Go ahead for major new indoor arena

The Auckland City Council tonight approved plans for a 12,000-seat, $80 million, downtown indoor arena for sports and entertainment.

The council will invest $66.4 million in the arena and a private company, which will contribute $11 million. The balance of about $2.5 million will come from interest earned on funds that are to be invested when the deal is signed.

Construction is expected to start in June at the Quay Park site, next to Auckland’s former railway station – and the arena open by the end of 2005.

The council’s decision was to proceed to the final step, the signing of the development agreement with Quay Park Arena Management Limited.

Mr Milne says the decision means the city will get a unique national facility.

“The arena will generate economic benefits, enhance Auckland’s reputation as place to live and visit, and will reinforce Auckland as the cultural capital of New Zealand.

“Because of its flexibility it will be available to every Aucklander.”

Tonight’s decision culminates eight years of careful planning.

“The concept has been tested and supported by three successive councils as well as by extensive public consultation.

“We are satisfied that due diligence has been completed – the arena is wanted, needed and will be a landmark building that Aucklanders can be proud of.

“It will be provided at little risk to ratepayers, and we have a private sector partner with the expertise and experience to make a go of it. It is cause for great celebration.”

The arena deal is New Zealand’s first major public private partnership for a public facility. Under the partnership, called a BOOT (Build, Own, Operate, Transfer) arrangement, the council will jointly fund the development of the arena.

Quay Park Arena Management will be responsible and carry the risks for building, operating and maintaining the arena for the next 40 years.

Ownership of the arena, which must be in good working order at all times, will then transfer to the council at no further cost to the council.

“We believe that the BOOT is the most cost effective way to provide the city with a world-class arena at minimal risk to ratepayers,” says Mr Milne.

“It recognises that the council does not have the experience and expertise to run such facilities, and allocates the risks to the party best placed to manage them.

“It means, in effect, that the council is contracting out of the risks associated with a business that is, by its nature, cyclical. We have transferred the cost of depreciation and maintenance to the private sector while enhancing Auckland as a place to live.

“It is a great deal for Auckland.” Quay Park Arena Management is owned by the Sydney-based company Jacobsen Arena Management (JVM) and Miami-based venue manager and promoter Jack Utsick Presents.

The council has been negotiating with a consortium led by Jacobsen Venue Management (JVM) over the detail of a development agreement since last December. The company also operates the Sydney Entertainment Centre, Capitol Theatre and the Brisbane Convention and Exhibition Centre.

Other members of the JVM-led consortium are Bovis Lendlease, who will project manage the development, and Auckland-based Mainzeal Construction, which will be contracted by Quay Park Arena Management to design and build the arena.

Mr Milne says the council’s funding of $66.5 million is an increase of $8.5 million over the $58 million it had earlier agreed to. Under the Guaranteed Maximum Price contract being negotiated with Mainzeal, 100 per cent of any savings made on construction will be returned to the council.

During the 40-year BOOT, the council will reimburse rates on the arena at a rate of 100 per cent for the first 15 years, 50 per cent for the second 15 years, and 25 per cent in the final 10 years.

On the other side of the ledger, Quay Park Arena Management will pay the council 20 cents per ticket sold, to go into a fund for community events, and royalties from arena profits once they reach a specified level.

Mr Milne says that while the council is not happy with the increased cost of the arena, it accepts that the price is sharp and would only have keep rising if a decision had been further delayed. “As the construction costs were finalised in the past days, it became evident that additional funding would be needed to ensure we did not jeopardise the quality of the building or its future success.”

Neighbouring councils, the Auckland Regional Council and central Government had been unsuccessfully approached for funding.

Mr Milne says that the arena will bring more, and more varied, events than Auckland has ever seen.

“It will be a venue where we might watch the Silver Ferns or Tall Blacks in action on a Saturday night, enjoy Elton John in concert on a Wednesday and attend a schools’ musical extravaganza on Friday. “With events like these, Aucklanders will get the same excitement we experienced during the America’s Cup – but on an ongoing basis.”

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