3.Ministerial Consultation Briefing Note 134 Dixon Street.pdf

1982
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Official
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BN 24 013
31 October 2024

Hon Chris Bishop, Minister of Housing
Hon Nicola Willis, Minister of Finance
CC: Simon Moutter, Chair, Kāinga Ora
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Consultation on 134 Dixon Street, Te Aro, Wellington
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Recommendations
1.
It is recommended that you:
a.  provide Kāinga Ora with any comments on the proposed investment, as described in the
investment summary.
b.  indicate if you wish to be consulted further prior to Board consideration of the Divestment Business
Case.
Yes / No
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c.  note that Kāinga Ora is consulting you on the proposed investment because it is a high-value
and complex investment.
d.  note that your feedback from this consultation will be considered in developing the Divestment
Business Case, alongside the value for money of the shortlisted options, and that the option which
represents the best value for money wil  be recommended to the Kāinga Ora Board (or delegate)
when making a decision whether or not to proceed.
Official
e.  note that upon approval of the Divestment Business Case, teams wil  commence work on the
divestment process.
the

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  Daniel Soughtton
Hon Chris Bishop
Hon Nicola Willis
Deputy Chief Executive - Central
Minister of Housing
Minister of Finance

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31 October / 2024
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GSR-24-15301 Consultation on 134 Dixon Street, Te Aro,
Wellington

1982
Act
Information
Official
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Released

determine whether lifting to 67% or above is the commercial y optimal renewal option (i.e. not
sell and replace or redevelopment).
11.  Rehousing of existing customers began in November 2022 and is now complete. As set out in out
in earlier correspondence, the policy position at the time (which was adopted by Housing New
Zealand and has been recently replaced by the EQPB Policy) required buildings to be vacated
within five years of receipt of a DSA. Works to decommission and secure the building are
underway and are due to be completed in November.
12.  The property is subject to a Right of First Refusal. Port Nicholson Block Settlement Trust (PNBST)
are the mandated iwi authority that manages the Treaty Settlement on behalf of their broader
beneficiaries of Taranaki Whanui. Engagement with PNBST has been ongoing. PNBST have not yet
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confirmed their position in respect of the property but have indicated they have an interest.
Options under consideration
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13.  There are limited options for this building given the number of constraints that apply (in
particular the heritage listing). In particular, Kāinga Ora is unlikely to obtain a consent to demolish
or redevelop the building without strong evidence that there is no suitable alternative use.
14.  We estimate that the per unit cost to remediate and structural y strengthen the building to above
67% NBS could be up to $1.07 million (total of $125 million). If we remediate the building without
structural strengthening (retaining the building at 40% NBS), the estimated cost per unit is
$692,000 per unit (total of $81 million).  If we were to divest, the estimated replacement value
for units of the same size in Central Wel ington is between $663,000 - $822,000 a unit (total
Information
replacement value of $77.9 million). On this basis, and for the other reasons set out below,
divestment (Option 2) is the preferred option.
15.  Confidential market soundings conducted earlier this year indicated some interest from
developers.  However, there is a risk that no buyers emerge so we will also continue to develop
options for Kāinga Ora to remediate the building.
16.  Our cost estimates are nearly a year old and will be updated as part of the development of the
Official
Project Brief.

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GSR-24-15301 Consultation on 134 Dixon Street, Te Aro,

Wellington

1982
Act
Information
Official
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For these reasons, Kāinga Ora has not sought to delist the
building to date. However. in the event Kāinga Ora
attempts to divest the building but can find no wil ing
buyer, option 4 becomes more achievable. However, this
option remains highly uncertain given a resource consent
application to demolish the building must be publicly
notified and any decision subject to third party right of
appeal.

1982
Act
Information
Official
the
under
Released
GSR-24-15301 Consultation on 134 Dixon Street, Te Aro,

Wellington