On Monday 11 August NewstalkZB's Ali Jones talked with Bob Parker about the Christchurch City Council's decision to buy five central city properties from failed property developer Dave Henderson. The full interview is published here.
ALI JONES:On the line from Beijing, Mayor - Christchurch Mayor Bob Parker. Good morning, Bob.
BOB PARKER:Good morning, Ali.
ALI JONES:I do appreciate you're being available. I know it's, what, twenty past five in the morning there?
BOB PARKER:It's just a wee bit early, yes. Yes. But there is a - there are signs of - there are signs of light outside the window. Don't know if there are any signs of life out there yet, but now it does feel pretty early.
ALI JONES:All right. Well, I do appreciate you're being available. On the issue of the purchase of Dave Henderson's buildings, how long did the councillors have to consider the deal? When where they told of the plans.
BOB PARKER:Well, the - we've probably had about a three or four day period to work through all of the issues. I've been trying to tally up the number of hours we would have spent on it. Now, it's a very short time frame. That was the - that was the background to the event, we had to move quickly. But we would have spent, conservatively, probably 10 hours or so discussing this as a group. One person I spoke to actually felt it was more like about 15 hours, but we spent a lot of time talking about it, answering questions and so forth, very long sessions. There were a lot of important questions to be asked. We had our legal counsel present with us and our planning people as well, as we worked our way through the - the issues, the potentials and the potential costs as well.
ALI JONES:Not all the councillors were there, of course?
BOB PARKER:Couple of councillors are away at the moment, so they obviously weren't part of the discussions. On the day of the debate, our deputy mayor, for personal reasons, family reasons, was unable to be with us and he had a leave of absence from that meeting. And I think at one of the very first meetings, possibly Councillor Williams wasn't at that meeting.
I think she was engaged in something else and maybe was late arriving to one of the sessions. So, for those of us who took part in the actual debate there was a lot of time, albeit over a short time frame.
ALI JONES:This is a major spend and a major issue, Bob. You've got councillors not there, the deputy mayor not there. Why on earth could this not have been rescheduled at a time where you could have had more people voting on it?
BOB PARKER:A very simple reason and that was there was, in the background, looming up, what effectively amounted to the beginning of a wind-up process around those properties that we were interested in. We needed to get in before the process went to the courts. And, you know, basically, if we didn't move in that time what could have happened was that these sites would have gone to some kind of a wind-up process, a sort of a mortgagee fire sale, free-for-all I guess you would call it.
And that would have meant, potentially, the sites would have been split up or bought by people who would have used them for inappropriate development purposes. For example, you know, we don't need another tilt slab, big box disaster happening in the middle of our beautiful city, basically, and we needed to move to protect those sites. They're absolutely key to the central city urban regeneration program that we're working on.
ALI JONES:Isn't the best mechanism for controlling development through the city plan, not buying millions of dollars worth of property that might be developed unsympathetically?
BOB PARKER:Yes, that would be ideal, but we didn't have the time to move on that and make a change to the city plan the kinds of control…
ALI JONES:No, no, Bob, the city plan issue - sorry to interrupt. This city plan issue has been an issue for at least the last decade, possibly 15 years. There's tilt slab rubbish going up in suburbs all over Christchurch. Zoning has been an issue. I would suggest to you that the council has been remiss in not dealing with the city plan at a much, much earlier stage. And you're now in a position, setting a dangerous precedent, of buying properties from developers in order to protect the city when the city plan should be doing that.
BOB PARKER:The city plan, ideally, would do it, but - and we are working our way through a lot of those issues. But you need to understand that a city plan process of significant change would require a variation that could take between two and three years, depending on the number challenges you've got to it. So, we didn't have the luxury of time in this case and these are very, very key properties to the urban regeneration program, and we needed to move quickly in order to protect them.
We're not in there to be land developers. We're in there because we had a long term vision for our city. We've had a large number of discussions with community and business about the shape of the central city, you can look at the number of strategies and papers that we have and there is a time when actually you do need to act. And for us, this was definitely one of those times. And the majority of the councillors present supported that idea, supported the vision, supported the need to move quickly.
ALI JONES:Will you now be putting the city plan and the issues that are obviously creating what is actually a pretty, I would suggest, unacceptable situation where developers can now come to you and say, hey look, I've got a bit of land here, I'm going to turn it into tilt slab, you'd better buy it from me - you've set a precedent, there is no denying. You are now going to put the city plan at the forefront of discussions with the council and get it sorted?
BOB PARKER:The city plan is at the forefront of discussions with council and we are getting it sorted, but it's a massive process to work through. And we're talking about a very clearly defined area of the inner city and, in fact, if someone else in that same area was facing a similar set of issues, we would certainly look very closely at it. These are prime sites. They are sites that already had a significant amount of development work done, in terms of planning; intellectual property, which is part of the purchase, comes to council.
We want to put a master plan in place over these areas in a very specific way and that means we can then release those properties back on to the market and we can be sure of the outcome of them. And that's what we've done.
We've moved, because we need to be sure of the outcome on several very key sites in the downtown area and that's about the future of the city. And I could, you know, talk about why it is that we need to do that and, fundamentally, we're - we have to build the city which can compete favourably with other cities in New Zealand and around the world for our young people, to get our young people home to create a new urban environment…
ALI JONES:Okay. Right. I - I understand that, Bob.
BOB PARKER:I mean, so, it's a very, very focused area of the city that we're talking about.
ALI JONES:Okay. Well, it's actually not that focused, cause we go into Sydenham as well, which is way over the avenues.
BOB PARKER:Well, that - okay. That - but that's a different situation again.
ALI JONES:Ah, okay.
BOB PARKER:There we have a site that had already got a complete plan, all of the consents were in place, and we knew that there were people out there who wanted to buy that site in Sydenham for a big box development. So, in that case there was a site that had already been discussed with the community by the developer, there was an ideal outcome, an example of what the sort of new urban intensification, a mixture of retail and residential, so it was very, very advanced. And it is a different situation to that one, but it's still about putting something in place which can protect an outcome.
ALI JONES:Where are you borrowing the money from, Bob?
BOB PARKER:Well, it'll effectively just come out of council's normal banking processes. And in the scheme of things for us, another $16.9 million, which it is in this case, is, you know, not something which is going to bring the bank down by any means. It's probably almost within the facility that council has to draw down on funds [indistinct]…
ALI JONES:So Ngai Tahu is not involved in…
BOB PARKER: … involved with a lot of large projects.
ALI JONES:Ngai Tahu's not involved? No? Okay.
BOB PARKER:No, no, this is a - no, correct. This is just council borrowing the money, we'll be paying interest only. And, of course, a number of those sites will be returning, in the meantime, quite a good rental stream, I think, particularly the one - the Penny Cycles one. That's the site that probably has the best rental income. So that will offset the spend as well.
ALI JONES:Were councillors provided with independent valuations of the properties or just indicative valuations provided by Mr Henderson?
BOB PARKER:We were provided with the valuations on the properties that were provided by Mr Henderson in the first instance. Then we used valuers that council uses to revalue the properties to current market conditions. So, bearing in mind that we have a falling property market, a weak property market at this time, new valuations were then sought and they were the basis for the discussion.
I think in the end we peeled probably about another $1.5 million off the prices, the valuations that we were provided on those buildings. And, of course, we had our own valuations in there from quotable value as well. So we knew what we were going into and we were determined to make sure that we, as much as we could control it, got a price range that was reflecting market conditions. So we used the valuers that council uses in these situations.
ALI JONES:And the councillors all saw those independent valuations?
BOB PARKER:No. What we - we didn't have time to do that. What we set was a range of valuations based on the information that we had at that time and we then gave, if you like, the chief executive and several of the councillors an opportunity to sign off on the actual final offer. And they came in below the valuations that have been provided from the, you know, the original [indistinct]…
ALI JONES:So Bob, just let me get this right…
BOB PARKER:… banks and what have you.
ALI JONES:Yep. You've got the whole council, the number of councillors there, those who were there who were involved in making this decision, who did not…
ALI JONES:… see independent valuation figures related to the properties they've voted on to buy?
BOB PARKER:No, the figures that we were provided in the first instance were provided by independent valuers, but the…
ALI JONES:But they were Dave Henderson's.
BOB PARKER:… but some of those figures weren't current.
ALI JONES:But they were Dave Henderson's figures.
BOB PARKER:Yes, but they were by value - they were valuers that council uses frequently in its own processes, so we were very confident…
ALI JONES:Yeah, no, no, I understand that. Bob…
BOB PARKER:… that the figures we were provided with and then we went away…
ALI JONES:Bob, it's a simple question.
BOB PARKER:…and got them revalued again.
ALI JONES:Okay. Simple question.
ALI JONES:Did the councillors…
BOB PARKER:Well there's - what's underlying the question is probably this, did we - did we pay too much for those sites.
ALI JONES:No, no, no, no. No, it's not.
BOB PARKER:Were - were they in some way…
ALI JONES:Bob no, that's not what's underlying the question.
BOB PARKER:What I'm saying is we got - we got, we got independent current valuations, and they were the basis for the purchase price, and we delegated authority around the final figure for the chief executive, our legal team.
ALI JONES:No, I'll ask the question again. Did the councillors who voted…
ALI JONES:…on the purchase of Dave Henderson's buildings see independent valuations commissioned by the council before they voted on the purchase of the properties?
BOB PARKER:They didn't see the final valuation, but that came in significantly less than the independent valuations, if you like, that were provided by Mr Henderson's people in the first instance.
ALI JONES:Yeah, okay, that's all right. That's all I want to know, so…
BOB PARKER:I mean, what they're using - what he's using is the same valuers in the city that [indistinct]…
ALI JONES:Yes, I know, but he's trying to get money from you. He's selling a property to you. I'd say that it would be prudent of…
BOB PARKER:Quite right.
ALI JONES:… the purchaser, surely, to be able to say, look, this is what the properties are worth, and to the people who are making the decisions on the spending of the money, here's the independent valuation and that's where the council sits on it, surely?
BOB PARKER:Well in - well, in effect that's what we did. And what we then did was got them revalued again, on the current market conditions where that was required, and those valuations came in lower and that was the basis for the offer that we made on the properties. So [indistinct]…
ALI JONES:And the councillors saw those valuations?
BOB PARKER:…value was involved.
ALI JONES:And the councillors saw those…
BOB PARKER:What the councillors did was approve effectively a maximum purchase price and we then had the job of getting the properties revalued. They came in below the price that…
ALI JONES:I understand that.
BOB PARKER:… we'd been working for.
BOB PARKER:Okay. And that was an independent valuation.
ALI JONES:Yes, but the councillors saw that.
BOB PARKER:But no, the councillors - yes, but they delegated the final authority for the decision on purchase based on a range of valuations that we had. I mean, this is part of the business that council is in, and valuing properties is part of the weighting process. We're aware of values around the city. We have our ear to the ground. That's our job.
What we then did was delegate, finally, the decision for purchase, having in general terms agreed to it but not having tied down a final number. That final number came in below the quantum that councillors had been basing their original discussions on, that was our hope, and we delegated the authority to do a deal on that independent valuation that was gained effectively almost on the days of the purchase offer.
ALI JONES:Okay. Now, the Civic Building, the old…
BOB PARKER:We're really satisfied that we got it right, Ali.
ALI JONES:OK, yeah. Now the civic building, the Civic Chambers building, Dave Henderson involved in that building at all, once you leave, as I've just heard a whisper that he may be involved in developing it?
BOB PARKER:That will be an independent valuation process, and once again it'll be an open tender process for the council site.
ALI JONES:But Dave Henderson not involved in that, at any - at this stage?
BOB PARKER:Well, look, I really have no idea whether he'll be involved or not.
ALI JONES:But he's not involved at this stage, Bob?
BOB PARKER:No more than any other developer in town who knows that those properties will eventually be coming on the market, is involved, correct.
ALI JONES:Okay. Was Gary Moore involved in the pulling together of this deal?
BOB PARKER:No, Gary wasn't involved in this at all.
ALI JONES:Okay. If you haven't got the zoning right in these areas you're now working on, as I said earlier, I just want reiterate, the city plan will start working hard in its speed to get these zoning issues sorted?
BOB PARKER:That's an interesting question, from the point of view that, you know, zoning and, if you like, the city plan, probably can't say, well, you can't have a building made from tilt slab. It's interested in terms of outcomes, space occupied, maximum height, site coverage, parking, a whole raft of issues. So it's perfectly possible for somebody under, you know, even a more highly developed city plan, if you like, and there are certainly areas where we are working on it, where we agree with you, that it's an absolute priority, but it takes time to bring variations to plans.
What we can do by purchasing the sites is we can put specific controls, as any property owner can, on the site and on the outcome that will be appearing on that site, if you like. We're going to develop master plans for these sites. A lot of it will be pretty close to the sorts of plans that Mr Henderson was developing for the sites because, quite frankly, the work that he's done in the central city area, think of the Lichfield Lanes area and the South of Lichfield, SOL, Square and so on, is absolutely outstanding.
And what we're aiming for in Christchurch City is to bring world class - bring world leading, urban design projects into the core of our city. We'll secure those development sites, we'll secure the plans, the way that they will look, and then we'll go back to the market as quickly as we can. And we're developing over the next three months, master plans for those specific sites. That's what you can do when you're a property owner.
But when you're a council, you effectively create an envelope within which development can actually take place. So you know, even if we tighten up the city plan in a number of areas, we can't necessarily guarantee that somebody won't build a large capacity warehouse type of building, I don't think there's a plan alive that could probably stop you doing that. But what we can do as the owner of the land is, effectively, put conditions on the sale and only sell to people who are prepared to develop to those conditions. Now that's the intention of the council at this time.
ALI JONES:Bob, I find that mind boggling. I find - as a ratepayer, I find that mind boggling. That the Christchurch City Council effectively cannot control even the size of a building on a site. And the only way, you're telling me, the only way the council can do this…
BOB PARKER:No, that's not what I said. No, that's not what I said.
ALI JONES:You said a large capacity…
BOB PARKER:Well, look, let's put it this way. When you - the planning controls that we put on sites, have to do with things like height, the volume, if you like, the total amount of that site that can be used, the amount of land that can be covered on the site, the percentage that it can be covered on. We are working in relatively general ways at the level of the city plan.
Now, what you're saying is that there are areas of the city plan that need to be improved to keep up with the perceptions and changes and uses that occur in the community all the time. And, absolutely, we agree with that and we are working through a series of variations on the plan.
But when you get down to the specifics of the shape and look of the building, whether there are access ways and lanes put through, many of those things, if they come under an existing plan, can only be controlled by you to that kind of detail when you actually own the site. And then as an owner, when you on-sell the site you can put in much tighter conditions, just like you could if you sold your house, you could put a covenant on the property. And, effectively, that's the process that we're working our way through.
ALI JONES:Okay. It just seems an expensive way to do it. In recent times we've seen the Ellerslie Flower Show purchase rushed through, a bid's been placed before councillors - or the bid was placed before the councillors even knew about it. The additional money needed for the extra space in the new Civic Chambers, the speedy deal on the new Civic Chambers itself. AMI is going to cost us too. Is - supplementary reports and late editions to meeting agendas, is this a new way of governing, Bob?
BOB PARKER:If you want to work your way through each of those situations one by one, you'll find that they - most of those aren't rushed situations at all. For example, AMI. Now the decision on AMI for council to underwrite was made in the last term of council; council was always very open about it at that time. An underwrite is an underwrite. We're not at the end of that process yet. I mean, what we…
BOB PARKER:Well, the Ellerslie Flower Show, once again, council had talked and consulted with community about events, we had an events strategy, the purchase of the Ellerslie Flower Show completely aligned with the events strategy that we consulted on with our community…
ALI JONES:The bid was placed before the councillors even knew about it, Bob.
BOB PARKER:But, Ali, councils have to work at times with significant amount of speed. We can't work as fast, generally, as private business, but when we have, for example, as we do with our Central City revitalisation or with events, an already discussed strategy - I mean, for example, with events we'd work through a program with the community about getting iconic events. We had an events strategy; it had been the subject of immense discussion. An opportunity came along, and councillors have the job to make a decision on those.
BOB PARKER:They don't have to act. They can say. no, we're not going to do it. But in each case, the majority of councillors felt that this was an opportunity that needed to be taken up.
ALI JONES:Okay. Jim Anderton has…
BOB PARKER:So, you know, I don't think that this…
BOB PARKER:Yeah, carry on. Sorry.
ALI JONES:I was just going to say, Jim Anderton - I know, it's - it's the delay, I know.
BOB PARKER:Sorry, because a) there's a time delay and b) I've just climbed out of bed. So you're going to have to bear with me just a little.
ALI JONES:[Laughs] No, no, no, I appreciate you being on the phone. Just finally, Jim Anderton has suggested that this purchase, this Henderson purchase of these properties by the council, may affect the council asking for $30 million from the Government for the low cost housing. What do you say to that?
BOB PARKER:Well, with all due respect, I think Mr Anderton, frankly, got his facts wrong in the first place about the city rents. I mean, after existing government subsidies are taken into account, the overwhelming majority of tenants will need to find around $6 a week to meet the rise. We'd rather there was no rent rise, but we don't think that $6 a week on average is too bad. And, frankly, I wouldn't blame the Minister of Finance for turning down further subsidy for tenants.
So we're still paying around 45 per cent less than market rentals for equivalent properties in Christchurch. So Mr Anderton has decided to ask the Government - sorry, ask the Minister of Finance for this money. Some might actually suggest that Mr Anderton won't gain the support of the Minister of Finance for further tax pay out funds, because frankly, it's not a good idea. And I would say in this case that he's using a very sensible decision, albeit one made in a tight timeframe, to protect a number of key central city sites and something of a smokescreen to cover up the fact that he maybe can't deliver on a promise he's made to city housing tenants.
I mean, we're just the meat in a political sandwich in this case, we're in the business of building an even better city, we're in the business of competing with other cities around the country and around the world to revitalise our population. The reality is we have an aging population; we need to attract young people into our city. The sort of development that we've seen around SOL Square and the Lanes, which is emerging as a new way for this city to reurbanise the centre of town, is something which is much admired, which is commented on by people locally and internationally, and we are determined to see a great outcome for our city.
BOB PARKER:And that's the vision, that's the basis on which we're actually working here, Ali.
ALI JONES:Now I know you live in the centre of the city, Bob, a lot of us obviously work or live in the suburbs, and - for example, the Mount Pleasant Community Centre had a request recently for $5000 for urgent maintenance turned down by the council. There are other issues, groups have been going through…
BOB PARKER:That's because the funding there - okay, that's because the funding for that has come out at community board level, not from council level. It is within, if you like, the community board's ability to approve funding for something like that. That was not a metropolitan project. So council turned it down because it is a community funding project. It had never been a line item in a council budget. From memory, there's been basically an ongoing relationship between the community board and that community centre, in which they approved funding. They can still do that.
BOB PARKER:Well, they can go to the community board and ask for a grant at community board level. Community boards in Christchurch have tens of thousands of dollars given to them to actually apply to projects and things in their specific wards that they want to support. So it should never have been coming to the metropolitan part of council, that is the city council, which has an overall city responsibility. It's a decision that a community board can still make, to give a grant to a facility in their own community. That's something they can do.
ALI JONES:Okay. Well, I just suggest if you can put - you know, a supplementary reports and supplementary editions to agendas, then maybe these are the sorts of things you can probably consider as well. I'm just concerned that some of the communities in Christchurch may now actually feel they're being left behind. It's all about the central city.
BOB PARKER:I don't believe they'll feel that at all. But without a working central city, we condemn ourselves to a future which is not going to be the sort of future we need to survive the challenges, if you like, of the twenty-first century. We have to build a great city, we have to build a city that will have an urban heart that actually functions, and if the centre of the city doesn't function, then the city as a whole doesn't function in a way that it needs to function, to face up to those challenges.
Now the - the centre of Christchurch has been hollowed out by building suburban developments around malls. And you might be able to say, well, you know, when council allowed malls to happen in a proximity to the Civic Centre, which it has done of around say five kilometres, and so that was a bad planning decision and I would agree with you there. The city plan didn't foresee that challenge, if you like. Once again, council has moved to close some of the loopholes around the way that malls can continuously expand.
But without a - without a living, breathing, functioning heart to our city, we're just a great suburban area. We don't have definition and we don't have something that we can all feel proud of, as a city.
ALI JONES:Okay. Thanks for your time, Bob, I do appreciate you getting up so early.
BOB PARKER:Yeah. Well as I say, I do apologise, I hope I'm sounding coherent, but I did have another phone call at about 1am this morning, the phone rang and it was, you know, the National program wanting to talk. So, I wasn't sure that my tongue and lips would actually be functioning at this time of the day.
ALI JONES:No, absolutely fine, we're not that rude. Not 1am, 20 past five. Thank you very much, Mayor, Bob Parker.