Porirua: a city where the council dabbles in property and cares for its staff while struggling to balance its books

Boris Johnson, aspiring to be Britain’s next Prime Minister, has the gift of the gab until he is grilled about his private life. Then he maintains a stubborn silence, insisting this should be off limits to public scrutiny.

In Porirua, citizens are served by a Mayor who is apt to be circumspect about council dealings that are very much a matter of public interest – especially to ratepayers.

Or (to be fair) maybe he has said a great deal, but has not been fully reported.

A week or so ago Stuff disclosed that beachfront land in Titahi Bay – sold to Porirua City Council to ensure it could be used by the public – was the subject of designs which include detailed options for developing apartments.

These were shown to councillors in a closed-door session, Stuff reported.

Porirua City Council was briefed on three development options to build multi-storey apartments on the land and was given detailed floor plans  from architecture firm Isthmus, according to information released under the Official Information Act. 

Good grief.  Whatever happened to open government?

Betcha the Mayor has something to say.

Yes – but not much.

Mayor Mike Tana said staff members had caused some confusion about the nature of their public consultations and the council should have been “a bit more transparent and a bit more responsive” – but:

 “We don’t get involved in the process around what gets put out there to the people.”

Furthermore, the designs were not plans but “concepts”. 

“We apologise for the inference that something was going to go ahead.”

At the weekend, Stuff struck again, revealing that...

A multi-million-dollar purchase of leaky buildings was made behind closed doors by Porirua City Council.

Believed to have cost at least $10 million, the deal was put together in public-excluded meetings by the council, which was taken to court by the owners of 24 townhouses at 26 View Rd, Titahi Bay.

The council would not confirm the total amount paid for the properties but a 2018 council report obtained by Stuff recommended a $12m delegation for the potential purchase.  And …   

Records show the council took ownership of the 24 properties on May 9 and sale prices ranged between $356,000 and $418,000.

Stuff says the claim stems from 2007 when the council consented the hillside development despite failing it days earlier. It was later assessed to be significantly affected by water issues.

The $10 million or so cost of taking care of this problem accounts for a big chunk of the council’s  annual income from rates.

Wow.  The mayor has got to be miffed about these costly consequence of something that happened more than 10 years ago.

Not really.

More troubling, his grasp of what transpired seems less than firm:

Porirua City Mayor Mike Tana said he didn’t know details of the deal or the amount paid as it was an “operational matter” conducted by council staff. 

Although he knew of the plan to buy the properties, he was unaware the purchases had been made and couldn’t comment, he said.

Porirua City Council manager Andrew Dalziel said the matter went before elected members at three meetings in 2018, and the confidential nature of the issue meant public were excluded.

In another report, Stuff says almost a quarter of Porirua’s general rates take could be swallowed up in this leaky homes settlement – but this is just one of many bills stretching the city’s finances.

Porirua will earn less than $50 million in general rates this year but in the last term allegedly forked out $10m for a leaky home development, spent $2m fixing 70m of slumping street, another $2.6m for an emergency operations centre where costs blew outapproved a living wage that will increase rates by half a per cent, and is reportedly now also liable for delays to Transmission Gully that could see it pay a bill of up to $1m.

Delays in granting consents related to work on the Transmission Gully project meant the council will now have to pay out between $600k and $1m to a contractor affected by the delays, according to Stuff’s sources.

One source, who wished to remain anonymous, told Stuff the resource consenting department of the council was largely responsible for this and had held up contractors who were flown out to complete the project.

Oh dear. More cause for mayoral disappointment:

Mayor Mike Tana said he couldn’t comment on the Transmission Gully dispute but believed it was “arguable” that council were responsible for the delays.

The council’s financial struggles bring another recent deal to mind.

In 2017, the council announced the former NZ Post building had been sold for $400,000 to developer Ian Cassel’s The Wellington Company, which would  convert it into rental apartments.

It was bought in 2014 for $570,000 by the council, which spent a further $180,000 on insurance, rates, resource consents and building improvements. The Wellington Company was to lease it for two years for $100,000, then buy it for $300,000.

Hmm.  So ratepayers lost money?

The council’s city growth and partnerships general manager Bryan Patchett said the price difference was an investment not a loss.

“We have to spend a bit of money … The alternative was to have that building sit there doing nothing.”

The council would get out of other costs associated with the four-storey building and get future income from rates on the apartments.

Earthquake strengthening would cost the developer at least $1 million and the lease-then-sale agreement was a good way to hold the developer to account, Patchett said.

“The strengthening must be completed in 12 months and apartments developed in two years … if that doesn’t happen we get the building back.”

Mayor Tana said council had to cut its losses on the building to see development in the city centre, although the decision to buy and sell the property had not been made on his watch.

Early last month, Stuff reported that the old post office had been converted into a boutique hotel. 

The Post Hotel is the latest project by The Wellington Company, who leased the three-storey building while it was renovated. The company has now purchased it for $300,000.

While the initial plan was to build residential apartments, developer Ian Cassels said the company and council decided a hotel was the best way to grow the local economy.

In the weekend article which listed a raft of financial challenges, Tana’s rival for the mayoralty, Ana Coffey, said the council didn’t have a lot of fat to trim.

Many of the unexpected costs faced by the council therefore were relatively more expensive for Porirua than other councils.

“We don’t have room to make a lot of mistakes at Porirua City Council.”

She also expressed concern that the council would spend an extra year without a balanced budget.

But Coffey is chair of the City Direction Committee which supported her recommendation to introduce the living wage for council employees.

The council is expected to endorse this recommendation on Wednesday, increasing the pay of 120 council workers from February.

“We need to take a principled approach to our decision making,” Cr Coffey said. “The increasing financial pressures on the local government sector are not going to change. But it can’t be at the expense of our employees who deserve to earn a wage that allows them to live with dignity.

“As elected members our decisions need to reflect the desires and needs of our community. We’ve consulted on the living wage in the past and feedback has been split. But there’s been strong messages coming through that people want those who are struggling in our community to have enough to live on and to be able to participate in society.”

Mayor Tana supported this recommendation:

 “This has been considered by the council for six years and I recognise the efforts of our community to put information before us to help us make the right decisions. We’ve had 60 leaders and community groups in our city, including Ngāti Toa, asking for this. I support it on the basis that we are listening to our people.

“Now we need to find a way to balance this decision with our responsibility to be fiscally prudent.”

Ratepayers have cause to be nervous.

General Manager Corporate Services/Chief Financial Officer Roy Baker confirmed that no work had been undertaken on how the living wage could be managed within the current budget, but a proposed start of February 2020 would have “a minimal impact on the budget.”

A full year of $325,000 a year would have an impact on the council’s ability to manage “the ups and downs” to continue delivering a 4.98% rate increase in 2020/21 onwards.

How this would be managed would be subject to discussions with the council as the 2020/21 annual plan budget was being developed.

 

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