Asset sales: stop calling, stop texting, stop turning up at my house late at night

Like a bigoted relative at a family gathering, council asset sales are the unwanted guest that just won’t get the message. Despite wide-spread opposition in Christchurch, including strong declarations from the council and mayor, the government keeps bringing along asset sales to the party, claiming that it’s their “plus one”. John Key again mentioned it is morning, in a TV interview. Once he’s snuck his guest into the room, he then outright lies about why he’s there at all.

How the city funded the rest of the build was a “matter for Cantabrians to consider”, Key told Firstline this morning. “It is for the council to say ‘do you want the nice-to-haves’,” he said. “Then they’ll ask how are you going to pay? That could be through rates or asset sales.”

The bolded quote is simply a bald-faced lie. The council has no say at all in whether they want nice-to-haves – it is a decision that has clearly come down from the Beehive, where stadia and convention centres seem to be the only pages in their economic recovery textbook. This was made clear to me last week, when I made a submission in person at the council, on the Three Year Plan, partly in opposition to the stadium plan. Upon giving my submission, Councillor Broughton asked me if I knew that it was a decision made by the government, not the council. I did know that, and that my submission was partly in vain, but I still urged the council to oppose these developments.

What Key and Brownlee are doing is forcing us – via the council – to build these assets, in spite of opposition. Then they will turn around and say that we need to pay our share, and that the rest of New Zealand shouldn’t have to go without so you carpers and moaners can have your flash new stadium. Bloody ingrates. So why don’t we just sell some of these assets you have? If the council opposes selling them off – for some obscure reason like the economics of keeping them far outweighing the prices we’d get for them in a rushed sale, or the social utility of a city owning its infrastructure – then the government can force the council to flog them using their “emergency powers”. Emergency powers that they haven’t seen fit to use to break the insurance deadlock, or to alleviate the suffering of the people worst hit out East, but could be used fund a white elephant monument to Brownlee’s egotistical stubbornness.

This is like selling the company van so the boss can buy a flash motorbike; meanwhile, the boys at the building site have to move their stuff from job to job using a wheelbarrow. It’s economic idiocy, and political expediency, from a government that continues to mismanage the recovery whilst simultaneously relying on it to turn around the government books. Like the fantastically bearded gentlemen in the new tv commercial, it’s time to take John Key’s mate asset sales into a quiet corner of the room and say “yeah, nah”, until he finally gets the message.

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More on the office block stadium thing

There is a letter in the press from Geoff Saunders this morning, who came up with the bright idea for the office block stadium thing. He’s a lawyer, not an architect, but he thinks its a good idea. He explains in the letter that he doesn’t want to put his law firm in Victoria St or Lincoln Rd, he wants to be in the city. But he also doesn’t want to pay $400 a square metre, though he “admires those” that have committed to do so. He then says:

The rationale behind the multi-use stadium proposal is to create four wonderful office towers with associated facilities, such as a gym and pool, and to lure us back. The land under the four office towers comes at very little cost to the developer/owner.

Hang on? The land comes at very little cost to the developer/owner? Mr Saunders might want to elaborate on that a bit. He has said that he wants a high spec office block, but that he doesn’t want to pay the market rate for it. So he’s proposing that someone build an office for him, and figures that this will be cheaper because “the land comes as very little cost”. We know that there is no such thing as a free lunch, so if the land comes at very little cost to the developers, it’s costing someone else. That someone else would be the taxpayer and the ratepayer, the ones who are funding the government acquisition of this land. In Saunders’ plan, not only would the average Christchurch resident be subsidising an uneconomic stadium, but we’d be subsidising office space for some of the city’s most high-profile, high-priced law firms, and that is simply unacceptable.

Joining the dots

There are two interesting stories in the Press this morning that show the complete shambles that the rebuild of Christchurch has become. The first is about the escalating costs of construction. Worryingly, it suggests that due to rising costs, developers are eschewing fancy designs and pumping for plain old tip slab instead. Central city developers are having to compete with buildings in Addington, Victoria St and out at the airport, where the land is cheaper, and foundations are cheaper to put in. For the developers in the central city, this means that to build a premium office space, they are having to pay more than anywhere else in the country.

Think about that for a moment. Yes, we need to ensure that the buildings here are safe for future seismic events. But the buildings going up in Addington and Victoria St aren’t the most expensive in the country; this is a clear by-product of the CCDU blueprint, which deliberately restricted land supply for a select few developers. So while the plan was to artificially maintain the property prices for the lucky few, if they can’t afford to build on this land, it will soon lose it’s value again. Who is going to want to move their law firm into the most expensive office building in the country, when it is in the centre of a grey, broken wasteland, pockmarked by the occasional tilt-slab barn? The government should never have tried to prop up the property prices of their favourite developers; they should have let their beloved market determine what land was worth in the centre of a devastated city. That said, very little is happening in the middle of town, it wouldn’t be too late to just scrap the plan and start again.

Worryingly, the cost of building is expected to go up when they actually get around to starting it. 

David Wallace, who represents developer Devonia Holdings, expected costs would “ramp up further” once the city’s anchor projects began.

Ah yes, those “anchor projects”, like the stadium. The damned stadium. But wait, the stadium could *make* money, according to a new plan. Geoff Saunders, a lawyer who seems to have the ear of Brownlee, has pitched the idea of building office blocks into the stadium. Ok. He reckons they would make $11 million a year. Ok. This raises more questions than answers for me. First, who is building these office blocks? This relates to the question who is building this stadium, and who is funding it? This is a question that people have been asking ever since the blueprint came out. It seems that the government is going to force the council to build it, and force the ratepayer to pay for it. If that’s the case, and this is the design, then will the ratepayer then be expected to build office blocks too? 

You would have to assume that they were going to be built by the council, as otherwise, the purported $11 million would not be returned to the people. If they were built by another operator, and their value was contingent on their proximity to a publicly-funded asset, then why would we let them take the money?

But probably the biggest question I have on this is contingent on it’s success: if you can generate $11 million a year from 4 office blocks on this site, then how much could you generate if you just built offices, not a stadium? The jury is still out on whether Lancester Park can be salvaged, and no-one has produced a costed economic plan for the stadium. Looking at the picture that accompanies the story, I reckon you could fit 15 of these office blocks on the site; using the same maths as Saunders, this would pull in around $40 million a year. Also, you wouldn’t have to needlessly destroy heritage buildings like the NG Gallery one. You could even include some social housing in there, and bring some people back into the central city.

I realise that this is never going to happen; however, I think it’s important to bring the keep highlighting the idiocy that is the CCDU blueprint and all it’s unintended, yet highly predictable, consequences.