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Flipping public land for a private profit

It is a curious little asset sale. A patch of land sitting next to the Manukau Pacific Events Centre (the waka shaped building near the Southern Motorway) and beside the whitewater canoeing venue, is on the block as Auckland Council sheds surplus land.

Land sales are the unspoken asset sale of the Super City council. While elected councillors, local boards and interest groups argue hard over any suggestion of selling port or airport company shares, many tens of millions of dollars of public land is privatised each year.

Auckland Council wants to sell $69m in non-strategic assets in the current financial year - $50m of it in property - and the Manukau site is one which went before its Finance and Performance Committee on Tuesday.

It is a peculiar deal because the land is currently designated as 'reserve' and is leased for 99 years to a charitable trust, Second Nature, which runs the event centre. The council would be selling to Second Nature.

But Second Nature has already cut a deal, in advance of Council sign-off, with a private company called Safari Group to buy the land for use as a 120-bed Ramada hotel and apartment complex. That deal would go unconditional as soon as the Council sells to Second Nature.

The sale is being guided by the council company Panuku Development Auckland and it may well be that it could negotiate to get 50 percent of the extra money from the onsale - but local politicians are asking why the council (ratepayer) doesn't get 100 percent of the gain.

The Manurewa Local Board chair, Angela Dalton, told councillors the revocation of the reserve status and sale to Second Nature so early in a lease, with that organisation already planning to sell it, smelled of the 'flipping' of real estate for a fast profit which has been reported in the media of late.

"Most decisions to sell land take about a year. This one was a couple of months. It is not unlike the whitewater rafting one that made it into the Long Term Plan at the eleventh hour.

"It is all about relationships."

Before the committee heard from Dalton, the Mayor, Phil Goff and a Manurewa councillor Sir John Walker, declared an interest as they knew people on the Second Nature Trust personally.

Dalton said her board had not had adequate answers on the speed of the sale. "The sum of all the parts is telling a story about sub-standard transparency, governance and management'.

Asked if she had been given any assurances that no 'flipping' or immediate profit taking would occur on the land, she said: "My board held a workshop on this and we were given the impression there could be uplift from the sale'.



Dalton claimed an instruction had been made from within the Council to look at just one option for disposing of the land, but the committee chairman, Ross Clow, said to his knowledge no such instruction had been made.

On the face of it, the block of land is unexceptional. It appears from Google Earth photos to be in car parking. It is 4600 square metres and councillors were told Panuku could find no alternative use.



Panuku recommended revoking the reserve status and approving the sale to Second Nature - for an undisclosed sum, although a paper to the committee said a valuation had put the freehold value around $2m. Because it is currently a reserve, the Reserves Act will require the Council to put any proceeds towards buying other land for reserves or in maintaining existing reserves.

Panuku believes a large-scale hotel would provide accommodation to a nearby health clinic and to stimulate private investment and building confidence in Manukau.

The local board's concerns - and suggestions from councillors Dick Quax and Linda Stewart of past transparency issues with the events centre and associated developments - did not move the finance committee to review the sale.

It decided to press ahead with lifting the reserve status, which would be open to public submissions, and then to sell - for Second Nature to clinch that Second Sale.

* The sale of another site deemed surplus, a carpark in the centre of Warkworth, was put on hold after objections from the Rodney Local Board chair Beth Holbrooke. The carpark is near the only inter-centre bus stop in the town and no park and ride facility had been developed. She said arbitrary decisions would play 'directly into the hands of the Rexit group' in Rodney. The finance committee chair, Ross Clow, offered to defer the sale decision to see if a revised proposal involving preservation of airspace and parking could be formed.

