No viable business case for film precinct found
Earlier in the year the Auckland Development Committee resolved to allow ATEED to work on a film precinct at Hobsonville Point rather than a residential and community facilities on the former designated marine precinct area.
Screen precinct earmarked for Hobsonville Point
Auckland Council’s Auckland Development Committee has today passed a recommendation to create a screen precinct on council-owned land at Hobsonville Point.
At the same time, the committee agreed that council will no longer proceed with a marine industry precinct on the 20 hectare site, a legacy project adopted by Auckland Council from the former Waitakere Council in 2010.
The committee today weighed up two options. The first, recommended by Auckland Council Property Limited (ACPL), would see 14 hectares of land committed to residential development, with the remaining 6 hectares earmarked for an Employment Hub.
The second, passed by the committee, is a proposal by Auckland Tourism, Events and Economic Development Limited (ATEED) to allow a procurement process for private investors to build and operate a screen precinct on 10 hectares of the land, with the remaining 10 hectares to become residential development.
ATEED now has until 31 October to complete the procurement process for the film studio campus and will report back to the Auckland Development Committee at its November meeting. In the event that a commercially viable proposal for developing the screen precinct hasn’t been secured by then, ACPL’s proposal will be adopted by council.
The Resolution that sparked the situation above was the following:
|Auckland Development Committee – 12 November 2015
Extract from the Auckland Development Committee meeting – 7 July 2015
|15||Hobsonville Point 20 hectare Block: Future Land Use|
|Resolution number AUC/2015/149
MOVED by Cr RI Clow, seconded by Cr WB Cashmore:
That the Auckland Development Committee:
a) agree that Auckland Council will not proceed with a Marine Industry Precinct at Hobsonville Point and that no further work be undertaken on the Marine Industry Precinct apart from existing contractual obligations.
b) request that Auckland Council Property Limited do the following:
i) advise the marine industry of the decision under clause a) and the reasons for it;
ii) thank the marine industry for its attempts to activate this precinct over the last five years; and
iii) encourage the marine industry to continue working with Waterfront Auckland and Auckland Tourism, Events and Economic Development Ltd on refit options.
|Resolution number AUC/2015/151
MOVED by Cr RI Clow, seconded by Chairperson PA Hulse:
That the Auckland Development Committee:
j) agree that council adopt an appropriate procurement process to identify the best potential outcomes for a screen precinct at Hobsonville, including the leasehold or freehold sale of council-owned land.
k) request that Auckland Council (Auckland Investment Office) reports back to the Auckland Development Committee on the market validation exercise and its procurement process to seek the committee’s decision on the detailed commercial proposals arising from the process.
l) require ATEED to complete the procurement process as per clauses j) and k) by 31 October 2015 and report back to the Auckland Development Committee at its November 2015 meeting.
m) agree that, in the event that a definitive and commercially viable proposal (or conditional agreement) for developing a screen precinct at Hobsonville Point has not been secured by 31 October 2015, and approved at the November 2015 Auckland Development Committee meeting, the 14/6 Masterplan for the 20ha Hobsonville Point block (as outlined in the agenda report) be adopted by council.
n) consult directly with the Upper Harbour Local Board and local community organisations as to how community needs might best be addressed under the Hobsonville screen precinct option.
Looking at the Auckland Development Committee Addendum Agenda (linked above) it does seem ATEED have not fulfilled parts J-L thus part M is invoked.
From the Auckland Development Committee Addendum Agenda:
Hobsonville Point update and proposed screen precinct
File No.: CP2015/23649
- This paper is pursuant to the Auckland Development Committee (ADC) meeting of 7 July 2015 requiring Auckland Investment Office (AIO) to report on the market validation exercise and adoption of an appropriate procurement process to identify the best potential outcomes for a Screen Innovation and Production Precinct at Hobsonville, including the leasehold or freehold sale of council-owned land, and to seek the ADC’s decision on the detailed commercial proposals arising from the process.
- At the Auckland Development Committee meeting of 7 July 2015 the committee:
- agreed that Council adopt an appropriate procurement process to identify the best potential outcomes for a proposed Screen Innovation and Production precinct at Hobsonville, including the leasehold or freehold sale of council-owned land.
- requested that Council, via the AIO report back to the committee on the market validation exercise and its procurement process to seek the committee’s decision on the detailed commercial proposals arising from the process.
- required ATEED to complete the procurement process by 31 October 2015 and report back to the committee at its November 2015 meeting.
- agreed that, in the event that a definitive and commercially viable proposal (or conditional agreement) for developing a screen precinct at Hobsonville Point has not been secured by 31 October 2015, and approved at the November Committee meeting, the 14/6 Masterplan for the 20ha Hobsonville Point block (as outlined in the agenda report) be adopted by Council.
- directed ATEED to consult directly with the Upper Harbour Local Board and local community organisations as to how community needs might best be addressed under the Hobsonville screen precinct option.
- as at 31 October, despite the significant amount of work done, we do not have a definitive and commercially viable proposal (or conditional agreement) for a screen precinct at Hobsonville Point – as requested by the ADC in resolution AUC/2015/150 from 7 July 2015.
That the Auckland Development Committee:
a) receive the update on the Hobsonville Point and proposed screen precinct report.
- Market Validation – procurement process
Following approval to proceed at July’s Auckland Development Committee (ADC) meeting, KPMG concluded a Market Validation Exercise on behalf of ATEED which confirmed national and international interest in a Screen Innovation and Production Precinct.
- Subsequently, ATEED – in conjunction with Auckland Investment Office – undertook a Request for Expressions of Interest (REOI) through Council’s Procurement Team to identify a Preferred Respondent(s) with which to advance negotiations towards a transaction that would meet Council’s objectives of a commercially viable proposal.
- A total of eight responses were received from the REOI process with four additional parties expressing interest to work alongside any Preferred Respondent.
- A process to evaluate responses was undertaken by AIO in September. There was no single response that met the ADC criteria of a commercially viable proposal. However, through the process the AIO identified two separate respondents which had the potential – in some form of combination or working relationship – to secure a quality outcome. The Preferred Respondents were:
- Party A – a well-respected property developer, which is well-known to Council and has a reputation for delivering exceptional results
- Party B – a highly experienced international studio operator.
- The AIO is of the opinion that no proposal is at a sufficiently advanced stage that an acceptable agreement on commercially appropriate terms could be concluded within the next two months.
- Current position
- After working together with Party A and Party B following the REOI process, and after extensive discussions with a wide number of industry players and the NZ Film Commission, the following points have become clear.
- There is clear interest from at least 20 industry participants in participating in the proposed Screen Innovation and Production Precinct at Hobsonville to capture the perceived benefits of such a facility. These businesses range from world-renowned industry players through to local tertiary providers and industry suppliers. The interest in long-term tenancies has validated the decision Council took to explore the screen precinct proposal in more detail.
- There appears to be the additional benefit of relocating Auckland Film Studios’ operations to any to any new precinct with the opportunity to free up the current land at Henderson for redevelopment.
- Excluding land costs, detailed estimates from a number of parties have determined that the cost of developing a 10ha Screen Innovation and Production Precinct would be in the vicinity of $65-$75 million with an additional $15 million for the land (assuming a commercial use valuation) – a total cost of $80-$90 million. The proposals under consideration contemplated a staged approach to meet/match the timing of demand and commitment from the industry to locate on and assume a long-term financial commitment to the precinct.
- Notwithstanding the levels of interest expressed by significant number of industry participants, as at the end of October the AIO has been unable to obtain no firm commitment, either in substance or in principle, from any private sector party willing to assume, either the development risk or, alternatively, the overall operating risk of the precinct.
- Next steps
ATEED remains committed to assisting the region’s important screen production industry to secure appropriate studio infrastructure for the major international productions the region continues to attract but is currently unable to accommodate due to a lack of screen infrastructure.
ATEED and the AIO will continue to explore business and investment attraction opportunities with the private sector.
So ATEED have not met the conditions as set out in the Resolutions set by the Auckland Development Committee and as noted in bold red above.
Thus as far as I am concerned that is it for ATEED. We move on and allow Panuku Development Auckland (who succeeded from Auckland Council Property Limited) to execute the Hobsonville Point Master Plan as noted in the June Resolutions of the Auckland Development Committee. No extensions to ATEED they have had their chance and it has been lost as the above Agenda report shows.
Time to cut losses and allow Panuku to do their work in establishing the 20ha block which is to house residential, light commercial and some civic facilities for Hobsonville Point. The Unitary Plan zoning for that block last I checked is Mixed Housing Urban which allows for at its maximum extent three storey terraced housing.