Ben McNulty: Wellington City Councillor on Kāinga Ora selling off the Dixon Street Flats

Kāinga Ora is under fire after Wellington's Dixon Street Flats were re-sold for almost triple the price.

The Government housing agency initially sold the flats to Taranaki Whanui earlier this year for just over $1 million.

Nearly three weeks later, the flats had been re-sold to a prominent Wellington developer for $3 million - a move Kāinga Ora has gone on to defend.

Wellington City Councillor Ben McNulty says this won't be good for the taxpayers - but the opportunity cost of potentially bartering for ages was higher.

"From a Wellington perspective, we're just glad to see something happening."

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Episode Transcript

Speaker 1 (00:00):
It sounded like the deal of the century when Kayga
Order sold Wellington's Dixon Street Flats for just over one
million dollars, And it turns out was the deal of
the century because just what two weeks and six days
later or something like that, the new owners, the Wellington
EWE Taranaki farnui On sold the property to a developer
for three million dollars. Ben McNulty is a Wellington City

(00:21):
councilor and with us hey Ben good O. Sounds like
a rubbish deal for the taxpayer, isn't it.

Speaker 2 (00:27):
Look the building was in such a state when you
actually do the maths on it. Even at the three million,
it's less than twenty five thousand dollars an apartment, which
speaks about the actual potential to do that building. So yes,
the taxpayer has missed out. But the opportunity cost of
this is that we have another Gordon Wilson Flats. I
mean you've got almost a two hundred meters straight line
between Dickson Street Flats and the Gordon Wilson Flats. That

(00:48):
was the opportunity cost of you know, bartering and leaving
it for a long time. From the Wellington's spective, we're
just glad to see something happening.

Speaker 1 (00:55):
And I can understand that. But you didn't have to
They didn't have to barter for a long time. They
could have just gone to Ian castles and see the
e we don't want to pay any more than a million?
How much are you gonna pay? Might have got three?

Speaker 2 (01:05):
Yeah, because it's actually EWE land. It wouldn't have. They
had right of first refusal through legislation, was my understanding.
So yeah, probably we're going to get to that position where.

Speaker 1 (01:15):
Why not been? I thought the right of first refusal
was that that you get the right to literally refuse,
and then after that, if you refuse or if you
can't strike a deal, KAO can sell as anyone else.

Speaker 2 (01:27):
Look, I'd have to look into what the specifics of
deal web, but my understanding was basically it would sort
of a nucky father. You had a lot of delegation
whether that what they want to do with it or not.
And again that's for me, it's all about the outcome
three million, one million, that's not it's a drop in
the bucket for the tax payer.

Speaker 1 (01:44):
Ben is the land underneath owned by the EWI?

Speaker 2 (01:47):
Is it? Yes?

Speaker 1 (01:49):
So anything that happens above that land, they have a
stake in it.

Speaker 2 (01:54):
That's my understanding with it as well.

Speaker 1 (01:56):
Yes, so that would suggest so is this more than
just a right of first refusal?

Speaker 2 (02:03):
Again, I had to you know, sorry to be on
the back end of this one. But my understanding I've
just had the sort of high level discussions on this,
is that the e we had a claim on it
through either a treaty claim or through land ownership, and
that gave them more than a right of first refuse
or a strong right to actually be able to determine
what happens with that land.

Speaker 1 (02:20):
So rather than a rite of first refusal, this is
sounding like a right to basically say, yep, we're taken
and these are the terms on which we'll take it,
basically call the shots.

Speaker 2 (02:30):
Look, I'm at this point now I need to go
back into the actual specific because you can render this
as a deal between can Order and Talernuck you find there.
It's not a city council, No, I understand, you know,
my interest is much more obviously and not turning into
a stagnant urban olm.

Speaker 1 (02:44):
And do you know what is the piece of legislation
that what is the treaty settlement?

Speaker 2 (02:49):
Here again again, I really have no perspective, so I
don't want to just makes.

Speaker 1 (02:57):
Okay, now what happens to it now?

Speaker 2 (03:00):
So Ian Castle's he runs Wellington Company. He does a
lot of conversions of office buildings into residential units. He
does that for the council for a program we've got
called tek Kye. So there's no one in the city
who's doing more conversions than Ian Castle's at the moment.
My understanding is that he's looking to do something where
Taranaki Farm and he will have some units available for
their ew for housing, but he's obviously got to make

(03:22):
a profit as well on it, so he's got to
then convert and actually be able to sell some of
those units onwards. So basically taking a nineteen sixties building
that's dilapidated, cold, earthquake prone and renovating it and strengthening
it for the twenty first century and putting one hundred
and fifteen you know, new warm, dry flats and rentals
in the middle of the CBD.

Speaker 1 (03:40):
Okay, so this is good. It's gone from state housing
to being something else. Now is it going to be
owner occupied? It's going to be private.

Speaker 2 (03:47):
I imagine that the ownership depends what he wants to
do in terms of I imagine the EWE will have
a stake in it. That's my understanding. They will say
some units must be allocated via where do they own that?
Is it a joint venture partnership. I'm not sure what
structure of that is. But then he still needs to
be able to make his income. So whether he does
a rental model where he actually owns the units and
he actually just returns a rental for it, or where

(04:08):
he decides to actually onsell it. But the key thing
it's housing capacity right in the city center.

Speaker 1 (04:13):
Hey, by the way, while I've got you, ben, have
you had a look yet? Have you guys? As the
city council had to look and to win, you know
how the shakeup of the earthquake rules yesterday will affect
the likes of Reading Cinema and the Amora Hotel and
all those places that are still shut up.

Speaker 2 (04:26):
Yeah, I mean there was a flurry of emails even
starting yesterday before the announcement, stuff saying please can we
find out this, this and this and basically the responses
and toy some more legislative detail. The answers are going
to be a bit sparing at the moment. But from
just what Chris Pink's announced with the two stories under
concrete not letting to be strengthened, I think the most
educated guests is we don't have to strength and slash

(04:46):
demolish the old Capital E building, which means that the
City to See Bridge is very likely to be able
to be remediated and saved. So I think that's probably
the one guess that we've got to take qua at
the moment. The other ones we need to just wait
and see. But my hope is that if they can't,
they can be remediated or potentially at a lower cost
because the ticking timeline. But no one wants Wellington to
confront is to Michael Fowler Center, but it's on the

(05:07):
same oil and surface to Town Hall, it's another beloved venue.
I don't think you could ever get a city council
brave enough to say bowl to Michael Fowler Center. But
at the same time, does Wellington have the tolerance for
another two hundred million dollars strengthening project.

Speaker 1 (05:20):
By here, Yeah, thank you very much, being appreciate it.
Ben McNulty, Wellington City Council.

Speaker 2 (05:24):
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