Housing: Whanganui council could sell assets below market rate for new social entity

Whanganui District Council pensioner housing at Walter Nash Place in Gonville. Photo / NZME

A new Whanganui social housing entity could require the district council to sell assets below the market rate.

The council will consult on the entity – a standalone joint venture with a partner to deliver 1000 new dwellings – as part of its 2025/26 annual plan process.

Consultants KPMG have developed a business case.

KPMG government and infrastructure director Joey Shannon told the council’s strategy and policy committee that the project would involve the sale of the council’s pensioner housing portfolio.

Under the proposal, the council would lease the portfolio to the new entity before eventually selling it.

“It’s more of a question of how big of a discount off the market value of the assets is agreed,” Shannon said.

He said following that sale, the council would have no ongoing financial responsibilities.

“All renewals and revenues sit within the entity.”

If the public supported the proposal, the next step would involve the council going to market to seek a partner – “a procurement-type exercise” – in the latter part of 2025, Shannon said.

A KPMG report said Whanganui’s older persons’ housing portfolio was expected to generate $2.1 million in annual revenue and produce a small surplus if the council stuck with the status quo.

Any growth in it would require council borrowing.

It said the land comprising the portfolio was under-used, with only 19% of the land area developed.

“That presents significant opportunities for redevelopment at higher densities.

“It is estimated that increasing land density to 35% across the current portfolio could generate a potential addition of 143 units.”

In 2023, it was revealed the council needed to add up to 195 units to its pensioner housing portfolio by 2050 to meet the demand of an ageing population. Its 275 pensioner units are located in 16 complexes built between 1946 and 1988.

Whanganui Deputy Mayor Helen Craig. Photo / NZME

The council unveiled plans for a new entity in April last year.

At the time, community wellbeing manager Lauren Tamehana said the district would need an additional 2000 homes over the next decade, with half coming through the building market.

Committee chairwoman, Councillor Kate Joblin, told the Chronicle this week that council resourcing would be required in the initial set-up – “the first couple of years”.

That could be in the form of funding or staffing, she said.

“We need to work through that but we’d be silly to think it would happen by itself because it won’t.

“I would say it would be the upper end of $500,000.”

Deputy Mayor Helen Craig said she was thankful for the portfolio because it meant older people had a “great and safe place to live”.

“If we [council] didn’t own it, I think we would have a lot more people in these tough times really struggling,” she said.

“I know a lot of people are involved in providing assistance in this community and I’m sure they will have a lot to say about this.

“It’s going to be very, very interesting.”

KPMG also provided a second option – a community housing provider (CHP).

That also involved the council establishing a standalone entity but no partner would be sought.

Instead, it would be eligible for government subsidies and funding.

A stand-alone entity with a partner could also register as a CHP.

Shannon said discussions with potential partners while developing the business case indicated “genuine interest”.

If there were no viable proposals within a few months, that could trigger consideration of the CHP option, he said.

Councillor Rob Vinsen said he preferred the CHP option and there would be “a real area for confusion and concern” when the preferred joint venture proposal went to public consultation.

“When we say ‘we are going to look for partners’, the natural reaction is ‘who are they?’ and ‘what’s the deal?‘,” he said.

“I think it’s so wide open.”

Community consultation will run in April and May, with the council to confirm a preferred option in June.

The 2025/26 annual plan needs to be signed off before July 1.

Mike Tweed is a multimedia journalist at the Whanganui Chronicle. Since starting in March 2020, he has dabbled in everything from sport to music. At present his focus is local government, primarily the Whanganui District Council.