ICW Demystifier: The Reading Deal

The Reading complex on Courtenay Place is made up of the Reading Cinema building and two associated car parks. It is privately owned by an American company - Reading International Incorporated.

Since the building was closed in 2019 for earthquake safety reasons, it has been left empty. Last year the McDonalds in the front of the building closed and coloured hoardings now cover the line of closed shops in the complex.

The closure of this complex has left a hole in Courtenay Place. As well as the 10 cinema screens, its ground floor space provided a handy, large, under-cover space which was used by a range of people in the community. For example, young people could go there to meet their friends, have some street food from the local stalls that were popping up, and have a place to enjoy that was alcohol-free. It was also a popular place that could be a shelter from Wellington’s variable weather for parents and caregivers with their pushchairs to meet for a chat.

When it closed it also left a gap for people coming into Courtenay Place to take in a movie, and perhaps have a meal and a glass of wine before or after the screening. That filled an early evening business flow for the local restaurants and bars, bringing in a different mix of the community than the more late-night visitors, and this has affected how Courtenay Place is experienced and perceived.

Why wasn’t anything happening?

After its closure, Covid-19 came along and that was a real challenge for the cinema-owners industry, so that might help to explain why the owners had no plans to share about re-opening. Also, they were not doing anything wrong - they were paying their rates and there is no local government or central government legislation that requires owners of empty or ‘undeveloped land’ to get work underway, unless the building is unsafe for the public.

ICW tried on many occasions to contact the owners to see if they could share their plans for the building and car parks. We explained how its closure was a major blow for our inner-city community, including losing a pharmacy and Post Shop. Unfortunately we never received any acknowledgement or reply to our emails.

What was happening?

The Wellington City Council (WCC) was also trying to find out what the owners planned to do.

Then some progress appeared to happening because the owners visited Wellington last year for a meeting with the Mayor. That visit had the media speculating on what was being discussed (read Scoop article)

More information then began to appear about what was being labelled as a ‘secret deal’, and that led to pressure on the Council to share more. That resulted in information being released. (read Scoop article).

What just happened

Given that there were heated opinions on both sides - ie, to do the deal, or not to do the deal - Councillor Iona Pannett put forward a motion not to proceed with the deal that would be publically discussed at the 29 February 2024 Council meeting. That happened and the motion not to go ahead was defeated.

What happens next?

On 4 March, Councillor Tim Brown - who supported the deal - shared his views in this Scoop article “Clearing Up the Facts about the Reading Deal”. It includes the following information:

The proposal developed by the Council and Reading is intended to enable and incentivise Reading to develop their building while exposing the Council to the least possible cost and risk.

The proposed transaction has the following steps:

– The Council advances Reading $6m so that Reading can develop a bankable plan for the building revitalisation. If Reading can’t develop such a plan or if the plan they develop doesn’t agree with the specifications stipulated by the Council, then Reading must return the $6m. Their return of the funds is guaranteed by a bank.
– If Reading develops a bankable plan, it must use the remaining Council funding ($26 million), plus bank loans and whatever other capital they have access to, to effect the development.
– Over the first ten years of the transaction, Reading makes lease payments to the Council and it can buy back the land at cost. After ten years the buyback is at the higher of cost or market value. From that point the Council can sell its interest in the land to other parties.

For the Council, the transaction will be balance sheet and P&L neutral.

Now what?

Following the vote, opinions about the value and appropriateness of the deal continue to be aired. Expect to see these reported in the media over the coming year.

And ICW will also continue to stay in touch with the Pōneke Promise team so we can share any developments and timeline.