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Value-added means extra rates bills
Thursday November 23, 2006
By Geoff Cumming

Residents and businesses in Auckland City can expect big extra rates bills for years to come if city councillors today opt, as predicted, for a stadium on the waterfront.

Millions of dollars will be needed for ancillary works to provide high-class public spaces around the stadium and the council says rates are the obvious source of funding.

A majority of city councillors have indicated support for the downtown option - though not the Captain Cook/Marsden Wharf site - despite only a preliminary estimate of the stadium cost.

If they say "yes" tonight, the ball will be passed to the regional council before the Government decides, making a similar stab in the dark about the drain on its surplus.

Just how vague is the Government's $499 million figure?

The estimate by quantity surveyors Rider Hunt has an allowance of "plus or minus 30 per cent" for variations, meaning a $649 million bill is in the ballpark. That's without unforseen escalations during construction, considered likely under the rushed design-and-build timeframe.

On top of that add 12.5 per cent for GST - not included in the Rider Hunt figures. The same applies to Eden Park's figures - its $385 million estimate is GST exclusive.

The waterfront option estimates also exclude the cost of land acquisition - the stadium will occupy 7ha - and replacement berthage and depot-space lost by Ports of Auckland.

With the port needing interim facilities until replacement wharves are built, sources put the bill in the realms of between $50 million and $100 million.

The only certainty, experts say, is that a 60,000-seat stadium with high urban design requirements and a four-year deadline won't come in for less than $499 million, plus GST.

Funding sources identified include $50 million from the Auckland City Council but this is just the baseline for city ratepayers.

The city council expects to pay for most of the improvements to areas surrounding the stadium, including pedestrian promenades, upgrading Quay St, paving, landscaping and public facilities to take advantage of the harbour-edge location. The Government estimate allows only $3 million for paving as far as the Quay St boundary, street furniture and landscaping.

A major stormwater outlet at Captain Cook Wharf, subject to occasional raw sewage overflows, would need to be extended to fulfil the stadium architects' vision of people swimming in the harbour from a beach beside the stadium. The cost of extending the outlet is estimated at $4.5 million.

The council can also expect to contribute to ongoing running and maintenance costs: while stadium backers say it can run profitably, depreciation will turn any surpluses red.

Auckland City chief executive David Rankin says rates are the obvious source of funding for the council works. Development levies on some major projects could also be used. Some works, such as the upgrading of Quay St, are already included in the council's long-term (10-year) plan, though the cost is unknown.

Similar projects have cost between $10 million and $20 million.

"The city has been clear that it wants to make the waterfront an accessible place with pleasant public spaces and there's been strong public support for that," said Mr Rankin.

The Government is examining a law change to help local government to raise funds from sources other than rates. Economic Development Minister Trevor Mallard has also proposed special levies including a hotel bed tax and airport departure tax.

But these are understood to be limited to the stadium construction cost. And the tourism industry says such levies would be disastrous.

Another problem for the Government is the likely cost of reimbursing the port. Mr Mallard has suggested the land acquisition could be a simple paper transfer; the port company says this is an issue for negotiation.

The uncertainty does not appear to be fazing councillors, with Mayor Dick Hubbard even claiming access to a higher authority.

He told TV's One News that Mayor Robbie - "the greatest visionary of all" - was sitting on his right shoulder. "I distinctly heard Mayor Robbie this morning say to me in my right ear: 'Dick - waterfront'."

The dilemma for councillors is clear enough: An upgrade of Eden Park is cheaper, offers more reliable costings and has greater certainty of being ready in time for the 2011 Rugby World Cup. But it doesn't fit the Government and city council's vision of a downtown stadium acting as an economic generator and a catalyst for Auckland's emergence as an "international city" during and after the Cup.

However, the value-added option carries the extreme risks of cost escalations, construction delays and the Rugby World Cup final being lost to Auckland.