Published 1 January 2012
Additional material at foot of story 3 January 2012
When you’re going to accuse a city council of unfair practice, it’s useful to get your terminology right.
Westfield (NZ) Ltd & the Shopping Centre Council’s representatives – having got their terminology wrong – left the Auckland Council free last month to ignore their criticisms of the new policy on business improvement districts.
The criticism might have been more accurate if Auckland had stuck with the Mainstreet promotional model, created for the old main streets to compete with the new out-of-centre malls, but the model has evolved from the purely retail focus to include all business types within an area.
Westfield representative Graeme Heap’s suggestion that the company could be very litigious if it didn’t get its way with its accusation of double dipping hardly helped. Litigate all the way to the Supreme Court, mate, but if the accusation’s ludicrous you’re not going to succeed.
The Urban Dictionary is as good as anywhere to track down a definition of double dipping: You dip your chip into the sauce, take a bite then dip the half-chewed chip again – complete, of course, with an army of baddies that were waiting in your mouth to hop on half-chewed food at the exit.
The point is, you do it. The accusation by Connal Townsend, representing Property Council autonomous unit, the Council of Shopping Centres, and repeated by Mr Heap at the Auckland Council’s regional development & operations committee meeting on 15 December was that, after the shopping centre manager took a bite for marketing, the council came along and took a bite. 2 bites by different eaters, not double dipping.
A semantic difference? The accusation ought to have been that the Auckland Council took its bite for identical purpose, which might have been akin to the courts’ double jeopardy.
Mr Townsend said shopping centres had a co-operative marketing mechanism – “A very substantial levy is charged, up to 80% of the marketing cost of the shopping centre” – and those retailers were being asked to pay the marketing budget twice, “once for the business improvement district down the street and once in the shopping centre. We’re really asking you to adopt a policy of excluding shopping centres on the grounds that, if you include them, you’re asking a double dip”.
Mr Heap did his best to get committee members’ backs up, telling them Westfield was “vehemently opposed to a shopping centre being included in a business improvement district in any sense. I’m not asking you to like a mall or its environment. We have over 100 million visits from people who do like them. I suggest if you really want to improve business districts to provide more parking and make it free.”
Mr Heap then boasted that, “by virtue of the location of most of our centres, we attract people to the business improvement districts and the shopping strips. In Newmarket, we pay 15% of the business improvement district budget and get one vote. Out of the $1 million budget, $300,000 is spent on marketing. That is a pretty inefficient marketing ratio, compared to the $800,000 we spend on 277.”
But hold on. Newmarket Broadway was an established & highly successful shopping strip long before the 277 mall was built (by another developer), success cemented in place when the old Newmarket Borough Council was able to create a rating advantage over Queen St shops courtesy of the borough’s near-100%-commercial rating base.
Westfield bought properties across the road from 277, worked on plans for a competing mall, bought 277 and had every intention of swamping the shopping strip, though it’s since reduced those development plans.
Unlike the picture painted at other business improvement districts, where tenants were encouraged to participate, Mr Heap first attributed the cost to Westfield itself, which he said got just one vote, then commented: “We pass all the cost to our retailers and it is their cost. We think it’s unjustified & unnecessary and it’s a double dip.”
Mayor Len Brown rejected Mr Heap’s stance: “We are sitting in a partnership with Westfield as we sit in a partnership with all companies across the region. We are trying to build our centres right across the region as well as the centre (cbd), but some are really struggling and it is critical that we do everything we can to achieve the collaboration.
“The thing I’m struggling with here, a lot of companies spend a lot of money supporting their own brand, but the bigger brand is Auckland. Is it your view that you want to stand alone from the big brand or do you wish to work collaboratively?”
Mr Heap: “Absolutely, we wish to work collaboratively. Working together doesn’t mean we should be paying more. We will work collaboratively together, but we don’t consider that paying extra to support our competitors out on the street is fair. Why do you think they’re not working (the shopping strips)? It’s got to do with foot traffic, it’s as simple as that, it’s a simple business thing. I take St Lukes as an example, it’s not in a business improvement district. The business improvement districts were created to compete against it. It creates its own parking, its own security.”
Amanda Kinzett, of the Onehunga Business Association, said every retailer within the Dressmart mall had a vote “and I wouldn’t have it any other way. It’s about moving Onehunga forward as a collaborative approach, not just individuals.”
She said key performance indicators didn’t have to be just foot traffic: “We deal with community, networking, migrant business programmes, we work throughout the community to support all our businesses. All our parking is free. When I drop into my local Westfield it’s not covered parking – the same as the street. We have our own cleaning, security – better than 277, may I say. People feel safe coming into a community centre. The kids respect the area.”
The committee resolved to adopt the business improvement districts policy, but agreed to review it in 24 months, given the range of feedback.
The issues of relocation of subsidies provided to ex-Manukau business associations, and the previous suggestion of a contestable fund for business improvement district initiatives from this source, will be considered as part of the report to the councils strategy & finance committee in March on the proposed reallocation of any regionally allocated local economic development budgets to local boards.
Council business area planning manager Janet Schofield acknowledged in her report the desire of some business sectors – particularly shopping centres & some bodies corporate – to be excluded from the programme or pay a discounted rate, and be considered as a special case for their large scale & existing co-operative marketing programmes, security & cleaning provisions. However, she said various other sectors undertook similar co-operative programmes.
“The principle on which this policy is based is inclusion of all businesses within a business improvement district boundary area to further the collective aims of the programme. All sectors can contribute to and gain from the joint initiatives of the business improvement district programme, raised profile & improvement to the business environment, recognition & influence that comes with a business improvement district partnership.”
Often, she said, the focus was on networking & development, security, innovation, transport, skills & training.
Westfield and the Shopping Centre Council’s position won some support from other submitters, but not for the same reasons. Karen Remetis, of the Town Centre Development Group and Towns & Cities NZ, said malls & big-box retail weren’t recognised as business improvement districts anywhere in the world, because business improvement districts were set up to fight back against them.
Auckland has 46 business improvement districts, of which 16 wanted to expand their boundaries, and there were indications another 25 could be formed over the next decade.
The council has proposed a $300,000/year contestable fund for business improvement district initiatives, but the proposal came too late to make it into the draft council long-term plan. It can still be considered if submissions on that draft long-term plan raise the need for additional business improvement district funding.
Want to comment? Go to the forum.
Attribution: Council committee meeting & agenda, story written by Bob Dey for the Bob Dey Property Report.