It will be smaller, more expensive and have a reduced capacity – but those behind the International Convention Centre say it will return much the same economic benefits and provide even more jobs.
They also confirmed no new economic modelling has been done since a 2011 report which estimated a $90 million return to New Zealand.
Initial projections of benefits from the ICC were 800 jobs on completion, 1000 jobs during construction and $90 million of economic benefits to New Zealand.
A new design was released today by Economic Development minister Steven Joyce and SkyCity chief executive Nigel Morrison. Visually, it is one level lower than the previous design but the thrust of the changes is around a reduction in size and capacity.
It’s a different convention centre from the one SkyCity mooted in 2011 when it edged out four competing bids to build the centre, winning on the basis of a promise it would cost taxpayers nothing but a change to the gambling law.
The Government signed a deal in 2013 for a $402 million trade with SkyCity – the value of building the centre against the benefits derived from the gambling law change.
But it then found itself looking for a redesign after Mr Morrison said the centre could cost up to $530 million and might need an injection of public money, prompting the Prime Minister to express concerns over an “eyesore” if extra money wasn’t spent on it.
Mr Joyce said this morning that the original benefits projected by the Government and SkyCity held true because they were based around a projections of incoming business which had not changed.
“We’re completely relaxed the numbers we have got in front of us today are able to accommodate the sizes that we’re estimated at the time. There is no material difference to the amount of business the centre is able to attract.
“There’s no substantial change to those metrics. From the Crown’s perspective those variations in cost have gone up and gone back but they don’t make a difference because we’re not paying for it. They certainly make a difference to SkyCity.”
In the time since SkyCity was selected, changes have included the value of the convention centre. It has risen from $350 million in July 2011 to the agreed $402m when the agreement was signed in June 2013, to an maximum $530 million earlier this year. It has now been pulled back to a minimum $430 million with a possible top end of $470 million, to be covered by SkyCity.
The size of the centre has also wandered from the 5000 sq m maximum, stated in a memo to then-minister David Carter in April 2011, to the 3500 sq m maximum in the June 2013 Heads of Agreement to the 2850 sq m in the revised design announced today. As well as conventions, the new design could accommodate 4200 people for a single event.
Other changes – which the Government and SkyCity said amounted to a maximum 10 per cent reduction – were a drop from the 10,000 sq m exhibition space heralded by SkyCity in its 2011 proposal Government to 8700 sq m and the eventual 8100 sq m in the latest design.
The new design was captured in an updated Heads of Agreement between SkyCity and the Government, which has seen more authority over construction and design handed to the casino company – subject to a line in the sand drawn by Mr Joyce and officials.
“What we’ve done is said, ‘here is the benchmark now and everything will be measured against the benchmark’. The arrangement is SkyCity can’t depart in any material way from this design today. It shifts the balance slightly.”
This means SkyCity will now have to work to the minimum requirements laid out in the updated deal. It will reduce the company’s ability to renegotiate, as it has since the original agreement was signed.
Mr Morrison said design changes, including a laneway between the convention centre and the new hotel SkyCity is building, would lead to an overall increase in jobs, even if there was a slight change to initial projections.
“If it has changed, it’s 1 per cent. I think you’ll find the number of people employed overall will be increased. The jobs will be greater under this scheme than they were previously.”
On the economic benefits, he said if there was any change it was “nominal” and irrelevant.
He said there was a benefit in reaching the agreement announced. “Part of the savings is being able to get on with it and avoiding future escalation.”
The final hurdle for SkyCity is the resource consent, which was lodged with Auckland Council in December. The panel considering the application has the option of putting it out for public consultation – or approving it with its own authority.
Mr Morrision said it was SkyCity’s preference the resource consent not be publicly notified,. “To do this, we need to get on with this.” He said if the plan was put out for public consultation, it was difficult to know how long it would add to the completion date or how costs would change in that time.
Mr Morrison said it was still not possible to know when the convention centre would be finished because the resource consent had yet to be decided. Beyond that, there would be a three-year build period.
There were no current bookings, but about 60 firm expressions of interest had been made.
He said the shift in location for the hotel to land purchased from TVNZ had added to the value of the deal by $28 million, the current value of the land. The sections, on which SkyCity’s hotel will now be located, were bought from TVNZ for $10 million in 2013 for the building of the convention centre.
Told Mr Joyce had called the new design “handsome”, Mr Morrison said: “Better than eyesore,” a reference to John Key’s comments in February.
Mr Joyce said Mr Key had seen the design and was happy with it.