Auckland public 'unaware of significance of golf course subsidies' Auckland Council commissioned report says, noting potential use for housing

Auckland public 'unaware of significance of golf course subsidies' Auckland Council commissioned report says, noting potential use for housing

The 13 golf courses operated by Auckland Council mean private interests receive a significant ratepayer subsidy with the alternative use value of the courses topping $2.1 billion, council commissioned reports say.

Reports by Cameron Partners and EY have been released in a review of Auckland Council alternative financing sources.

The comments on golf courses come at a time when Auckland has an estimated housing shortage of about 25,000 based on interest.co.nz estimates, and, according to Reserve Bank Governor Graeme Wheeler, a house price to income ratio of 9.2, which is up from 6 in 2011 and compares to an average of 5 across the rest of New Zealand.

Cameron Partners notes the golf courses have a rateable land value of $61.2 million. However, just four of the courses - Remuera, Chamberlain Park, Pupuke and Takapuna - if made available for housing at the value of surrounding land with 30% reserved for the likes of public spaces, would be worth an estimated $1.4 billion.

"These valuations should encourage Council to review its obligations to providing inner city golf courses, especially those that have limited community access, or at least consider whether its current portfolio is optimised given changes to the city since they were built," Cameron Partners says.

'Many thousands of dollars per golf club member per annum'

EY points out that because the course operators don't pay market rent equivalent to the highest-value use, the opportunity cost of the sites to ratepayers equates to "many thousands of dollars per golf club member per annum."

The Remuera Golf Course, for example, is 41.2 hectares and has a rating value of $11 million, or $26.7 per square metre. However, EY puts its market value at $250 million to $300 million, or $675 per square metre. Assuming a hypothetical residential housing development, EY says Remuera would see finished sites range from $1,500 to $2,000 per square metre, the Waitemata Golf Course $1,200 to $1,400, and Northcote $1,000 to $1,500.

Rental from the Remuera Golf Course, which is a private club, for the land only is $130,000 a year.

"This represents a significant subsidisation to private interests and raises questions about whether at least parts of this asset, the land the golf course occupies, could be considered for higher value uses," says EY.

It suggests a fair market ground rental for the property would be in excess of $16 million a year, with renewals on a seven yearly cycle.

"We pass no judgment about whether this is the right use of this land. However, we assert the Auckland public is likely to be unaware of the significance of this subsidy. By making this subsidy and others like it transparent, Aucklanders can make their own minds up about whether this represents fair value and, ultimately, whether capital locked away in this investment could be put to uses that serve the wider vision for Auckland," EY says.

View shafts also highlighted

View shafts, or the protection of people's views of Auckland's volcanoes, is another area EY flags for investigation. The firm questions whether the opportunity costs of minor relaxations of these rules are well understood.

"For example, the Auckland Council recently noted the net cost of the Mt Eden view shaft to be potentially $440 million."

The full 269 page Auckland Council report, which combines the Cameron Partners and EY reports, is here. 

Released on Friday, the report comes after councillors agreed in May to undertake a review of the Council's mix of financing sources. Both EY and Cameron Partners highlight Auckland's growth challenges with Cameron Partners saying, "Under existing assumptions and constraints there appears to be virtually zero additional debt capacity." A broad range of financing options are canvassed.

Golf Courses - estimated values in alternative use and current lease arrangements
Club ($ millions) Rates systems
Land Value
Alternative
Use Value
Current Lease
Period Expires
Number of 
further renewals
Latest final
renewals date
           
Remuera 18.5 517.1 2070    
Chamberlain Park Unavailable 315.8 Operated by
Council staff
N/A N/A
Pupuke 10.8 307.2 31-Dec-22 Yes (subject to an
old renewal clause)
1-Dec-38
Takapuna 17.1 229.7 Public course
managed via
parks operation
   
Waitemata Unavailable 212.2     2015
(correspondence)
Muriwai 1.7 173.1 31-Dec-28 Perpetual Renewal
subject to Reserves Act
Public use
considerations
 
Omaha Beach 5.5 146.6 30-Nov-21 No n/a
Clarks Beach 2.8 98.7 1-Apr-17 None n/a
Waiuku 2.8 36.1      
Waiheke 1.5 34.5 5-Oct-17 1 5-Oct-22
Awhitu 0.2 34.0 Unknown Unknown Unknown
Waitakere 0 14.5 Unknown Unknown Unknown
Great Barrier Island 0.3 13.5 31-Aug-17 1 31-Aug-22
Total $ 61.2 $ 2,132.9      

 

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Not wishing to support golf courses but this smells of knowing the price of everything but the value of nothing.

hate golf its like paint dry,typical bean counters, while we are it why don't we build houses on our sport fields they only get used on weekends, even better we have heaps of land in parks lets knock down the trees and build houses.
its so simple high immigration is causing the problem roll it back to a sustainable level

Remmers Golf Club set bludging on the ratepayer? Whoever would have thought.

Time for a rent increase. No doubt that will be welcomed by the free market user pays supporters in the club. Or a couple of All Welcome free public open days during the week, and non-members free access on the weekend. Whichever would be most entertaining for the onlookers.

Turn all the golf courses into public parks , stop the council selling all our existing open spaces and stop the out of control population growth in Auckland.

It's a no-brainer - inappropriate use of land for areas near the centre of a global city, and unlike a park, golf courses are only used by a small minority. I hope the council have the strength of purpose to overcome the inevitable howls of protest from those with a vested interest, and sell them off for housing.

Then take the money from the sale and invest it in public transport and fix aucklands too biggest problems in one go.

Genius at work - a Darwins-Blade award coming up

That only solves todays problem, so you have a tidal wave of newcomers who are overwhelming the availability of land and housing, so you sell off all the golf courses, and you then discover that the tidal wave was a continuous never-ending flood and in ten years time you still have the same problem, you didn't solve it, you simply kicked the can down the road for the next generation and you no longer have golf courses to sell off, now you have an obesity epidemic because people are no longer getting outdoors exercise because all the recreation areas are gone etc etc etc

And once the golf courses are built on.....what next? Could the govt please tell us what number of migrants they intend to bring in, how they calculated such a number and show the evidence that makes them believe there is a net benefit to the people?

As much chance of getting such as of getting the cost/benefit analysis of the TPP.

There is a massive net benefit in having a city of scale that is able to compete with other global cities for business and skilled labour. I think Auckland is about a million short of that at the moment.

I think you're missing the point. Parks and sports fields are used by everyone golf courses are only used by a small minority. Council providing land for well below market value for a small number of people is a massive subsidy. Either open it up to everyone, charge a market rent or sell it.

What an incredibly short sighted and stupid suggestion.

Why not sell all parks and schools too? How about selling off roads too (they aren't congested enough yet!)?? Why not fill in the harbours and sell those off?? Why not build in all the volcanic cones??

Those valuations are absolute codswollop anyway. They appear to value fully developed land, not undeveloped land which is only worth a fraction of the amount.

And of course what do you do when you have used up all of the golf course land??

This is just absolutely stupid. Auckland needs to solve its unsustainable population growth issue, not just fill every open green space...

Chris_J... suggestions like this from council advisors come about because of pressure from people like you, moaning about immigration and housing.

You, of all people, should not be surprised by these suggestions.

I moan about immigration for which there is a simple solution.

I don't moan about house prices, I just note that they are nearing a cyclical peak.

These types of suggestions aren't a solution for anything, just a diversion.

National are financed by vested interests who want to keep wages down and generate demand for consumables by uncontrolled immigration and keep house values stupidly high. This is globalisation for the sake of big corporates. People can moan all they like , wave and smile is not going to change policy , the only option is change of Govt ,if polies get the message that kiwis don't want uncontrolled migration then there is some hope. How stupid to keep selling assets , how long before nothing is left !
Kiwis need to wake up , the Govt is becoming too arrogant and corrupt , all the tell tail signs are there.
Labour may be no better however once a Govt is sent packing for a particular issue then it may send message to the winner as well.
Anyone wanting to have insight in to the corporations inner world should, Confessions of an economic hit man.

If Remuera Golf Club were charged a realistic $16,000,000 per year that would only be $5,333 per member assuming say just 3,000 full time members.
$3,375 is the current joining fee and there is a wait list. $2,594 is the annual fee for a full time member.
So the well heeled RGC members can afford to pay way more and the club can already afford to pay substantially more for its annual lease than the current $130,000 paid per year!

And still much cheaper than Japanese golf club memberships during their bubble when the average membership fee was USD258,000.

http://articles.chicagotribune.com/1990-05-31/news/9002140319_1_golf-mem...

All very well to build houses, but children and adults need green spaces to enjoy as well. Been to Cornwall Park lately? Its a huge park, but it gets full pretty quickly. With more housing in the area such as the Alexandra Park where are all the people supposed to go to for a bit of greenery? It is so short sighted.

"Pave paradise and put up a parking lot....."

Yes exactly, we should get rid of Remura Golf Club. Either open it up to the public to alleviate pressure on Cornwall park, or sell if off and use the funds for the betterment of the wider public.

Having so much public land reserved for so few people when the wider population needs greenspace is regrettable.

Residents of Remuera are members of the public as well. They like golf., good on them if it floats their boat.
Living in a wealthy area is nice. Can't drag everybody down to lowest common denominator.

The agenda of whoever commissioned the report is intriguing. Will they try and force the rents up on all the golf courses they own to some sort of "market" rent? What is the market rent for a golf course, given I understand some clubs at least are struggling? What do their lease agreements allow them to do in terms of rent increases? What is the rental value based on? Do they really actually wish to close some and sell them off for housing? Reading the report above suggests only Takapuna and Chamberlain Park are not leased, and are run by the Council. Are they the easy targets, given they presumably could be sold off? But what would the political reaction to that be. To sell the others would presumably need the members to relinquish their leases or go into some sort of liquidation. Remuera gets the most comment. Presumably it may be among the most financially sound of the clubs, so just possibly could pay more rent. Does the Council then go on an ability to pay basis, even though that would seem somewhat inequitable? Charging Remuera $16 million in rent, even if their agreements allowed them to do so, which I doubt, would close the club as a golf course. Is it in Auckland's interest to then build over it with housing. Or are they softening Remuera up for some increase in rent, assuming they can charge it under their lease terms? Charging Muriwai much at all would close that down. Would they really get $173 million for selling that course for private housing? I doubt it. Would building more houses in Muriwai alleviate a housing shortage?
Do they wish the sport to be more elitist, where only wealthy people can afford to play, at a significantly reduced number of courses? Or is it some modest consolidation that actually lets one or two private (but very public in reality) courses like Maungakiekie to prosper somewhat more than they are? Presumably the commissioners, whoever they are, will come out and explain what their agenda is in due course.

market rates or close them and do housing.

It's astonishing that having leaned about England and green belts inn the early 70's in social studies that NZ with a reported 100,000 extra inhabitants in the year to Sept- does this include "students"? should be so vigilant about the concept pf green belts Covering Aucklands excess golf courses in housing is just so thick it ranks with our performance of our last at home defense of the America's Cup.

If you want to follow failure, follow the English. No, we need to do what is best for New Zealand. (NZ 70's "social studies" propaganda has a lot to answer for. I too went through that at few years earlier, lived for a few years in England, and could easily see the bankruptcy of it all. Fortunately I lived in many other countries as well which only emphasised their folly.)

Tut, tut Mr Chaston you display a remarkable degree of Anglophobia with such frequent regularity. It is a good job the English aren't really a defined racial group anymore otherwise some people might be tempted to point the finger of racism at you - and we know how frequently you espouse your horror of racism. God forbid if it were selective racism.

Well I like he it seems has lived in different countries one is the UK and widely travelled in my youth, have you? ie real world experience of the outcomes a policy should have meaning, and I understand where he is coming from. Now whither alternative policies would have been even worse is matter of conjuncture. So now since I was british originally I cannot be a racist in this regard.

Turn them into parks. Grow some trees, stop wasting time manicuring grass.

Actually, turn them into housing. It turns out the urban forest is far more dense than farmland, and in fact more dense and varied than parkland. If you want more trees and biodiversity, the irony is housing (single family stand-alone housing) trumps the alternatives. Benefits people too if we built enough ...

....lets go for a walk outside kids...we can walk along the footpath and look at the cars!

'the irony is housing (single family stand-alone housing) trumps the alternatives'

Really? I guess if you ignore the alternative of putting it back to native bush.

City without golf courses..that will make it an international city haha

Yip one of the world's most livable cities...but wait, no golf courses. Might have to strike Auckland off that list.

but wait no golf courses, no affordable shelter, no means of transporting oneself from one area to another without massive delays... But hey 'livable' doesn't have to correspond to the ability to shelter oneself from the weather? (which has more rain and less sunshine hours than wellington btw, and lower incomes than wellington too.)

Auckland city does not control the level of immigration that is a government issue. so why should auckland have to sell everything they can find to fix and improve infrastructure due to government policy.
if the government wants to flood the place they need to step up with some funds as well.
to me this whole thing smells of a way of privatising aucklands income producing assets by the central powerbrokers.
they even trotted out their mouth piece mike minute to make the case. unfortunately the sheeple think he knows what he is talking about and can not see his speech for what it is, a party political broadcast.
in saying that I will be first to buy into watercare, nice cash cow there