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Wellington Town Hall in 2017 (Photo: Collection/Gado/Getty Images)
Wellington Town Hall in 2017 (Photo: Collection/Gado/Getty Images)

WellingtonOctober 27, 2023

Sunk costs: How Wellington Town Hall became the ultimate money pit

Wellington Town Hall in 2017 (Photo: Collection/Gado/Getty Images)
Wellington Town Hall in 2017 (Photo: Collection/Gado/Getty Images)

Once derided as an ‘ill-proportioned mockery’ of ‘dubious merit both historically and architecturally’, Wellington Town Hall will now cost ratepayers $330 million to fix. How did it get so expensive?

The Wellington Town Hall is a building that has lost most of its architectural and aesthetic value. It is notoriously earthquake-prone and seems almost certain to face more issues in the future. The city already built the Michael Fowler Centre, the venue that was intended to replace it, 40 years ago. The council has already moved its offices to a different location and doesn’t plan to return. 

This week, Wellington City Council approved another $147m to bring the heritage-listed building up to code, bringing the total cost as high as $330m – more than the construction of Spark Arena and the new Tākina Convention Centre combined. 

The town hall has been in rough shape for most of its existence. It’s a stone and masonry building, on unstable reclaimed land, in a city built on a fault line. This is at least the fourth time the building has closed for earthquake repairs since it opened in 1904. 

The two most impressive features – the 50m-high clock tower and the Roman-style portico – were removed after the 1931 Hawke’s Bay earthquake, and the more extravagant detailings were removed after the 1942 Wairarapa earthquake. By 1977, it was “so unsafe that it could collapse on 3,000 or more people in an earthquake above force four on the Richter scale”.

The mayor at the time, Michael Fowler, was sure he had the answer: the old town hall was no longer big enough for the city, and estimated repairs would cost almost as much as constructing a replacement. It would be better to demolish it and build a new town hall. He became such a high-profile proponent of the project that when it opened, the “town hall” moniker never really stuck – everyone called it the Michael Fowler Centre. 

The Michael Fowler Centre was built to replace the Wellington Town Hall.

An ill-proportioned mockery

With the Michael Fowler Centre under construction, the question became: what to do with the old town hall? The Historic Places Trust in 1978 commissioned a report on the building’s heritage quality by William Toomath, one of New Zealand’s most prominent architects and a graduate of Harvard’s school of design. 

That report has never been available online, but a scanned copy was provided to The Spinoff by Heritage New Zealand.

“Externally, the building in its present state is of dubious merit both historically and architecturally,” the report said. “This building has lost the greater part of its original Victorian swagger, pomposity, and grandeur, an ill-proportioned mockery of a classical work of architecture.”

The original town hall building, with its clock tower and portico, both of which were removed after the 1931 Hawke’s Bay earthquake

“As it stands now, the building’s external design is inexpressive and insignificant… As a townscape or scenic unit in the texture of the city, the existing building has little to offer.

“The building might be allowed to stand as a sad joke, regarded with kindly humour and tolerance. But it is another question whether the expenditure of considerable amounts of public money would be justified for the sake of preserving such a debased work under the guise of a worthy example of the classical style in architecture. This, categorically, it is no longer.”

The Town Hall after most of the exterior flourishes were removed.

However, the report praised the main chamber for its acoustic quality, considered one of the best in the world for classical and romantic music, although it noted the hall was “not considered ideal by jazz musicians, some solo singers, or for speech functions”.

An analysis of the main hall’s acoustics pointed to the building’s rectangular shape as the main reason for the great acoustics – it has similar dimensions to the Grosser Musikvereinssaal in Vienna. “This is much of the highest value and in my opinion worth preserving on architectural and historical grounds, as well as being uniquely valuable for concert music.”

However, Toomath was very conservative on whether it was worth the cost of saving and really only valued the interior main hall. “There are degrees of value, and economic necessity frequently poses a choice that must be made.” The council chambers and mayor suites were “usable but not irreplaceable”, the offices were “not essential” and the concert chamber was “not particularly satisfactory”. 

The report concluded: “retention, full strengthening, and upgrading of the whole existing building would be hard to justify and complicated and costly to achieve”. It recommended the front sections of the building could be demolished and a cheaper new exterior could be built around the main hall. 

The report on the building’s acoustics was a key factor when the council voted to retain the old building in 1984 – but it ignored Toomath’s recommendation to only partially rebuild. The town hall reopened in 1992 as part of the new Civic Square precinct.

The spruced-up town hall lasted just 20 years before it had to close again in 2013, once again due to earthquake issues. After 10 years lying empty, the hall has faded from the city’s memory. Wellington city councillor Nicola Young, who is in her fourth term, noted that she has never attended a meeting in the town hall. 

Scaffolding on the town hall today

The heritage trap

The town hall was listed as a Category 1 heritage building in 2003. The listing report is far less detailed than the earlier Toomath report but acknowledges the building “no longer has the visual impact and authenticity it once did”, and its value mostly comes from the main auditorium. 

Councillors and the public never saw the Toomath report and never seriously debated the heritage quality of the building. It’s perfectly possible that if they tried, they could have challenged the heritage listing, or descheduled it from the District Plan – effectively removing its protections. The council never applied for resource consent to demolish the town hall and never seriously considered challenging the heritage protections. Advice from staff simply said demolishing the building would be legally difficult.

Suggestions from councillor Diane Calvert that they consult the public again before approving the newly increased costs were dismissed on the basis that it would cause delays and increase costs further. The last time the council asked the public their thoughts on the hall, the estimated cost was $90m.

Councillor Ben McNulty was clearly frustrated by the assumption that a heritage listing meant the council was forced to keep the building no matter the cost. He wanted the council to pursue a local bill in parliament that would give it special permission to remove the heritage listing. He eventually got the votes to push this through – but it will be focused on future scenarios and won’t apply to the town hall. 

The heritage trap is becoming a major problem for owners of earthquake-damaged buildings, especially in Wellington. Heritage listings make buildings almost impossible to tear down, but impossibly expensive to fix. 

Wellington Town Hall’s auditorium (Photo: Supplied)

The Michael Fowler Centre is also in need of earthquake repairs. It is not listed by Heritage New Zealand but is listed by the council as part of the Civic Square Heritage Area. It could make for yet another difficult and expensive repair job. Deputy mayor Laurie Foon said her main motivation to vote for the $330m spend was fear. “Fear of not having the town hall or the Michael Fowler Centre, which means having no decent concert or congregation centre in the city. The fear of Wellington not having a place that can champion the arts.

Sunk cost fallacy

First coined by economist Richard Thaler, the sunk cost fallacy is a logic flaw where people stick with a losing venture simply because they have already invested so much time and money that they can’t get back. 

Mayor Tory Whanau gave a perfect example of this at a media standup announcing the latest cost estimates: “With $182m already invested, the cost of [mothballing the project] would result in hundreds of millions spent without a new and strengthened town hall. So we can’t just leave it there unfinished.”

Mayor Tory Whanau said the council has spent too much to walk away from the town hall.

Over a decade of construction, builders kept finding new and greater problems. It needed new piles, the foundations had to be upgraded, it needed to be base-isolated, the ground water levels were too high. As each new problem emerged, the council coughed up more money. 

It began in 2012, with a $30m budget. A year later, it was re-estimated at $43m. This was the figure that started to set alarm bells ringing. The council’s chief executive Kevin Lavery warned it was “an awful lot of money for zero return” and property council president Ian Cassels said the town hall was becoming a “white elephant”, asking, “Is it important enough to justify the amount of spend?”

By 2014, the costs were upped to $60m. At that stage, the council’s director of earthquake strengthening work, Neville Brown, was “grossly uncomfortable with the numbers”. By 2017 it was $90m, and in 2019 it was up to $112m. Then mayor Justin Lester said it would “only become more expensive in the future”. Next it was $145m, then last year $182m

This week, the council took the largest leap of all: agreeing to spend $250-$330m. 

In eight separate blowouts over 10 years, the cost has increased elevenfold,  but always in bite-sized chunks. Until now, it has never increased by more than 50% at any one time – and if you take the current lower-end estimate, it still hasn’t. 

At every stage, councillors saw a cost increase that was considerably smaller than what had already been spent, and they repeatedly fell victim to the sunk cost fallacy. 

No one thinks $330m is a reasonable price to pay for a 3,000-person venue, no matter how good the acoustics may be. No councillor would have approved the repairs if they knew it would get this expensive. But once again, they fell victim to the sunk cost fallacy. At one point a $43m cost was enough to make the council seriously reconsider the project. This year, another $147m was an unavoidable expense, simply because $182m had already been spent. 

Construction work on the town hall.

The town hall is still a construction site, and not particularly close to being finished. When councillors visited the site earlier this month they saw “an entire river running through the basement”, according to McNulty. 

Can we be sure the build will stay on budget this time? Whanau assured councillors the work was “halfway through and we’ve done the hardest parts”, but none of them seemed particularly confident the project would stay on budget. Councillor Tony Randle complained the council was “asked to sign a blank cheque”, before slightly misquoting Albert Einstein: “The definition of stupidity is to keep doing the same thing and expect different results.” A few minutes later, he voted to approve the spend. 

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