Mayoral candidate John Tamihere says he's lodged a complaint with the Serious Fraud Office over the sale of the Auckland Council’s historic Civic Administration Building.
The redevelopment of the property is expected to start next month after it was sold by Auckland Council to developer Civic Lane Limited for $3 million. As part of the deal Civic Lane has been given a 5000 square metre property adjoining Mayoral Drive that's expected to be used to develop a hotel.
Auckland councillors were briefed on the property deal which was being handled in on its behalf by Council Controlled Organisation (CCO) Panuku last week after the public and media were excluded from a meeting. But the details regarding how much it had been sold for have remained under wraps until now.
The developer wants to turn it into apartments, along with a wider development which is expected to include new commercial office and retail space, as well as a hotel built on Mayoral Drive itself.
“I'm requesting that the SFO investigate this deal and am questioning why developer Civic Lane, has been given a sweet honey pot deal,” Tamihere says. “As a ratepayer it doesn’t add up. I want them to look into it and the officials who negotiated it. The city cannot wait until after the elections and this must be investigated now.”
Councillor Mike Lee isn’t impressed with the sale either and says at last week’s council meeting the councillors were told the sale was a done deal.
“We were told it was a fait accompli and that was the reason for our motion. $3 million for an 18 storey building and half a hectare of land in the CBD? These people are getting away with daylight robbery.”
He says he has been getting legal advice and is seeking some of the key documents involved in the deal.
But Auckland Mayor Phil Goff says the sale of the historic Grey’s Ave building means the city’s ratepayers won't have to pay for its refurbishment.
“This settlement means that an A category heritage building can be restored and refurbished without burdening ratepayers more than $80 million in restoration costs. It will also deliver a thriving new area providing hotel and residential accommodation and an exciting new performing arts centre,” Goff says.
Panuku project development director Clive Fuhr says restoring the building and removing the asbestos from the property would have cost $80 million dollars. He says coupled with the ups and downs of the real estate market and construction costs in the city, selling the property to Civic Lane was the best way forward for the council.
“I think from our point of view it feels quite momentous because I think from a property perspective it’s been a really challenging project. We feel, notwithstanding the stuff that’s gone on in council last week, we feel like we’ve climbed a mountain. There’s been an incredibly thorough due diligence process to lock down the construction pricing and make it as bullet proof as possible and that’s what’s taken the time.”
Fuhr says the sale includes a detailed development agreement between Panuku and Civic Lane that means it will have to carry out the restoration and redevelopment work to agreed terms. He says the redevelopment of the building is expected to be completed in 2021.
When the Council first announced it was looking at selling the building in 2016 Tawera Group was expected to buy it. But now, almost three years later, it has now been sold to Civic Lane, which is owned by Tawera Group’s chief financial officer John Love and his wife Josephine Love.
Love is pleased with the outcome.
“This building will have its challenges to develop, and not every developer would have taken it on. But the location and complete refurbishment will make it a truly desirable place to live and visit. We’re looking forward to being able to provide new homes and a new community in such a wonderful location in central Auckland so close to everything, including theatres such as the Aotea Centre and the Auckland Town Hall, the Auckland Art Gallery, world-class shopping and dining, and of course the new CRL Aotea train station.”
Councillor Mike Lee has threatened to take the sale to the Auditor General and questioned the price it was being sold for. Lee put forward a motion, which was seconded by councillor John Watson, calling for Panuku to suspend any sale or transfer of ownership of the historic property until the Council had been provided with a full report of the commercial details of the proposed transaction, including the price. And they also wanted more information on how the outstanding heritage concerns relating to the Category A listed building had been resolved.
The motion was defeated, but Lee said it didn’t take away from the fact it’s a bad deal and described the sale price as disgracefully low.
The Civic Administration Building was designed by Hungarian architect Tibor Karl (TK) Donner and was officially opened in 1966. It is recognised as New Zealand’s first skyscraper and building the structure required the use of, what was at the time, cutting edge construction techniques.
The building has been vacant for the past five years following the Auckland Council’s 2012 decision to buy the ASB building in Albert Street for $104 million.
A council report from 2015 stated that the property was unsuitable for long term use without significant refurbishment, including removing asbestos from the building. The council voted to seek interest from the private sector to refurbish the Civic Administration Building while maintaining its heritage value, as far as practicable. The council also said it would consider the sale of the building and surrounding land to a selected development party on a freehold or long term leasehold basis.
In September 2016 former Mayor Len Brown announced that Panuku had selected Tawera Group to restore the historic building. At the time the Auckland Council said it was working through the resource and building consents, particularly in terms of the refurbishment works.