Council F&P deal slammed

Ian Taylor.
Ian Taylor.
Dunedin technology companies are angry the Dunedin City Council was prepared to spend $2.3 million to help an outside company create 65 extra jobs when the local companies are being neglected.

ARL managing director Ian Taylor lashed out yesterday at the decision to help Fisher and Paykel, saying that for $2.3 million, the smaller technology companies in the city, including those which worked closely with his company, could have created 100 jobs.

''Bringing these high-tech jobs to the city is good, no disagreement. But when we had all the trouble in India, the DCC never came to see me about what they can do to help.''

Dunedin Mayor Dave Cull announced on Monday the council would spend the money on providing extra office space in the Wall Street complex, including an opening through to Penrose's building, upgrading Penrose's building and making a contribution to tenant relocation costs.

Fisher and Paykel Appliances, the company owned by Chinese whiteware giant Haier, would contribute a similar amount.

Golden Block Investments (GBI) owns Penrose's building. The council owns 49% of GBI, with the other 51% owned by Golden Block Developments (GBD), a company controlled by developer Tony Clear.

The two city council-appointed directors on GBI are Syd Brown and council property manager Robert Clark. The other two directors, representing GBD, are Mr Clear and Ken Cummings.

Golden Block Developments directors are Mr Clear, Jason La Hood and Durham Throp. No details were available on any financial contribution to be made by GBD to the Penrose's upgrade.

Property developers spoken to yesterday said while the council could claim it had a 50% say in GBI, it only did at the board level.

If push came to shove, Golden Block Developments would have the final say as it held the extra share.

It was similar to Prime Minister John Key being able to sell 49% of state-owned energy companies and retaining full control of the company with the Government retaining 51% of the shares.

They also said it was unusual the majority owner of the building, GBD, was not making a financial contribution.

It should have been the council upgrading Wall Street, which it owned, and GBD making a substantial contribution to the improvement of Penrose's building.

While supportive of the new jobs, Mr Taylor said it was a slap in the face for other commercial property owners in the city whose rates would go to pay for the upgrade of Penrose's building.

There were plenty of empty buildings which could have accommodated the extra jobs.

Mr Taylor said the day Fisher and Paykel Appliances, which had received much help from the council previously, made more than 300 workers redundant at the Silverstream plant, he and his wife were planning to close their business.

The cancellation of a contract in India had left the Taylors stretched for money and they decided the best decision was to close the Dunedin operation.

''As we walked into our office, the receptionist held up the newspaper and showed us the headline. I turned to Liz and said `we can't do this now'.''

The Taylors sold their investment in Terralink for around $1.5 million.

''It was up to us to find a way to survive. We paid off all of our debt and had enough cash to last for two months.

''Not one councillor came to see us at that time.''

It did not seem right for the council to spend $2.3 million on Fisher and Paykel when others remained loyal to the place, he said.

''The reason we stayed was Fisher and Paykel making those 350 people redundant.''

Cr Hilary Calvert, a commercial property owner in the city, said the decision to spend the money on upgrading Penrose's building and Wall Street made sense on a commercial level.

Any business owner of Wall Street would have done exactly the same to keep a tenant or improve the value of the building should it be sold.

However, she was concerned over ''unreliable information'' given to councillors and was unsure, because of the information supplied, whether the investment would break even.

''On a commercial level I think the decision makes sense but we won't know - based on the unreliable information - whether it will break even. Who knows if it will cost three times that?''

She had talked to other councillors about the information, pointing out aspects she did not agree with, but the decision to proceed had passed anyway, Cr Calvert said.

Because of Wall Street's ''innovative design'' it did not have as much lettable space as it could have and to accommodate the expansion by Fisher and Paykel, there was no option other than to go into Penrose's building and lose some car parks.

Car parks were under threat all around the city and that could not continue, she said.

Cr Calvert also questioned the need for the council to contribute to the relocation costs of existing tenants.

That might happen if the tenant could not find anywhere else but usually, landlords would do everything they could to attract a tenant to shift to their building.

reality check

In answer to Max power.

The council isn't responsible fixing unemployment outside its own need. It provides services to the city such as water, roads, rubbish collection and so on from rates collected.

There is now very little room for much else outside our council's core responciblities.

Why do some people continue to think our council is some sort of father xmas that is expected to continue financing the wish list of our old boys network. 

 

Some just don't get it

Councils are elected by ratepayers, they then administer the city and all the infrastructure within, i.e roads, drains, water supply.They should not compete with private investors by risking funds gathered through rates and other levies, if things go bad they then have access to borrow funds at the expence of private companies or investors.

Didn't the DCC just contract our water dept to a Christchurch company 

It's that simple, this council is out of control and if they stuck to their "core" responsibilities we would have smart buisness setting up in Dunedin, they are using my money to compete against interests that allow the company I work for to employ locals.

Self interest and ignorance from our elected officails will see Dunedin continue to lagg behind the rest of NZ.  

What have we learnt?

That's really easy to answer, marious. The DCC cannot be trusted to make good use of public money, for the public good. This is another prime example.

And for the record, I wouldn't purchase any F&P product. After countless problems with their dishwashers, washing machines and fridges, over the last few years i have replaced all but the fridge with quality European products. And the fridge will be going this year. F&P used to make great products but have been going downhill since the advent of the Gentle Annie.

And to Dave Cull. If you think the ratepayers will be happy with our money being used to prop up a multi national foreign company, when we are in so much debt, you would be dead wrong. Go ahead with this and you will be gone at the next election. 

Dunedin will not be Detroit

With all the other businesses which have downsized and or gone from Dunedin in recent memory I believe the Council has considered what it could do to keep F&P in Wall St.

It does irk a bit to once again be spending millions we don't have to retain a business which it was founded here but F&P is a true multi national now and logically are not emotionally invested in Dunedin. We should look on it as contributing to the future prosperity of our city and its investments.

If the numbers add up its just good business to invest in tailoring the space to fit such a tennant providing they provide some assurance they will stay in the longterm.

I just wish F&P was still manufacturing here.

Nothing to hide

Marious: the council can afford to do anything it likes, it affords it by raising rates if required.  The big question is can you and I afford it. 

Really though it depends on the deal the city has done,  if they expect a return from the investment within the next few years then probably it's a good idea,  if not,  and let's face it their recent track record for smart financial decision making is not all that good,  then probably it's a bad idea.  It's our money being put at risk an open democratic government will be happy to publish the details of the transaction and the council's predictions of the results and how they calculated them . I can't see why they would not there's nothing here to hide.  

Corporate welfare Mr Cull

Fact, the council is broke and already deeply indebted. Budgets will be tight for many years to come as ratepayers face large debt repayments and council project losses.

So Mr Cull how can this council possibly afford to consider giving F&P or any such company such assitance.

Is it a function of council to prop up with public funds private companies in this way?

Is the council giving to the propossed water front hotel devolper or other companies currently?

Dunedin councils have borrowed and overspent to disastirous effect in part due to the interests of a few.

So what have we learnt? 

Loyalty??

Funny that when it was under New Zealand ownership Fisher & Paykel pulled the plug on Dunedin in a big way.

Now that the company is Chinese-owned they are prepared to keep, and expand, their operations in Dunedin.

Those Chinese are really bad news are they not? Some of them even want to invest in the city by building a hotel (the nerve!)

It's all very well for Ian Taylor to go on about the Council not supporting him and other local companies, but nowhere in the story does it say that Taylor actually approached the Council for assistance when he decided to stay in Dunedin.  Did he ask or does he expect Council to be mind readers?

Ian Taylor has dropped a notch in my book

Had Ian Taylor been a DCC tenant then they would have possibly done the same thing. But would Ian Taylor have put up 3 million of his own money to match the DCC contribution when he himself says he was almost out of money? Did he approach the DCC? How would they know he was in trouble? Did he approach his own landlord? Maybe he owned his own building and could have sold it to rasie some capital?

And he is wrong, rates will not go up for other ratepayers - it is being funded by selling other buildings in the property portfolio. They have simply cashed up one investment to pay for another.

If you don't like what you see in Dunedin then maybe you could throw your hat in the ring at the next election. 

[Abridged] 

You are kidding me...

All of the comments here are from the same names again with nothing better to do than bag the DCC and downplay anything positive. If the DCC had let them go the same people would be bagging the council. This has created jobs and brought much needed money into our economy at a time when we need it. 

Put simply, we have a DCC tenant who needed more space and would potentially leave the city taking millions from the economy. The DCC has stepped up and come to an arrangement and got the right outcome. 

This is a win for the DCC and ratepayers. It's bringing in money, talented people and reversing the trend of business moving away from Dunedin. Fisher and Paykel have an extensive history with Dunedin and I for one am ecstatic about the decision.  DCC has made similar arrangements in the past - why do you think we still have Speight's and Cadbury Confectionary in the city! 

Let us hope we see the DCC invest in more jobs to help our city remain one of the main centres of NZ. Well done DCC and all involved.

Missed opportunity

Definitely a missed opportunity for F&P to anchor the rejuvenation of the Vogel St precinct, and at the same time alleviate parking pressures within the CBD.

Contrary to previous comments by others, CBD zoning does actually allow for offices, but it does not allow for industrial, and one would think that the product development and testing that's occurring within Wall St would be deemed an industrial usage and in direct breach of the District Plan.

I'm all for development, all for job creation and all for progress (pro stadium & proposed hotel), but this proposal is giving off a rather unpleasant odour to say the least.

Councillor Calvert remembers

"'On a commercial level I think the decision makes sense but we won't know - based on the unreliable information - whether it will break even. Who knows if it will cost three times that?"  Seems lik new councillor Hilary Calvert has a clearer memory of what happens when decisions are made based on unreliable information, than those who were there when the Carisbrook and Fubar stadium decisions were made.

Is this correct?

Once again, the DCC seems to be ambivalent about its own rules when it comes to doing deals. The Wall St Mall is clearly a designated retail area. It is only through poor design and forethought that it is left with what is loosely described as office space. That in itself seems a breach of zone from retail. But then the F&P operation can hardly be described as either office space or retail. It doesn't  provide either goods or services to the general public in a retail sense. Its sole activity is commercial research and development purely for its parent company Haier of China. For that reason it could be said to be out of zone if the city planning dept was true to its word.

There seems to be plenty of space for F&P's type of operation down in the Vogel St developments where I am sure they would be welcomed, and at a much cheaper rate at no cost to the rate payers. Why council seem determined to flout their own plans is a question which needs answering.

Robert Clark and Dave Cull. Please explain

It sounds like Property Development manager, Robert Clark, and Dave Cull have some serious explaning to do with this deal. It is right of Ian Taylor, and others, to challenge this and demand answers.

Fisher and Paykel have ditched us before after receiving council handouts. There is nothing stopping them doing it again when it suits. Now it is largely a Chinese company we can expect no loyalty given the internationalist way of doing business by the Chinese and other countries.

Great that F and P ( Haier) are reinvesting, but they carry the can, like others must do so, including Ian Taylor's company. Playing favourites among companies, by public organisations, is a recipe for grief.

My view

As a ratepayer, my view is that the DCC should not have any financial interest in any property that they themselves are not the tenant.

Speculation in the property market with public money is not on given the amount of debt this city is in. All property not used by council entities should be sold off and used for debt reduction. 

council's business interests

Too many problems are caused by the DCC having business interests which are managed at elected representative level in any sense at all. This is made worse by the past tendency for people in the South Island to do business through 'gentlemen's agreements', the rather sexist term used by Mayor Cull when talking about his ( or the DCC's? - who can tell?) business dealings with Pete Hodgson.

Yes, helping F and P financially might help. And helping Wall St might increase council profits. But I can't see how any of this can be done  transparently and fairly. 

The current system here of conflating and confusing local gvernment with local economic benefit or development is a bad one. Conflicts of interest seem inevitable. The most serious vulnerability is that it allows local government processes to be captured by those wanting to spend a great deal of public money not necessarily in the public interest, arguing 'economic benefit' - as we have seen in the past.

It all makes me wonder whether attempting local economic development is a legitimate local government function at all. I suspect not.

F&P

Is F&P still a Kiwi owned business. I thought the Chinese bought it. If so, they are the ones with money, so why should we the ratepayers once again have to fit the the bill?

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