Most of Tauranga’s elder housing villages have been sold to the Government for nearly $25 million less than their capital valuation.
On Wednesday, Tauranga City Council announced it had sold seven of its elder housing villages to Kāinga Ora for $17.2m.
The capital value of the seven villages, as of July 2021, totals $41.65m — $24.45m less than the sale price.
The sale follows last year’s sale of the failed Harington St Transport Hub site to Waibop (Harrington) Ltd for $1 and the sale of council land at 82-90 Devonport Rd to Willis Bond and Co on the agreement the company would build a council administration building.
Council commission chairwoman Anne Tolley said the price was mitigated by the fact the villages were going to a community housing provider and better-protected tenants than if the properties went on the open market.
But Simon Bridges, speaking earlier in the week as Tauranga MP, said the sale from the council to the Government was, in his opinion, “appalling”.
Bridges said it was no wonder rates kept going up. “This means over $20m more in rates than would have been the case had they sold at market value like they should have.”
Citizens’ Advocacy Tauranga chairman Rob Paterson said the sale of the villages at that price was, in his view, an “absolute rort”.
“They’re selling it short. It may be to a group that has some community interests at heart but I despair … They should not even be selling them in the first place. We need them for elder housing.”
Paterson was concerned that as existing elder housing tenants moved on, their space would be given to others – not other elderly.
“Where are they going to go? There’s a limited number of rentals. The RSA has quite a good batch down there, but who else is providing housing for the elderly?”
After the council announced the sale, Te Tuinga Whānau executive director Tommy Wilson was among social services that said they supported the move, but he also noted his organisation was experiencing an increase in elderly people seeking their help.
Paterson said: “It shows that we can’t accommodate these elderly people already.”
He was also concerned the “meagre” money from the sale would be wasted on nice-to-haves instead of going towards critical city infrastructure.
In his opinion: “The price is absolutely ridiculous. What are we going to spend $17m on?”
Sales documents for the villages were signed on April 14 and the financial settlement was expected to happen in about six months.
Council general manager of strategy and growth Christine Jones said the sale and purchase price was based on “Kāinga Ora financial modelling, not market valuations, and was independently reviewed by KPMG on [the] council’s behalf as part of the negotiation process”.
“It reflects the cost of providing public housing and Kāinga Ora’s ongoing commitment to invest $32.4m in upgrading and redeveloping the portfolio over the next 25 years,” she said.
She said the council would reinvest proceeds from the sale of the villages into city “housing, including social, public, elder and affordable housing”.
In response to the criticisms, Tolley said the decision to sell to a community housing provider “inevitably affected the potential sale price”. The decision was made by the previous elected council to protect the interests of present and future tenants, she said.
“If the council had sold these villages for anything like their market value, whoever bought them would have had to immediately increase rents and that would have made rentals completely unaffordable for many, if not all of the existing tenants,” Tolley said.
“The sale to Kāinga Ora means current and future tenants will continue to have access to affordable housing, and significant new investment will also be committed to maintain the quality of the accommodation provided over the coming years.”
This was balanced with the private sale of Hinau St and Pitau Rd villages, which were expected to yield “considerably more value” than otherwise. This money would go towards Tauranga’s social and community housing goals, Tolley said.
In March last year, these villages were valued at $18m-23m.
Asked whether existing elderly tenants would eventually be replaced with other elderly in need of housing, a Kāinga Ora spokeswoman said: “We’ll be building a larger number of warm, dry and modern homes for people most in need of public housing and those may be older people, families, those on their own or others.”
Existing tenant agreements “ensure they will always have a place to call home with security of tenure and affordable rents”, she said.
Last year Kāinga Ora bought the 95.3ha Ferncliffe Farm site in Tauriko West for $70.4m for housing.
It has also been involved in council plans to potentially develop key reserves into housing, such as Parau Farms near Bethlehem and the 85ha reserve in Greerton that hosts Tauranga Racecourse and Tauranga Golf Club.
Capital value of the villages:
Brookfield Village, Otūmoetai – $6m
Girven Village, Mount Maunganui – $4.87m
Monowai Village, Mount Maunganui – $8.52m
Maitland Village, Greerton – $1.36m
Pooles Village, Greerton – $4.28m
Shelley Pillans Village, Tauranga Central – $9.1*m
Vale Street Village, Tauranga Central – $7.52m
Source: Tauranga City Council
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