WELLINGTON: - Castalia

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