Why is GDC paying rent on assets it still owns?

Gisborne District Council is being accused of making a mockery of its own process with revelations it has been paying rent for commercial assets it still owns.

Information released to Tairawhiti Residents Association shows that since December 2015 over $100,000 in rent payments have gone to Gisborne Holdings Ltd for Waikanae Holiday Park and Gisborne Vehicle Testing Station.

TRA Chairperson Rick Thorpe says the most bizarre aspect of the arrangement is that Gisborne District Council is right in the middle of two weeks public consultation on whether or not those assets should be transferred to GHL.

“As one councillor we spoke to said, it makes a mockery of their whole process and it reaffirms our significant concerns with the way decisions are being made in the organisation” said Mr Thorpe. “Did all the councillors know this was the arrangement when they agreed to consult on the transfer of those assets? Why are they even doing this ‘consultation’?”

Information was provided in a spreadsheet to Tairāwhiti Residents Association today following an urgent request under the Local Government Meetings and Official Information Act.

“We understand Council has internal charges to cover depreciation for replacements, but even if the rental arrangement was above board, at $100,000 for six months, these two assets must be getting gold plated when they’re replaced.”

In addition to these extraordinary payments, Council has also been paying nearly $100,000 per month in rental for the Fitzherbert St administration buildings and temporary accommodation for staff in the Emerald Hotel. The information shows Council payments to GHL of $15,000 per month for staff that have transferred from GDC to GHL to manage the assets – including Council’s community housing.

An independent report commissioned by Council and prepared by PriceWaterhouseCoopers seems to vindicate critics of the asset transfer decisions. The report says that the transfer process is likely to cost Council money rather than save it.

“Council staff now seem to acknowledge that the transfers would not result in any increase in dividends from GHL to GDC and in fact Council would have to make cuts – euphemistically referred to as “streamlining Council operations” in the staff report – to other parts of the organisation in order to cover the lost income from the commercial assets if they transfer them.”

In response to the new revelations and ongoing concern with the decisions being made at 12.30pm on Friday, residents and ratepayers will protest outside the Council buildings in Fitzherbert Street. 

“Council acting with impunity, dishonest consultation and unaccountable processes must be stopped” said TRA member and protest organiser Mary Eliza Manuel. “We will highlight the waste of money this fiasco already is and call on Council to stop the bulldozers demolishing perfectly good public assets.”

 

– – –

FACTS:

  • 2/3 of the GDC Administration Buildings at Fitzherbert St are earthquake code compliant… unless GDC choose to change the local rules. The one building that isn’t compliant needs $2-3m work to bring it up to the legal standard.
  • Council voted to transfer the buildings to Gisborne Holdings Ltd – a commercial company owned by Council, on the basis that all the existing buildings at Fitzherbert St site would be demolished and replaced with new buildings costing up to $12m – including $1.5m for the relocation of staff during rebuild.
  • GHL and GDC have agreed that GDC will pay annual rent of around $1.3m per year to GHL for the new administration buildings. GDC currently spends less than half of that amount on the existing, soon to be demolished, administration buildings.
  • GHL said they’d only take on the Fitzherbert St site if GDC also transferred other assets to them. An independent assessment by Price Waterhouse Coopers (commissioned by GDC) has found that the transfer of the Waikanae Holiday Park and Gisborne Vehicle Testing Station is likely to cost GDC an additional $570,000 per year.
  • GDC has already paid GHL over $100,000 this year for rent on the properties GDC still owns, and another $90,000 for management fees.

– – – – –

  1. Gisborne District Council LGOIMA release: LGOIMA 194751 – worksheet
  2. PriceWaterhouseCoopers report: Commercial-Asset-Restructuring-Report 

 

 

Advertisements

One Comment Add yours

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s