Call to weigh risks in five-star deal
Wellington ratepayers could face a bill of $92 million over 20 years if the city council leases the convention centre facilities in the proposed five-star Hilton Hotel.
The annual lease price - the amount Hilton expects from Wellington City Council to lease the conference facilities - is $3.5m a year over 20 years.
When the council's share of rates and insurance are factored in, the council's liability rises to $4.6m a year, or $92m over the life of the 20-year lease.
The lease agreement would include a profit-share deal, which the council claims will reduce the average annual fee to about $2m. The council would be locked into the lease for 20 years but there would be a review after 15 years.
Wellington property developer Mark Dunajtschik is to bankroll the $100m-plus, 165-room Hilton with a convention centre able to host up to 2500 people.
The council's City Growth director, Derek Fry, said the average cost to ratepayers was likely to be $1.5m to $2.5m a year.
"The worst case for rate payers would be $3.5m . . . in any year there is no profit share to WCC."
Fry said the convention centre budgets and accounts would be transparent, with regular operating performance reviews with the developer and Hilton. The accounts would be audited.
"There will also be three-way oversight between Hilton, the council and the development company whose interests are aligned."
Convention centre staff would be managed by Hilton, which would also be responsible for all catering, he said.
The business case found the conference facilities would bring about $30m a year to the city in economic benefits, and about 200 jobs, if it opened as planned across the road from Te Papa in 2017.
Helene Ritchie was the sole councillor to vote against the council, supporting "in principle" a new purpose-built convention centre subject to community consultation, starting next month.
It was essential the council released the business case, she said.
"It should be made public so people can weigh up the risks, which are very considerable and listed in the report, and the costs to ratepayers which are also significant."
The Hilton lease deal was "unprecedented" in her career as Wellington's longest serving councillor, she said.
"It's a gift that's been named a lease. We (the council) don't have the right to occupy, manage, operate or own . . . it is really a grant."
She tried unsuccessfully to have the council provide councillors with independent commercial and legal advice before the proposal went out for consultation, something she said Pricewater houseCoopers also called for.
"The council didn't take that advice . . . and proceeded accordingly."
Tom Law, chairman of the Federation of Wellington Progressive and Residents' Association, was surprised to hear ratepayers could face an annual bill of more than $2m and wanted more information
The council needed to put all its cards on the table.
"Not all the information is being released to the public. That is an integrity issue."
The Dominion Post