Changes ahead for Napier's $34 million investment portfolio?

The majority of council's property portfolio of 76 commercial or industrial buildings is in Ahuriri, Pandora, or Onekawa (pictured). Photo / File

Changes to a $34 million investment portfolio which helps offset Napier City Council rates are being considered.

At its first meeting of 2018, the council yesterday agreed to recommend proposed changes to its investment property portfolio policy be consulted on through the Long Term Plan 2018-2028 process.

This portfolio includes 76 commercial and industrial properties across Napier - the majority in Onekawa, Ahuriri, and Pandora. As of June last year the portfolio was valued at about $34.8m and generated around $1.7m in rental revenue, which offsets rates.

The current policy states the council will retain the portfolio in its entirety, but there had been some "negative sentiment" in the community toward leasehold land.

"Council has had numerous requests from lessees requesting the right to freehold their site," a paper before council stated. "There is additional concern that leasehold land may have a detrimental impact on business investment and redevelopment of specific sites."

Councillors were told the current policy provided no flexibility for freeholding specific, non-strategic assets which could assist in the redevelopment of industrial or commercial land in Napier, and stimulate private investment, if sold.

More flexibility would allow the council to consider each property on its merits so any decisions would be made "with the best intentions for the future of Napier".

So one of the possible policy amendments on which council agreed to be consulted was to allow the freeholding of some "non-strategic" land, on a case-by-case basis, and only when alternative and suitable investments could be found.

"The decision to sell any property would need to be made on the basis that an alternative investment could be found with similar and/or improved returns so the financial implications for ratepayers is negligible."

Funds from leasehold land are required by law be directed to the improvement, protection, management, or use of the inner harbour and the coastal marine area.

Given the financial returns to council, councillor Graeme Taylor said he was glad there were "lots of safeguards in place", and that taking each property on a case-by-case basis was the right approach.

Council director city strategy Richard Munneke said council's motivation "needs to be to protect the ratepayer".

He said the "public good" would also be protected because any proposal would go through the council's audit and risk committee before being accepted.

Councillors were told there was a small amount of risk if they chose not to propose a change to the policy, because this would disappoint those leaseholders wishing to freehold their site.

There was also risk in changing the existing "no sell" policy - council could get multiple requests from leaseholders to sell properties, raising challenges to find equal investment opportunities so as to avoid an impact on rates.

The "non-strategic" land was identified in a June 2016 report commissioned by the council as having no particular public space, urban or landscape attributes. The majority of these properties were in the Onekawa industrial area.