Hamilton City Council has paid $6.5m for five properties on Victoria St - spending up to 56 per cent more than the recommended market valuation for most of them.
But Hamilton Mayor Andrew King says the council paid the same as anyone else would have and is delighted his dream of opening up central Hamilton to the Waikato River is progressing.
Council confirmed today it paid a total of $6.49m for the five properties between 242-266 Victoria St - 51 per cent more than the $4.3m independent market valuation given to them by Telfor Young.
The cost of four of the properties was 56 per cent more than the market valuation and the fifth property was 21 per cent more.
The $6.49m spend comes from the $7m budget the council set aside as part of its 10-year-plan to purchase properties between Victoria on the River and Embassy Park as part of its plans to eventually develop a giant city park on the river.
King said purchasing the four properties with five buildings were long-term strategic purchases.
"These are prime properties on our main street, and I expect if they had been marketed they would have fetched similar prices to what the Council has paid.
"I'm delighted these purchases will help progress my dream of opening up central Hamilton to the Waikato River for the long-term benefit of our city and its residents."
Council has no funding or confirmed plans to demolish the buildings and develop the park and will retain the buildings as investment properties and the existing tenants will stay on.
242-254 Victoria St, whose tenants include Mexico and Dough Bros, was purchased from Donald Fraser and Peter Morton for $3.75m - 56 per cent more than the $2.4m market valuation.
Council paid $1.95m, 56 per cent more than the $1.25m market valuation, for 266 Victoria St from Matt Stark and Gareth Munro. It shelled out another $790,00 for 260 Victoria St from developer Matt Stark and Graeme Ballard - 21 per cent more than the $650,000 market valuation. These two properties are beside the existing park and part of the sale deal was they must be demolished within 10 years or be offered back to the owner.
The purchase of Stark's buildings was only passed by council after the mayor used his casting vote. The purchase of the Mexico and Dough Bros properties, owned by Fraser and Morton, went through seven in favour and three against. Three councillors were absent.
Fraser told the Herald last month he believed the council paid a fair price for his buildings and he had been keen to support the council's vision for the area.
While Stark told the Herald in March that he was not looking to make a huge profit off any buildings he sold to council.
Stark said at the time he would sell the buildings on to council at the same cost they paid for them plus any significant holding costs. "We can't go hugely into our own pockets as well so there has to be fair commercial reality at the end of the day to solve this potential problem or potential win for the city."
The decision goes against previous advice from Hamilton chief executive Richard Briggs who told the Herald in December last year the council would only ever pay market valuation for a property.
"I suggest any good businessman won't be paying over the odds for them anyway, but that's their call and anyone selling the properties will be selling them at market. The market is going to drive all this out."
What Council paid:
Properties, Owners, Capital Value, Estimated Market Value (EMV), Sale Price
• 246, 250 and 254 Victoria St, owned by Donald Fraser and Peter Morton, CV $2.075m, EMV $2.4m, Sale Price $3.75m
• 260 Victoria St, owned by 260 Victoria Limited whose directors are Matt Stark and Graeme Ballard, CV $560,000, EMV $650,000, Sale Price $790,000
• 266 Victoria St, owned by 266 Limited whose directors are Matt Stark and Gareth Munro, CV $820,000, EMV $1.25m, Sale Price $1.95m