From:
Barbara McKerrow
To:
Mayor Tory Whanau
Subject:
RE: Private and confidential - proposed Terms of Reference
Date:
Thursday, 12 October 2023 9:50:00 am
Attachments:
image001.png
image003.png
Thank you Tory, I will advise Linda and Beth Keightley who I have arranged to be her key point of
contact.
Ngā mihi,
Barbara
The information contained in this email is privileged and confidential and intended for the addressee only.
ACT 1987
If you are not the intended recipient, you are asked to respect that confidentiality and not disclose, copy or make use of its
contents.
If received in error you are asked to destroy this email and contact the sender immediately. Your assistance is appreciated.
From: Mayor Tory Whanau <[email address]>
Sent: 12 October 2023 09:49
AND MEETINGS
To: Barbara McKerrow <[email address]>
Subject: RE: Private and confidential - proposed Terms of Reference
Kia ora Barbara
I have reviewed this and approve it.
Nga mihi
INFORMATION
Tory Whanau
Mayor of Wellington | Wellington City Council
EA:
s7(2)(f)(ii)
Sign up to our weekly email here!
From: Barbara McKerrow <[email address]>
Sent: Thursday, 12 October 2023 9:46 am
To: Mayor Tory Whanau <[email address]>
Subject: Private and confidential - proposed Terms of Reference
Kia ora Tory
The attached Terms of Reference have been developed by Dentons Kensington Swan partner
Linda Clark as the external reviewer I have appointed to undertake an inquiry into the Code of
Conduct complaint you received this week. Can you please review this and indicate to me
whether you approve it? Once we have your agreement you will be advised on next steps.Thank
you.
Ngā mihi,
Barbara
RELEASED UNDER THE LOCAL GOVERNMENT OFFICIAL
Barbara McKerrow
Chief Executive Officer | Tumu Whakarae| Wellington City Council
M s7(2)(f)(ii) |
E [email address] |
W Wellington.govt.nz |
The information contained in this email is privileged and confidential and intended for the addressee only.
If you are not the intended recipient, you are asked to respect that confidentiality and not disclose, copy or
make use of its contents.
If received in error you are asked to destroy this email and contact the sender immediately. Your assistance is
appreciated.
ACT 1987
AND MEETINGS
INFORMATION
RELEASED UNDER THE LOCAL GOVERNMENT OFFICIAL
Code of Conduct for Elected Members Inquiry | Terms of Reference
Background
1.
On 6 October 2023 Deputy Mayor Laurie Foon made a complaint about a number of
Council ors al egedly breaching
. The complaint al eged
breaches of the Code of Conduct related to:
(a)
confidentiality, where they receive
confidential information in the course of their duties;
(b)
be aware that failure to observe
confidentiality wil impede the performance of council by inhibiting information
flows and undermining public confidence in the council;
(c)
remember the respect and dignity of their
office in their dealings with other elected members, managers and the public;
(d)
conduct their dealings with other elected
members in ways that maintain public confidence in the office to which they
have been elected; and
(e)
avoid criticizing any employee in any
way, but especial y in ways that reflect on the competence and integrity of the
employee.
2.
In particular, the complaint identifies the al eged publication of specific details of a
publicly excluded agenda item in the media and on social media.
3.
Under the Code of Conduct for Elected Members, the Mayor (in concert with the
Chief Executive where appropriate) must
consider each al egation in a manner that
is fair to al parties involved in the al egation.
4.
The Chief Executive has appointed Dentons Kensington Swan partner Linda Clark
as the external reviewer
reviewer to undertake an inquiry into the complaint.
Purpose
5.
The purpose of this inquiry is to consider the complaint made by the Deputy Mayor
complainant inquire into the al eged leaking of confidential information and the
other al eged co
nduct and determine whether any breach of the Code of Conduct for
Code
6.
The council ors named in the complaint are Crs Ray Chung, Iona Pannett, Tony
Randle, Diane Calvert and Nicola Young respondents
7. Specifical y, this inquiry wil consider:
(a) whether the Code requires Council ors to keep information discussed at a
publicly excluded meeting of the ful council confidential, even if they did not vote
in favour of the decision to exclude the public, and if so, what the scope of that
confidentiality requirement is;
(b) if yes, whether a breach of confidentiality occurred in this case (in relation to the
named respondents);
(c)
whether the conduct of Council ors fol owing the 4 October 2023 meeting was
consistent with the Code and in accordance with the obligations it imposes on
elected members; and
(d) in the event any breach is identified, what recommendations are appropriate in
Code of Conduct for Elected Members Inquiry
|
Page 1
|
11 October 2023
respect of any Councillor found to have breached the Code.
8.
A copy of the complaint is attached.
Summary of complaint
9.
On 4 October 2023 a full Council of Wellington City Council (“
Council”) resolved to hear
the agenda item “City Activation” with public excluded under section 48 of the Local
Government Official Information and Meetings Act 1987 (
LGOIMA). The meeting was to
discuss a proposed deal related to the earthquake prone building identified as the
Reading Cinema complex on Courtenay Place.
10.
Five Councillors voted against the decision to exclude the public from the discussion.
11.
A news article was published on the
NZ Herald shortly after the meeting concluded. The
article included otherwise confidential information, notably that the Council met to
consider ‘a multimil ion-dollar deal, involving the Council buying the land underneath the
Reading Cinema’. Further news reports have published further details about the public
excluded meeting of Council.
12.
The complaint alleged a number of breaches of Council’s Code of Conduct, including,
that ‘specific details of the proposal, the voting record, and commentary have been
disclosed to media’.
13.
The complaint specifically alleges that:
(a)
Cr Randle photographed the AV screen with the confidential report visible;
(b)
a member of staff heard Cr Randle say that that he was going to publicly release
details about the item;
(c)
Cr Randle made an online comment on ‘X’ (formerly Twitter) disclosing the voting
record;
(d)
confidential information was shared with a
NZ Herald reporter and with
the Post about the agenda item;
(e)
Councillors Ray Chung, Iona Pannett, Tony Randle and Nicola Young have
publicly commented on the confidential matter; and
(f)
on this basis, ‘it would appear that one or more Council ors have leaked
confidential information’.
14.
The complainant asks for these matters to be ‘investigated and addressed’.
15.
The reviewer will undertake an inquiry into the complaint.
Process
16.
Section 3 of the Code sets out the process to be followed by the Mayor and the Chief
Executive in relation to any alleged breach by Elected Members of the Code of
Conduct. The reviewer shall carry out this review in accordance with this section of
the Code.
17.
In particular, the reviewer shall ensure that:
(a)
due process is respected; and
(b)
the Respondents are given the opportunity to consider and respond to any
allegations made against them.
18. In addition to Section 3 of the Code, the reviewer shall comply with the steps below.
19. The reviewer will undertake an inquiry into the complaint and prepare a report for the
Mayor, regarding that inquiry, who will share it with the Chief Executive.
Code of Conduct for Elected Members Inquiry
|
Page 2
|
11 October 2023
20. In preparing that report the reviewer will:
(a)
conduct a detailed ‘desktop review’ of all relevant documentation held by Council
about the meeting of the full Council held on 4 October 2023;
(b)
interview the complainant and respondents, as well as any Councillors they consider
may be able to assist the review; and
(c)
interview the staff member who is alleged to have overhead Cr Randle.
21.
In addition, the reviewer may, if they consider it necessary in the circumstances:
(a)
consult with the complainant, respondents and affected parties; and /or
(b)
interview other potentially relevant witnesses / affected parties; and/or
(c)
require the production of relevant documents or information from the
complainant, respondent and affected parties (including Wellington City Council);
and/or
(d)
refer to any relevant documentation.
22. Consultations and/or interviews will be digitally recorded and transcribed. The reviewer
will delete all recordings and transcriptions 30 days after the report has been provided to
the Mayor.
23. The reviewer may include in the report any recommendations to the Mayor in relation
to the inquiry.
24. Upon receipt of the report, the Mayor may refer the matter to Council for
consideration and determination.
Deliverable for reviewer
25. The reviewer is to provide a report setting out the findings and recommendations (if
any) to be presented to the Mayor by 27 November 2023.
Attachments:
(a)
Letter of complaint dated 6 October 2023
(b)
Code of Conduct for Elected Members dated October 2015
(c)
Extracts of media reports related to the 4 October 2023 meeting
(d)
Council agenda, report for meeting on 4 October 2023
(e)
Questions and Answers relating to meeting on 4 October 2023
Code of Conduct for Elected Members Inquiry
|
Page 3
|
11 October 2023
From: Barbara McKerrow <[email address]>
Sent: Monday, 9 October 2023 3:05 pm
To: Beth Keightley <[email address]>
Subject: FW: Code of conduct complaint - next steps - Legally privileged and confidential
Kia ora Beth
Please see the advice below and the attached complaint. Can you please make contact with Linda
Clark to commence this process.
Ngā mihi,
Barbara
The information contained in this email is privileged and confidential and intended for the addressee only.
If you are not the intended recipient, you are asked to respect that confidentiality and not disclose, copy or make use of its
contents.
If received in error you are asked to destroy this email and contact the sender immediately. Your assistance is apprec iated.
From: Clark, Linda <[email address]>
Sent: 09 October 2023 14:50
To: Barbara McKerrow <[email address]>
Cc: s7(2)(a) <s7(2)(a) @dentons.com>
Subject: Code of conduct complaint - next steps - Legally privil eged and confidential
Kia ora Barbara,
You have advised us that a complaint has been received al eging that some council ors have
breached the Code of Conduct, with particular reference to maintaining confidentiality. We understand
the complaint arises out of discussions about the future of the Reading Cinema site. The complaint
contains serious allegations. We also understand the Mayor, acting in her capacity as the initial
decision maker regarding complaints made under the Code of Conduct, is seeking an independent
review to establish if any breach/s have occurred.
In terms of next steps, we recommend the following:
• In conjunction with Council’s General Counsel we draft a Terms of Reference (TOR) for the
review and agree to an approximate timeframe for its completion.
• Once the TOR have been agreed to, the named council ors should be informed of the
complaint and t
he review into the complaint. They should be provided with a copy of the TOR
at the same time, together with written assurances that they wil be provided with the
opportun
ity to meet with the reviewer and/or to provide information in whatever form they
prefer in response to the allegations.
• We wil begin reviewing any documentary evidence in respect of the complaint as soon as
practicable.
• We wil approach the complainant, the named council ors and any other third party who we
consider may have relevant information as soon as practicable fol owing the release of the
TOR and in line with the timeframe as agreed.
In the meantime, to assist the Mayor retain her neutrality as the initial decision-maker we would
advise that her office makes no comment on the review other than, if necessary, (once the TOR have
been finalised and the named council ors informed) to confirm that a complaint has been made and
inquiries are underway. The time to comment wil be once the review process has been ful y
completed.
Happy to discuss any time.
Regards,
Linda
Linda Clark
Partner
What’s Next? The answer is Talent. With more than 20,000 people, 12,000 lawyers
and 200 locations, Dentons has the talent for what you need, where you need it.
s7(2)(a)
[email address]
Bio | Website
Dentons Kensington Swan
40 Bowen Street, Pipitea, Wel ington, 6011, New Zealand
Zaanouni Law Firm & Associates > LuatViet > Fernanda Lopes & Associados >
Guevara & Gutierrez > Paz Horowitz Abogados > Sirote > Adepetun
Caxton-Martins
Agbor & Segun > Davis Brown > East African Law Chambers > For more information
on the firms that have come together to form Dentons, go to dentons.com/legacyfirms
From:
Beth Keightley
To:
Gareth Hancock
Subject:
FW: Review costings - legally privileged and confidential [KS-KSNational.FID614340]
Date:
Friday, 19 January 2024 10:10:56 am
Attachments:
image001.png
Ngā Mihi
Beth
Beth Keightley
General Counsel | Legal Services | Te Tumu Ara Whaimana
(Strategy and Governance) | Wellington City
Council
E [email address] | W Wellington.govt.nz | Ms7(2)(f)(ii)
.
.
From: Clark, Linda <[email address]>
Sent: Wednesday, October 11, 2023 4:34 PM
To: Beth Keightley <[email address]>
Subject: Review costings - legally privileged and confidential [KS-KSNational.FID614340]
Kia ora Beth,
In terms of a costs estimate for the review:
Based on our AOG rates we will be charging out at:
s7(2)(b)(ii)
In terms of time estimated:
Pre interview stage – reviewing documents, cases on Code breaches, commentary etc (will depend
on number of documents)
s7(2)(a) 13 hours
10 hours
s7(2)(a)
Linda 5 hours
Interview stage
Assume minimum of 7 interviews (complainant, witness and 5 respondents) and allow 3 hours
for Linda and Lucinda per interview for planning, travel, debrief and any collateral at end, a
total of 21 hours
Report writing
15- 20 hours Lucinda
10 - 12 hours Linda
Natural justice report back
Dependent on nature and scale of feedback, conservative estimate is 5 hours each but this
phase has the potential to require more hours if councillors engage legal counsel and raise
issues about process and/or content from the drafts shown to them prior to finalisation
Finalising report
Depending on nature and scale of feedback, rough estimate of 5 hours each
Using these estimates as a guide we estimate betweens7(2)(b)(ii)
Let me know what you think.
From:
Beth Keightley
To:
Gareth Hancock
Subject:
FW: Confirming review TOR/costs [KS-KSNational.FID614340]
Date:
Friday, 19 January 2024 10:10:41 am
Attachments:
LSO - October 2023.DOCX
image001.png
Ngā Mihi
Beth
Beth Keightley
General Counsel | Legal Services | Te Tumu Ara Whaimana
(Strategy and Governance) | Wellington City
Council
E [email address] | W Wellington.govt.nz |s7(2)(f)(ii)
.
.
From: s7(2)(a)
<s7(2)(a)
@dentons.com>
Sent: Thursday, October 12, 2023 3:14 PM
To: Clark, Linda <[email address]>; Beth Keightley <[email address]>
Subject: RE: Confirming review TOR/costs [KS-KSNational.FID614340]
Kia ora Beth
Further to Linda’s email below, please see
attached an LSO for your review and approval.
Please let us know if you have any questions or concerns about this.
Nā,
s7(2)(a)
s7(2)(a)
Associate
What’s Next? The answer is Talent. With more than 20,000 people, 12,000 lawyers
and 200 locations, Dentons has the talent for what you need, where you need it.
D s7(2)(a)
| M s7(2)(a)
s7(2)(a) @dentons.com
Website
Dentons Kensington Swan
40 Bowen Street, Pipitea, Wellington, 6011, New Zealand
Zaanouni Law Firm & Associates > LuatViet > Fernanda Lopes & Associados >
Guevara & Gutierrez > Paz Horowitz Abogados > Sirote > Adepetun Caxton-Martins
Agbor & Segun > Davis Brown > East African Law Chambers > For more information
on the firms that have come together to form Dentons, go to dentons.com/legacyfirms
Dentons is a global legal practice providing client services worldwide through its member
firms and affiliates. This email may be confidential and protected by legal privilege. If you are
not the intended recipient, disclosure, copying, distribution and use are prohibited; please
notify us immediately and delete this email from your systems. Dentons records and stores
emails sent to us or our affiliates in keeping with our internal policies and procedures.
Dentons Kensington Swan is a partnership governed by New Zealand law. Please see
Can you confirm that the nominated Acting Lawyer (nominated personnel, if any) is available to
provide the Services?
Can you confirm that the timeframe is acceptable?
Conflict of interest declaration
I, Linda Clark, have made diligent inquiry whether Dentons Kensington Swan has any actual,
potential or perceived Conflict of Interest if Dentons Kensington Swan were to provide the Services
described in this Legal Services Order and I have disclosed any actual, potential or perceived
Conflict of Interest below.
Disclose any and all actual, potential or perceived Conflicts of Interest:
Estimate/Quote
Fee (disbursements and GST exclusive) s7(2)(b)(ii)
Expenses
Total s7(2)(b)(ii)
Identify whether the Total is an estimate,
Estimate
fixed fee/quote, capped fee, done under a
retainer etc…
Additional information/assumptions:
See emails from Linda Clark to Beth Keightley dated 11 and 12 October 2023 regarding
review costs.
Additional information
Part C – Variations to Part A LEAVE BLANK WHEN ISSUING LEGAL SERVICES ORDER The client will complete Part C if they wish to change any details in Part A
2
8133645.1
Part D – Variations to Part B
LEAVE BLANK WHEN ISSUING LEGAL SERVICES ORDER
The provider will complete this only if and when it receives a Variation per Part C above from the
client
Revised Estimate
Fee (disbursements and GST exclusive)
Expenses
Total
Identify whether the Total is an estimate,
fixed fee/quote, capped fee, done under a
retainer etc…
Additional information/assumptions:
3
8133645.1
From:
Beth Keightley
To:
Clark, Linda; s7(2)(a)
Subject:
FW: Attachments and links requested
Date:
Wednesday, 11 October 2023 10:07:00 am
Attachments:
image001.gif
image004.jpg
2023-10-04 Agenda Council.pdf
2023-10-04 Agenda PX Council.pdf
City Activation Project - PX report.pdf
2023-10-04 Q&A Council.pdf
Collation of links and articles - Code of Conduct.docx
image002.png
image003.png
image007.png
Kia ora Linda and s7(2)(a)
Thanks for your email of last night -0 we will come back to you on that. In the interim, see attached
relevant info related to the complaint
Ngā Mihi
Beth
Beth Keightley
General Counsel | Legal Services | Te Tumu Ara Whaimana
(Strategy and Governance) | Wellington City
Council
E [email address] | W Wellington.govt.nz | Ms7(2)(f)(ii)
.
.
From: Elizabeth Steel <[email address]>
Sent: Tuesday, 10 October 2023 8:56 am
To: Beth Keightley <[email address]>
Subject: Attachments and links requested
Kia ora Beth
Please see attached council agenda and minutes along with requested links
Any questions please let me know
Elizabeth Steel
Chief Advisor Strategy & Governance| Wellington City Council
Ms7(2)(f)(ii) E [email address] | W Wellington.govt.nz | |
COUNCIL
4 OCTOBER 2023 MEMBERSHIP
Mayor Whanau (Chair)
Deputy Mayor Foon (Deputy Chair)
Councillor Abdurahman
Councillor Apanowicz
Councillor Brown
Councillor Calvert
Councillor Chung
Councillor Free
Councillor Matthews
Councillor McNulty
Councillor O'Neill
Councillor Pannett
Councillor Paul
Councillor Randle
Councillor Wi Neera
Councillor Young
Have your say!
You can make a short presentation to the Councillors, Committee members, Subcommittee members or Community Board
members at this meeting. Please let us know by noon the working day before the meeting. You can do this either by phoning
04-499-4444, emailing [email address], or writing to Democracy Services, Wellington City Council, PO Box
2199, Wellington, giving your name, phone number, and the issue you would like to talk about. All Council and committee
meetings are livestreamed on our YouTube page. This includes any public participation at the meeting.
PUBLIC EXCLUDED
TABLE OF CONTENTS
4 OCTOBER 2023
Business
Page No.
1.
Meeting Conduct
5
1.1 Karakia
5
1.2 Apologies
5
1.3 Announcements by the Mayor
5
1.4 Conflict of Interest Declarations
5
1.5 Confirmation of Minutes
5
1.6 Items not on the Agenda
5
1.7 Public Participation
6
2.
Public Excluded
4.1 City Activation project
7
PUBLIC EXCLUDED
Page 3
1. Meeting Conduct
1.1 Karakia
The Chairperson will open the hui with a karakia.
Whakataka te hau ki te uru,
Cease oh winds of the west
Whakataka te hau ki te tonga.
and of the south
Kia mākinakina ki uta,
Let the bracing breezes flow,
Kia mātaratara ki tai.
over the land and the sea.
E hī ake ana te atākura.
Let the red-tipped dawn come
He tio, he huka, he hauhū.
with a sharpened edge, a touch of frost,
Tihei Mauri Ora!
a promise of a glorious day
At the appropriate time, the following karakia will be read to close the hui.
Unuhia, unuhia, unuhia ki te uru tapu nui
Draw on, draw on
Kia wātea, kia māmā, te ngākau, te tinana, Draw on the supreme sacredness
te wairua
To clear, to free the heart, the body
I te ara takatū
and the spirit of mankind
Koia rā e Rongo, whakairia ake ki runga
Oh Rongo, above (symbol of peace)
Kia wātea, kia wātea
Let this all be done in unity
Āe rā, kua wātea!
1. 2 Apologies
The Chairperson invites notice from members of:
1.
Leave of absence for future hui of the Wellington City Council; or
2.
Apologies, including apologies for lateness and early departure from the hui, where
leave of absence has not previously been granted.
1. 3 Announcements by the Mayor
1. 4 Conflict of Interest Declarations
Members are reminded of the need to be vigilant to stand aside from decision making when
a conflict arises between their role as a member and any private or other external interest
they might have.
1. 5 Confirmation of Minutes
The minutes of the meeting held on 7 September 2023 will be put to the Te Kaunihera o
Pōneke | Council for confirmation.
1. 6 Items not on the Agenda
The Chairperson will give notice of items not on the agenda as follows:
Page 5
COUNCIL
4 OCTOBER 2023 Matters Requiring Urgent Attention as Determined by Resolution of the Wellington
City Council
The Chairperson shall state to the hui.
1.
The reason why the item is not on the agenda; and
2.
The reason why discussion of the item cannot be delayed until a subsequent hui.
The item may be allowed onto the agenda by resolution of the Wellington City Council.
Minor Matters relating to the General Business of the Wellington City Council
The Chairperson shall state to the hui that the item will be discussed, but no resolution,
decision, or recommendation may be made in respect of the item except to refer it to a
subsequent hui of the Wellington City Council for further discussion.
1. 7 Public Participation
A maximum of 60 minutes is set aside for public participation at the commencement of any
hui of the Council or committee that is open to the public. Under Standing Order 31.2 a
written, oral or electronic application to address the hui setting forth the subject, is required to
be lodged with the Chief Executive by 12.00 noon of the working day prior to the hui
concerned, and subsequently approved by the Chairperson.
Requests for public participation can be sent by email to publ
[email address], by
post to Democracy Services, Wellington City Council, PO Box 2199, Wellington, or by phone
at 04 499 4444 and asking to speak to Democracy Services.
Page 6
4. Public Excluded
Recommendation
That Te Kaunihera o Pōneke | Council:
1.
Pursuant to the provisions of the Local Government Official Information and Meetings
Act 1987, exclude the public from the following part of the proceedings of this meeting
namely:
General subject of the
Reasons for passing this
Ground(s) under section
matter to be considered
resolution in relation to each
48(1) for the passing of this
matter
resolution
4.1 City Activation project
7(2)(b)(ii)
s48(1)(a)
The withholding of the information
That the public conduct of this item
is necessary to protect information would be likely to result in the
where the making available of the
disclosure of information for which
information would be likely
good reason for withholding would
unreasonably to prejudice the
exist under Section 7.
commercial position of the person
who supplied or who is the subject
of the information.
7(2)(i)
The withholding of the information
is necessary to enable the local
authority to carry on, without
prejudice or disadvantage,
negotiations (including commercial
and industrial negotiations).
Page 7
COUNCIL
4 OCTOBER 2023
Policy.
The costs of the proposed land purchase is large (although
less than the 10% threshold of rates income identified in the
Significance and Engagement Policy) and there is an
opportunity cost, in that the purchase wil decrease Council’s
headroom. Officers anticipate that this transaction would likely
generate a low to moderate level of community interest. There
are no inconsistencies with existing policies or strategies.
Financial considerations
☐ Nil
☐ Budgetary provision in Annual Plan / Long- ☒ Unbudgeted $32m
term Plan
3.
The purchase price for the Land ($32 million) is supported by a current market
valuation obtained by Council from Colliers.
4.
The Council’s proposed involvement in the initiative is based on the requirement that it
is fiscally neutral to the Council, at the Council’s sole discretion.
5.
However, there is an opportunity cost to this initiative. It is proposed that the purchase
of the Land wil be funded by debt. The purchase wil therefore decrease the Council’s
debt headroom and ability to borrow for other projects
by $32 million.
Risk
☐ Low
☒ Medium
☐ High
☐ Extreme
6.
Based on the risks discussed under ‘Considerations for Decision Making’ within this
report, this initiative is of medium risk.
Authors
Sarah Houston-Eastergaard, Treasurer
Sean Greig, Development Manager
Phil Becker, Manager Build Wellington
Authoriser
Andrea Reeves, Chief Financial Officer
Page 10
Item 4.1
Taunakitanga | Officers’ Recommendations
Officers recommend the following motion:
That Te Kaunihera o Pōneke | Council:
1) Receive the information.
2) Approve the commercial terms outlined in this report.
3) Agree to the acquisition by the Council of the underlying fee simple estate in the
Reading Courtenay land at 80 Courtenay Place, Te Aro, Wellington legally described as
Lot 1 Deposited Plan 85458 and held on Record of Title 38963 (‘the Land’).
4) Agree to the Council granting a ground lease of the Land to the New Zealand entity of
Reading International Inc, currently Reading Courtenay Central Limited.
5) Delegate authority to the Chief Executive Officer to conclude negotiations with Reading
and finalise all matters relating to the purchase and leaseback on terms no less
favourable to the Council (as a whole) than those detailed in paragraphs 3
1 – 34 of this
report and execute the relevant formal agreements.
6) Note that this proposed initiative will be funded by debt and is estimated to increase the
Debt to Revenue ratio by between 1% and 3% over the 10-year period of the upcoming
Long-Term Plan.
7) Note that the revenue received by the Council from the ground lease wil cover Council’s
cost of holding the debt.
Whakarāpopoto | Executive Summary
7.
In January 2019, Reading Courtenay was closed due to an engineering assessment
identifying significant structural risk in the event of an earthquake. The building has
effectively been ‘mothballed’ since. In addition, the adjoining multi-storey carpark at 24
Tory Street was demolished in 2016 following the Kaikōura Earthquake.
8.
Feedback received is that closure of Reading Courtenay and the demolition of the
adjoining carpark building has contributed to a cycle of economic decline in the area,
affecting surrounding businesses, and increasing anti-social behaviour. Further,
property owners an d the development sector provide frequent informal feedback
describing how these conditions reduce the appetite for investment and development in
the city, including the Courtenay precinct.
9.
In October 2022, the US owners of Reading International Inc. came to Wellington and
met with the Mayor, officers and economic stakeholders. The purpose of the visit was
to reaffirm their commitment to Wellington and desire to work with Council to accelerate
the reinstatement of Reading Courtenay.
10.
Following that meeting, a non-binding Memorandum of Collaboration and
Understanding (‘MOCU’) was signed between Reading (Note that any reference to
‘Reading’ within this report includes the New Zealand entities and Reading
International Inc.) and Council in December 2022. The MOCU records the basis upon
which Reading and Council would endeavour to reach agreement on the commercial
terms and the Reading Courtenay civic outcomes.
11. The premise for Council’s involvement in the reactivation of Reading Courtenay,
informed by stakeholder feedback arising from other Courtenay Place precinct related
initiatives, was to provide an opportunity to assist with:
a. Accelerating and influencing the redevelopment of Reading Courtenay.
Item 4.1
Page 11
COUNCIL
4 OCTOBER 2023
b. Addressing the economic, social, and physical ‘shadow’ cast by the vacant
building.
c. Restoring economic activity to the Courtenay Place precinct.
d. Reducing the risk of prolonged inactivity and improve the perceived cycle of
decline in the area.
e. Addressing the perceptions of reduced personal safety arising from on-street
behaviour.
f. Bringing forward redevelopment timeframes for the wider Reading landholding
that will form a platform to support investment decisions for neighbouring sites.
12. Officers have completed negotiations with Reading on the key commercial terms
outlined in this report which, subject to Council approval, provide an agreed, non-
binding framework for the further negotiation and completion of a formal and, if
executed, legally binding agreement (subject to satisfaction of all conditions in the
formal agreement) that will involve:
a. Reading selling the underlying Reading Courtenay land – 80 Courtenay Place,
Te Aro, Wellington, legally described as Lot 1 Deposited Plan 85458 and having
an area of 7,143m2 more or less (‘the Land’).
b. Council purchasing the Land for $32 million, which is based on an independent
valuation process.
c. Reading leasing back the Land from the Council on a 21-yr perpetually
renewable ground lease.
d. Reading having a buy back right during the first 15 years of the initial ground
lease term.
e. Council having the ability to sell its interest in the Land after the 10th anniversary
of the commencement date of the ground lease.
13. Officers are satisfied that this proposed arrangement is the most reasonable option
that: will generate sufficien
t funding for Reading to commit to the redevelopment,
accelerates the re-opening of Reading Courtenay, and provides Council a level of
influence over the design e.g., Council’s approval is required for Reading’s concept
design which will
achieve specific Reading Courtenay civic outcomes.
14. Council’s involvement is based on the initiative being fiscally neutral to the Council, at
its sole discretion, and otherwise generally on usual market terms acceptable to the
Council.
15. The
Board of Directors of Reading Courtenay Central Limited approved the key
commercial terms on 30 August 2023.
Takenga mai | Background
16. Reading International Inc. is an entertainment and real estate company listed on the
Nasdaq stock market within the US. Ellen Cotter is its CEO and Margaret Cotter is the
Chair of the Board.
17. Reading International Inc. is the owner of Reading Courtenay Central Limited and
through two separate entities (Courtenay Carpark Limited and Reading Wellington
Page 12
Item 4.1
Properties Limited), owns circa 15,000m2 of land in Te Aro. All three companies are
incorporated in New Zealand.
18. The landholding is split across five parcels with frontages to Courtenay Place, Tory
Street and Wakefield Street, as shown in Attachment 1.
19. Four parcels are currently vacant and utilised as at-grade carparking with the main
7,143m2 parcel fronting Courtenay Place being occupied by the currently vacant
Reading Courtenay building (shown in red in Attachment 1). It is this land parcel that is
the subject of this report.
20. In January 2019, Reading Courtenay, housing a multiplex cinema with food and retail
outlets, was closed due to an engineering assessment that identified significant
structural risk in the event of an earthquake. The building has effectively been
‘mothballed’ since with seismic work not required to be completed until March 2035.
21. Following the Kaikōura Earthquake, the adjoining multi-storey car park at 24 Tory
Street was demolished in 2016.
22. Reading advise that Reading Courtenay was positioned and oper
ated as a safe, family
friendly facility that received daily visitation of approximately 6300 people before
closure, and therefore generating significant footfall to the Courtenay Place precinct.
The impact of this is addressed further in the following “Engagement and Consultation”
section, but feedback received is that closure, and therefore cessation of visitors, has
contributed to a cycle of economic decline in the area, affecting surrounding
businesses, and increasing anti-social behaviou r. Further, property owners and the
development sector provide frequent informal feedback describing how these
conditions reduce the appetite for investment and development in the city, including the
Courtenay precinct.
23. The closure of Reading Courtenay has also led to a loss of income for Council through
the reduction in rateable values. Further, in accordance with Council’s Rates
Remission Policy, a rates remission of the targeted rates for
“property under
development or earthquake strengthening” has been provided to Reading.
24. Financially, Reading has advised it is the subject of the double impact of a loss in
revenue due to Reading Courtenay’s earthquake-related safety concerns, followed by
Covid-related losses in revenue throughout their global entertainment portfolio.
Consequently, Reading advises that their current financial position means that they are
unable to easily, independently fund the redevelopment in the near future.
25. In October 2022, the US owners of Reading, Ellen and Margaret Cotter, came to
Wellington and met with the Mayor and officers. They affirmed their commitment to
Wellington and strong desire to work with the Council to accelerate the redevelopment
of Reading Courtenay.
26. Following that meeting, Reading and Council discussed, in principle, how Council could
support the redevelopment of Reading Courtenay. The MOCU was subsequently
signed between Reading and Council in December 2022.
27. The MOCU is non-binding except in limited circumstances (including information
sharing, confidentiality, public announcements, and costs). It records the basis upon
which Reading and Council would advance closer, collaborative discussions, to
endeavour to reach agreement on the key commercial terms and the Reading
Courtenay civic outcomes. It also contains the following commercial terms principles:
Item 4.1
Page 13
COUNCIL
4 OCTOBER 2023
a. All necessary internal, governance and other approvals required must be
obtained in respect of all the commercial terms.
b. The commercial terms must meet the commercial return and/or commercial
objective requirements of each party.
c. The programme(s) on which the relevant work(s) may be carried out should
reflect the parties’ shared intent to achieve, on a timely basis, the Wellington
community, and wider public benefits to be gained from:
I. The re-establishment of Reading Courtenay as a nationally significant
cinema and retail destination; and
II. Associated community, pedestrian, and visitor benefits to the central city
environment, including the positive reactivation of Wellington’s important
Courtenay Place precinct.
Kōrerorero | Discussion
28. Council’s participation in the revitalisation of Reading Courtenay provides an
opportunity to positively influence the redevelopment of Courtenay Central, extending
beyond standard regulatory oversight. This initiative is driven by the desire to revive the
economic, social, and physical aspects of the Courtenay Place precinct and in
particular to:
a.
Restoring Economic Vitality: The vacant site of Reading Courtenay casts a
detrimental 'shadow' over the Courtenay Place precinct, affecting economic
activity, social vibrancy, and the overall appeal of the area. By actively
participating in this redevelopment, t he Council are supporting economic vitality
and helping to restore Courtenay Place as a thriving hub for residents and
visitors alike.
b.
Mitigating Prolonged Inactivity: With Reading unable to easily and independently
finance the redevelopment in the near future, there's a risk of prolonged
inactivity on their wider landholding. Council's involvement mitigates this risk by
ensuring timely progress, preventing economic stagnation, and fostering a
renewed sense of vibrancy in the precinct.
c.
Enhancing Community Safety: The re-opening of Reading Courtenay is
expected to address personal safety concerns, creating an environment
perceived as safe and family friendly. This contributes to a more secure and
pleasant atmosphere for residents, visitors, and local businesses.
d
Attracting New Residents and Businesses: Accelerating the redevelopment of
Reading Courtenay is projected to expedite broader redevelopment efforts on
Reading's landholding. This, in turn, attracts new residents and businesses,
fosters economic growth, and supports investment decisions for neighbouring
properties, cultivating a thriving ecosystem.
e.
Fostering Connectivity: Our involvement in Reading Courtenay's redevelopment
aligns with our vision for a connected and accessible city. It enhances the
experience of visiting Tākina and creates a seamless connection to the
Courtenay Place, further promoting Wellington as a vibrant destination.
29. Engaging in this initiative aims to address community and economic challenges and
supports the strategic positioning of the city precinct for growth. This aligns with
Page 14
Item 4.1
rent shall be reviewed to the current market rent for the
Land.
Outgoings
Reading will be responsible for the payment of all
outgoings of any nature in respect of the Property,
including utilities, sewer, and rates.
Improvements
The improvements will be owned by and at the risk of
Reading, who will be responsible for all maintenance,
repair, and replacement.
Buy-back
Reading will have the right to buy-back the Land during the first 15 years
of the initial term of the lease, as follows:
1.
During the first 10 years, Reading will have the right to buy-back
the Land at the agreed value ($32m), plus any accrued and unpaid
rent.
2.
Between the 10th anniversary and the 15th anniversary, for as long
as WCC remains the lessor, Reading will have the right to buy-back
the Land at the higher of the agreed value ($32m) or the market
value of Council’s interest in the Land, plus any accrued and
unpaid rent, with the market value calculated on the basis that:
a. the lease has reset to 21 years on and from the date the buy-
back option is exercised; and
b. the annual ground rent has been reset to the then current
market rent for the Land as at that date.
Note, Reading will reimburse Council for any lending related break fees
payable by Council should the exercise of the buy-back right result in such
fees.
Sale by
Council
Council will not be permitted to sell its interest in the Land (other than to
Reading) until after the 10th anniversary of the commencement date of
the ground lease. If Council elects to sell during the period between the
10th anniversary and the 15th anniversary, Reading will have a right of
first refusal on the same basis as the buy-back right above (i.e., as per 2.
of the 15 year buy-back right above).
Security/
Reading’s obligations under the formal agreement (including the ground
Guarantors
lease) will be guaranteed by a Reading parent entity.
35. An indicative timeline of the above key commercial terms has been provided as
Attachment 2.
36. The formal agreement will include provisions providing sufficient certainty in relation to
the intent and nature of the Reading Courtenay redevelopment, which will require
Reading to progress and complete this in a timely manner, including an agreed sunset
date.
37. Entry into any formal agreement will be subject to Council due diligence, which will
include approval of:
a. Audited statements of financial position of the Reading entities.
b. Project feasibility, including costings and budget.
c. Credit assessment in relation to Reading’s ability to pay the annual ground rent
on an ongoing basis.
d. Key design outcomes and concept design.
Item 4.1
Page 17
COUNCIL
4 OCTOBER 2023 Kōwhiringa | Options
38. Council could:
a. Option 1 – Do nothing.
Council provides no assistance to Reading (monetary or otherwise) to
accelerate the redevelopment of Reading Courtenay. Reading would likely
therefore independently pursue alternative options. The deadline for completing
seismic work to Reading Courtenay is March 2035.
b. Option 2 – Facilitate third party involvement.
Council uses its established relationships with the Wellington development
community to assist Reading in procuring a development partner. This may
involve Council providing alternative financial support to Reading and / or a third
party to achieve the desired development outcomes.
c. Option 3 – Purchase and leaseback the Land (Recommended
).
As set out in the commercial terms discussed above.
d. Option 4 – Provide more limited involvement.
Council could seek to acquire part of the Land and/or the wider Reading
landholding to ensure a particular outcome for the development, e.g. a through-
site link between Wakefield Street and Courtenay Place.
39. An assessment of these options has been provided at Attachment 3. Note, Options 2
and 4 were discussed with Reading but they were not favoured by Reading.
40. Based on the analysis at Attachment 3. Option 3 is recommended as it has been
assessed as the most reasonable of the options that meets the key objectives of:
a. Accelerating the re-opening of Reading Courtenay.
b. Providing Council with some additional influence over the redevelopment.
c. Removing the economic, social, and physical ‘shadow’ cast by the vacant site.
d. Restoring economic activity to the Courtenay Place precinct.
e. Assisting in addressing the existing personal safety issues.
41. Officers have explored the potential for additional influence over the wider Reading
landholding. However, Reading was unable to commit to any redevelopment outcomes
for these sites and Officers did not pursue this further with Reading as it was detracting
from the key objective of reactivating Reading Courtenay.
Whai whakaaro ki ngā whakataunga | Considerations for decision-making
Alignment with Council’s strategies and policies
42. The redevelopment of Reading Courtenay contributes to Outcome 3: ‘A Business
Friendly City‘ and Outcome 6; ‘A Dynamic City Heart and Thriving Suburban Centres’
of Council‘s Economic Wellbeing Strategy (2022).
43. The proposed redevelopment contributes to Council’s long-term strategic vision
‘Pōneke: The creative Capital where people and nature thrive’ and supports the social
community objective.
Page 18
Item 4.1
44. The reactivation of Reading Courtenay will assist in addressing the existing personal
safety issues, aligning with the Pōneke Promise to ‘make central Wellington safe,
vibrant and welcoming’.
Engagement and Consultation
45. Given the commercial and confidential nature of this arrangement, no public
engagement or consultation has been undertaken into the proposed arrangement with
Reading, as this would lead to the disclosure of a large amount of information
commercially sensitive to Reading.
46. Under the Local Government Act 2002 (LGA), Council must ensure that it gives
consideration to the views and preferences of people likely to be affected by, or have
an interest in this matter. This does not in itself mean that consultation is required.
47. The Courtenay Place precinct rated lowest on perceived safety across Wellington
within the ‘Wellington at Night Survey’s’ completed in 2021 by Council’s
Strategy,
Policy, and Research team. This feedback, along with specific mention of
reactivation/development of Reading Courtenay in open text fields o
f the survey
indicates that Council involvement would be supported.
48. During the recent stakeholder engagement sessions for the Courtenay Place precinct
plan (August 2023), all stakeholder groups (hospitality, business, residents) noted the
impact the closure of Readings has had on the area – loss of indoor space, reduction in
foot traffic and change in patron demographics.
49. Part of the ‘Our Central City’ within the Strategy for Children and Young People
highlights the need for indoor play spaces and safe spaces for children; a gap that the
closure of Reading Courtenay left.
50. It is reasonable to acknowledge that public opinions on Council's involvement in this
proposed initiative will vary. While some members of the public will question the use of
public funds to support a listed US company, others will perceive the potential urban
revitalisation benefits that could result from the redevelopment of Reading Courtenay
and its positive impact on the broader Courtenay Place precinct. These differing
perspectives underscore the nature of the decision, highlighting the need for careful
consideration of both the financial aspects and the potential urban outcomes
associated with this initiative.
51. Given the above, Council may reasonably determine that it has sufficient
understanding of the views of affected or interested people as is. Further information is
included in ‘Legal Considerations’ below.
Implications for Māori
52.
27 and 37A Taranaki Street (shaded green in Attachment 1), which form part of the
wider Reading landholding sits within the area identified as Te Aro Pa in the District
Plan. This opens opportunities for engagement with mana whenua and interpretation of
the cultural significance of the area.
53. Under the commercial terms negotiated to date, Council’s approval is required for
Reading’s concept design which wil provide an opportunity for Council to explore with
Reading the inclusion of iwi design elements in the redevelopment.
Item 4.1
Page 19
COUNCIL
4 OCTOBER 2023 Financial implications
Primary financial impact
54. Council’s involvement in this initiative is predicated on a fundamental requirement that
it is fiscally neutral to Council, in Council’s sole discretion.
55. One of the key implications is the opportunity cost to this initiative. It is proposed that
the purchase of the Land will be funded by debt. The purchase will therefore decrease
the Council’s debt headroom and ability to borrow for other projects by $32 mil ion.
56. The Council has a portfolio of ground leases not integral to delivering core Council
services. Officers are currently considering the portfolio of leases to determine, subject
to Council approval, whether there is a possibility for some of these being liquidated.
The purpose of this consideration is to ensure the Council is maximising its returns
from its investments. The proceeds from any sale would likely be recommended for
reinvestment to achieve a higher rate of return, diversify Council’s portfolio, and
mitigate risk. However, there is an opportunity to identify selected ground leases that
could reduce Council’s overall debt by the purchase price of this lease.
57. The borrowing is estimated to increase the Council’s Debt to revenue ratio by between
1% and 3% over the 10-year period of the upcoming Long-Term Plan.
58. It will be fiscally neutral to hold the debt on Council’s balance sheet as the cost of
holding the debt will be covered by the ground lease payment. The ground lease rental
will be structured to cover the interest cost, fees and other charges that are directly
attributable to Council drawing the debt and holding it for the initial term of the ground
lease.
59. The purchase price for the Land is supported by an independent market valuation
obtained by Council from Colliers.
Secondary financial impact
60. Based on the current capital value of $28.8m (nil improvement value), Council’s
2023/24 rates revenue from
Reading Courtenay is approximately $0.32m (not including
any remissions). If adopting an indicative redeveloped value of $85m, as advised by
Reading, the rates payable to Council by Reading would increase by approximately
$0.62m to $0.94m
.
Legal considera
tions
61. Council’s Legal Services team has worked closely with Bell Gully lawyers who have
been engaged to assist with negotiating and documenting the commercial terms,
preparing the formal agreements, and overseeing the conveyancing aspects of the
proposed arrangements.
62. As noted above, the MOCU and the commercial terms negotiated between Officers
and Reading to date do not (except in limited circumstances, including information
sharing, confidentiality, public announcements, and costs) create any legally binding
obligations on Council.
63. This decision by Council on this proposed initiative has been assessed as a medium
significant decision under Council’s Significance and Engagement Policy. This means
that Council is required to ensure its decision-making processes promotes compliance
Page 20
Item 4.1
with the requirements for decision-making under section 76(1) of the LGA. In
summary, these requirements relate to the identification and assessment of options,
alignment with Council policies, and the consideration of the views and preferences of
people likely to be affected or have an interest in the matter. The Council does not
necessarily need to ensure, however, that all provisions have been “appropriately
observed”.
64. Council has a qualified discretion to make judgements about the decision-making
requirements in the LGA based on proportionality with the significance of the decision
to be made. This includes, in particular:
a. the degree to which benefits and costs are to be identified and assessed,
b. the degree to which benefits and costs are to be quantified,
c. the extent and detail of the information to be considered, and
d. the extent and nature of any written record to be kept of the man
ner in which the
local authority has complied with these requirements.
65. In making these judgements, Council must have regard to the significance of all
relevant matters, as well as to the principles set out in section 14 of the LGA
(discussed below), the extent of the local authority’s resources, and the extent to which
the nature or circumstances of a decision allow the local authority scope and
opportunity to consider a range of options or the views and preferences of other
persons.
66. In this instance, which is assessed as being of medium significance, Council has not
undertaken any specific engagement or consultation on the proposed decision due to
the confidential nature of this decision. To undertake consultation on the commercial
terms would require the disclosure of information that is commercially sensitive to
Reading, and which Reading does not wish to disclose. However, Council may
reasonably determine that it has sufficient understanding of the views and preferences
of other people: several reports and research have been undertaken that identify the
impact that the closure of Reading Courtenay has had on the area, as discussed under
‘Engagement and Consultation’ above.
67. Section 14 of the LGA sets out the principles that Council should consider in making
this decision. All are applicable, however, the most relevant here are:
a. a local authority should undertake any commercial transactions in
accordance with sound business practices.
The Council is ensuring adherence to the principle of sound business practices
by carefully evaluating the financial aspects of the proposed Reading initiative.
This includes assessing the feasibility of the investment, conducting thorough
financial analyses, and securing the transaction through debt funding offset by
ground lease rentals, aligning with responsible financial management practices.
b. when making a decision, a local authority should take account of the
diversity of the community, and the community’s interests, the interests of
future as well as current communities; and the likely impact of any
decision on each aspect of the Well-beings.
By addressing the concerns related to the Courtenay Place precinct's safety and
the economic well-being of the central city area, the proposed Reading initiative
demonstrates a commitment to improving the well-being of both current and
future communities. This aligns with the Council's obligation to assess the likely
Item 4.1
Page 21
COUNCIL
4 OCTOBER 2023
impact of its decisions on various aspects of the well-beings, fostering a safer
and economically vibrant city for all residents.
Risks and mitigations
68. Risk 1: Funds allocation by Reading
• Description: Reading may not allocate the deposit funds received by Reading
from Council for the purchase of the Land to agreed cost categories.
•
Impact: This could result in extended project timelines, increased financial
burden on Council, and inability of Reading to complete the redevelopment
works.
• Mitigation: To mitigate this risk, a comprehensive precommitment due diligence
period will be conducted by officers to assess Reading's financial position and
project feasibility. The formal agreement will also include conditions precedent
requiring suitable funding capacity confirmation and an agreed construction
program. Further, the deposit can only be allocated by Reading to agreed,
specific pre-construction works, with immediate repayment requirements and
bank guarantees in case of termination of the formal agreement.
69. Risk 2: Financial impacts on Council
• Description: Debt drawn for the agreed purcha se price ($32m) could place
undue pressure on the Council’s already constrained financial capacity.
• Impact: The primary impact will be the opportunity cost.
• Mitigation: The primary mitigation w ill be for the initiative to operate on a fiscally
neutral basis, accompanied by prudent debt management, including ongoing
financial analysis and reviews.
70. Risk 3: Construction Risks and Delays
• Description: Construction delays could occur, which might prolong the current
economic condition
s in the Courtenay Place precinct.
• Impact: Prolonged construction delays could further affect surrounding
businesses, contribute to anti-social behaviour, and hinder investment and
development in the area.
• Mitiga
tion: To mitigate this risk, the formal agreement will include, and be
conditional on, specific requirements for Reading to promptly proceed with
appointing experienced contractors and carrying out the redevelopment. Timely
construction will help restore economic activity in the precinct and minimise
negative impacts.
71. Risk 4: Public Perception and Opposition
• Description: There is negative public reaction to the Council assisting a private
entity in the proposed project.
• Impact: Public opposition could lead to reputational risk and potential obstacles
in project execution.
• Mitigation: To mitigate this risk, clear communication strategies will be
developed to convey the project's benefits to the community, emphasising the
Page 22
Item 4.1
restoration of economic activity and addressing what is perceived as a 'market
failure’. While upholding confidentiality obligations throughout the life of the
initiative, public engagement and transparency will be maintained throughout
the project to garner community support.
72. Risk 5: Rental payment default by Reading
• Description: Reading may default on rental payments for the ground lease,
potentially causing financial setbacks for the Council.
• Impact: Rental payment defaults could affect the Council's revenue stream and
create financial uncertainties.
• Mitigation: To mitigate this risk, a comprehensive credit assessment will be
conducted to evaluate Reading's ability to meet annual ground rent obligations.
Furthermore, the ground lease will include provisions for immediate termination
in case of non-payment, transferring all improvements to the Council (as lessor
under the ground lease) without compensation to Reading The ground lease
will also be guaranteed by a Reading parent entity.
73. Risk 6: Delayed Redevelopment of the Wider Reading Landholding
• Description: A delay in the redevelopment of Reading Courtenay could also
delay the redevelopment of the wider Reading landholding.
• Impact: Delayed redevelopment could postpone the arrival of new residents and
businesses to the area, impacting investment decisions for neighbouring sites.
• Mitigation: To mitigate this risk, the formal agreement will emphasise Reading's
commitment to complete the Courtenay redevelopment promptly, aligned with
the overall project's goals. This will help expedite wider landholding
redevelopment, enhancing the area's economic prospects. Tagging the Reading
initiative with requirements to redevelop Reading’s wider landholding has been
considered but discounted due to likelihood of inhibiting future development
partners in respect of that land.
74. Risk 7: Risk of Precedent-Setting for Future Council Assistance
• Description: There is a risk that this initiative could set a precedent for the
Council to financially assist other private enterprises in redevelopment projects.
• Impa
ct: Setting an unsustainable precedent could lead to financial strain on the
Council and create expectations for similar assistance in future projects.
• Mitigation: To mitigate this risk, the project's unique opportunity to revitalise the
Courtenay Place precinct, likely not addressable by other initiatives, will be
highlighted. This will clarify that this assistance is exceptional and highly unlikely
to be a standard practice for the Council. Future decisions on similar initiatives
are at the discretion of the Council.
75. Risk 8: Inadequate Project Feasibility
• Description: The risk that the project's feasibility will not align with expectations.
• Impact: Inadequate feasibility could result in financial losses, project delays, and
a failure to achieve project objectives.
• Mitigation: To mitigate this risk, a rigorous precommitment due diligence period
will assess project feasibility. The formal agreement will include provisions to
Item 4.1
Page 23
COUNCIL
4 OCTOBER 2023
ensure that Reading confirms its funding capacity and establishes an agreed
construction program, reducing the likelihood of inadequate feasibility.
Disability and accessibility impact
76. The initiative is subject to resource consent and as such will be assessed through this
process by the Council in its regulatory capacity. Notwithstanding, an agreed civic
outcome for the redevelopment is that Reading will provide publicly accessible toilets
on the ground floor and ensure universal access throughout the redeveloped Reading
Courtenay.
Climate Change impact and considerations
77. The existing building is being refurbished rather than demolished and rebuilt, therefore
recycling the existing structure, which is a good outcome for emissions. Overal
l,
emissions will be incurred in the redevelopment, and operational emissions should be
the same as they were for the original building. The key commercial ter ms of the
contract do not include any specifications over the quality of the build or its operational
emissions footprint. In terms of climate risk, this rests with Reading and it is noted that
the site is generally low lying but doesn’t have a basement, and services for the
building are either at ground level or on the roof.
Communications Plan
78. A communications plan will share the impacts the project will have on stakeholders, the
community, public, local businesses, and nearby residents. There are wide ranging
positive economic and social benefits, as described in this report which can be
addressed and discussed in public forums.
79. The MOCU contains legally binding confidentiality obligations on both parties (including
in relation to public announcements relating to the proposed initiative). Consequently,
subject to Council approval, it is anticipated that any communications plan will be
agreed with Reading upon execution of the formal agreement, which is anticipated to
be Nov/Dec 2023.
Health and Safety Impact considered
80. Health and safety
implications for the Council associated with the recommendations
are minimal, and Reading will be responsible for all site-specific health and safety
matters duri ng the proposed redevelopment.
Ngā mahinga e whai ake nei | Next actions
81. Subject to Council approval, Officers will finalise and enter into a non-binding
commercial terms sheet with Reading, reflecting the commercial terms negotiated with
Reading as outlined in this report.
82. Officers will then proceed to undertaking the required due diligence and subject to
officers’ satisfaction of this process; negotiate, prepare and finalise the formal
agreement. Noting that the commercial terms negotiated with Reading to date give
officers the right to obtain further Councillor approval to enter into the formal
agreement, should it wish to do so.
Page 24
Item 4.1
Attachments
Attachment 1.
Attachment 1 - Reading Landholding ⇩
Page 26
Attachment 2.
Attachment 2 - Timeline on Initiative Structure ⇩
Page 27
Attachment 3.
Attachment 3 - Pros and Cons ⇩
Page 28
Item 4.1
Page 25
COUNCIL
4 OCTOBER 2023
Attachment 1: Reading landholding
Page 26
Item 4.1, Attachment 1: Attachment 1 - Reading Landholding
PUBLIC EXCLUDED
Questions and Answers
Te Kaunihera o Pōneke | Council
Wednesday 4 October 2023
Item 2.1 City Activation Project
1. What liability may elected members and or officers face in determining such a proposal given
the state of the city’s finances?
In summary, none. Elected Members only have personal liability for financial transactions in
very limited circumstances, which do not apply here (these are where mon
ey has
been unlawfully spent, assets unlawfully disposed of, liabilities unlawfully incurred or an
intentional or negligent failure to enforce debts). Even in those circumstances, there are a wide
range of defenses available to an Elected Member.
Elected Members are also indemnified for criminal claims and for civil claims (for civil claims this
requires that the Elected Member acted in good faith). O
fficers would also not have any
personal liability in these circumstances.
2. Wil elected members (knowing that they are aware of the state of the city’s finances- in
general terms) be contravening any sections with the Local Government Act?
No. There are provisions throughout the LGA which require Council to manage its financial
dealings prudently; however, no definition of "prudent" is included in the Act.
3. Would approving such a deal have any negative consequences on the trust and confidence in
the Council by Wel ingtonians and or the incoming government to make sound financial
decisions?
We are unable to comment on the potential views of Wellingtonians or the incoming
government on the Council’s ability to make sound financial decisions. However, we would note
that, in accordance with the agreed key commercial terms, Council’s involvement in this
initiative is based on the initiative being fiscally neutral to the Council, at its sole discretion, and
otherwise generaly on usual market terms acceptable to the Council. Entry into any formal
agreement will be subject to a due diligence process that will be facilitated by Bell Gully, on
behalf of the Council.
Further, the agreed purchase price ($32m) represents a fair and reasonable current market
value based on separate independent valuations.
PUBLIC EXCLUDED
PUBLIC EXCLUDED
4. What independent advice is available to elected members in terms of undertaking due
diligence in respect of the deal including but not limited to the owners of Reading?
At this stage, no independent due diligence has been undertaken other than a sensitive land
check. As discussed at 3. above, the agreed key commercial terms provide for a due diligence
process to be undertaken prior to entering into any formal agreement.
5. In relation to our decision-making next week, could we please have a few examples of where
giving concessions to developers has been successful?
The Waterfront was mentioned in Q and A today. Conversely, when has it not worked and
what have been the learnings from that?
It is important to note that no concessions are being provided to Reading in this initiative – in
accordance with the agreed key commercial terms, Council’s involvement on the Reading
proposal is based on the initiative being fiscally neutral to Council, at its sole discretion, and
otherwise generally on usual market terms acceptable to Council.
It is also important to note that the primary aim of these types of initiatives, and Council’s
involvement in them, is to achieve outcomes that could otherwise not be achieved if relying
solely on the private sector to deliver.
Examples of successful projects between Council and third-party developers include:
• Adopting a precinct approach that delivered
award winning public space amenity on prime
waterfront land by negotiating a public / private agreement, where otherwise the developer
would have delivered within their funding means and regulatory obligations.
o Willis Bond: Site 9 / Bell Gully Building, 40 Lady Elizabeth Lane – prime, waterfront
located and base-isolated, office building with ground floor retail.
o Willis Bond: Site 10 / PwC Centre, 10 Waterloo Quay – prime, waterfront located and
base-isolated, office building with ground floor retail.
• The Wellington Company: Aroha, 197 Willis St, Te Aka, 203 Willis St and Te Pu, 180 Willis St –
converted office buildings providing a total of 212 apartments forming part of Council’s
affordable rental programme, Te Kāinga. These apartments are currently 98% occupied, with
average r ents between 5 and 11% below market.
Examples of projects that have not progressed as anticipated include:
• The Wel ington Company: Shel y Bay – The developer sold the land to Sir Peter Jackson noting
that it was a chal enging project on multiple fronts, influenced by increased construction costs
and interest rates. The risks of a project not commencing need to be suitably addressed within
third-party agreements.
• Voxel: St Johns, Karori – this proposed residential development did not progress as the
developer was unable to meet Council’s requirement for the site due to increased development
costs and the softening of the residential market. Ultimately the Council took decisive action and
triggered the sunset clause, with no cost to the Council. This is a good example of Council
PUBLIC EXCLUDED
PUBLIC EXCLUDED
negotiating appropriate mechanisms to protect our interests when certain
conditions/milestones are not met within a project.
6. Are there any examples of success in other cities?
Willis Bond has been part of several successful public-private partnerships where excellent
community and commercial outcomes have been achieved.
Further to the many development partnership arrangements with Wellington City Council
including the Chews Lane, Clyde Quay Wharf, Sites 9 and 10, Takina and the Michael Fowler Car
park projects.
Auckland – Eke Panuku, the development arm of Auckland City Council appointed Willis Bond as
its preferred residential developer for Wynyard Quarter over 10 years ago under a master
development arrangement which included five very large development sites. This arrangement
has been highly successful with three of the sites now fully developed and planning wel
underway for the final two. The commercial arrangements included some reasonably unique
risk-reward structures to expedite development but also protect Auckland Council's financial
position relating to land value.
Tauranga – The Tauranga City Council appointed Willis Bond as its preferred development
partner under a long-term relationship agreement. Several significant projects have emerged
from this partnership including the the construction of New Zealand's largest mass timber
building and the construction of the new civ ic precinct.
PUBLIC EXCLUDED
Col ation of links and articles:
Wellington.Scoop » Councillors vote on secret deal for land under Reading Cinema building
Wellington City Council meeting on Reading Cinema’s future held in secret - NZ Herald
https://www.nzherald.co.nz/nz/financial-crisis-wellington-city-council-told-to-drastically-cut-capital-
spending/J3ILPMV47JBQPBCGEJEJTVQOYI/
https://www.newstalkzb.co.nz/on-air/wellington/wellington-mornings-with-nick-mills/audio/friday-
faceoff-nicola-young-and-brigitte-morten/
https://www.newshub.co.nz/home/new-zealand/2023/10/wellington-city-council-s-closed-door-
meeting-over-reading-cinemas-ruffles-feathers.html
Wel ington council or frustrated Reading Cinemas meeting held behind closed doors | RNZ News
Council Meeting you tube: Public part of meeting live streamed
Meeting minutes and agenda (PX and public in attachments)
https://www.youtube.com/watch?v=v00AbUDZ0i4&list=PLC-bDlXns7J0w3XQDRR2YD6InIG8WDXTB
From:
Beth Keightley
To:
Clark, Linda
Subject:
FW: Code of conduct complaint - next steps - Legally privileged and confidential
Date:
Monday, 9 October 2023 5:38:00 pm
Attachments:
Code of Conduct complaint.pdf
Terms of Reference Code of Conduct investigation template.docx
image001.png
Kia ora Linda
Attached is our template terms of reference. Please use this as a starting point in drafting the
TOR, however it can be amended as appropriate.
Ngā Mihi
Beth
Beth Keightley
General Counsel | Legal Services | Te Tumu Ara Whaimana
(Strategy and Governance) | Wellington City
Council
E [email address] | W Wellington.govt.nz | Ms7(2)(f)(ii)
.
.
From: Barbara McKerrow <[email address]>
Sent: Monday, 9 October 2023 3:05 pm
To: Beth Keightley <[email address]>
Subject: FW: Code of conduct complaint - next steps - Legally privileged and confidential
Kia ora Beth
Please see the advice below and the attached complaint. Can you please make contact with
Linda Clark to commence this process.
Ngā mihi,
Barbara
The information contained in this email is privileged and confidential and intended for the addressee only.
If you are not the intended recipient, you are asked to respect that confidentiality and not disclose, copy or make use of its
contents.
If received in error you are asked to destroy this email and contact the sender immediately. Your assistance is appreciated.
From: Clark, Linda <[email address]>
Sent: 09 October 2023 14:50
To: Barbara McKerrow <[email address]>
Cc: King, Lucinda <[email address]>
Subject: Code of conduct complaint - next steps - Legally privileged and confidential
Kia ora Barbara,
You have advised us that a complaint has been received alleging that some councillors have
breached the Code of Conduct, with particular reference to maintaining confidentiality. We
understand the complaint arises out of discussions about the future of the Reading Cinema site. The
complaint contains serious allegations. We also understand the Mayor, acting in her capacity as the
initial decision maker regarding complaints made under the Code of Conduct, is seeking an
independent review to establish if any breach/s have occurred.
In terms of next steps, we recommend the following:
In conjunction with Council’s General Counsel we draft a Terms of Reference (TOR) for the
review and agree to an approximate timeframe for its completion.
Once the TOR have been agreed to, the named councillors should be informed of the
complaint and the review into the complaint. They should be provided with a copy of the TOR
at the same time, together with written assurances that they will be provided with the
opportunity to meet with the reviewer and/or to provide information in whatever form they
prefer in response to the allegations.
We will begin reviewing any documentary evidence in respect of the complaint as soon as
practicable.
We will approach the complainant, the named councillors and any other third party who we
consider may have relevant information as soon as practicable following the release of the
TOR and in line with the timeframe as agreed.
In the meantime, to assist the Mayor retain her neutrality as the initial decision-maker we would
advise that her office makes no comment on the review other than, if necessary, (once the TOR have
been finalised and the named councillors informed) to confirm that a complaint has been made and
inquiries are underway. The time to comment will be once the review process has been fully
completed.
Happy to discuss any time.
Regards,
Linda
Linda Clark
Partner
What’s Next? The answer is Talent. With more than 20,000 people, 12,000 lawyers
and 200 locations, Dentons has the talent for what you need, where you need it.
D +64 4 915 0862 | M +64 27 490 7942
[email address]
Bio | Website
Dentons Kensington Swan
40 Bowen Street, Pipitea, Wellington, 6011, New Zealand
Zaanouni Law Firm & Associates > LuatViet > Fernanda Lopes & Associados >
Guevara & Gutierrez > Paz Horowitz Abogados > Sirote > Adepetun Caxton-Martins
Agbor & Segun > Davis Brown > East African Law Chambers > For more information
on the firms that have come together to form Dentons, go to dentons.com/legacyfirms
Dentons is a global legal practice providing client services worldwide through its member
firms and affiliates. This email may be confidential and protected by legal privilege. If you are
not the intended recipient, disclosure, copying, distribution and use are prohibited; please
notify us immediately and delete this email from your systems. Dentons records and stores
emails sent to us or our affiliates in keeping with our internal policies and procedures.
Dentons Kensington Swan is a partnership governed by New Zealand law. Please see
dentons.com for Legal Notices.
s7(2)(c)(i)
s7(2)(c)(i)
s7(2)(c)(i)
Code of Conduct for Elected Members Inquiry | Terms of Reference
Background
1.
On XXX ,XXX made a formal complaint in relation to the alleged conduct of XXX
regarding XXX.
2.
Under the Code of Conduct for Elected Members, the Mayor (in concert with the
Chief Executive where appropriate) must consider each allegation in a manner that
is fair to all parties involved in the allegation. The Chief Executive has appointed
XXX as the external reviewer to undertake an investigation of the complaint.
Purpose
3.
The purpose of this inquiry is to consider the complaint made by XXX (“complainant”),
inquire into the alleged behaviour by XXXX (“respondent”), and determine w
hether a
breach of the Code of Conduct for Elected Members (the Code) has occurred.
4.
A copy of the complaint is attached.
5.
In summary, the complaint relates to XXX
6.
The reviewer will undertake an investigation into the complaint.
Process
7.
Section 3 of the Code sets out the process to be followed by the Mayor and the Chief
Executive in relation to an alleged breach by Elected Members of the Code of
Conduct. The reviewer shall carry out this review in accordance with this section of
the Code. In particular, the reviewer shall ensure that:
(a) due process is respected;
(b) The respondent (and any other named members) are given the opportunity to
consider and respond to any allegations made against them.
8. In addition to Section 3 of the Code, the reviewer shall comply with the steps below.
9.
The reviewer will undertake an investigation into the complaint and prepare a report for
the Mayor
regarding that investigation who wil share it with the Chief Executive. In
preparing that report the reviewer may:
(a) consult with the complainant, respondent and affected parties; and /or
(b) interview the complainant, respondent and other potentially relevant witnesses /
affected parties; and/or
Code of Conduct for Elected Members Inquiry
|
Page 1
|
26 November 2020
(c) require the production of relevant documents or information from the
complainant, respondent and affected parties (including Wellington City Council);
and/or
(d) refer to any relevant documentation.
10. Consultations and/or interviews may be digitally recorded and transcribed.
11. The reviewer may include in the report any recommendations to the Mayor in relation
to the investigation.
12. Upon receipt of the report, the Mayor may refer the matter to Council for
consideration and determination.
Deliverable for reviewer
13. The reviewer is to provide a report setting out the findings and recommendations (if
any) to be presented to the Mayor.
Attachments:
(a) Letter of complaint dated XX
(b) Code of Conduct for Elected Members dated October 2015
Code of Conduct for Elected Members Inquiry
|
Page 2
|
26 November 2020
