Whanganui District Council has agreed to buy the properties near the corner of Ridgway Street and Victoria Avenue. Photo: 123RF
The Whanganui District Council is pushing ahead with a buy-up of three properties in the CBD facilitating the development of a four-star hotel and carpark in the city.
The move comes ahead of public hearings and deliberations on the draft long-term plan which asked for public feedback on a proposed council-led 60-bed hotel project
Council agreed to buy the properties - worth about $4 million - near the corner of Ridgway Street and Victoria Avenue - using $3.5m from the Whanganui Endowment Fund with the remainder debt funded.
The fund's property portfolio already includes about 40 properties with a value of about $45m.
Chief executive David Langford told councillors that buying the three properties would support a feasibility assessment for the hotel and carpark proposal, but that the investment stacked up whether a hotel development went ahead or not.
He reminded councillors they had agreed to a plan to grow non-rates revenue to ease the burden on ratepayers.
"The annual return on capital of this purchase will be about 5 percent or a net of $190,000 a year with room to improve this with a bit of management.
"The return on the properties is good enough that it is a sensible addition to the city endowment portfolio whether the hotel occurs or not. I acknowledge the timing is not great and there will be perceptions that council is predetermining its position as part of the long-term plan [on the hotel], but I want to be explicit that is not the case."
Council heard one of the properties - Wakefield Chambers - was a suitable anchor site for a hotel development and that the others could provide ancillary services including additional rooms and parking.
Complicating decision-making for councillors was the fact the sale and purchase contract for two of the properties would go unconditional on 13 May.
Whanganui councillor Rob Vinsen. Photo: RNZ / Robin Martin
Councillor Rob Vinsen worried about buying the Whanganui Furnishings building as a potential carpark for the proposed hotel.
"Why is this effective to consider this adds to a hotel by having a carpark where you've got to walk through the weather to get to it if you're a guest at that hotel?"
Councillor Jenny Duncan thought the property buy-up was a bad look.
"My concern is about the optics of this.
"Why was the unconditional date not made after 7 June so we didn't conflate matters and look to the community that we were going ahead with something [prior to LTP deliberations]. I know what we're doing and I support it, but the timing is really poor."
Deputy mayor Helen Craig acknowledged it was an awkward decision for councillors.
"However, we have to leave the emotion aside and the influence we might feel from the public aside and decide on the facts."
Craig made no secret that she was in favour of the eventual development of a hotel.
Councillor Michael Law was uncomfortable with making a commercial decision.
"I believe experts should be making these decisions and not us. We are not financial analysts. We shouldn't be making decisions on purchasing property."
He felt there was not enough detail in the council officers' report and the return on investment did not seem high enough.
Councillor Josh Chandulal-Mackay said for him the investment stacked up and gave the council future options.
Whanganui mayor Andrew Tripe. Photo: RNZ / Robin Martin
But Vinsen - who failed with a motion for the decision to lie on the table until the next council meeting - said the property buy-up reinforced his view council should not be dabbling in business.
"First of all to be discussing property purchasing and property acquisition on the front page of the Whanganui Chronicle next day is no way to run a business.
"Business people know when to hold 'em and they know when to fold 'em and this is a time to fold 'em. No self-respecting property developer would do this."
Vinsen believed there was an appetite for a hotel development in Whanganui, but it should be driven by a commercial operator not council.
Councillor Philippa Baker-Hogan said she could not support making a decision on the properties ahead of ratifying the long-term plan.
"In no way did I think I'd be opening my council papers yesterday and see that this was going to be in the public arena and we were going to be making a decision to purchase some property prior to making a decision whether we are going to go ahead with a decision [on the hotel] prior to the deliberations."
Mayor Andrew Tripe agreed to a separate vote on each of the property acquisitions and all three were approved by a majority vote.