Jared Savage

Jared Savage is the New Zealand Herald's investigations editor.

Weeds choke $70m dream

When Prime Minister John Key launched a multi-million development on this site three years ago, it was expected to change the face of Newmarket. Now it's covered in weeds and the four-star hotel's swimming pool is full of dirt. Jared Savage examines what went wrong

The derelict site in Newmarket. Photo / Dean Purcell
The derelict site in Newmarket. Photo / Dean Purcell

A wealthy Auckland businessman, granted citizenship against official advice because of the "potential benefits" of his investment, has yet to start a proposed $70 million property development.

Donghua Liu opened the $3.5 million refurbishment of the Boulevard Hotel with Prime Minister John Key and Construction Minister Maurice Williamson in time for the Rugby World Cup as the first stage of an ambitious project to rejuvenate the derelict site in Newmarket.

Nearly three years later the four-star hotel is now a $400-a-week accommodation lodge and 20,000sq m of prime land behind it lies empty, with no resource consent applications lodged for the proposed hotel, apartment blocks and retail shops.

A Weekend Herald investigation has discovered the $70 million project at the former Carlton Bowling Club site stalled after Liu unsuccessfully lobbied the Government to relax business immigration rules for wealthy foreigners.

Liu - who was granted New Zealand citizenship against official advice after support from Williamson - hired professional consultants to lobby the Government to lower the $10 million threshold that non-English speaking migrants need to invest to qualify as business migrants.

The information is contained in a glossy brochure handed to guests at the Boulevard opening, which included 2011 Epsom electorate candidates John Banks, Paul Goldsmith and David Parker.

Prime Minister John Key at the opening of the Boulevard Hotel with (from left) Wilson Chow, Donghua Liu, Councillor Cameron Brewer and Chinese Consul-General Liao Juhua.
Prime Minister John Key at the opening of the Boulevard Hotel with (from left) Wilson Chow, Donghua Liu, Councillor Cameron Brewer and Chinese Consul-General Liao Juhua.

The document said the second and third stages of the development would go ahead following "improvements to New Zealand's business migrant rules".

"The Alpers Ave Redevelopment Group and its industry partners are working with the Government on finding a solution that will promote New Zealand's development and align its policies with countries like Australia, Canada and the United States."

Liu also told Chinese media at the ribbon-cutting ceremony that his plans for the $70 million redevelopment of the former Carlton Bowling Club site was unlikely to go beyond the design stage unless the Government cut the $10 million threshold.

"Like many developers throughout the construction, our group is constrained by a lack of access to capital. An improvement to business migrant rules would allow the group to source the equity capital it needs from overseas, particularly from China," Liu told a Chinese newspaper at the launch.

"Without that improvement, it is likely that stages two and three will be stalled indefinitely."

Liu hired consultancy group Exceltium, run by political consultant Matthew Hooton, to lobby the Government over the business immigration rules.

Hooton confirmed his team worked with Liu and construction industry associates and this included policy analysis of business immigration across different countries, an NZIER economic study and polling on public attitudes towards the proposed development.

He said the work was launched publicly with the Prime Minister and MPs from different political parties and a briefing document was prepared for the incoming Government and distributed widely in Wellington after the 2011 election.

Williamson, asked if he was disappointed the Alpers Ave development had yet to progress or whether he supported Liu's bid to reduce the $10 million limit, said his focus as Building and Construction Minister was to encourage more development.

"Foreign direct investment is an important element in getting more new buildings built, creating more jobs for New Zealanders.

"I haven't supported any request to lower the existing $10 million threshold, but I have had discussions with my ministerial colleagues to explore possible new initiatives to encourage more investment in New Zealand."

One initiative discussed was the creation of another business migrant scheme, set at less than $10 million, where the English language requirement would be revised.

The Weekend Herald inquired about a room at the Boulevard this week, but was told that rooms could be booked only for a minimum of three months. The weekly rent for each of the 38 rooms was between $400 and $500, which included all utility bills, although laundry was an extra cost with coin-operated machines. The pool outside had been filled with dirt and washing was hanging from windows on the outside of the building, while a Japanese restaurant on the ground floor had closed permanently.

Roncon Holdings - which made a $22,000 donation to the National Party in 2012 - and a subsidiary own around 20,000sq m of land in different titles in the heart of Newmarket. The site has a 2011 capital valuation of $20 million, although the market value of such a prime site will be much more. Liu - or companies he controls - also owns seven other properties in upmarket Auckland suburbs and Pauanui, worth an estimated $13 million.

An Auckland Council spokesman said no resource consent applications had been made for any development on the Newmarket site. However, the Weekend Herald has obtained design plans submitted to the Urban Design Panel, an independent body of design professionals, for pre-application hearings. Though the project was supported by council officers, a number of design concerns had been raised by the panel about the "visual dominance" of the buildings. These included the "lack of an over-arching design" to provide public open spaces, "circulation" for pedestrians and vehicles, as well as the bulk, location and type of building.

The lack of construction on the site does not seem to be because of a lack of financial support. Companies Office records show the Roncon Group is owned by the Chongqing Tianlong Developing Company, which is registered in China. Liu is described as the "ultimate shareholder".

The financial report for the year ending March 2012 describes the Roncon Group as a "going concern" - or having the resources to continue operating - as the Chinese company has undertaken to provide ongoing financial support. This is despite accumulated losses of $19.3 million. The Roncon Group annual report lists assets, mostly property, of $29.3 million and $58 million of liabilities, which is mostly a related party loan from Chongqing Tianlong.

Liu is due back in Auckland District Court next month to face charges of attacking his partner and her mother at the Boulevard Hotel in December.

Court documents show he is charged with assault with intent to injure his de facto wife, Juan Zhang, which carries a maximum sentence of three years in jail. Her mother, Lunju Wang, is listed as the victim of a male assaults female charge.

Liu, aged 53, has pleaded not guilty and his lawyer Todd Simmonds said the charges would be vigorously defended.

Citizenship bid pushed through against advice

The Herald revealed last week that Donghua Liu was granted citizenship against the recommendation of officials from the Department of Internal Affairs after Maurice Williamson lobbied the ministerial colleague making the decision.

It later emerged that Liu was granted permanent residency - also against official advice - in 2005 by Labour associate immigration minister Damien O'Connor.

The DIA recommended the citizenship application be declined on the grounds that Liu did not spend enough time in New Zealand or meet the English language criteria.

However, one of Liu's business partners approached Williamson and John Banks - then Mayor of Auckland - and they wrote to the Internal Affairs Minister Nathan Guy, asking him to grant citizenship against the official advice. "Invested in NZ and a lot of support," was a file note for the case released under the Official Information Act.

Guy said he made the final decision on more than 800 citizenship cases and regularly received correspondence from family and supporters of applicants. He considered all of the evidence and said of Liu's application: "I considered at the time that, on balance, the potential benefits to New Zealand warranted the granting of citizenship."

The official recommendation on whether citizenship should be granted was ignored in 61 of the 1011 cases between 2009 and 2011.

Others who supported Liu's bid for citizenship were lawyer Jeremy Goodwin and Roy Mottram, who are listed as directors in different companies with him. Electoral donation records show that Roncon Pacific Hotel Management Holdings Ltd - of which Liu and Goodwin are directors - made a $22,000 donation to the National Party in 2012.

Mottram confirmed he approached Williamson and Banks to support Liu's citizenship bid as, he said, he was making a very significant contribution as a businessman in Auckland, particularly in the construction industry.

"John's support was just a matter of course because the activity was in Auckland City, he was the mayor and he was supportive of things that were good for Auckland," Mottram said.

"Obviously, if you're the Minister of Building and Construction, you would want to promote building and construction, which we have been involved with for a long time."

Mottram did not return phone calls this week about the lack of progress on the Newmarket site.

- additional reporting: Yining Ding

- NZ Herald

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