Willis Bond, again

bond willis

by Lindsay Shelton
The city council’s close relationship with Willis Bond seems to be continuing, with today’s news that the Wellington property development company is being lined up to build a high-rise hotel on council-owned land next to the Michael Fowler Centre.

The news is published this morning in the DomPost, which reports.

It is understood the Wellington City Council is in talks with developer Willis Bond about building a hotel on the site, at the intersection of Jervois Quay and Wakefield St, which would overlook Wellington Harbour.

The mayor is quoted as saying “a few schemes” for the land have come in, but no formal report has yet been received by his new council.

WIllis Bond’s close relationship with the council came under scrutiny when the company was chosen to build the Movie Museum and Convention Centre, for which the city agreed – at a closed meeting – to pay $150million.

This decision faced criticism because the the council chose the company without tenders being called. In its submission on the council’s long-term plan, the Mt Victoria Residents Association stated why this was a concern:

“The proposal has been stitched up in haste and in secret with no presentation of viable options, which is contrary to democratic processes of good local government. There is no evidence of any attempt to find private developers for what are essentially private operations; WCC simply states its preference to develop it itself…There has been no tender process for the development and construction aspects of the project – Willis Bond and Studio Pacific have been handed the project and presumably are able to charge what they wish.

The association warned there was a risk of the Auditor-General needing to intervene to examine the absence of an open tender process.

The lack of a tender was also criticised by the Property Council’s Wellington branch president Mike Cole, who said his organisation had raised concerns with the city council, which he believed was underestimating its buying power for such a huge project.

“Other contractors may do the project with small margins, just to have this trophy project on their books.” As an architect and developer, he would have liked to have seen the project put out to tender. He had spoken to other developers who were also keen to make offers, and they would have been competitive. “The way the process has been run seems odd…”

It wasn’t the first time that a city council deal with Willis Bond had faced criticism.

When Willis Bond demolished the historic Overseas Passenger Terminal and replaced it with 76 luxury apartments, public ownership was lost. In the words of Judge Thompson who approved the project after an appeal in the Environment Court in 2009:

A subdivision given consent in 2006 broadly separated the envelope of the proposed building from the surrounding wharf structure … This will enable the building to be owned by the developer or its successors, and the wharf structure to remain in public ownership, thus providing for ongoing public access.

Three years later, more details of Willis Bond’s deal were revealed – the council had given them a lease of 125 years for $1 a year. Peter Love of the Port Nicholson Block Settlement Trust said this was “a joke” and the trust would have jumped at the chance to secure the site:

“What a deal. We could go to our bankers tomorrow and say, `We’ve got a lease on a classic piece of waterfront property at $1 a year.’ Who’s not going to give us $32 million?” He … questioned the financial return for Wellington ratepayers.

Wellington Waterfront Ltd’s Ian Pike defended the deal, and said the idea that the council could have fixed the wharf itself was not considered because property development was a risky business for a local authority. (Willis Bond’s deal included spending $16m repiling the wharf.) He said his council-owned company could not sell waterfront land freehold so was required to charge a peppercorn rental to guarantee developers’ occupation rights.

Willis Bond’s history of being the city council’s preferred developer for publically-owned waterfront sites also includes three buildings which it restored rather than demolishing – the Odlins Building (renamed the NZX Centre), its neighbour Shed 22 (now Mac’s Brewery), and the Free Ambulance Building. Its deals with the city for these three buildings have never been made known – they’re hidden behind the excuse of “commercial confidentiality.”

But another “peppercorn rental” deal between Willis Bond and the council was uncovered in 2011, when two buildings in its Chews Lane development went on the market – the ground lease negotiated with the council for the publically-owned land was $1 a year for 250 years. The real estate agent selling the apartments said this concession had been needed to make the Chews Lane development viable for Willis Bond. We commented:

…the council’s generosity benefits more than the developer. It now becomes an even sweeter deal for the family trusts or high net worth individuals who will become the buildings’ new owners and who will collect a net annual income of more than $900,000 a year. They could pay the entire 250-year lease from their petty cash.

Most recently, Willis Bond’s influence is visible at the other end of town, where it is building a six-storey office block on publically-owned waterfront land in the Kumutoto precinct. In 2013, at the recommendation of Wellington Waterfront Ltd, councillors agreed that Willis Bond would be their “preferred developer” for the site after what was described as a “rigorous selection process.”

Today’s report about building a hotel on the publically-owned land next to the Michael Fowler Centre raises the question of whether there’s to be a rigorous selection process before a developer is chosen. Or do the talks with Willis Bond indicate that the council has already made up its mind? A figure of between $6.5million and $8.5million is mentioned as the value of the lease, money which the council says would help pay for seismic strengthening around Civic Square. But will the council be able to overcome its predeliction for dollar a year deals? And will developers other than Willis Bond get a chance to compete for the project?

 

26 comments:

  1. Traveller, 3. November 2016, 10:02

    If (to quote Ian Pike) property development is a risky business for a local authority, then why is the city council spending $150m to build the Movie Museum and Convention Centre?

     
  2. becholmes, 3. November 2016, 11:09

    As a ratepayer I am happy to have Willis Bond build major developments in the city. Their work is always high standard and quality and you get what you pay for. There are too many shoddy cheap builders out there who will cut corners for profit. Just look to Auckland as an example. My vote goes to Willis Bond.

     
  3. hel, 3. November 2016, 13:04

    Top notch developers and if anyone is going to build on that site happy to see them involved as a site like that should showcase quality.

     
  4. Ben, 3. November 2016, 13:46

    @ becholmes: I agree. At least Willis Bond build high quality attractive buildings that will last. The last thing Wellington needs is cheap shoddy apartment/other buildings going up everywhere.
    Hopefully the council will ensure we do not see the unattractive and cheap apartment buildings which are getting all too common in Auckland.
    The council also needs to look at the minimum size for an apartment so we do not get developers building apartments that almost the size of a hotel room.
    Wellington is beautiful and we need to keep it that way.

     
  5. Save Jack Ilott Green Campaign, 3. November 2016, 13:52

    It is a shame we have lost another open space near the waterfront and we need to ensure that the same thing does not happen to Jack Ilott Green.
    Unless we fight to retain our green spaces we are going to end up living in a concrete jungle and inner city living will become very unattractive.
    Hopefully the council’s motion last June to investigate gazetting Jack Ilott Green as a reserve will be actioned soon, so 7% of our inner city green space is saved for posterity!

     
  6. Rumpole, 3. November 2016, 15:29

    Willis Bond and the City Council are at it again. Exclusive rights must cease. Call in the Auditor General.

     
  7. lindsay, 3. November 2016, 15:48

    @becholmes: surely you are not condemning every other development company in Wellington?

     
  8. City Lad, 3. November 2016, 16:29

    Willis Bond is developing apartment buildings in Auckland too.

     
  9. Alana, 3. November 2016, 17:50

    It may well be the case that WB is the best. But open transparency is required in government decision making and the lack of a competitive process creates suspicion about both the developer and the WCC. Why choose the back door method that reeks of favouritism? I hope the new Council establishes a more trustworthy process for similar decisions. Thanks Wellington.Scoop for setting this out so clearly.

     
  10. Traveller, 3. November 2016, 17:58

    To quote the Auditor-General: “Without transparency, people will speculate.”

     
  11. Hel, 3. November 2016, 20:21

    It is a known fact that the MF car park was put out to all developers to put forward schemes. The article states there were a number of schemes considered. Still facts do tend to get in the way of a good conspiracy theory.

     
  12. CC, 3. November 2016, 22:48

    Apart from an ability to screw highly profitable land deals from the Council and an ability to access ACC and NZ Super Fund finance, Mark McGuinness (Willis Bond) is no different to any other local property speculator. He uses the same pool of architects and engineers as other developers and his usual construction firm (owned by his brothers) is just as competent as other large scale Wellington firms who no doubt use the same local pool of sub-contractors.

     
  13. City Lad, 3. November 2016, 23:41

    Hel claims that “It is a known fact that the MF carpark was put out to all developers who were invited to put forward schemes”. Who were they?

     
  14. Kb, 3. November 2016, 23:44

    I can’t believe that there are people here saying that it’s good that Willis Bond are getting these deals from the council without a competitive tender process. Regardless of whether Willis Bnd have a good reputation, every contract should be open to all offers and the offer of every applicant would be judged not only on price, but on their experience/reputation. I agree with other comments saying we need to call in the auditor general.

     
  15. Nora, 4. November 2016, 7:53

    Ben I agree we don’t need shoddy apartments going up everywhere but we do not want to lose attractive open spaces along Jervois Quay (the council last week has replanted the gardens around the Michael Fowler Car Park). Concert goers attending functions in the MF Centre do not want to lose the lovely views across to the harbour or the very convenient car parks.

     
  16. Seamonkey Madness, 4. November 2016, 8:51

    People seem to have a short memories and forget that there is a sewer storage tank underneath the carpark. As Wellington.Scoop reported:
    “…a giant tank under the Michael Fowler Centre carpark [built] in 2004… can hold 850,000 litres of sewage and thus take pressure off the wastewater system and pumping stations in the event of very heavy rain or disastrous power failure.”
    There are more details here.

     
  17. City Lad, 4. November 2016, 13:10

    Apart from Willis Bond, I await with interest to hear from Hel the names of other developers invited by the City Council to put forward schemes for the MFC site.

     
  18. JC, 4. November 2016, 14:19

    City Lad – why do you need names? The Mayor has said that the Council has reviewed “a few schemes”. It’s clear that they haven’t just gone straight to Willis Bond. Yes, they are “in talks” with Willis Bond now, but there is nothing to suggest that the Council has undertaken an improper process here. So, why make all this fuss?

     
  19. Ben, 4. November 2016, 15:29

    @seamonkey madness: Let’s hope the council remember the sewerage tank is there! I assume the tanks and associated pipe work etc will have to be relocated and, as it was part of a 9 million dollar project, who is paying to relocate it? If the council are paying, there goes any profit made by selling the car park?

     
  20. CC, 4. November 2016, 18:04

    JC – perhaps City Lad, after many years of research, knows that ‘reviewing a few schemes’ in Council parlance doesn’t mean that an open, transparent and competitive process has been undertaken for the disposal of the MFC car park. If Hel has evidence to support his/her claim, then it is not unreasonable that the “…. known fact that the MFC car park was put out to all developers to put forward schemes” be substantiated as City Lad has requested.

     
  21. Maximus, 4. November 2016, 19:47

    It’s an interesting dilemma. From memory, there was a big pohutukawa tree there on site, and it is still there. Was it moved, or did it stay in situ? There can be no tank under the said tree, but I believe a large amount of the rest of the site is tank for Poo. Therefore, either build hotel ankle deep in poo, or cut down tree and build on “solid” ground, not just on solids…. Cutting down trees? Building crap? This sounds like a job for the Chow brothers!

     
  22. CC, 4. November 2016, 22:23

    Good to know you are still around Maximus and that you haven’t lost your way with words. However, perhaps you are being a bit hard on the Chow Brothers – they seem to be shaping up as reasonably ethical developers in that they don’t expect ratepayer subsidies or special favours to bolster their profit-making endeavours. Looks like we are in for more Site 10 type pollution amelioration costs on the MFC carpark site deal.

     
  23. Hel, 4. November 2016, 22:44

    For the benefit of CC and City Lad, as regular readers of Wellington. Scoop I would have thought you’d remember reading the article of 14 December: which reports:
    ‘The Wellington City Council is … advertising for a developer to build an eight-storey building alongside the Michael Fowler Centre.’

     
  24. Rumpole, 5. November 2016, 13:03

    My three golden rules for city council involvement with property developers are: Transparency, Transparency, Transparency. Nothing less. So who were the other developers? CC and City Lad are entitled to ask.

     
  25. Ian Apperley, 6. November 2016, 15:31

    When the Council carries out things in a less than transparent way, people will speculate.

     
  26. Guy M, 8. November 2016, 16:50

    Seamonkey madness and Maximus – good to see that you have both picked up on the giant sewerage tank on site. I too though that the tank was all over the site – but if we take Mr Monkey’s figure of 850,000 litres of sewerage, and assume that a litre of sewerage takes up the same volume as a litre of water, then there can be 1000 litres in one cubic metre. If we say that the pit is 3m deep, then the pit size could be about 17m square. Or, if it is a pit 6m deep, then the pit size might only be 12m square. Either way, despite the unpleasantness of a deep sewerage pit, it is not actually all that big compared to the overall site, which is in the region of a triangle 90m x 60m in size, about 2700m2? That puts the 3m deep tank at only one tenth of the area of the overall site. Still a lot of room left over for building on.

     

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