The council has 63 leases which include Datacom's former waterfront building, Bowen House near Parliament and the Oaks Complex on Cuba Street. Photo: RNZ / Quin Tauetau
Wellington city councillors could sell off the land underneath several CBD buildings to pay for the council's insurance risk.
Last Thursday councillors voted to stop the sale of the council's 34 percent stake in Wellington Airport.
The sale was part of the council's long-term plan, with money raised from it set to be used to establish an investment fund.
The fund would help the city's recovery following a future natural disaster, address the council's insurance risk and reduce reliance on future borrowing.
But with the sale grounded, councillors have to amend their long term plan with an alternative to deal with the council's insurance woes.
Latest council estimates state it is underinsured by $2.6 billion.
After an urgent meeting on Wednesday councillors came out of it indicating a sale of the council ground lease portfolio could be on the cards.
Ground leases are the land underneath buildings that the council owns and leases to building owners.
It has 63 leases which include Datacom's former waterfront building (which the council plans to move into soon), Bowen House near Parliament and the Oaks Complex on Cuba Street.
Its full portfolio value is $234 million.
There is no indication yet of what leases, if any, the council would sell.
Council said in a statement it has 450,000 carbon credits which could also be considered for sale, at an estimated $60 per credit (at today's pricing).
Advice on this will be provided to the Council as part of the LTP amendment process.
After the meeting yesterday city councillor John Apanowicz told media there could be a new perpetual investment fund created through the sale of the council's ground leases.
Wellington mayor Tory Whanau said councillors had a "shared commitment" to investigate their sale.
She said they would also consider selling carbon credit holdings to make up a fund that could offer both returns and be a form of self-insurance to council which would grow over time.
"It would be a vital step towards a long-term solution to our insurance risk."
Councillors have also signalled that capital projects would likely be cut as a result of the recent airport shares' decision.
In agenda documents released prior to last week's vote staff said councillors might have to consider almost doubling their debt ceiling from $272 million to $500m and cutting capital project spend by $400m or tripling the council's debt ceiling to $750m and slashing capital spend by $600m.
Council staff said at the time projects that could be cut included the Golden Mile upgrades, the cycleway programme and the Khandallah Pool strengthening, which campaigners fought to save.
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