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Sale process

Case study for students: Paraparaumu Aerodrome.

Valuation

The government wanted to maximise its income from the sale but also ensure that the aerodrome stayed open. If it set the price too high, buyers might sell the land for higher-earning uses than aviation. The price needed to balance these concerns.

Therefore, MOT decided to value and sell the aerodrome as a ‘going concern' (on the basis that the business would continue operating), despite its own assessment of the business as uneconomic). Its ‘going concern' valuation of the aerodrome was $1.6 million. (This valuation compared to a higher one of $3.5 million if the aerodrome ceased operating and all the land were sold.)

Tender eligibility and assessment

To help keep the aerodrome open after sale and to address community anxiety about bids by property developers, the government specified that only ‘user groups' could submit tenders. However, it didn't require that ‘uses' be aviation related. It also didn't include a legal requirement to keep the aerodrome open as it felt this would limit the sale revenue too much.
The main criteria for assessing tenders were:

  • commitment, capability and financial position to continue operating the aerodrome
  • price.