Property rights extinguished

Editorial

By John Subritzky     

Is this the deal of the century? The government enables the racing industry to ask the Avondale Jockey Club (AJC) to hand over the Avondale Racecourse - which is the club’s private property - to the industry body. The racing industry can then sell the land and pocket the estimated $300 million. The AJC gets…nothing. That is one sweet deal for one of them.

The winds of change are blowing through the derelict old public stand at Avondale Racecourse. The beleaguered Avondale Jockey Club is in a David and Goliath battle for survival. The AJC is an incorporated society with about 250 mainly older members. A good race day sees about 400 people at the course. In recent years the club has struggled to produce an annual cash surplus, but now the existence of the club is under threat because they own about 30 hectares of prime Auckland real estate. The land could be worth $300 million and has no significant debt or encumbrances.

Avondale Racecourse

​Since their first race day meeting on Saturday 26 April 1890, the club has overcome many difficulties, but now a plan has been produced from the highest levels of government to take their assets without compensation.

The 2018 Messara Report proposed radical changes. Patronage at racecourses is in free fall and racing is facing strong competition from overseas sports betting. The NZ racing industry is already undergoing huge structural reform and in May it was bailed out by the government with a $72.5m emergency rescue package. Most of this was needed to pull the Racing Industry Transition Agency (RITA), which operates the TAB, back from imminent insolvency.  "Of the immediate grant, $26 million will be used by RITA to pay its outstanding supplier bill, which it hasn't been able to do because of strangled revenue," Minister of Racing, Winston Peters said.

The Racing Industry Bill is currently working its way through parliament. It is expected to be passed into law before the September election. A significant part of the bill deals with how to take over assets from about fifteen racecourses nationwide that are deemed to be surplus to industry needs. The mainly provincial tracks have minimal capital value, but Avondale is the massive exception.

The racing reforms will be mainly paid for by declaring Avondale racecourse to be surplus and sold, with the proceeds “transferred” to the racing industry. The AJC, the Avondale community and West Auckland are expected to cover the cost of nationwide reforms that will benefit even the well-off clubs like Ellerslie and Cambridge. The result that Avondale gets is that we will lose 30ha of open green space, ten sports fields, and the venue for the iconic Avondale Markets. The Whau Ward already has one of the lowest ratios of green space of any ward in the city.

A select committee reviewed the bill and there was significant concern expressed about the provisions for asset transfers. Several specific protections would require the Minister to consider whether there are special circumstances regarding the use of the surplus venue by the community, including not-for-profit use and historic donations of land made to the venue by the community. It is doubtful that any of the nine proposed conditions apply to Avondale. If agreement is not reached, then a reviewer can be appointed to go through the issues. Failing agreement, then an Order in Council can be made taking the assets.

Racing has a 120 year history at Avondale

​Another criterion for club dissolution and transfer of assets to the racing industry is that the club is deemed to be no longer racing by not holding a race day for two years. The irony is that clubs who wish to race are now being denied race days in the coming season calendar by RITA. How can a club stay active if it is not allowed to host races? Along with fifteen other clubs, Avondale has been excluded from the calendar.
The AJC had already felt like the unwanted relative after previous discrimination. They had fought industry attempts to close the track in 2008-2009. The lucrative weekend profit sharing race days were taken away and AJC was left with the minor midweek races that were only expected to break even. Their season was progressively shortened. Fixtures were reduced from fifteen race days in 2015 to twelve race days in the following two seasons. Then last season there were only nine race days – the lowest possible level under the NZ Thoroughbred Racing (NZTR) funding model. Now there might never be another horse on the track.
Unlike weekend races where clubs get a commission for on-course betting, there is neutral income from holding weekday racing as AJC Treasurer Tracey Berkahn explains: “NZTR’s policy that drives racing activity, applying to all racetracks in New Zealand, is a ‘command model’ designed to achieve various outcomes, including that clubs holding weekday events (‘industry days’) break even on those days and generate no income for themselves. For Avondale JC (and many others) commissions for the club from the level of on-course betting are non-existent.”

It is mind-boggling that 180 years after the Treaty of Waitangi was signed, that now in 2020 there is a brand new law being passed to enable private property to be acquired with no compensation by the Crown on behalf of a government regulated sporting code. New Zealand has spent three decades working through trying to redress other historic injustices so why create new ones where private property rights are extinguished without compensation?

The only dissent on the review committee was from the Green Party who added a minority view:

The Green Party acknowledges the almost one-quarter of submitters who raised important concerns about Subpart 2 of the bill, allowing the Minister to approve the transfer of assets and “surplus” venues from a local club to the racing industry. The committee heard very strong opposition from many country clubs, in particular, who are largely sustained by their local communities and who fiercely dispute the view that they are a drain on the industry as a whole. 

We heard different visions for the future of racing in Aotearoa New Zealand: one that embraces a diversity of racecourses and supports trainers and community participation around the country, and another more heavily invested in a smaller number of “strategic” venues providing all-weather tracks and high-stake races. A majority of submitters, who are less likely to be negatively affected by any transfer of assets, supported the second view. There is a very clear disagreement within the industry that needs to be resolved, and is not, in our view, convincingly resolved by the evidence. The Green Party believes industry leaders need to better engage with and understand the role and value of smaller clubs within the industry as a whole as well as their communities.

AJC has plans for the future redevelopment of the racecourse

It really is starting to look like the AJC is doomed. The Racing Industry Bill reflects the New Zealand First Party policy on racing. This policy is part of the Coalition Agreement that put Labour into power. Winston Peters is Minister of Racing and he is the sponsor of the Bill. As Minister, he will be making the decisions on club asset transfers once the bill is passed into law.

Deborah Russell, MP for New Lynn, wants to retain some of the community use of the site. In June 2019 she said that her major concern was protecting community amenities such as sports facilities and the markets based at the site. Beacon asked her how this could be achieved politically, and Deborah responded that as a back-bench MP, she has limited options. The reality is that even the Prime Minister could be unable to prevent the sacrifice of the AJC without destabilising the coalition government.

At Auckland Council level, the property arm Panuku has been foreshadowing the conversion of the racecourse into higher density housing. Panuku’s Avondale Town Centre Regeneration plan 2017 looked at the AJC site’s strategic value for a quality master planned development. In the interim a specific proposal was that connections to Avondale would be created to future proof access should that area need to be developed.

Cr Tracy Mulholland, Whau Ward, has championed the development of a council pool and recreation centre. Last term, $105 million was provisioned for this over the next decade. Acquiring part of the racecourse land would be an ideal opportunity to lock this project in as part of the Avondale town centre redevelopment. It would be another slap in the face to Avondale ratepayers though if they had to buy the land back once it was transferred to the racing industry.

The racecourse saga is rapidly gaining momentum with a range of possible buyers lining up to profit from the misfortune of the AJC. Politicians also want to be seen to be advancing the housing development of the racecourse. The only certainty is that there will be little if any green space left if the land is developed for intensive housing. The Kainga Ora proposal for 236 new apartments for Highbury Triangle is one example. Development of apartments up to 12 floors on the similar sized 28ha Unitech site in Mt Albert also show how it could work out as the future of Avondale.
​
With the likely changes to the racecourse there could be positives for the racing industry and for the ongoing redevelopment of Avondale, but at what cost to the AJC and local people?

Artist's impression of housing development at Unitec. Is this the future of Avondale?