Auckland will get its international convention centre, albeit on a smaller scale than originally envisaged, after the Government and SkyCity Entertainment reached a new agreement.
The casino operator has increased the minimum it will invest in the convention centre to $430million and said total costs, including land, might be $450 million to $470 million.
SkyCity was forced to revise its original design after the Government refused to contribute to costs that ballooned out to an estimated $530 million, exceeding the initial estimate of $402 million.
Political pressure forced the Government to backtrack on parts of its agreement on the centre, forcing a rethink by SkyCity.
However, reaction to the revised centre plan was muted yesterday with only the Taxpayers Union and Labour bothering to make any comment. The Green Party, the most outspoken critic of the original deal, did not comment.
After all the so-called outrage over SkyCity being able to increase the number of poker machines and gambling tables through the deal, Labour leader Andrew Little said the new design would mean fewer people would be able to attend conferences.
''It's not a convention centre, it's a concessions centre.''
He accused the Government of breaking a promise.
Taxpayers Union executive director Jordan Williams was ''outraged'' about the latest details of the centre, specifically the number of delegates the centre would be able to hold being reduced for a second time.
Taxpayers were promised a facility to host between 3500 and 5000 delegates. The Government revised that down to 3000 and SkyCity had decreased it again to 2850, he said.
SkyCity sent a note to the NZX announcing the agreement but Economic Development Minister Steven Joyce only posted a statement on the Beehive.govt.nz website announcing the fact.
SkyCity chief executive Nigel Morrison said the company was pleased to have finalised and agreed on the preliminary design with the Crown.
''I believe the architects and designers have done an outstanding job and we are very proud of the exceptional design.
''While the revised design is for a slightly smaller centre, its design ensures it will be a landmark building for Auckland and New Zealand.''
SkyCity was well advanced in its plans to activate the various gaming concessions. The company had allowed an additional $50 million of capital expenditure for internal building works and the purchase of the additional gaming product.
Other main points of the announcement included an agreement between the parties to enable SkyCity to have greater control over costs and other risks.
SkyCity would have greater responsibility for managing the design, procurement and construction processes through to a completion of the centre.
The company remained hopeful of receiving a non-notified resource consent from the Auckland Council for the overall development, including the new hotel, in coming months. Subject to consents, SkyCity expected to have a buildings work contract signed with a construction partner and start construction before the end of the year.
Mr Joyce said the Crown had previously indicated it was prepared to accept a slightly smaller convention centre with a reduction in capacity of up to 10% if that was needed to meet the agreed total construction cost.
The revised design met the requirement. Craigs Investment Partners broker Chris Timms said the forecast was for the convention centre concessions and additional number of visitors generated to provide a 30% increase to its existing Auckland gaming revenues once the project was complete.
However, Craigs maintained its sell rating on the company on valuation grounds.
The shares looked fully priced as the company entered a three-year major capital expenditure cycle. In total, the company was spending about $1 billion through the convention centre build and the Adelaide redevelopment.
At a glance
• SkyCity and Crown agree on smaller convention centre
• Political outrage muted
• SkyCity increases capital investment in centre from $402million to $430 million
• Construction could start by end of the year
