Convention centre for 1200 – council asked to pay $2m annual lease for 10 years

News from WCC
Wellington City Councillors will vote next week after being briefed on a purpose-built convention centre and five-star Hilton Hotel proposed for a vacant site opposite Te Papa.

Mayor Celia Wade-Brown welcomed the proposal, saying the convention centre is a transformative project that will keep Wellington ahead in the conference market.

“We’re shifting the game with the convention centre proposal,” says Mayor Wade-Brown. “If agreed to, this convention centre proposal will be a great investment in Wellington, and we’ll have a purpose-built five-star facility to help spur the Capital’s growth, contribute to NZ Inc and draw on the Government’s international marketing clout.”

If given the go-ahead, the state-of-the-art 4400 square-metre facility would be able to host up to 1200 conference delegates and have a banqueting capacity for up to 1450 people. It would be built along with the 165-room hotel on the site in Cable Street.

The overall project would be financed by local developer Mark Dunajtschik. The Council would lease the convention centre at an average net cost to the city of about $2 million a year over the lease term.

“We’ll be asking Councillors to vote to take the proposal out for consultation,” says Mayor Wade-Brown. “Today was a chance to lay out the detailed business case and the process we’ll use to consult with ratepayers on a plan that could bring $30 million in new expenditure to the city each year and directly create at least another 200 jobs.”

The convention market earns more than $140 million for the city each year and supports about 1000 jobs, but Mayor Wade-Brown says without investment in purpose-built convention facilities, the city could lose a lot of that economic activity.

“Our facilities, while individually attractive and good for boutique events, are too small and, in some cases, too old, and lacking the flexibility needed for the modern convention market. With new convention centres being built in Auckland, Christchurch and Queenstown, we stand to lose a big part of our existing business.”

Deputy Mayor and Governance, Finance and Planning Committee Chair Justin Lester says the proposal is a cost-effective way to secure a large and modern convention facility with little risk to ratepayers.

“The Council is working with a leading local developer prepared to invest all the capital and carry most of the risk – for our part, the city would lease the new convention centre and the Hilton hotel chain would run it.”

The Council’s Economic Growth Committee Chair, Councillor Jo Coughlan, says the proposed convention centre is the first of the Council’s ‘8 Big Ideas’ to get to this stage and is a catalyst project for the City Council’s Growth Agenda.

“This is a great opportunity for Wellington and a significant investment which would see an additional $20 million in GDP growth per year.

“The eight ideas all support and build on one another and the convention centre proposal feeds into the proposed film museum, the tech precinct and the airport extension.”

If the Council votes next week to support the proposal, a formal consultation period would run from 8 July to 8 August and be supported by a range of information. During that time, negotiations would continue with the developer and Hilton. “The aim is for the Council to be in a position to make a final decision in September,” says Cr Coughlan.

“Wellington has two choices – we can do nothing and accept we’ll lose up to $25 million a year of economic benefits from the convention sector, or we can partner with Hilton and have an international convention centre which will see us continue to grow and compete.

“The proposal being considered by Councillors would give us a purpose-built strong modern offering for a relatively small cost,” says Cr Coughlan.

An overview of the economic case supporting the Convention Centre

• Wellington is currently the country’s second largest convention destination behind Auckland, making up 15 per cent of the country’s total convention market and earning more than $140 million for the city each year.

• If we do nothing, we could lose up to 17 per cent of that business when other newer facilities are built around the country – that’s up to $25 million in lost business and about 170 jobs.

• This new purpose-built centre would protect that business and, we estimate, grow the overall business I Wellington by about 10 per cent – about 74 new events delivering 68,000 delegate days each year..

• As well as protecting the existing market and jobs, that growth would add $30 million in new expenditure and directly create more than 200 new jobs.

• We expect flow-on secondary development to occur in time in supporting businesses such as entertainment, hospitality and retail.

• A 5-star Hilton would help attract premier industry events to the Capital and support other economic development initiatives such as the proposed film museum and tech precinct.

• We get this for an average net cost to the city of $2 million a year over 10 years on our base operating projections (after accounting for profit share and rates income).

• It would cost the City Council at least $55 million to build a convention centre itself and at least $1.7 million more a year to run – the city would carry all the cost and associated borrowings, and all the risk.

Some details and background information

• The developer is Mark Dunajtschik – an established and successful local developer with a demonstrated commitment to Wellington

• New 165-bed 5-star hotel and purpose-built conference facility with full-format conference hosting capacity of up to 1200 delegates and banqueting capacity for up to 1450 people. In theatre style seating, the facility can seat 2500 in the largest space.

• At the time of completion, the new venue would be the second-largest convention facility in the country and would be completed before the other convention capacity becomes available in other parts of the country

• The venue would be branded, marketed and managed by Hilton which would give Wellington international exposure – and confidence that new events will be attracted to the Capital.

 

8 comments:

  1. Hel, 20. June 2014, 18:57

    Not that keen on the impression but think it is a great move for Wellington and hope the business ratepayers get in behind to fund the cost.

     
  2. Esjay, 20. June 2014, 19:47

    What happens with existing Council buildings that catered for many conferences until earthquake prone requirements made them redundant?

     
  3. CC, 20. June 2014, 22:09

    Another bout of Council enthusiasm for what is doubtlessly another exaggerated guestimate of returns on a ‘big business’ idea. The only problem is that the proposed conference centre, like other projects, will depend on the deep pockets of the ratepayers to subsidise the returns to private sector investors. Given that the intending developer had no qualms about holding the city to ransom over his Harcourt Building dealings, is there a quid pro quo attached to the conference centre deal?

    It will be a great day when the city’s infrastructure is properly resourced and the business sector stops troughing on rates revenue.

     
  4. Hel, 20. June 2014, 23:08

    CC, last time I looked the business sector paid rates and I recall they heavily subsidise the residential rates.

     
  5. CC, 21. June 2014, 9:12

    Yes Hel, but the business sector get much of their’s back, while the residential share mainly pays for infrastructure. Also, the differential was significantly changed in recent years to decrease the business component, so you should put on the glasses on and look again. As an added consideration, businesses build their rates costs into their revenue structures, meaning consumers ultimately pay their share for them. It would be great if employees’ incomes increased when and because rates increase.

     
  6. Esjay, 21. June 2014, 16:05

    CC, yes I agree with your sentiments. Perhaps the business sector can reconsider its $2.5 million contribution to Te Papa, and pass it on to the Hilton proposal.

     
  7. Nora, 22. June 2014, 10:17

    What happened to the conference centre for 2500 people? it appears to have been halved. [Check the council's news release again - it says "the facility can seat 2500 people in the largest space."

    I think the majority of Wellingtonians would prefer to see this money go towards strengthening the Town Hall which is such a loss to concerts etc which are being transferred to the Michael Fowler Centre and the Opera House, both of which are too big for soloists accompanied by a pianist. St Andrews and Old St Paul’s are filling the gaps but bring back the acoustic perfect Town Hall soon…

     
  8. Pollyanna, 22. June 2014, 12:18

    Have just read the agenda for the Council meeting next Tuesday 24th and this item (Report 1) is to be considered after the exclusion of the public!

     

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