WELLINGTON: - Castalia

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WELLINGTON: - Castalia

PUBLIC TRANSPORT

WELLINGTON:

The little cable car that could

50 | handshake

By David Ehrhardt & Isabella Gawith


Lonely Planet gave Wellington top honors for

its cultural scene, its local film industry, and the

abundance of independent coffee roasters. But

its editors missed the real symbol of Wellington:

the shiny red cable car that carries around 3,000

passengers each day from the Central Business

District to the university and suburbs on the

steep hills above the city.

The cable car was built with private finance

in the 1890s by the Upland Estate Company

(UEC), developers of what is now the swanky

suburb of Kelburn. The property developers

realized that their project’s success depended

on providing quick access between the new

suburb and the city. The solution: a cable

car modeled on successful projects in San

Francisco and another booming New Zealand

city, Dunedin.

UEC formed the Kelburn and Karori Tramway

Company (KKTC) in 1889. UEC intended to

fund two-thirds of the required £30,000, and

raise the remainder through a public share offering.

But of the 10,000 shares offered, only 1,680

sold, requiring UEC’s existing shareholders to

buy the rest. No public finances were available

either, so after lengthy negotiations, the Wellington

City Council allowed the purchase of land

and retained the right of purchase, but offered

no financing. Without public monies, KKTC

turned to a risk sharing mechanism popular

among speculative companies of the time:

PUBLIC TRANSPORT

Wellington, New Zealand, recently judged the coolest small capital in the world

by Lonely Planet, is also home to one of the coolest small PPPs in the world.

Photo © Br3nda

paying lawyers, surveyors, engineers and other

external experts in debentures, to be paid back

only if and when shareholders were paid.

The cable car was completed in 1902, at an

estimated cost of £17,479 (equivalent to $1.6

million today). By 1926, annual ridership was

2 million, and the investors earned a handsome

profit. However, by the 1940s, competition from

council-run buses was causing problems for the

company. A dispute over unfair competition

reached the Supreme Court in 1946, resulting in

purchase of the cable car by the Wellington City

Council.

The Council operated the cable car for 44 years

until 1991, when national legislation required

council-owned passenger transport services to

be corporatized or privatized. This led to the formation

of the council-owned Wellington Cable

Car Limited (WCCL). WCCL initially tendered

out contracts for maintenance and operation to

private firms. Serco had the operating contract

from 1997 to 2007, and since 2007 WCCL has

managed it. Operations and maintenance take

place in-house.

Wellington’s cable car PPP (as well as a less

picturesque, but still very useful PPP that treats

Wellington’s wastewater) is a good example of

New Zealand’s strong tradition of public-private

cooperation in infrastructure. This bodes well for

the new national PPP policy and its implementing

agency, the National Infrastructure Unit.

IFC | 51

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