“We understand the council has internal charges to cover depreciation for replacements but even if the rental arrangement was above board, at $100,000 for six months, these two assets must be getting gold-plated when they’re replaced.
“In addition to these extraordinary payments, the council has also been paying nearly $100,000 per month in rental for the Fitzherbert Street administration buildings and temporary accommodation for staff in the Emerald Hotel. The information shows council payments to GHL of $15,000 per month for staff that have transferred from GDC to GHL to manage the assets, including the council’s community housing.”
In total, the figures showed a total of $855,509 of payments had been made by either GDC or council-controlled companies to GHL between December and May.
But council chief executive Judy Campbell said the payments were due to the way the council structured its finances.
Mrs Campbell said the situation of rent for offices was GDC paying GHL to provide office space for the administration staff of GDC.
“It obliges GHL to build a new building, and provide interim office space at 39 Gladstone Road, The Emerald building, The Works building, Kahutia Street and Te Puia Springs.”
Management feeMeanwhile, the management fee was GDC paying GHL to manage those commercial assets not transferred to GHL.
“Because of the knowledge/experience of the GHL staff, GDC sub-contracted GHL to assist with the management.”
The rent for Fitzherbert Street was negotiated on the basis that GHL would receive all income and be responsible for all expenses of the holiday park and vehicle testing properties (but not the income or expenses of the commercial activities carried out on the properties) as per the heads of agreement document, signed in December 2015, and which stated that before phase one transfer to GHL, the commercial activity (GVT/HP “businesses”) paid the commercial asset (building and land owner/holder) an amount of $270,000 pa.
"The asset would receive this as income and in return be responsible for the maintenance and management of the asset. i.e. painting the building, fixing roller doors, paying rates, cleaning gutters for example. The activity would term this as 'rental'; the asset would term this as 'income'."
At the time of the phase one transfer to GHL, it was agreed in the HOA (Clause 5.1(h), that GHL would act as the commercial asset manager and hence receive the income of $270,000 pa.
“In return, GHL’s obligation is to maintain the asset of the land and buildings. i.e. pay for building and land maintenance and pay the rates.
“Our fact sheet and documented reports on the rebuild of the Fitzherbert Street buildings are available on our website.”
The cost of temporary relocation of staff and rebuild of the building at Fitzherbert Street would have no direct impact on rates.
“This is because the GHL dividend increases in the first four years of the proposed transfer. This allows rates increases to remain at the same level agreed to in the long term plan 2015-2025.”
