Subscribe to RSSQuestions Over $6m Velodrome
Waikato Regional Council will carry out further investigations before deciding to consult with the public over whether to put up $6 million to build a world-class velodrome near Cambridge.
The council decided this after considering a due diligence review by Deloitte, which examined the accuracy of the Waikato Bay of Plenty Home of Cycling Trust’s economic impact assessment report, the proposed capital and operational budgets and other issues including facility ownership and depreciation.
The council also discussed the findings of a staff report assessing the benefits, alignment and rationale for funding.
A number of concerns were raised in both reports, as well as in presentations to the meeting, including:
- The funding of ongoing operational costs and maintenance, as well as any additional works which might be undertaken.
- Ownership and governance of the velodrome, including what would become of the facility if the trust was to go into liquidation.
- Whether the spread of benefits would be localised or extend to advantage the Waikato region.
- Bay of Plenty Regional Council’s decision last week to defer any decision to fund $4 million until the Ten Year Plan 2012-2022. The plan is due to be adopted in June next year, which is after the Sport and Recreation New Zealand (SPARC) deadline.
- The decision by Hamilton City Council last week against supporting the regional council’s proposal to consult to fund the velodrome.
Regional council chairman Peter Buckley said, “It has been a terribly tight timeframe for us, with all the information we’ve had to digest in the past 24 hours in particular.
“We’ve been put in a difficult situation by the government funding agency’s tight timeframes,” he said.
“I would have liked to see the proposal go to the public through the Long Term Plan consultation process, but I need to have more information before spending additional unbudgeted funds on public consultation at this time,” Cr Buckley said.
Following careful consideration, councillors resolved they needed further information before a proposal could be put to the public, particularly around costs.
Staff will now provide a report to the council during its next meeting on June 29 which will outline what further work is required for a more detailed assessment of the Home of Cycling Trust’s proposal, and the time it will take to do the additional work. The council will also contact SPARC to discuss seeking an extension to allow consultation to be completed.
In April, the Waikato Bay of Plenty Home of Cycling Trust made a presentation to council, highlighting the benefits the proposed $28.5 million national cycling centre of excellence would deliver to the region, including projected economic benefits of $11 million a year.
The trust was seeking the entire $11 million local government share from the Waikato and Bay of Plenty regional councils and Waipa District Council. Time pressures meant the trust could not seek council support through the usual annual or long term planning processes. However, Waipa District Council has since conditionally allocated $1 million.
The Government is putting $7 million into the cycling centre project, with $11 million sought from local government, and the balance from trusts and naming rights.
Since winning the preferred tender bid, the Waikato Bay of Plenty Trust has been on a fast track to secure funding and finalise commercial tenancies, design and build agreements and other governance and operational details.
SPARC extended the deadline until early September to allow the trust to confirm it has the funding in place to develop the centre.
SPARC has stated it has the option to negotiate with other shortlisted bids, Auckland or Palmerston North, if Waikato Bay of Plenty cannot complete these technical and financial conditions. The timeframe has been set so building is completed by March 2013 in preparation for the 2016 Olympic programme.
11 Comments
What nonsense. What a rort.
As far as I can see from the above numbers, they are arguing a return of “projected economic benefits of $11 million a year” on investments of about $28.5 million.
That would be a return of 38% per year!!! Selling drugs has a worse rate of return. Putting that kind of stuff into a finance company advertisement would get you prosecuted!
If they got that kind of return, velodromes would be popping up all over like mushrooms. Say thanks, but no thanks to those guys.
Karl, there is a big difference between economic benefit and realizable revenue. Typically when calculating returns you must use the latter. Yes it might benefit the region by $11m pa but most of this money will go to businesses and workers, such as accommodation etc. The council/velodrome will not be able to realize much of it, and will likely see a very low return. However councils often chose to subsidize things that benefit there community.
Scott - I am certainly aware of the difference between those two kinds of benefits.
I am also aware of the fact that sports / events benefit predictions are almost always totally overblown by their promoters (just look at the recent Olympics, or the RWC, where Council is already footing the bill for the Rugby Body because the banks were unwilling to lend to them). I also don’t think professional sports SHOULD be subsidised at all (certainly not by Councils). But that is more a philosophical objection, rather than my concern about overblown benefits.
This Waikato velodrome sounds like a particularly cheeky case of overstated benefits. If the economic benefits for a velodrome would be so high, why don’t we (or other countries) already have more of them? I am not convinced.
Karl, it’s more than just a velodrome, though. It’s a “centre of excellence”, which means various associated activities. If it were just a big concrete circle, I’d agree with you entirely. However, it’s not, so it’s entirely possible that all the associated spin-off value is realistic.
Plus, being a one-of-a-kind venue gives it a lot more pulling power. Like Lake Karapiro is to rowing. Build lots of them and the value of any given one is reduced, but if you have only one or two in a country the size of NZ there’s a concentration of utility and utilisation that increases the benefits.
Its the area to build it.
It is very quickly becoming the area for where all New Zealand’s top / elite sports people are going to train.
$6m actually doesn’t sound to bad, and considering the one down in Southland was massively damaged last year in that huge snowfall, its probably a good thing.
I’m guessing the one in Manuaku doesn’t get used anymore?
Surely it will be a wooden covered track with other facilities?
Carl - it still does, but its half destroyed by whoever the dimwit was who thought it’d be a good idea to have rally cars fly around it.
well its concrete anyway, plus its outside.
maybe good for 1990, but in 2011, anything like this needs to be world standard, wooden and inclosed,
indoor tracks need to be of high speed and world class.
that thing never way.
NZ track cyclists are some of the top performing athletes in a world sport which has only one international standard track in the country at Invercargill. The proposed velodrome is therefore a building of national, not only local, significance
The Manukau velodrome being concrete and open was not really up to world standard in 1990 when new but it was heaps better than the old Papatoetoe track it replaced. It can only be described as a “local” track now.
Waikato rate payers are the losers, St Peters School are the winners why else would they offer the land for next to nothing.
St Peters school will be able to offer another sport to their future pupils. Perhaps the school roll is falling they need other enticement for their pupils.
They will be able to take it over after it falls over due to lack of support from the local community who did not want it any way but were forced to pay for it by their local Regionalcouncils who disregard democrate rights
Wardell wants to get people out of cars and on bikespart of his submissions, how many cyclist will be KILLED while cycling from Cambrige and Hamilton to the Velodrome which is only accessible via state highway 1
Waikato Regional Council officers are no better than the Serepisos, Petricevic, Roest, Bryers, Hotchin, of the world good at spending other peoples money on grand and risky ideas but when they fail they all head for the hills and blame it on every one else, But in their eyes they can do no wrong. Unfortunately the rate payers will suffer again.