Auckland Council Property Ltd will put a proposal tomorrow to its owner, Auckland Council, to step up its involvement in the supply of housing and also in town centre regeneration.
The property company’s chief executive David Rankin, will put the proposal to the council’s finance & performance committee.
That doesn’t mean it will automatically happen – Mr Rankin had a presentation prepared for the council’s development committee last week, on taking over the whole of the 20ha marine industry precinct at Hobsonville Point for housing instead of just half of it, but that idea was scuttled when the committee decided to give the marine industry another year to show it was serious about developing there.
The Hobsonville Point decision means the council can’t yet recoup about $31 million spent so far on the marine industry precinct, and will continue to incur holding costs. It may, in time, get its money back, but the council is also under pressure to hold rates & reduce overall debt.
Enter the council property company with another proposal to earn the council money, promote the fast housing development being pushed by the Government and meet council aspirations to start transforming the city on the compact-city model.
The company wants approval “for the actions required to enable Auckland Council Property Ltd (ACPL) to significantly expand the scope, scale & speed of its involvement in projects to increase the supply of housing in Auckland and create value for the council through increased town centre regeneration, and enabling combinations of service & non-service uses of council-owned properties.
“The result of this expansion will be to reduce the burden on rates through surpluses generated and by creating new funding sources for existing planned capital works.”
Mr Rankin says in his report for tomorrow’s meeting that, increasingly since its formation, “ACPL’s statement of intent has been amended to increase the shareholder’s emphasis on the company leading housing development projects. These projects are in partnership with private & third-sector parties and will improve the supply of housing in Auckland.
“To date, the model has produced results from using surplus council property. However, other possibilities exist. They include more proactive investigation into, and use of, all or part of council service sites, more site aggregation activity by ACPL where there are market obstacles, and the acquisition of sites with private or third-sector partners. These activities will enable development to occur and the exit of the council’s capital within a reasonable period of time.
“This proposal details how ACPL could expand the scale of its operations, and move more quickly on housing projects to increase the supply of housing in Auckland. While not limited to the relatively affordable price segment to the market, there is an emphasis on this part of the market in ACPL’s focus & activities.
“To assist the council to control its growing rates & debt, ACPL can create value for the council by assisting to enable both service &d non-service uses of Council property. Effectively this can provide a new funding source to assist with paying for planned renewal & new capital works by creating saleable assets and reducing the need to borrow, or by funding renewals or facilities through mixed redevelopment of a current service site such as Wilshire Village.”
There is a cost – Mr Rankin said ACPL would need access to more resources including staff, contractors & specialist advisors, budgets for investigatory work and a streamlined ability to acquire sites. To achieve this he has proposed a change in council delegations, so the ACPL board would have authority to proceed up to $15 million, the council’s chief executive, chief financial officer & finance committee chairman could decide on projects in the $15-25 million range, and the committee would retain authority for projects above $25 million.
Other financial aspects include extending the repayment period for funds from the council’s strategic development fund budget from 2 to 4 years for each project, and debt-funding all spending – capital & operational, including accrued interest – to mitigate any volatility impact on rates, repaying it within 4 years.
ACPL would fund a $5 million/year development budget from sales of surplus properties.
Link: Council committee agenda item, Expanding Auckland Council Property Ltd’s role in housing delivery & creating value for council
Attribution: Council committee agenda.