A dreary skyline without Krukziener

Andrew Krukziener, in front of the ambitious Metropolis. Photo / Gilda Kirkpatrick

Mention the name Andrew Krukziener, principal of Krukziener Properties, to most people interested in property in Auckland and one word inevitably crops up - Metropolis.

The New York-styled and bronze-domed residential and retail tower at 1 Courthouse Lane is arguably the most beautiful building on the city skyline - but it's the project for which he has taken the most flak from the news media over the past 10 years.

Now understandably "publicity shy", Krukziener agreed to a rare exclusive interview before facing a High Court battle with the Inland Revenue Department relating to Metropolis next Thursday.

While Metropolis is his best known undertaking, Krukziener points out that he has been involved with almost 100 construction projects over the past 25 years - the vast majority of them in the CBD and without which, Auckland would be a much poorer city.

"People who worked with me on these buildings would say they have the hallmarks of attention to detail, an uncompromising quest for quality and they were on time and on budget delivery." He confesses to being "a detail junky" whether this relates to the design of a skirting board or the content of a legal document.

Krukziener lays claim to many "firsts" in Auckland, including: the first inner-city residential conversion at 29 St Benedict St, the first residential conversion strata title in Argus House in High St and the first office building strata title at 17 Albert St.

He collected an international design lighting award for the 21-storey office block at No 1 Queen St, known as HSBC House, and an international construction award for Metropolis. He has won a number of Building Owners and Managers Association International (BOMA) awards for his commercial and residential projects.

His many and varied projects have included developed and refurbished office buildings, apartment buildings, a luxury retail department store, strip retail shopping, hotels, backpacker accommodation and a retirement village. And he has been responsible for the restoration of many of Auckland's derelict or neglected, but significant character buildings, such as the old Customhouse DFS Galleria, the old Magistrate's Court Building, Carlisle Apartments and Fisherman's Wharf, now The Wharf, at Northcote Point.

"I like to believe that I am known for raising the bar in commercial property and setting a new standard - showing everyone that quality and beauty can be achieved in Auckland," Krukziener says.

He has undoubtedly been an inspiration for many industry professionals over the years - regularly lecturing at universities and speaking at property events to audiences who value his insight and experience.

He relates how he was inspired in his early 20s by structures like the Empire State and Chrysler buildings.

"Travelling frequently to New York, I was awed by their romanticism and the inspirational thoughts that these skyscrapers engendered in people," he says.

"Buildings define a city. Together they all form the fabric that makes the city a whole. Each building should increase the quality of the fabric, rather than taking away from it."

In this regard Krukziener believes Auckland's commercial buildings have become "too soul-less".

"There is so little creativity in our significant buildings - there's not enough ego and pride involved. The nicest buildings in Auckland are the old buildings. They were built with pride - by people competing to build the best building in town."

It was the desire to build a truly lovely and magnificent tower in Auckland that led him, at the age of just 29, to start his most ambitious project - Metropolis. It was the largest-ever construction project in New Zealand to be undertaken by a private developer at the time.

"But instead of being the jewel in the crown of my career, it made me a classic tall poppy - 40 storeys high," Krukziener says. "I planned this to be my last project before retirement, but instead, at the age of 35, I was forced to sell my entire investment portfolio built up over the preceding 15 years to pay the $25 million loss I sustained personally from the project."

Krukziener says "a lot of misinformation and media inaccuracy" has unjustifiably damaged his reputation following the financial failure of Metropolis.

"The reality is that I commenced erecting a great and potentially profitable building which was a textbook project with 315 apartments sold before construction started," he says. "Metropolis was designed to be completed on time and under budget, and most of the time that would spell financial success. However, the Asian crisis came along and changed the market in every way.

"High-interest money borrowed on the project and the post-Asian crisis resulted in a drop in sales activity, combined with declining values. Ultimately, I repaid all the banks and second mortgage lenders. However, the bondholders lost $11 million of their $21 million invested." Krukziener believes that "around 2000, the IRD was looking to make an example of a real estate developer and I was the perfect choice".

He had lost a lot of money on his Metropolis project but was still involved with a number of other projects and business entities.

"So they thought I would be unable to defend myself and they could use me to create some new law," he states. Now, 11 years after the completion of Metropolis, he faces the final act of the financial failure of Metropolis with his appeal in the High Court next week.

"The IRD is seeking to enforce a landmark tax case against me relating to loans from trusts to individuals," Krukziener says. "The essence of the case is that the IRD is seeking to re-categorise loans that I received from my trusts, and subsequently repaid as income, and they are taking this assessment back to 1991.

"All major law and accounting firms will be watching the outcome of my case, which is known as Case Z23, because if I lose, it will have extremely wide-ranging negative consequences on many of their high net-worth clients. Many of their clients with trusts have organised their affairs in the same way based on the same advice I received over many years."

In a separate case also related to the financial failure of Metropolis, Krukziener faces a bankruptcy application lodged by the IRD next Tuesday, and he is putting a creditors' compromise forward to deal with this issue

"A High Court judge will be charged with the responsibility of deciding to accept my proposal or not - and if not, I will be bankrupted."

Krukziener doesn't think he deserves this fate. "Entrepreneurship should be valued and revered, not thwarted by the taint of bankruptcy," he says. "Out of almost 100 major deals, I got one financially horribly wrong. Success in property development is never guaranteed and I have already paid the price both financially and publicly." He exhibits a report by the Ministry of Economic Development, prepared following an investigation into the financial failure of Metropolis, which states in the conclusion: "I consider, on the basis of the information supplied in the submissions, Mr Krukziener's actions to be exemplary".

Krukziener says he could have "gone under" 10 years ago and kept his assets in trust but he didn't - because he has a strong sense of morality and wants to do the right thing. "I sold everything I owned in trust and repaid my obligations. I gave it a go and on this one building I failed."

While attention has been focused on Metropolis, Krukziener says he has made lots of money for many other people - private joint-venture partners, syndicate investors, banks and second-tier lenders.

"I have transformed the city's skyline and streetscape, created thousands of jobs, spent hundreds of millions of dollars on construction - without ever having a legal dispute with a builder or creating a leaky building - and generated millions of dollars in taxes in the process."

Krukziener says experiences in recent years have changed him personally. "I am not, and have never been, the typical heavy-drinking, partying, developer-stereotype working the social circuit," he says. "However, I have been well-known historically for being a workaholic and needing little sleep - but now my wife and two boys take the front seat - although I am still well-known for my 3am emails."