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PROJECTS AND PROPERTY COMMITTEE
11 DECEMBER 1995
A meeting of the Projects and Property Committee
was held on Monday 11 December 1995 at 4.00 p.m.
PRESENT: Councillor R B Wright (Chairman),
The Mayor, Ms V S Buck,
Councillors O T Alpers, Carole Anderton,
I Ganda, I D Howell, A G James,
G A Moore and D J O'Rourke.
ABSENT: Councillor M F Fahey. IN ATTENDANCE: Councillor D C Close. The Committee reports that: PART A - MATTERS REQUIRING A COUNCIL DECISION
1. CONTRACT NO. 95/96-120
CHRISTCHURCH CONVENTION CENTRE
MAIN BUILDING AND SITEWORKS
Officer responsible Author Design Services Manager Mike Stockwell Corporate Plan Output: Corporate Plan, Volume 1, Table 8
The Committee considered the following report by the Design Services Manager: "PURPOSE OF REPORT
The purpose of this report is to recommend that the Council accepts a tender for construction of the Convention Centre main building, siteworks and kitchen/food and beverage equipment.
1. Background
The early 1990s in the Christchurch tourism and entertainment industry were characterised by a growing demand for the ability to stage national and more particularly, international conventions in Christchurch. Whilst the hotel industry and Town Hall was at that time typically catering for conventions up to the 300 delegate mark it has become increasingly apparent that there was no suitable venue that could offer facilities for substantially larger numbers and increase economic benefits to the city (a feature of conventions). Coupled with that there was a body of opinion that considered that the Town Hall should more appropriately focus on the performing arts for which it was specifically designed. In addition, the Council itself had at that time identified the need for enhanced convention facilities in Christchurch so as to further
1 Cont'd
both community and economic growth objectives. The Convention Centre (together with the Sport and Entertainment Centre) was recognised by the Council as an enhancement project which was first identified and promoted in the 1994/1995 Annual Plan and Budget.
In 1994 a study team of Council officers reported on the feasibility and costs of providing a Sport and Entertainment plus Convention Centre for Christchurch. This report recommended that the Council build a Convention Centre in the inner city either separate from or linked to the existing Town Hall. The Sport and Entertainment Centre was to be outside the city centre. The upshot was the purchase of the Star site in Kilmore Street for $4.0 m for a Convention Centre linked to the Town Hall by an airbridge to allow the two facilities to be operated together for very large events and independently for other events thus capitalising on the best of both worlds.
2. Anticipated Number of Conventions
Pre-opening marketing of the Convention Centre over the last three months has resulted in 16 conventions and exhibitions from 1997 onwards `pencil booked' to utilise the entire complex, with a further 9 events proposing to utilise some of the rooms in the complex.
Large conferences and exhibitions at the Convention Centre are expected to total around 40 for the first years' operation. Other smaller events (such as banquets, seminars, and meetings) are expected to total 100 more giving an expected total of 140 events in the first year alone.
3. Profit and Loss/Benefits to City
Projected profit and loss scenarios for the combined Convention Centre/Town Hall/Sport and Entertainment Centre have been worked up by KPMG Peat Marwick Chartered Accountants. These show an outcome that is within the financial envelope that has been provided in the Council's adopted Annual Plan. At the same time as considering profit and loss scenarios it is appropriate to emphasise the wider benefits the project will bring to the city. In very simple terms these are estimated conservatively to be:
(a) 9,300 additional conference delegates to Christchurch each year bringing an addition $11.4 m in direct spending within the city. Note that this is based on an average length of stay of 3.5 days at $350 spending per day - reference NZ Tourism Board and Convention Centre Naming Rights Prospectus. This sum is conservative and does not allow for any additional multiplication factor commonly applied within the tourist industry.
(b) 10 to 15 extra full time jobs with up to 250 extra part time positions for special events and shows. Note also that the New Zealand Tourism Board state that for each $1.0 m brought into an area, 23 extra full time jobs are created - reference NZ Tourism Board and Town Hall Manager.
1 Cont'd 4. Parking
There is a growing concern about the adequacy of parking availability in the Peterborough Street/ Kilmore Street area near the Casino, Parkroyal, Town Hall and proposed Convention Centre. In terms of the City Plan the provision of a new 43 space car park to service the new Convention Centre complies. It is acknowledged however that this is on the low side and the Council is looking to improve on this by providing a new parking building (or buildings) in a location yet to be finalised. Currently there is $6.0 m on the Council's Annual Plan and Budget for this purpose in the 1997/1998 financial year. This car park will probably be in the vicinity of Armagh Street servicing the central city area, perhaps a little too far south to alleviate concerns about the area around the Convention Centre.
In addition Council officers are pursuing the possibility of another new car park in the Kilmore Street/ Peterborough Street area to boost parking availability near the Casino, Parkroyal, Town Hall and new Convention Centre. This may well be funded and built by private enterprise and leased/operated by the Council. The reality of this second car park building will depend upon securing a suitable site, the economic viability of the proposal and a positive decision by the Council to proceed. A proposal is planned to be put before the Council sometime in the early New Year.
5. Summary Description of Convention Centre
The Convention Centre has been designed to a brief written by the specialist international venue management company Ogden/IFC (Brisbane) in conjunction with Council officers. A competition for the concept design of the building and provision of professional services was held in 1995. This was evaluated by a team of Council officers assisted by Ogden/IFC and given careful consideration by a Council subcommittee. The clear winner was a concept design produced by Warren & Mahoney Architects and this was unanimously accepted by the Council (on the recommendation of the Subcommittee) at its May 1995 meeting. At the same meeting tenders were accepted for project management (Octa Associates), quantity surveying (Rider Hunt) and architectural services (Warren & Mahoney).
The project involves demolition of the existing Star building, storehouses and substation and construction of a new stand alone Convention Centre linked to the Town Hall by an airbridge over Kilmore Street. In addition a 43 space car park will be provided on a portion of land that provides the opportunity for future development of a multi-storey car park, extension to the Convention Centre or both. The Convention Centre statistics are shown in summary on Attachment (a). Attachment (a) sketch plans show the Convention Centre layout including proposed traffic management alterations to Kilmore Street and Peterborough Street (Note that the traffic management alterations will be subject to the Council public consultation process probably around April 1996).
1 Cont'd 6. Design Cost/Quality Philosophy
The Convention Centre has been designed to a very tight budget. The technical brief was examined by the design team and subjected to several rigorous value management sessions. From this process a design philosophy was produced which retained an appropriate balance between functionality, aesthetics and cost efficiency. The team has worked extremely hard to produce a building which meets the brief at the lowest practicable cost - refer also section 13 for potential cost savings.
7. Management of Facility
The Council has determined that the operation and management of the Convention Centre, Town Hall, Sport and Entertainment Centre will be implemented by a specialist venue management company who will be employed via a performance based management contract. Tenders for this operation and management closed in November and will be reported to the 13 December 1995 Council meeting. The Projects and Property Committee are aiming to recommend to the Council a preferred operator by 31 January 1996.
8. Timetable
The demolition of the Star site buildings is now complete. Tenders have been called for construction of the main building and siteworks. These closed on Monday 4 December and will be reported to the Council meeting on Wednesday 13 December. The proposed timetable is as follows:
Summary briefing paper presented to Councillors - Thursday 16 November
Tenders closed - Monday 4 December
Report to Projects and Property Committee - Monday 11 December
Council accepts tenders - Wednesday 13 December
Construction - January 1996 to February 1997 (refer also Clause 12)
Commissioning - March 1997
It is proposed to run small conventions in April/May/June 1997 as a shakedown period with bookings for larger events starting in June 1997. Note that certain equipment (items (b)(ii) and (iii) in Section 13) will be tendered separately in early 1996 in order to give time for prior consultation with the chosen venue management operator - refer Section 7.
9. Resource Consent
At the time of writing this report a Resource Consent application has been lodged and is being considered by a Commissioner. As virtually all neighbours agreements to non-complying matters have been given, it is anticipated that Resource and Building Consents will be granted well before Christmas.
1 Cont'd 10. Naming Rights
The Council's 1995/1996 budget for the Convention Centre proposes to raise $2.352 m towards the capital cost by selling naming rights to various spaces - refer Council Budget section 13 below. Naming rights are being offered for the main convention hall, the meeting rooms, business centre and VIP lounge, and the Town Hall auditorium. Commercial agreements are also being offered for provision of certain food and beverage equipment/fitout. Organisations approached include large corporates who are community focussed and have a track record of large sponsorships.
The fund-raising is being managed by Dowding and Associates who are confident of significantly exceeding this target. Heads of agreement are expected to be confirmed by mid December with firm contracts in place by February/March 1996.
11. Registration of Tenderers
In the interest of obtaining high quality tenders, interested Contractors were invited to register for the main building, mechanical, electrical, fire services, lift work and operable walls (folding doors). These were carefully evaluated against a set of required attributes and tender shortlists established. The Subcommittee and the Council approved these shortlists which can be seen as attachment (b).
12. Tenders
Tenders for the main building, siteworks and kitchen equipment closed at 4 p.m. on Monday 4 December 1995. They were as follows:
Chas S Luney Limited $12,218,904
Fletcher Construction $12,236,650
Armitage Williams Construction Limited $12,599,909
Naylor Love Limited $12,610,373
C Lund & Son South Island Limited $12,659,842
Downer & Co Limited Late Tender
Hawkins Construction Limited Withdrew
Mainzeal Property & Construction Limited Withdrew
These tenders all include a Contingency Sum of $250,000 and exclude GST.
The lowest tenderer, Chas S Luney Limited, is well known in the construction industry as a very well managed company. Mr Luney has given an assurance that if awarded this Contract, his company has the resources to be able to complete the project within the specified time frame.
All of the above tenders include the supply of kitchen/food and beverage equipment. This part of the Contract will be delayed by variation order until the successful venue management operator has
1 Cont'd been selected and has had the opportunity to review the scheduled equipment. If the venue manager requires fine tuning adjustments to be made, then this can be done by contract variations using the tendered rates in the detailed and priced Schedule of Quantities in the usual manner.
It is important to note that conventions are already being booked for 1997 on the understanding that the Convention Centre will be completed and commissioned on schedule in March 1997. To maintain this programme, construction must start in January 1996. To this end it is vitally important that a tender be let for construction in December 1995.
13. Funding
(i) Cost Plan
The cost plan for the project is as follows:
Original Updated Cost
Cost Plan with
Plan Luney's
Tender
Included
(a) Building and siteworks 12,604,500
(includes $250,000 building 10,973,50 includes
contingency, demolition, 0 (b)(i)
traffic plan and building
storage shelving)
(b) Furniture Fittings and 725,000 (included
Equipment (i) Kitchen/food and 856,000 above)
beverage equipment (ii) FF&E - 539,000 938,000
tables, chairs, crockery etc 528,000
(iii) Audio visual equipment -
pa systems, videos etc
(c) Architectural and engineering 806,500 806,500
professional fees
(d) Other miscellaneous 550,000 650,000
professional fees - refer
attachment (c)
(e) Marketing expenses - naming 300,000 300,000
right float, advertising,
sales co-ordination etc
(f) Project contingency 250,000 110,000
(g) Credit from Entertainment - (80,000)
Centre funds (for oversize
kitchen to serve Entertainment
Centre needs as well as
Convention Centre)
Total = $15,000,0 Total =
00 $15,857,000
(but refer to
item (iv)
following for
possible cost
reductions)
1 Cont'd
(ii) Council Budget
The above $15.0 m cost plan is to be financed as follows:
* Funds in CCC 1994/1995 budget (already expended) 0.255
* Funds in CCC 1995/1996 and 1997/1998 budget 14.745
-----------
Total = $15.0 m
Within the above budget, revenue of $2.352 m is to be raised by naming rights and other commercial agreements (note that based on the level of interest to date, substantially more is now anticipated - refer section 10 above).
(iii) Cashflow
This is shown on the 1995/1996 Corporate Plan as follows:
* Already expended (1994/1995) 0.255
* 1995/1996 6.500
* 1996/1997 8.245
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Total = $15.0 m
(iv) Tenders and Funding Options
The updated cost plan totals $15.857 m (refer (i) above) versus a current budget of $15.0 m. Two options exist for matching the cost plan to the budget. They are either reducing costs or increasing the funding.
Analysis of Luney's tender indicates that potential cost savings are possible as follows:
* Savings that will not alter the technical design brief for the building value = $0.562 m
* Savings that will alter the technical design brief for the building value = $0.295 m
Therefore minimum project funding to keep the design within the technical brief = $15.857 - $0.562 = $15.295 m.
This represents a minimum extra funding requirement of $0.295 m (ie $15.295 - $150 m).
As discussed in section 10 it is confidently expected that surplus funds will be generated by the sale of naming rights. At this stage the precise amount of the surplus is not guaranteed but could be reasonably expected to exceed the minimum extra funding requirement of $0.295 m.
1 Cont'd
(v) Recommended Strategy
The recommended strategy is as follows:
(a) Increase the funding budget from $150 m to $15.295 m from the extra money anticipated from the sale of naming rights and food/beverage agreements.
(b) Accept the Luneys (lowest) tender and by variation order make savings of $0.562 m. This will reduce the project cost plan to $15.295 m thereby matching the cost plan to the funding budget.
(c) If when the sale of naming rights is finally resolved (expected to be early 1996) and surplus money becomes available then re-examine the deleted items to check at that stage whether it is worthwhile reinstating any of them.
14. Summary
The proposed new Convention Centre is one of the Council's enhancement projects that has arisen out of the need to fill a growing economic market in Christchurch. It is in line with the Council's community and economic growth objectives and is covered in the Annual Plan and Budget. The chosen Convention Centre design was the result of a competition from a shortlist of five architects. It is the result of extensive study by overseas and local consultants working together with Council staff to a cost plan of $15.0 m (excluding $4.0 m for land). Tenders for the main building, siteworks and kitchen equipment have come in $0.857 over the Council's cost plan of $150 m. Examination of possible cost reductions indicates that $0.562 could be saved whilst still keeping the design within the technical brief. This would reduce the required project funding to $15.295 m. The extra $0.295 m required can be financed by anticipated additional money from the sale of naming rights and food/beverage commercial agreements.
Note: The kitchen equipment which is part of Luneys tender must be held over by variation order until the venue manager has reviewed it.
If the completion date of March 1997 is to be achieved it is vitally important that a building tender be accepted in December 1995." Also attached as Attachment (d) is a schedule of potential cost savings tabled at the meeting, comprising Schedule A items estimated at $562,000 and Schedule B items estimated at $295,000, total potential cost savings amounting to $857,000. The items listed in this schedule are provisional, and the final choice of items to be deleted or added will be subject to a value management study by the Project Design Team.
1 Cont'd Recommendation: 1. That the lowest tender of Chas S Luney Limited for $12,218,904 for the main building siteworks and kitchen equipment be accepted. 2. That the kitchen equipment be held over by variation order until the venue management operator has reviewed it (this is expected to occur early in 1996). 3. That the contract price for the building etc be reduced $0.857 m by variation order (after the contract is let) so that the cost plan matches the funding currently available (i.e. $15m). 4. That if additional funds become available from sources such as naming rights, commercial agreements or other fundraising then these be used to reinstate deleted items as identified by the Design Team through a value management analysis procedure.
The meeting concluded at 5.05 p.m. CONSIDERED THIS 13TH DAY OF DECEMBER 1995
MAYOR