Whanganui District Council signs off on property purchases; the hotel could be the end result

Whanganui District Council has voted to purchase property in Whanganui town centre, with the potential end goal of a new hotel and car park.

However, some councilors have questioned the decision ahead of hearings on the council’s Long Term Plan (LTP) for 2024-2034.

An online petition has been launched against the purchases.

The council will spend $3.916 million on land and buildings on Victoria Avenue, Ridgway Street and St Hill St.

Through his long-term plan, he aims to take over a $55 million hotel and parking lot, subject to a detailed business case.

Speaking at a council meeting this week, chief executive David Langford said the council needed to increase non-rates revenue.

“The more money we can get from other sources, the less you have to charge to cover the costs of basic services.”

He said the properties would be added to the council’s city amenity portfolio – a collection of about 50 properties with a valuation of $45 million.

The annual return on capital for the purchases would be about 5 percent — a net $190,000 a year — and the purchase would cost the general ratepayer nothing, he said.

“All profits in the portfolio were closed and put in a reserve.

“That reserve should fund almost the entire acquisition. The small remaining balance will be financed by some debt.

“This debt will be serviced by future portfolio returns.”

The city’s endowment reserves will cover $3.5 million of the purchase, with the $416,000 in debt.

Councilor Jenny Duncan said she supported the hotel plan but the timing of the purchases was “very poor” and could look bad to the public.

Public hearings on the long-term plan take place between May 14-16, with deliberations between June 5-7.

“Why wasn’t the unconditional date made after June 7, so we didn’t combine the issues and look, to the community, like we’re moving forward with something?” Duncan said.

Purchase contracts become unconditional on May 13.

Langford said council management followed councilors’ instructions to “follow these things”.

While the property purchase was an amenity portfolio purchase that allowed for the possibility of a hotel, it stood alone as an investment that would increase non-rate revenue, he said.

“What you’ve asked officers to do is to keep fares affordable,” Langford said.

Councilor Rob Vinsen, supported by Councilor Philippa Baker-Hogan, moved a procedural motion to postpone the matter until the next council meeting on June 7, but it was lost.

The properties on the table were 33 Victoria Ave to 36 St Hill St (Whanganui Furnishers), 63 and 65 to 71 Ridgway St (called the Flynn properties) and 45 to 49 Victoria Ave and 51 and 61 Ridgway St (Wakefield Chambers) .

Vinsen said he supported the purchase of Wakefield Chambers and the Flynn properties, but not Whanganui Furnishers.

A car park, which would likely be built on part of the Whanganui Furnishers property, was “pie in the sky”, he said.

A majority of councilors voted to go ahead with the purchases “upon completion of satisfactory due diligence”.

Councilors Charlie Anderson, Peter Oskam and Baker-Hogan opposed all three, Vinsen opposed Whanganui Furnishers and Michael Law opposed Flynn Properties.

Talking to CHRONICMayor Andrew Tripe said that while the hotel and parking lot project has a $55 million figure, nothing has been spent yet.

“We will not commit to spending any of this capital expenditure on a hotel until we complete a comprehensive business case,” he said.

“We will also look at the model. It could be that, if it’s attractive enough, a developer could come in and a number of different operators could be interested.”

Tripe said the business case “would tell anyone interested in investing whether it’s a good idea or not.”

An online petition opposing the purchases was launched Tuesday morning before the council meeting began.

By noon on Wednesday, it had received 176 signatures.

The petition said progress on the hotel project was not shared with residents to help them submit their long-term plan.

The council should halt the purchases “until all plans have been fully disclosed to our community and further public consultation has taken place” or it should vote on option two of the long-term plan, it said.

The public had the chance to share their views on the hotel plan through the consultation on the LTP.

There were three options – go ahead with the plan that is the subject of the business case (option one), seek an operator to develop a hotel and car park for Whanganui (option two) or do nothing (option three).

“Whanganui is still recovering from the huge cost of the (Sarjeant) art gallery upgrades. More public consultation is needed before committing taxpayers to another major project,” the petition says.

A report by the council’s general manager of properties and open spaces, Sarah O’Hagan, said last October the council approved a budget of up to $1.5 million to commission and complete a study feasibility and design works for hotel and parking.

The feasibility study was ongoing and was “supported by international expertise through (commercial real estate company) JLL New Zealand”.

Discussions with several operators to explore interest in operating a downtown hotel resulted in a written proposal from the King and Queen hotel chain, the report said.

King and Queen is based in New Plymouth.

Tripe said representatives from the King and Queen Hotel have visited the city several times.

“They are our regional neighbors and from their perspective we are on their travel path.

“For any expansion I can do, Whanganui is a sensible next step.”

Mike Tweed is assistant news director and multimedia journalist at Whanganui Chronicle. Since starting in March 2020, he has dabbled in everything from sports to music. It currently focuses on local government, primarily Whanganui District Council.