Alex Swney created the Heart of the City (HoC) Trust, was its Chief Executive, and got Auckland Council to fund it through a targeted rate. He ripped off the ratepayer to the tune of $4 million. It took the intervention by the IRD and SFO to finally bring the crook to justice.
You’d think following the HoC experience that Auckland Council would have learned to be very wary indeed of backing Trusts, especially ones where large sums of ratepayers money are involved, and especially one involving Alex Swney. Alas no.
Swney was a founding Trustee of the Auckland Harbour Bridge Pathway Trust (the Trust). The Trust has been established to promote a cycle/pedestrian bridge over Auckland’s Waitemata Harbour called Skypath. The Trust claimed that Skypath would be financially self-supporting and the Trust would be responsible for getting all the necessary funding. After 20 years the Trust would gift the facility to the City.
This must have sounded too good to be true to Council officers and some elected representatives because before long they were backing the project.
You know what they say, if it sounds too good to be true then it probably is.
Originally the scheme was backed by Infrasol (NZ) Ltd. a division of Hopper Developments Ltd. Hopper withdrew from the Trust early on, following difficulties with the Trust as to interpretations of data relating to patronage and cost.
Another finance backer was found, Morrison & Co (Morrison). Morrison proposes to draw upon public money - via the NZ Pension Fund.
However, a new scenario developed under Morrison. Morrison will not provide any funding to the project whatsoever, without Council’s underwrite.
So now we are in a whole new ball game, one that should be sounding warning bells throughout Council.
The Trust and its financier explained that they would meet the first 25% of the project’s risk (the most risky risk, as the Trust explained). However, the Trust claimed that Council’s risk was minimal, because SkyPath’s patronage assessments demonstrated that it was easily self-supporting. These additional sweeteners proved too much for Council to resist.
The fact is however, that SkyPath hasn’t the remotest prayer of meeting its patronage assessments. Here's why:
Two real life comparisons
SkyPath’s peak patronage assessment for year 1 exceeds that of the long established London Eye. The London Eye is immediately accessible by foot, car, bus, ferry and tube, has two carparking buildings, cafes, lounges, is spectacular, World famous and supported by a tourism industry and resident population that dwarfs that of SkyPath.
Sydney Harbour Bridge
Sydney Harbour Bridge - Saturday 22nd November 2014
Perfect weather, free, flat, safely separated cyclist and pedestrian pathways, easily accessible, immediately adjacent to intensively built-up areas and major tourism attractions.
54 pedestrians, 2 cyclists, 5 security personnel - between 12 noon and 1pm.
Obviously not the 9,000 - 23,000 ticket sales every Saturday, all summer - assessed and needed for SkyPath’s financial viability and Council’s corresponding underwrite, for its first 20 years.
Additionally, SkyPath’s calculated overhead running cost is less than the Council underwrite the Trust has sought. This distortion in the Trust’s public relations onslaught means that if Council continues to underwrite SkyPath on the terms sought by the Trust and its financier, the Trust and its financier would face NO risk, and Council would face and pay for THE LOT .
Meanwhile, The Trust and Morrison would be left with their guaranteed, unaudited management fees - which is where all the money is in this venture.
The Trust’s revenue base is identical to that which Alex Swney set up for Heart of the City. That is to say, the Trust lobbies Government and Local Government agencies to fund its commercial enterprise and its all-pervasive self promotion.
The SkyPath Trust has to date gained approximately $2 million in public monies and public financial support and for that, it has now finally produced a resource consent application that is riddled with unresolved problems. Some of these are pointed out in the NZTA submission to the resource consent citing structural, operational and other concerns through the licence to occupy process. Details are provided by Cllr George Wood.
While Swney was under investigation, and held name suppression, he remained a Trustee of the SkyPath Trust and the Trust successfully elevated its status to that of a Charitable Trust.
Also during that time, the Trust applied for and received significant sums of public monies and support, particularly from Auckland Council.
Many other infrastructural projects of similar size cost less than $250K for their resource consent processing. The Trust secured an underwrite of $588K from Auckland Council, for its resource consent process alone.
The Trust’s recent campaign to gain support for its project from people around the World clicking a 30-second support vote was great PR, but relied on ignorance of the project’s detrimental effects.
Detremental effects include, amongst other things, having to make room in the Heritage area of Northcote Point, for parking, toilets, cars driving right under the proposed bridge, and another cycleway north.
The Trust recently started a fund-raising campaign branded “Give a Little”, based on the Trust’s claim that SkyPath’s structural issues were solved. They were not at the time, and are not now as shown by the NZTA submission.
In the real world, most of us know the fate of many company directors who make unsubstantiated claims about the viability of their interests, for the purpose of gaining funding from the public.
Unfortunately, if this project goes ahead, there might not be a fairy-tale ending with everyone living happily ever after.
Certainly, the four Trustees and the financier would live very happily indeed.
However if the project is approved, Council and its ratepayers will be woken from their deep slumber, by a wicked witch named Reality. At that stage, the twinkle in Skypath’s sketchy promises, will be replaced by PAY NOW demands for this $50M - $100M folly.
* Much of the background information for this blog has been supplied by Kevin Clarke. He is an experienced architect and urban designer who has been engaged to advise Courts, Councils, barristers, architects and building contractors in litigated building disputes.