Porirua City Council loses thousands in CBD apartment deal: 'investment not a loss'
Porirua City Council has labelled a property sale in its CBD a successful investment - despite losing thousands on the deal.
In February, the council announced the former NZ Post building in Serlby Place has been sold for $400,000 to developer Ian Cassel's The Wellington Company, which will convert it into rental apartments.
It was bought by council in 2014 for $570,000 and it has spent a further $180,000 on insurance, rates, resource consents and building improvements. The Wellington Company will lease it for two years for $100,000, then buy it for $300,000.
The council's city growth and partnerships general manager Bryan Patchett said the price difference was an investment not a loss.
"We have to spend a bit of money ... The alternative was to have that building sit there doing nothing."
The council will also get out of other costs associated with the four-storey building and will get future income from rates on the apartments.
Earthquake strengthening would cost the developer at least $1 million and the lease-then-sale agreement was a good way to hold the developer to account, he said.
"The strengthening must be completed in 12 months and apartments developed in two years ... if that doesn't happen we get the building back."
He said securing the investment of a "serious player" had already resulted in three other investors registering their interest in the city.
"Lets face it the area has some fabulous amenities and it's under appreciated."
Porirua mayor Mike Tana said council had to cut its losses on the building to see development in the city centre, although the decision to buy and sell the property had not been made on his watch.
Previous mayor Nick Leggett said council would be criticised no matter what they did, but the sale was a good result for everyone.
"If we didn't buy the building it would have sat there empty for years and people would have complained about that too.
"It was brought at a good price and it got a good result for the city."
The Wellington Company Project manager Tony Seagel said 43 apartments would be ready for tenants by October.
Seagel did not know what the apartments would be rented for, but said Wellington commuters, Whitireia students, business travellers and weekend travellers were the type of tenant they would attract.
Plans for the complex involve one and two bedroom apartments on the top three floors of the property with commercial businesses on the ground floor
What Porirua council spent:
Building purchase: $570,000
Demolition works: $60,000
Porirua City Council rates for three years: $94,247
Regional Council rates for two years: $2759.91
Resource consent: $25,000
Total insurance: $2,985