SkyCity wins big over land
Company pledges more cash for construction as convention site rises by $18m in value
Land sold by TVNZ to SkyCity for $10 million to help build a convention centre has been valued at $28 million, less than two years later. The boost in value came after the casino company decided to build its hotel on the former TVNZ land instead of using it for the convention centre — a “switcheroo” revealed by the Herald.
It can also be revealed that SkyCity has reserved the right to operate bars, restaurants and retail areas throughout the controversial convention centre once it is built, in an agreement with the Government.
At the launch of the centre’s new design yesterday, SkyCity chief executive Nigel Morrison said the increased land value was a major factor in the agreed minimum input from the casino company rising from $402 million to $430 million.
The valuation is believed to include a weighting based on its intended use as a hotel and its key position in the convention centre. Even on straight land value increase, the section has gone up 22 per cent in just 20 months, from $14.3 million to $17.5 million.
Mr Morrison said “SkyCity has agreed to increase the $402 million minimum contracted sum to $430 million, fundamentally reflecting the relocation of the future development site from Wellesley St to Hobson St”.
The site was flagged by SkyCity for a future hotel neighbouring the convention centre. It was initially intended for Wellesley St at the back of the convention centre but moved to the former TVNZ land after SkyCity bought it.
He said the $28 million valuation “fundamentally . . . recognises the value shift and being able to create a better hotel on Hobson St than we would have on Wellesley St”.
The convention centre redesign came about after Mr Morrison said last year the building cost had grown from $402 million to $530 million, and it might need an injection of public money.
That prompted Prime Minister John Key to express concerns over an “eyesore” if extra money wasn’t spent on it.
No public money was forthcoming, however, so SkyCity had to downsize its plans to meet its budget.
The new convention centre design is therefore smaller, one level lower and with capacity for fewer people.
However, Economic Development Minister Steven Joyce said the changes didn’t affect the Crown because the design fulfilled what it wanted from a convention centre. The final hurdle for SkyCity was the resource consent, lodged with Auckland Council in December. It could be put out for public consultation, which would delay construction.
Labour leader Andrew Little and Green Party co-leader Metiria Turei both said the deal would be up for review if either was in government.
Mr Little said the centre had shrunk from original projections and he would seek an assurance taxpayers had fair value from the gambling concessions granted to SkyCity.
“We reserve the right to go back and say ‘this is not the deal’ and have a look at concessions.”
Ms Turei said SkyCity got the TVNZ land cheaply because the Government “was over the barrel”.