IV. Jurisdiction Surveys

L. New Zealand

Viaduct Basin (America’s Cup Site)

In 1996, Tramco bought a 20-year lease with a perpetual right of renewal from Ports of Auckland on an 18-hectare harborfront site at Viaduct Basin, planning to lease out sections to individual developers with specific projects. See Reuter’s Business Briefing (RBB), 4 and 5. Tramco, which is owned by six men, created Viaduct Harbour Holdings as the holding company for the land. See RBB, 5. They wanted to create a mixed-use property with commercial, tourist, residential and retail interests. See RBB, 2.

In June 1996, Auckland’s Regional Services Trust decided on Viaduct Basin as the site for the America’s Cup village. See RBB, 5. It estimated that the cost of expanding and improving the basin to house about 12 yachting syndicates at between $38 and $40 million. See id. Trust Chair Craig Little said that any regional money would come from the trust, with no cost to taxpayers. See id. The work required would include dredging the basin and some land reclamation. See RBB, 6. The Local Government Amendment Bill, under consideration by a parliamentary select committee, would enable the trust to be involved in the funding, building and management of an America’s Cup facility. See id.

In August 1997, the head of Viaduct Harbour Holdings wanted to see the Auckland waterfront rival the world’s most beautiful harbor cities. See RBB, 5. An urban planner from San Francisco designed the area based on the heights and dimensions of Venice. See id. However, Auckland City Council’s 1995 zoning plan had eliminated the possibility of office blocks in the area, and provided different height restrictions for the three zones within the Viaduct Holding’s area. See id. For example, closest to the water was public open space (5-meter height restriction); next back was a mixed use development zone (12-15 meters); and furthest from the water was a “port-related activities” zone. See id. Thus, only six of the owned 18 hectares could be developed quickly. See id.

Another difficulty being negotiated with the city council in August 1997 was the proposed levy of 10 percent of the construction value to help pay for $50 million in public works. See id. By February 1998, Auckland City Council and various landowners and developers who were appealing the area’s 1995 rezoning reached a compromise that allowed for the $50 million in public works. See RBB, 4. Instead of a 10 percent levy, the development levy was 7.5 percent (while the rest of the central city is 5 percent). See id. The levies were due when planning permission was granted for each building, making the individual developers, who would benefit most directly from the public works, responsible for the payments instead of having Viaduct Holdings pay a lump sum. See id. The public works were to include a 10-meter-wide waterfront promenade, green areas, a public plaza, seawall and street upgrading. See id. Had the public works case gone to the Environment Court, the projects could easily have been on hold until just before the America’s Cup races began, so the council worked directly with the landowners and were able to come to an agreement on their own. See id.

The compromise allowed mixed-use development, including some commercial, so that Viaduct Basin could compete with the council-led Britomart project at the other end of Auckland’s waterfront. See id. To solve the height-restriction difficulties, Viaduct was allowed to build to 22 meters, although it had wanted 30 meters (pre-1995, the height allowed had been 40 meters) in the zone furthest from the water. See id. In the middle zone (12-15 meters), Challenge Properties, which leased land from Viaduct Holdings, was allowed to build a plaza and a luxury apartment complex to 16.5 meters (five stories), although they had hoped for seven stories. See id.

Allowing the compromise to go forward, the Environment Court approved about $500 million worth of property development at Viaduct Basin, adjacent to the America’s Cup village. See id. Viaduct Holdings described its position as that of a ground lessor, not taking any development risks, but facilitating development. See id. “We create a leasehold estate and a developer comes to us with a scheme, which we approve,” said the chief executive of Viaduct Holdings. Id. It did design an office park, however, and sold that plan to a developer. See id.

New Zealand’s flat economy made people loathe to invest in such a large project, but Viaduct Holdings tried to make it clear that this development was not just for the America’s Cup, but a venture that would help accommodate planned future growth in Auckland, and that would prosper because of its prime harborfront location. See id. As of June 1998, only one development on the site was without a lessor. See id.

A year later, Maritime Square was close to completion. See RBB, 3. This collection of seven, five-story office buildings overlooks the harbor and is grouped around landscaped gardens through which tenants can access the harbor’s edge. See id. The offices mirror the old maritime mercantile design, but are up-to-date technologically. See id. The developer had researched tenants’ wants, and discovered a strong interest in having their workplace environment mix with the outdoor environment, and not just be a stack of offices. See id. Maritime Square is the only commercial office district on the waterfront, amidst restaurants and residences, which the developers hope will be a strong draw for tenants. See id. Its other bonuses include its proximity to main downtown streets and its individual identity, something that a lot of businesses in Auckland are now seeking. See id.

In June 1999, Auckland began work to add sculptures/public art to Viaduct Basin. See RBB, 2. Eight permanent sites were planned, mostly on the water’s edge, with one in the water. See id. Permanent works were estimated to cost between $200,000 and $1 million each, while temporary works (to be located at the center of the development area) would cost between $20,000 and $300,000 apiece. See id. The temporary artworks could coincide with high-profile events at the basin, adding to the publicity, while the permanent works would give sponsors a chance to be associated with lasting elements of the Auckland scene. See id. Almost immediately, more than 300 artists applied for tender documents to submit plans. See id. Once chosen, the artists would submit detailed design proposals, which would be used to get funding (and perhaps design cooperation) from corporate, public and private sources on a project-by-project basis. See id. The proposals themselves would be paid for by the city council. See id.

Another development in the basin includes the renovation and the signing of a 12-year lease for an open air city market building that had been vacant for five years. See id. The farmer’s market received a multi-million dollar facelift, with pitched skylights and new elevators, wiring and air conditioning. See id. The original timber columns remained, as well as the steel trusses and exterior, thus bringing the building up to code, but maintaining its historical character and open air attractions. See id. It will now house commercial, retail and showroom tenants, as well as meeting and reception rooms. See id.

The Auckland region’s $1 billion infrastructure fund is managed by Infrastructure Auckland, which said in May 1999 that it would have to sell port shares in order to meet transportation and storm drainage needs. See RBB, 1. The organization would require a referendum vote by Aucklanders for the sale of any more than 24.9 percent of the port holding. See id. Such a vote may occur soon, as too much money is now tied up in port holdings, causing an investment risk by tying too much up in one investment, and leaving not enough available for needing repairs and improvements. See id. Selling some port shares would yield a higher return for a lower risk than just holding onto the real estate and hoping for increased value in the near term. See id.

One issue of concern in selling some or all of the property is public access to the waterfront. See id. Competing with private property developers to keep lucrative waterfront land in public hands may be difficult. See id. By the end of January 2000, Infrastructure Auckland wondered what to do with its assets in the American Express NZ Cup Village, which includes seven challenger syndicate bases and a marina. See id. The value of retaining the property depended upon who won the Cup, and since New Zealand retained it, one would assume that the value was not lost. See id. A private buyer could decide to redevelop the bases even with New Zealand retaining the cup, however. See id. The organization spent $85.7 million in taxpayer money on the basin, and is now (Jan. 29, 2000) considering selling the assets back to taxpayers. See id. “A writedown in the value of the village assets means they are now worth $60.7 million.” Id.

*(This synopsis is a compilation of newspaper wire service reports, with no final analysis given to most of the ideas and suggestions reported.)