ADDRESS TO Henderson Massey Community Board 3rd February 2011
Madam Chair, Ladies and Gentlemen.
I wish to pose the serious question. Is it time to quit the Film Studios?
In October 2002 WCC purchased the old ENZA coolstores for $3.85m.
In July 2003 the Council decided to borrow $880,000 to convert them into a film studio for lease to the local film industry.
At the time Councillors Derek Battersby and Vanessa Neeson rightly objected to the weak business plan with unanswered questions. Councillor Brenda Brady however, supported it on the understanding it would be self-supporting.
The resolve of Councillors Battersby and Neeson was not evident in the unanimous Council decision in May 2005 to form a new company as a public private partnership to expand the Film Studios. The Council was to put in $6m in the form of the land and buildings at 40 Henderson Valley Rd, seek private finance of $9m and gain a Central Government grant of $1m. The ownership of the new company was to be 40% Council, 60% private. Bob Harvey sought to make Henderson Valley the “Hollywood of the South Pacific.”
In June 2006 it was announced Tony Tay was the new business partner. As it transpired ownership of the new business was Council:Tay $6m:$7.5m and the $1m Government grant went towards the building. The fact that Council owned less than 50% of the new venture absolved it from the responsibility of full public accountability.
On 29th June 2010 Tony Tay Group Ltd went into liquidation. I rang a number of Councillors to ask if they knew anything about it. They did not. There had been a Council meeting on the night before I rang, so when I rang the Deputy Mayor, Penny Hulse and she indicated she was aware of the liquidation, I asked why the matter had not been raised at the previous night’s Council meeting. She said it was not the sort of thing discussed at a Council meeting. Next day I rang the CEO and posed a number of questions by email. I was informed that matters would be discussed with Councillors the following Tuesday and a reply sent after that. Evidently, over the years, it had become the custom of WCC to run a series of CAF meetings for Councillors which were not publicly advertised but discussed Council matters. Meanwhile on 7th July Bob Harvey stated via the Herald “This will have no effect whatsoever on the film studio. The future of the studios is guaranteed. We are fully booked for the next three years.”
On 8th July I addressed the Henderson Community Board on the matter, a copy of which I forwarded to all Auckland Councillors and Local Board members recently.
Penny Hulse advised me “We receive a quarterly update at FOP which includes an update on Prime West (now Auckland Film Studios) The advice that we have is that we are secure and the issues that Tony Tay is having with some of his wider investments have no impact on the film studio.”
Not satisfied I sent emails to the two Councillors who were paid directorship fees of $16,300 each on top of their Councillor salaries for their positions on the Board of Waitakere City Holdings Ltd.
In its last Annual Report WCHL states “The Company’s principal activity during the year was to operate as an investment company of the Waitakere City Council.”
It recorded a $3,000 loss from operating activities that year.
Linda Cooper’s gratuitous response is published on my blogsite.
Ross Clow, although acknowledging losses by Auckland Film Studios Ltd of $2.2m in 2009 and $558,000 in 2010, pointed out that they were only “paper losses’. I pointed out that 61 Finance companies had made similar claims before going into liquidation.
I searched the Companies Office for further information.
Originally, at the time the proposed private/public partnership for the Film Studios was rubberstamped by Councillors, there was also approval for setting up a private/public Management Company with $100,000 paid up capital. As it eventuated Prime West Management Ltd was set up for $1,000 with an input of $400 from Waitakere Properties Ltd and $600 private. By 30/6/09 the management company was insolvent but had been advanced an unsecured loan of $49,000 by WPL for repayment in 2010. That loan was more than 100 times WPL’s capital investment.
On 23rd December 2009 Auckland Film Studios Ltd (formerly Prime West Ltd) amalgamated with Prime West Management Ltd for a nil consideration. The loan was repaid the following month.
In November 2010 I rang Gary Swift, CEO of Auckland Council Investments Ltd, to find out why an unsecured loan had been advanced by WPL, a ratepayer owned entity. I was told he did not feel he had the right to ask such questions. He later sent an email saying he did not have the information I had requested. I rang him and asked him if he was prepared to chase it up. He said that it was outside his area of responsibility.
On 17th January 2011, Mayor Len Brown expressed confidence in the Film Industry on a talkback radio session on Radio Live.
On 19th January 2011, I had a meeting with Doug McKay. I must say that I was impressed that he afforded me some time and was prepared to listen to what I had to say. I found this a vast improvement on the attitude of former CEOs at Waitakere City Council. I ventured to suggest to Doug that come 31/3/11 the Film Studios will record yet another loss and that they are not fully booked ahead despite the assurances and guarantees from Bob Harvey. We were in general agreement and he assured me the Film Studios are being watched closely.
One of the described functions of Local Board members is to have input into CCOs. If this function is to be carried out competently it will require more than just a cursory understanding of profit and loss accounts and balance sheets. The Film Studios are not self-supporting. It’s time to quit them.