When Council Becomes Your Landlord
- 2 days ago
- 5 min read
Updated: 15 hours ago
"We're from the Government and we're here to improve your business."
Few sentences in the English language have caused more involuntary eye twitching.
Yet that is, in essence, where Gisborne now finds itself.
Gisborne District Council, through its commercial arm Gisborne Holdings Ltd (GHL), has decided that owning strategic commercial buildings is apparently part of local government.
Not content with roads, water, rates, rubbish, planning rules and the occasional speed hump, Council has broadened its commercial property portfolio by purchasing the Bates Building on Lowe Street.
It has also shown interest in broader strategic property ownership around the city centre.
The language is familiar.
Revitalisation.
Activation.
Shared spaces.
Catalyst projects.
Placemaking.
Urban planners have an extraordinary talent for inventing words that sound exciting while somehow making you wonder whether you'll still be able to park your ute.
Council's New Side Hustle
The Bates Building isn't simply another investment property.
It contains restaurants, retailers, service businesses and apartments.
The tenants are ordinary local businesses offering authentic Gizzy goods and services, paying rates, employing locals and trying to make a living.
Only now, instead of paying rent to a private landlord, they pay rent to a company owned by the same Council that sets their rates, designs the streets outside their shops and writes the planning rules that govern their businesses.
That's quite a career change.
Council is now regulator, planner, infrastructure provider... and landlord.
It is a little like appointing the referee as captain of one of the teams. They may be completely impartial, but you'd forgive the spectators for raising an eyebrow.
The Next Piece of the Puzzle?
Following Gisborne Holdings Ltd's purchase of the Bates Building, attention has naturally turned to the Emerald Hotel.
Local Democracy Reporting revealed that Trust Tairāwhiti was assessing the property, although the organisation neither confirmed nor denied any acquisition plans.
Whether or not a purchase ultimately occurs, the possibility raises an important question.
If publicly backed organisations progressively acquire key waterfront properties while simultaneously helping shape the Reads Quay redevelopment, where does urban planning end and market participation begin?
Welcome to the Construction Zone
Supporters of the Reads Quay redevelopment promise a vibrant riverfront full of people strolling beside the river, lingering over coffee and enjoying beautifully landscaped public spaces.
Perhaps.
But before anyone reaches for their flat white overlooking the Taruheru River, someone has to survive the construction.
The Bates Building and surrounding businesses are likely to spend years operating beside an active building site.
Temporary fencing.
Excavators.
Traffic management.
Road cones reproducing at alarming speed.
Access changes.
Noise.
Dust.
Disappearing parking.
Customers and business owners wondering whether it's easier to go somewhere else.
The promised benefits sit somewhere over the horizon.
The disruption arrives on day one.
Businesses cannot pay wages with artist's impressions.
The Curious Case of Government Shopping for Shops
Owning commercial property also gives Council something it has never previously possessed.
Choice.
Every lease renewal becomes an opportunity to decide what kind of business belongs on the waterfront.
Perhaps another café.
Perhaps boutique retail.
Perhaps hospitality.
Perhaps something considered more "aligned with the vision."
None of this requires a conspiracy.
It is simply how landlords operate.
Except this landlord also writes the planning rules.
Markets normally allow customers to decide which businesses succeed.
Public ownership introduces another influence.
The vision created by an uninvested committee and out-of-town consultants.
And visions have a habit of preferring something over what the consumer really wants.
Grey Street Wasn't Exactly a Glowing Recommendation
Of course we've recently tried something similar before.
Visitors to Gisborne can still see the madness of Grey Street that became the district's most recent failed urban planning experiment.
Planters appeared.
Parking disappeared.
Road markings multiplied.
Traffic slowed.
Consultants smiled.
Businesses frowned.
Residents protested.
Eventually much of it had to be reversed after overwhelming public opposition.
It turns out Gisborne people possess a strange and rather inconvenient habit.
They like unimpeded driving and parking close to shops.
Who knew?
The lesson wasn't that improving streets is impossible.
It was that designing a city around PowerPoint presentations instead of local behaviour can become an expensive hobby.
The Planner Who Also Owns the Monopoly Board
Here's where things become philosophically awkward.
Council designs the redevelopment.
Council approves the planning framework.
Council determines (reduces) parking.
Council funds the streetscape.
Council owns commercial property beside the redevelopment through GHL.
Even if every decision is made honestly and professionally, the incentives are no longer cleanly separated.
The same public investment that is intended to revitalise the riverfront could also improve the value of Council-owned commercial assets.
Again, nobody needs to suggest wrongdoing.
The concern is structural.
Good governance usually separates the referee from the players.
The Ratepayer's Wallet Isn't Bottomless
Meanwhile GHL continues managing a portfolio approaching $140 million.
That includes commercial property, holiday parks and Tauwhareparae Farms, an extensive farming operation whose financial performance has experienced significant valuation swings over recent years.
Supporters argue these investments generate long-term returns for the community.
Critics ask a simpler question.
Why is local government trying to build an investment portfolio competing with its ratepayers when roads need repairing, water infrastructure requires upgrading and rates continue climbing?
Every dollar tied up in commercial property is a dollar unavailable for core services.
Or, radical thought...
A dollar left in the pockets of the people who earned it.
Revitalisation or Reinvention?
None of this argues against making Reads Quay more attractive.
This is a picturesque area of town loved by visitors that probably needs some basic maintenance and a waterblast.
Most people would welcome better public spaces, cleaner river access and a city centre that people enjoy visiting.
The question is not whether Gisborne should improve.
The question is who should lead that improvement.
At GisborneNZ, we argue that Council's job is remarkably straightforward.
Build good infrastructure.
Maintain roads.
Provide reliable water.
Collect rubbish.
Set fair planning rules.
Then get out of the way and let entrepreneurs, investors and property owners create the vibrancy.
Instead, Gisborne risks drifting toward a model where Council owns buildings, redesigns streets, chooses strategic investments, influences the commercial mix of the riverfront and hopes private enterprise follows behind.
That's a lot of faith to place in public institutions whose core competency was originally emptying rubbish bins.
GisborneNZ's Final Thought
Perhaps spending millions on the Reads Quay redevelopment will be an overwhelming success.
Perhaps the Bates Building will become the centrepiece of a thriving riverfront.
Perhaps everyone will forget there were ever concerns.
But if you're asking existing businesses to pay higher rents, endure years of construction, restrict vehicle access, lose convenient parking and trust that everything will eventually work out, it isn't unreasonable for them to ask one simple question:
If this vision is such a great commercial opportunity...
...why wasn't private capital lining up to do it first?
