Council selects preferred property governance model for consultation
Published on 26 August 2026
Palmerston North City Council today voted to seek community feedback on whether to create a council owned property entity, to help combat rising costs.
Council owns approximately $300M of property across 76 sites, including operational buildings, community facilities, commercial property, as well as 444 social housing units across 18 complexes.
The portfolio faces significant investment pressures in the years ahead.
Across the wider property portfolio, Council is also facing increasing renewal requirements, ageing buildings, seismic strengthening costs and ongoing operating deficits.
The Property Governance Review considered whether Council's current approach remains the best way to manage a portfolio of this size and complexity, while also looking for opportunities to make better use of assets that have commercial or redevelopment potential.
Over the past two weeks, Council considered four potential approaches: continuing with the current model, building additional property development capability within Council, or establishing one of two Council-Controlled Trading Organisation (CCTO) models. The key difference between the two CCTO options was whether social housing could eventually transform to a Community Housing Provider model or remain in Council ownership.
Options were assessed against financial sustainability, community and social outcomes, strategic and economic outcomes, governance and accountability, and feasibility and risk. The assessment found the two CCTO options provided the greatest opportunity to strengthen commercial capability and create greater capacity to progress redevelopment opportunities.
Today, Councillors voted 12-3 in favour of working on creating a separate CCTO, wholly owned by Council. This means all property remains owned by city ratepayers.
This would allow the CCTO to take a longer-term approach to property investment, make better use of underperforming or underutilised assets, progress redevelopment opportunities and reinvest proceeds into future property projects or other Council priorities.
The preferred option will now be developed further and included in the draft 2027-37 Long-Term Plan, with the community to have the opportunity to provide feedback through consultation next year before Council makes a final decision.
Mayor Grant Smith says maintaining the status quo was not considered the best option for Palmerston North or its ratepayers.
"We've got some significant decisions ahead of us about how we maintain, renew and make better use of Council property, and continuing to do things exactly as we do now wasn't going to address those challenges."
"We need to make sure we're getting the best possible value from the assets our community owns and looking for ways to reduce the pressure these costs place on ratepayers over the long-term."
"A dedicated property entity gives us the opportunity to bring specialist commercial and development expertise to the table while Council retains ownership and strategic oversight."
Mayor Smith says retaining ownership of social housing was an important part of the preferred approach.
"We're proud of the role Council plays in providing social housing in our city, and under this option, those homes remain in Council ownership.
"Elected members would continue to make important decisions about social housing, while the specialist property entity could help us plan and deliver renewal and redevelopment projects more effectively and make better long-term decisions."
The assets and functions that could sit within the proposed entity have not yet been determined at this point.
Mayor Smith says the next step is hearing what the community thinks.
"We've selected the option we believe provides the strongest basis to take forward, but we have not made a final decision to establish a new entity or decided which properties would sit within it."
The community will be able to have its say through consultation on the draft 2027–37 Long-Term Plan in March/April, with no final decision on establishing the CCTO to be made until elected members have considered that feedback.