Bold plans for new centres fail to get off ground

By Anne Gibson

Land that was to be used by Albany City Property Investments for a $3.5 billion development is now being sold. Photo / Supplied
Land that was to be used by Albany City Property Investments for a $3.5 billion development is now being sold. Photo / Supplied

The grass grows long on the city's fringes as visions of new town centres evaporate, quietly and almost without a mention.

As Super City polls close today, Auckland's spread has been contained more by the end of the boom-bust real estate cycle than any centralised planning attempt.

Gone are millions of dollars, borrowed from the public and banks, to fund plans which were a product of the 2000s real estate rise. The land was to become entire new suburban areas for Auckland.

Ditched or downsized are grand plans for architectural wonders, tall towers of apartment blocks, sprawling housing estates, shops linking to offices and new suburban hubs at the end of rural railway lines.

One scheme for bare land at Albany sucked down about $100 million and people are now asking exactly where that all went.

The closest they can get is writedowns in the value of land ($81 million), fees to the developers, leasehold land rent payments - though those dried up during the global financial crisis - and some repayments to bondholders.

Ex-Air Force waterfront land at Hobsonville has been carved into residential lots and the first houses are about to hit the market in Housing NZ's 3000-residence scheme.

But plans for many other Auckland sites are defunct.

Patrick Fontein's Kensington Park is now in the hands of John Sax, who is finishing a scaled-down version.

Nigel McKenna's vision for Flat Bush is in the hands of NBR Rich List family the Todds.

Sax will build fewer houses at Orewa's master-planned Kensington Park, saying he has applied for rezoning and envisages just 650 places, the lower-density plan supported by Rodney District Council because it would provide for a higher-quality project.

"We're reducing the density and putting in more green belts. That will mean more amenities for the existing residents and more wetland areas too. I'm not criticising Patrick because what he did was very good. We're just adding to what is already a well-conceived process," Sax said.

But the BNZ is not satisfied and its bankruptcy application against Fontein will be heard in the High Court at Auckland on November 8.

He's fighting the application, though his companies have gone under and by his own admission owe $93.9 million.

He gave personal guarantees on at least $120 million and says he can earn $200,000-plus annually as a property consultant, of which about $100,000 will go to creditors.

The BNZ doesn't agree and claims he was "fiscally irresponsible".

Kensington Park's collapse was caused by his failure to fund infrastructure as it was built and apply money according to loan agreements - it was not the financial crisis which caused the downfall but his own actions, the bank maintains.

Grand visions at Albany, Orewa, Waimauku, Clevedon and Manukau cost banks, businesses and businesspeople dearly.

The public got stung too. Most costly to hundreds of retiree investors was the now-ditched St Laurence/Symphony scheme for Albany. Kevin Podmore, chairman of Albany City Property Investments (in liquidation) blames leasehold land for Albany's demise.

"In hindsight, one of the problems with leasehold land is you have rental obligations and if you don't pay the rent, you forgo the asset. We paid money for a leasehold interest and got into a situation where we couldn't pay the rent. The banks weren't willing to provide funds to pay rent, so the lessor took the asset back."

Asked what lesson he learned, he quipped "be the lessor, not the lessee."

So did ACPI pay too much for the lease?

"In terms of the feasibility, it was okay. But unfortunately when you've got a global financial crisis, money becomes so scarce.

"When we did all this, there was a market but things have changed. It's not like there was a whole lot of money that went out of the company. There was a whole lot of money that went to the asset that turned out to be worth zero," Podmore admits.

He has bigger problems than ACPI, in the form of finance company St Laurence which is in receivership owing 9000 investors about $245 million.

Rick Martin, who leaseholded freehold Albany land, is now selling the sites.

Progressive Enterprises has been one of the big buyers lately, taking a large chunk and planning a big Countdown to break Foodstuffs' monopoly on the area around Westfield Albany.

Gone also is Martin's vision for a European-style village with a train station and 1375 units in neighbourhood clusters on a 464ha Waimauku block north-west of Auckland.

He needed rural land rezoned to build an almost completely carless village. But the Environment Court backed a council decision to ban rezoning of rural land for the Waimauku Estate Village and Martin sold the land.

"I got knocked back in the Environment Court then appealed it, and got knocked back again. I've still got the model of the property. I tried to sell it to [neighbour and opponent] Barry [Hart] but no luck. I'm going to put it on Trade Me under the heading 'field of broken dreams'! Reserve $100," Martin said.

"The funny thing was that the Margaret River Council, Western Australia, heard about the project a few years ago, contacted me and said it was just what they were trying to do over there.

"They then hired James Lundy, our urban designer, to help them with their district plan. The Waimauku Estate concept can be done in Margaret River as of right, so at least someone benefited out of it," Martin said.

At Flat Bush, Manukau City Council says the contract to develop a new town centre has left Nigel McKenna's financially stricken Melview Group and now gone to Todd Property, a subsidiary of Todd Corporation, the investment arm of the country's wealthiest family.

Melview had the contract to design and develop a 17ha town centre with housing, offices and cultural facilities but the council owns the land which Melview wanted to start progressively buying after winning the contract in late 2007.

Mike Higgins, chief executive of Tomorrow's Manukau Properties, said his organisation had concerns after the Melview Group's widely reported financial issues and Todd Property Group had satisfied the organisation that they had the staff and money to meet the obligations.

Auckland's borders remain rural, a sour sight for visionaries who wanted to commercialise them. Many of the sites have been sold or the companies that hatched the plans are subject to bankruptcy, liquidation or receivership proceedings.

The wind still blows through the fields of dreams on Auckland's fringe.

Broken dreams

Flat Bush, South Auckland
* Developer: Nigel McKenna.
* Site: 17ha bare land on Ormiston Rd, Manukau.
* Dream: Homes for 40,000 people, new town centre.
* Reality: Undeveloped land, now in the hands of other developers.
* Losses: Unknown.

Albany City Property Investments
* Developers: St Laurence's Mike O'Sullivan and Kevin Podmore, Symphony's Colin Reynolds with sons Adam and Damon, and Garry Looker and Gary Nolan.
* Site: 12ha of bare land opposite Westfield Albany
* Dream: $3.5 billion 30-level units, retirement village, offices.
* Reality: Bare, undeveloped land now gradually being sold as freehold titles.
* Losses: $96.1 million in year to March 31, 2009, liquidator says $76.2 million owed.

Kensington Park, Orewa
* Developers: Patrick Fontein, Allan Clarke, Nicholas Topp, Wendy Norwood.
* Site: Puriri Ave off Centreway Rd, Orewa.
* Dream: $450 million, 750 apartments and houses, lake, shops, gym, pool.
* Reality: Partly finished, scaled back to 650 places by John Sax.
* Losses: Around $93 million, Fontein has $120 million in personal guarantees.

Waimauku Estate VIllage
* Developer: Rick Martin's Cornerstone Group.
* Site: 464ha farmland.
* Dream: 1375 units.
* Reality: Rejected by Environment Court, land sold to Malory Corp.
* Losses: Unknown.

Clevedon Canal Scheme
* Developer: Westminster Properties.
* Dream: Gold Coast-style gated 279 large houses with moorings on canal.
* Site: 5km from the rural community of Clevedon on Wairoa River.
* Reality: Strong local opposition, rejected by Environment Court.
* Losses: Unknown.

- NZ Herald

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