Christchurch stadium plan facing funding shortfall of up $60m

Sunday, 17 November 2019

Former Crusaders and All Blacks captain Kieran Read says Christchurch's temporary stadium is no longer a 'symbol of progress' for Christchurch. (Video first published in May 2018)

Private sector cash may be needed to meet an up to $60 million funding shortfall for Christchurch's new stadium.

A 25,000 seat, roofed design is being tested in an investment case originally due to be completed by July, but now expected before Christmas.

Officials are exploring whether the private sector could build and operate the stadium, and share the costs, to solve the cost issues.

An industry expert says there would be interest from the market if that was decided.

* Chch stadium costs rising while city council works on delayed business case

* Christchurch stadium could cost almost $1b to build and operate**

An early concept image for the stadium was released the Government's 100-day blueprint.

Stuff revealed an investment case draft was sent to the Government for review, with officials' feedback suggesting there were 'affordability issues'. No figures were provided.

In response to questions from Stuff, a statement attributed to 'Crown and [city] Council officials' said the concept fell outside of the $473m budget by 'about $30m to $60m'.

The statement said the Government and city council were 'committed' to progressing the stadium. No decisions had been made about how the stadium would be built or managed, it said.

So far, about $2.86m has been spent on the investment case, including engineering/architectural work, geotechnical/contamination testing, acoustic design, consultation and market soundings, and testing financial models. There is $3m budgeted for it.

It would need approval from councillors before going before Cabinet, which would then grant the project $220m from $300m fund Labour promised pre-election. Council has committed $253m.

Delays to the investment case have been attributed to the mosque shootings and the local elections. Meanwhile, building costs are rising by up to $1 million a month.

A Treasury report looking at how a public-private partnership (PPP) might work, obtained by Stuff under the Official Information Act, said the benefits of a PPP for the stadium, and the market appetite, 'should be fully considered'.

It would give certainty to the costs for the build and operation – an important consideration given the 'budget constraints'.

National and international PPPs had shown they were more likely to be built on time and to a higher quality, and be more innovative and provide a better experience for the user, the report said.

'For these reasons, we think there is a strong chance that it is the best procurement model for both Crown and council and likely to deliver value for money.'

It said the stadium investment case had highlighted 'major risks' including design or build delays that would undermine confidence in the city's regeneration, greater than expected maintenance or refurbishment costs that could create 'a significant ongoing burden' for the city, and the quality of the facility not being good enough to attract the events needed to provide the economic benefits expected. A PPP arrangement could help manage these risks.

The cost of building and running the stadium over its first 25 years has been estimated at up to $1.355 billion.

Morrison and Co's Steven Proctor is executive director of the public infrastructure partners fund, which invests in PPPs. He believed there would be 'a lot of market appetite' for a build and operate contract for the stadium.

PPPs almost always came in on time and on budget, Proctor said.

Christchurch has attempted to use them for major rebuild projects in the past. A contract for the convention centre involving Australian-based Plenary Group, Christchurch's Carter Group and Ngāi Tahu Property as private partners broke down in 2016. It was plagued by delays and public uncertainty.

Proctor said the convention centre deal fell over because it was badly procured, not because it was a PPP.

The Treasury report used the new 60,000-seat Perth Stadium as a successful example. Perth's business case found using a PPP gave a 21 per cent cost saving over the life of the stadium due to a 'competitive design process' that lead to lower construction costs and lower costs for refurbishments.

Christchurch's stadium is planned for the block of land bounded by Madras, Barbadoes, Hereford and Tuam streets, with an opening date in 2023.