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Council considers investment case for new multi-use arena

Wednesday, December 11, 2019   Posted in: Earthquake By: Administrator With tags: sport, recreation, earthquake recovery, built environment

Christchurch City Council Newsline: 9th December 2019

The Investment Case for a covered multi-use arena with seating for at least 25,000 people will be considered by Christchurch City Council on Thursday (12th December).

The arena is one of the anchor projects included in the Christchurch Central Recovery Plan and is going to be built in the city centre on Crown-owned land bordered by Madras, Barbadoes, Hereford and Tuam streets.

The Investment Case has had input from community partners, city leaders and technical experts, and shows there is a strong strategic case for building a multi-use arena.

The Investment Case says that in order for the Canterbury Multi-Use Arena to be competitive and attract international and national events, it needs to have:

  • A roof so it can host events year-round.
  • Minimum seating capacity of 25,000 (with the potential to add temporary seating for a further 5000 in the future).
  • A fixed rectangular turf.
  • High quality acoustics.

It is projected the arena will cost $472.7 million to build based on those specifications.

The Council has put $253 million in its 2018-28 Long Term Plan as its contribution towards the arena’s construction costs.

The Crown has signalled it will contribute $220 million towards the project but is waiting on the Investment Case before it confirms the funding through the Christchurch Regeneration Acceleration Facility.

The net operating costs for the arena, including lifecycle costs, are anticipated in the Investment Case to be $4.2 million per annum.

The Council has currently allocated $4.1 million per annum within the 2018-28 Long Term Plan to cover these costs.

The Investment Case recommends the Council take the lead in delivering the project once a funding agreement between the Crown and Council is in place.

The Council would appoint a Project Board under the suggested delivery model; who would then independently appoint a delivery team who would pull together consortia of contractors to build the arena.

The Project Board would oversee delivery of the project and would be responsible for ensuring it is delivered on schedule and in budget.

“The Investment Case shows there is a strong strategic case for building a multi-use arena," says Christchurch City Council Manager Major Facilities Vertical Capital Delivery , Alistair Pearson

“Without an arena Christchurch cannot host big concerts or top-level sporting events. These events attract visitors and revenue to the city and are important for economic development. They also add to residents’ quality of life and make Christchurch an attractive, vibrant place to live," Mr Pearson  says.

“At the moment we are not capturing our share of economic benefit from cultural and sporting events. A new arena will provide an anchor and catalyst for CBD recovery and revitalisation and provide a focal point and an attraction for local and international visitors.

“Modelling undertaken for the investment case conservatively estimates that stays in Christchurch will increase by nearly 100,000 bed-nights per annum because of the domestic and international tourism driven by the new arena,’’ Mr Pearson says.

Read the Investment Case for a Multi-use Arena in Christchurch.

What happens next?

The Investment Case will be considered by the Council on Thursday. If it accepts the Investment Case, it will then be submitted to the Crown for approval.

When is construction likely to start?

Assuming the Investment Case is approved, enabling works are expected to commence on-site in quarter two of 2020.

How long will construction take?

The arena is expected to open in 2024.

Has any work begun on site?

Geotechnical investigations have been under way on the site since late 2018. We needed to determine the condition of the land so that could be factored into the planning for the arena. Some site remediation work has also been done.

Why only build a 25,000 seat arena?

It is the most affordable, viable option. The Investment Case looked at a number of options, but options that contained less than 20,000 seats or greater than 30,000 seats were not considered viable.

A venue smaller than 20,000 would not be competitive with other covered venues in the South Island for events, concerts, and sporting content. A venue larger than 30,000 was not seen as feasible because of space constraints on the site.

Why can’t we continue using Christchurch Stadium?

Christchurch Stadium was designed only as a temporary facility and is small – it has a seating capacity of only 18,000 – when compared with other venues around New Zealand. The facility is ageing and the stadium is uncovered, resulting in poor patronage and performer experience.

Who will operate the arena?

Council-owned entity Vbase is the proposed operator of the arena.

What impact will building the arena have on rates?

Expenditure for the arena and ongoing operating costs have already been factored into the Council’s Long-Term Plan. Should the arena not proceed for any reason, rates savings of about 2.9 per cent (spread across the 2023 to 2025 financial years) could be made.

Will other Councils or private investors contribute to the arena?

Possibly. We wanted to finalise the Investment Case before beginning discussions with third parties about how they might support the arena project.

Who put the Investment Case together?

Council engaged professional services firm EY to work collaboratively with staff to develop the Investment Case. Additional input has come from industry experts, specialist consultants and various stakeholders. Crown agencies have also helped by providing advice on the Government funding approval processes.

Why has the Investment Case taken more than a year to prepare?

We needed to do extensive work to ensure the multi-use arena will be fit for purpose and is financially feasible. This has involved working with key stakeholders to establish their needs and investigating alternative design options.

We have also had to do market sounding – with the construction industry, financiers, facilities management and operators – to help obtain clarity about the costs of building and running an arena.

The budget is tight and as we progressed the Investment Case, it became apparent more work was needed, particularly around affordability. What was scoped initially fell outside of the $473 million budget by about $30-$60 million. We had to refine the proof of concept design to give more certainty about construction costs and to ensure that it fitted within the budget.

How much has the Investment Case cost to prepare?

About $3 million.