At the end of the 19th century, Wellington was expanding rapidly, and, due to the city's hilly terrain, good building land was at a premium. When new residential developments were proposed for Kelburn, it was suggested that a cable car or funicular could be built to provide easy access. In 1898, a number of people prominent in the development of the residential subdivisions founded the Kelburne & Karori Tramway Company. The plan was to build a tramway between the city and Kelburn, and link it by carriage to Karori, a settlement on the far side of Kelburn. The company began purchasing land for the construction of the tramway and negotiated with the Karori authorities for a new road (now Upland Road) to link the upper terminus with Karori. In 1898, the city council granted permission for the venture, on the condition that it had the option to purchase the operation at a later date. The location of Victoria University of Wellington was influenced by the company's offer of a donation of £1000 if the university were located in Kelburn, so students would patronise the car when travelling between the city and the university. Several of the Company investors like Martin Kennedy were supporters of Seddon, who stalled on releasing land on the alternative Mount Cook Gaol site for the university, although this site was widely supported in Wellington.
