A ballpark worst-case scenario for a proposed Queenstown convention centre sees ratepayers stung an average of $145 a year.
The figure is in a Queenstown Lakes District Council agenda prepared for a meeting this coming Tuesday when councillors will consider kissing or killing the proposal.
In a section under rating options, it says little detailed work has been done but in simple terms a worse-case estimate would be “an average cost of approximately $145 (i.e. $3.2 million divided by the number of ratepayers).
“It’s contemplated one of the next steps would be to undertake a more sophisticated analysis which would include options for apportioning rates differentially to CBD businesses; Wakatipu residents and Wanaka residents on a more equitable basis.”
The agenda reiterates an “upper estimate” of council having to fund $39m out of $54m in construction bills and initial working capital.
It would require a “high-side” return from a private investor of 8.25 per cent. The agenda adds if council guaranteed lease payments – and the operator did not make sufficient surplus to meet or offset the least payments – than ratepayers would be up for $3.21m a year.
The report says any contribution from rates could be offset by “efficiency savings” within council’s operations.
“It’s recommended that any ratings impact analysis also include preliminary analysis of possible changes to budget forecasts.”
Back in February, Queenstown Lakes District Council selected a preferred consortium headed by Ngai Tahu Property and infrastructure specialists Morrison & Co to advance a 750-800 person centre – and SkyCity Entertainment Group was announced as the preferred operator of a proposed $50-million development.
The preferred site is on council-owned land Lakeview up the top of Man Street.
The report says having a casino on part of the site would likely generate significant revenue to off-set any operating losses from a convention centre – but a casino is not critical to the project.
In a recent council survey, 43 per cent of respondents either “opposed” or “strongly opposed” a casino as part of the precinct – 25 per cent “supported” or “strongly supported” that scenario.
The report notes Auckland’s proposed national convention centre is forecast to create 800 fulltime equivalent jobs – and BERL Economics forecasts of a Queenstown centre creating 466 are probably a little high.
“…although this needs to be balanced by the extent to which tourism is part of our economy (unlike Auckland) and therefore a convention centre in a tourism district may have a disproportionately positive impact.”
A review of a Horwath feasibility study by Jan Tonkin, the boss of major Kiwi convention organiser The Conference Company, also pours cold water on year one forecasts for a Queenstown centre’s performance as optimistic without a significant lead-in time to promote the venue – most organisers book two to three years in advance.
However, Tonkin adds estimates for international conferences in Queenstown by Horwath appear realistic providing adequate marketing is done.
Tonkin warns continued prevarication by the country on convention centre projects is doing damage to New Zealand reputation as a convention destination.
“She suggests until such time as there is a firm commitment to these projects, we’ll remain off their radar for bookings in the short to medium term.”
The report notes Queenstown’s council has three options – ceasing the project, committing with caveats and exit options or unconditional commitment to a development.
It recommends councillors make a “firm commitment” to it subject to Government contributing, a Lakeview masterplan being done, and finalising rating or other funding options.
“The fundamental rationale for development of the convention centre lies in the indirect economic benefit to the
BERL has forecast a centre would add up to more than $30m to regional annual Gross Domestic Product.
The meeting kicks off at 1pm, Tuesday, at QLDC’s Gorge Road chambers.
Queenstown Lakes District councillors will consider a recommendation this coming Tuesday to:
– Lead the development of a convention centre at Man Street’s Lakeview site
– That it be part of an integrated development
– That the above are subject to Government confirming a contribution to a centre
– And also subject to council approving a master-plan for the five-hectare council-owned Lakeview site plus preferred rating model to fund council’s contribution
Source: QLDC meeting agenda
(NOTE: Councillors and mayor’s thoughts on the meeting in yesterday’s Mountain Scene print edition)