Christchurch convention centre deal: How it went pear-shaped

By Shelley Robinson

The design for the new Christchurch convention centre. Photo / Christchurch Star
The design for the new Christchurch convention centre. Photo / Christchurch Star

Official documents have revealed for the first time what contributed to the soured convention centre deal between the Government and Plenary Conventions New Zealand.

Treasury documents released under the Official Information Act show the slow demise over about two years. There were delays due to the difficulty of Plenary (PCNZ) building the project within Cabinet's budget.

How much Cabinet has put aside for the project remains under-wraps, with costs redacted in the document.

The city council's cost-share agreement showed a budget of $284 million, expected to be topped up by private partnerships.

More than $84.5 million has been spent on the convention centre so far, with little to show on the ground.

The Treasury confirmed yesterday this spend was budgeted and not a blow-out.

PCNZ, a consortium of Plenary Group, Ngai Tahu Property and Carter Group, won the building contract not only for the convention centre, but for the surrounding precinct, and maintain it for 10 years. It was announced on August 8, 2014.

The Government has remained tight-lipped on why the PCNZ deal broke down, citing commercial sensitivity - saying only that it was "mutually agreed".

The documents showed events came to a head on May 11 this year when PCNZ tabled information that showed "pricing pressures" as a result of a "pricing update."

Earthquake damage to the Christchurch Convention Centre. Photo / Christchurch Star
Earthquake damage to the Christchurch Convention Centre. Photo / Christchurch Star

The actual pricing pressure was redacted from the memo. PCNZ started legal processes the next day.

On May 12, PCNZ issued Otakaro Ltd, the Government-owned company which took over from the Canterbury Earthquake Recovery Authority, with a written notice. The notice said was "unlikely" that the parties would reach agreement within the Affordability Threshold of May 31.

That meant 15 days of "good faith" negotiations, before PCNZ could terminate the "process agreement", said Treasury in a memo to Minister of Finance Bill English and Minister supporting Greater Christchurch Regeneration Gerry Brownlee on May 20.

A process agreement sets out the obligations of each party.

But Treasury said either party could terminate on May 31.

It is not said in the documents when ultimately the partnership finished or why. A month later it was publicly announced the Crown would do the project alone.

A detailed time-line showed in March 2015, Canterbury Earthquake Recovery Authority "paused" the project after receiving PCNZ mid-stage design.

CERA decided to reduce the project's size, removing the hotel and car park to manage "cost pressures."

Cabinet approval was sought for a new business case. It had a fixed budget, and transferred design construction and facility management risk to the developer.

Cabinet agreed to funding in November 2015.

But a month later PCNZ presented three options - none of which, said official documents, could meet the budget set by Cabinet.

On December 16, joint ministers agreed to delay a decision, due to this.

In February, after negotiations with PCNZ, CERA presented three options to joint ministers. Costs of each were redacted.

They were a "five-star facility", a 4.5 facility with a "high quality" finish and iconic facade, that could host 140 delegates, and finally a three-star facility not favoured by CERA because of quality of the finish, size and financial risk.

A "go decision" was made by joint ministers on February 16. It is not clear in the documents which option, or if any option, was chosen.

Negotiations kept continuing until May 12 when the legal process was invoked.

Mr Brownlee told The Star yesterday he had provided the "best information" while maintaining the commercial position of the Crown, as it has put out for tender the build.

He said the "termination" of the agreement with PCNZ involved a number of different steps and was "ultimately mutual."

He said it was known from the beginning that either party could end the relationship at different stages.

City councillor Jamie Gough said delays in the convention centre had done irreparable damage to business confidence.

He said delays would have cost the city conferences.

He said the anchor projects and the convention centre put a "stake in the ground" for businesses.

". . . but when you have those stakes and they start moving it does a tremendous amount of damage and in some case irreparable."

He said the lack of communication over the convention centre created an air of uncertainty and speculation was rife.

Labour MP for Canterbury Issues Dr Megan Woods said she was concerned with how little information had been given to taxpayers.

"Gerry Brownlee has hidden behind commercial sensitivity instead of giving clear answers about why this project was so delayed, and why the original plan fell apart," she said.

Ngai Tahu Property had no comment, Carter Group did not respond to an email asking for comment.

PCNZ New Zealand director Paul Crowe said both parties had agreed to discontinue the process in June.

He said its design and master planning would be used the Crown in its delivery.

Consultant reports on convention centre

2012

• Architectural outline - Woods Bagot, $111,000.
• Utilisation review and projections - Vbase, invoice not located.
• Preliminary geotechnical advice - Tonkin & Taylor, invoice not located.
• Hotel opportunities - Horwath HTL, $32,000.
• Retail and commercial opportunities - Colliers, $8500.
• Convention Centre precinct report - Barbara Maple & Associates, $15,069 and The Conference Company Ltd, $11,515.
• Peer review concept design estimate - Davis Langdon NZ Ltd, $12,500.
• Structural outline specification - Holmes Consulting Group, $42,750.
• Development budget estimate - Rider Levett Bucknall, $30,000.

2013

• Business case, draft - PwC, $165,105.
• Feasibility study - Horwath HTL, $35,000.
• Detailed business case - PwC $11,210.

2014

• RFP review - PwC, $25,000.
• Expert review of Plenary Conventions' outline development proposal - Horwath HTL, cost unknown.
• External expert review of RFP response, other commercial developments - Wareham Cameron Co, cost unknown.
• Expert review of Plenary Conventions outline development proposal - $11,300
• Outline development proposal review - Accor, $37,000
• Interim opinion, probity assurance review - McHale Group, $18,824.
• Preferred operator gate 2 requirements - EY, cost unknown.
• Preferred consortium stage gate 2 requirements - EY, cost unknown.
• Stage gate 2 requirements - Minter Ellison Rdd Watts and Lane Neave Lawyers, cost unknown.
• Quality assurance initiation and definition phase, final report - KPMG, $58,400.

2015

• Car park management plan - Parking and Traffic Consultants, cost unknown.
• Remediation options - Tonkin & Taylor, invoice not located.
• Custom tool - Greenstar, invoice not located.
• Project options report - EY, invoice not located.

2016

• Limited procedures quantitative risk analysis - PwC, $35,600.
• Transportation assessment report - TDG, invoice not located.

- Christchurch Star

Get the news delivered straight to your inbox

Receive the day’s news, sport and entertainment in our daily email newsletter

SIGN UP NOW

© Copyright 2017, NZME. Publishing Limited

Assembled by: (static) on production apcf04 at 24 May 2017 04:07:51 Processing Time: 351ms