Swapping debt for building probably the best thing

The Dom Post reports:

Wellington ratepayers will never be repaid a cent of the $10 million they loaned wildlife sanctuary Zealandia for its new visitor centre.

Instead, the building will be sold to for the loan amount under a proposal by Zealandia, leaving ratepayers with the keys and a multimillion-dollar for a centre that failed to pay for itself.

The council says the handover will not affect rates.

While Zealandia had balanced its in recent years, it had not started to pay back the $10.38m interest-free loan as planned.

Sanctuary Trust board chairwoman Denise  said on Tuesday its small profits meant it would never be able to pay off the loan or cover its interest.

“We’re producing an operating surplus – in the last year $31,000, and the previous year $25,000. We have no capacity with those figures to pay interest on the loan or to pay it back.

“We’ve advised the council over the last two years that we don’t see that situation being likely.”

If the council took ownership of its building and exhibition space, opened in 2010, the sanctuary would lease it back, which would pay for ongoing maintenance costs.

It’s good that Zealandia has now mad a surplus for the last two years.

The visitor centre was a horribly expensive white elephant that should serve as a warning to the Council over other projects such as the airport runway, that a policy of build it and hope they come is flawed.

It is obvious Zealandia will never make enough surplus to pay back the loan. Hence the Council has three main options:

  • The status quo – loan never paid back
  • Close down Zealandia for unpaid
  • Swap the loan for the building

The last option seems the best (of a bad bunch).

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