Napier City Council will decide whether a ‘high risk’ $15 million second tier multi-use velodrome that’s unlikely to pay its way will go ahead or not after a revised business case is tabled in June.
Velodrome visionaries have not been deterred from their plans to co-locate at Pettigrew Green Arena (PGA), despite high performance cycling lagging well behind softball, cricket and indoor sports facilities in the February 2015 Hawke’s Bay Regional Sports Facilities Plan.
Napier City Council (NCC) set aside $5 million in its 10-year plan, mostly from the council’s Parklands residential development. Its optimistic view – subject to ‘partnership funding’ and a detailed business case – is for building consent in early 2017 and an operational facility in 2019.
In mid-December NCC approved $500,000 for a business plan for the multipurpose facility with a successful tender for design and build due late-February, to work thereafter with NCC’s project team refining the concept and costings.
Critics take potshots
Old intercity rivalries quickly flared on learning NCC was about to invest serious money into the project, with Napier Mayor Bill Dalton and his CEO Wayne Jack in the firing line.
Letters to the editor, critical columnists and online rants called it “a vanity project”, a “white elephant”, a “lame duck”, a “monument” and a “huge commercial gamble…(making) the multi-million losses on the MTG look like a huge success”.
Hawke’s Bay already has a Regional Sports Park; a 50 metre pool in Napier might better service the community. Why, they cried, does Napier insist on building new things when it doesn’t maintain what it already has … and shouldn’t that money be going toward more urgent matters like coastal protection?
Dalton, whose pet project the velodrome appears to be, slammed those engaged in an “orchestrated campaign”, insisting investment by Napier ratepayers and others could bring millions into the region.
Of those submitting to the LTP, 78% were in favour … but if it didn’t stack up, the mayor said he’d abandon the idea.
Napier CEO Wayne Jack, slowly getting back on the cycle saddle after a serious bike crash in Taupō last November, was preparing a presentation to HBRC seeking $3 million for the velodrome vision when BayBuzz called.
“We don’t do projects in isolation, there are other facilities under development including aquatic and sports parks so they’re all getting equal weighting,” he insisted.
Jack is pulling out all stops, using Treasury’s ‘better business case’ template, to ensure ratepayers aren’t left with a deficit beyond reasonable public good.
He’s determined to learn from Napier’s own past failings and the mistakes of others; bringing in a designer early in the process will help the business case to progress to a more detailed design.
Hawke’s Bay has a vibrant cycling culture centred on 25,000 riders, according to NCC; among the highest participation in the nation. We have the largest network of easy cycle paths in the country, host a range of cycling-related sport and recreational events, and encourage group fitness and sightseeing rides including visits to wineries, cafes and local attractions.
Painted green lanes on inner city roads, limestone tracks along stop banks and the coast, stretch into rural areas connecting villages, towns and the twin cities. A strong contingent of road racers can often be seen in tight packs with a rainbow display of helmet lights zipping around the region in the early evening.
Ivan Aplin estimates there are 5,000-6,000 people involved in regular recreational cycling; at a competitive level, Cycling HB has about 500 and 100 in Central Hawke’s Bay, the Ramblers Cycling Club have over 300, there’s an enthusiastic following for BMX, and the region has the largest mountain bike club in the country.
So what’s that got to do with a velodrome, which caters to a small group who take sports cycling to the extreme?
Sport Hawke’s Bay chief executive Mark Aspden compares the velodrome to a top grade athletics track. “A lot of people in the region run, but running around a track is probably only of interest to a few people … I don’t think you could ever describe it as a need.”
And former PGA chief executive Brendon Rope says a velodrome requires consistent use, but only caters to a niche component of track cycling: “Why should we keep focusing on the cycling community?”
No free ride
And why would people pay when they can ride around the Hawke’s Bay countryside most of the year. “It may get high use in winter but I don’t believe it will be sustainable, the council will have to keep putting money in.”
Besides, users need specialised bikes built for speed with fixed gears, high pressure tyres and no brakes to negotiate a 250 metre oval track with steep banks, tight corners and long straights.
The tender for ‘design services’ for recreational, club and competition cyclists with additional sporting facilities had critics claiming non-velodrome uses appeared like an afterthought.
It’s to be built to international standards with multi-use facilities in the centre “readily dismountable, coverable or removable” to comply with the strictest cycling requirements.
There will be warm up and warm down areas for cyclists, cycle racks, storage lockers and sheds and permanent spectator seating for cycling events with “consideration” for other sports requirements.
Ideally there will be 3,000 square metre infield capacity for three international standard courts, with rubber or sprung wooden floors able to be used for basketball, volleyball, futsal, tennis and other events and a 300 metre indoor walking and running track.
An overarching design requirement is integration with the PGA facilities.
Wrestling with risk
Just over a year ago, the Hawke’s Bay Velodrome Indicative Business Case prepared for NCC by the Davies Howard Group, concluded the proposal was “a high-risk investment by the Council”, urging a series of peer-reviewed studies ahead of a more robust business case.
The return on investment study showed cash leaking everywhere, with NCC picking up shortfalls on cost, revenue, maintenance and other contingencies.
Unless Brendon Rope sees improvement and broadened use, he’ll stand by his view that we don’t need it, can’t afford it and have better ways to spend public money.
With a velodrome three hours up the road in Cambridge he’d rather see the money spent on other community assets, including more indoor public pool space, and multi-use courts.
The idea for a Hawke’s Bay velodrome is not new, having first been put to Napier in 2002 by the Ramblers, around the time a wider desire for a new North Island velodrome was first expressed.
Regional cycling interests began scoping out the possibilities, then Hastings District Council (HDC) embraced the proposal in 2006 as part of the Regional Sports Park. When Cycling NZ decided to put $7 million toward a ‘home of cycling’ HDC found it was contending with eleven other cities.
The business ultimately went to Cambridge because of its proximity to Auckland, Hamilton and Karapiro, the home of high performance rowing. The fact many cyclists were competitive rowers apparently made logistical sense.
Now, switching gears, Cycling NZ is borrowing rowing’s regional hub model to develop more cyclists to national and international competition level, backing Napier for a second-tier velodrome allegedly supported by all regional cycling groups.
Ivan Aplin, immediate past president of Cycling NZ Road and Track, former Ramblers chairman and one-time Sport HB administrator, expects similar cycling excitement to Cambridge where the Waikato Championships ramped up the use of training facilities 300%.
Aplin relishes the idea of visiting cyclists training on our flat roads and the velodrome, the prospect of university-level performance testing and a fulltime cycling coach. “It could be just what the sportneeds to flourish here.”
Choosing the Taradale-based PGA site over the original suggestion of Park Island delivers the perception of proximity to Hastings and EIT, and would maximize use of existing facilities including the gym, changing rooms, offices and meeting rooms.
Here the spin momentarily shifts from elite cycling to outcomes for the rest of the community. Wayne Jack is ecstatic at partnering with EIT and the AUT Millennium Institute’s sports scientists who specialise in sport and recreational programmes for youth and the elderly and targeting child obesity.
“The velodrome is only one small part” of the multi-use facility, the real purpose behind this investment he suggests is getting people more active.
Back to the velodrome. Sport NZ wants high performance programmes in the regions. “There’s a lot of emerging talent, a need for a good nutrition, training and goal setting so these athletes have the ethic and aptitude to progress to the next level.”
For Cycling NZ, having the velodrome based in Napier ticks all the boxes for mountain biking, BMX, road cycling and cycle tracks. “Hawke’s Bay is now a real cycling destination and it really does fit in nicely,” says Jack.
Opponents to the idea “aren’t well informed of the benefits.” Velodrome advocate Ivan Aplin also tries to debunk any suggestion of elitism; the Pain Train group in Cambridge ride around at a steady tempo in wet weather; schools use both Invercargill and Cambridge facilities in winter, older people meet to bike around the flat track.
Walking groups use the outside and do exercises and there’s a culture of meet and greet. “You could have a club night playing basketball and volleyball … In Cambridge the café which is part of the velodrome is always full.”
Aplin says it makes sense to add the multi-use velodrome to PGA. “You need a minimum of six courts to apply for national events …With a category three facility you can have an Oceania games or national event.”
It’s a big idea, but whether it’s a good idea remains to be seen, says Sport HB’s CEO Mark Aspden. “It’s clearly a lot of money and a significant-sized project for the region.”
On a positive note he suggests hiring a fleet of velodrome bikes could bring a novelty factor to the region, “allowing people to race around like an Olympic cyclist”, comparable perhaps to playing golf at Cape Kidnappers or visiting the wineries.
Sport HB is not taking sides, but like others it’s watching closely to ensure projected users, costs and revenue streams are based on actual case studies.
Crunching the numbers
Velodrome plans were resurrected in early 2014 with Giblin Group commissioned by NCC to figure out how it could be paid for.
In the mix were due diligence, costings, usage assumptions and other details from Hastings’ original velodrome proposal offered to NCC by the Regional Sports Park Trust. The August 2014 report was followed by a series of brainstorming workshops.
The soft argument is that it’s a good fit with Hawke’s Bay’s cycling culture, would increase year round involvement, particularly among young club cyclists, and bolster tourism and accommodation.
The hard argument is that benefits depend on a high use of all facilities and, unless there was serious rethinking, it was unlikely to pay its own way.
While development costs of $15 million were comparable to the Invercargill velodrome, it would need “confirmed and recommended income streams” of around $22.6 million to cover contingencies and shortfalls.
The ‘indicative’ business case for building and running it was contingent on NCC extracting $3 million from HBRC, at least $4 million from commercial sponsors; $1.7 million from community and philanthropic and gaming trusts; $150,000 from community sponsorship; $750,000 from central government and maybe $555,000 from sponsorship of community bikes.
The project missed “significant infrastructure” government funding, so revenue generation is more skewed toward corporate cash, but Jack remains confident he can coax something from Crown coffers.
Operating costs were estimated at $375,000 to $675,000 per year with revenues based on events, community use and membership forecast to grow from $460,000 in the first year to $600,000 from year six and beyond.
Overruns and shortfalls
The report expressed considerable uncertainty around costs and potential revenue, urging further feasibility studies and audits and a guarantee of further funding if building costs were exceeded or there were shortfalls in annual operating and running costs.
Hastings mayor Lawrence Yule is uncomfortable the plans don’t sit well within the framework of councils working more closely together, were developed before the amalgamation decision and are outside the Regional Sports Framework.
“A better approach would be to collect a regional rate of say $2 million a year that was put into a fund that accumulated for regional facilities in an agreed timeframe and locations.”
That, he says, is how regional roading priorities are funded. “In ten years this could accumulate $25 million and be drawn on to help fund … recreational infrastructure like more indoor court space, a new regional swimming pool … further development of the HB Showgrounds.”
Yule is currently advancing this concept with other regional leaders.
HDC paid a million dollars toward the Museum Theatre Gallery (MTG) in Napier and NCC committed equally toward the original HDC velodrome proposal, a pledge that died when that proposal failed.
Mayor Yule says Hastings honoured its commitment and will support the velodrome philosophically if the business case is viable. “I don’t think councillors would be prepared to make a further (financial) commitment.”
There are concerns a large lump from Lotto and other charity money could mean there’s less in the pot for other sports. Sport HB’s Aspden says that argument could be used against any project.
“That’s a risk and sports are always competing for a finite amount of money, but I think a lot of funders are also enthusiastic to share it around not just pick on one project.”
Although NCC isn’t dissuaded by the interim report’s daunting detail, it would seem that before proceeding it must at least conduct a survey under the direction of local cycling clubs and Sport HB to assess the likely interest levels and patronage.
Wayne Jack insists all these points will be covered off in the half-million dollar business case, designed to ensure a robust return on investment ahead of a full design, which will be put before NCC in June.
“We want to make sure it isn’t [a drain on ratepayers] but there will be some level of public good, and we’re trying to determine what that will be and what council is prepared to fund.”
The 2,500 seat multi-purpose PGA facility has been struggling to find the right balance between commercial and community use.
Hastings and Napier council contributions have dropped from $175,000 annually to $55,000 and in the year ended June the $10 million complex was $86,000 in the red, despite claims that by 2023 it will have contributed around $45 million to the region.
The PGA recently got $135,981 from Lotto, but its fees for use are also presenting challenges. Basketball HB recently asked NCC to forgive a $22,500 debt for court hireage and was looking for grants to cover future use.
Another challenge would be to ensure the multi-purpose velodrome, possibly integrated by a walkway to PGA and under common management, would increase patronage and revenues rather than cannibalising existing use.
Sport HB’s Aspden says Napier faces a ‘Catch 22’ situation: While the level of upfront spend might give more certainty, it might also be wasted if you have to pull the plug.
He says juggling use and management of any multi-use facility needs to be clearly understood. Although there are economies of scale there are also limitations, for example, court access when the velodrome is in use, or there’s a tournament.
Again Wayne Jack has a counter. Court sports could be played concurrently to “track cycling around the outside” with modular nets and equipment either coming up through the floor or down from the ceiling.
Aspden says there’s no limit to the things you could have in a new complex – conference facilities, commercial office space, all sorts of indoor sports …food, “each needing their own business case … so where do you draw the line?” he asks.
When BayBuzz called Brendan Rope, he’d been tossing around ideas about the right mix of facilities with Wayne Jack on a commuter plane.
Rope, while skeptical, suggests cafes, sporting and fitness services, physiotherapists and others renting space might help sustainability. “Unless there’s a lot of thought to get it just right, it’s always going to be an ongoing burden.”
He says three years after the original Pettigrew Green business case promised sustainability, “there was no correlation to how it was working and what the financials looked like”.
Rope says the “positive view of the world” adopted in this type of project needs tempering with reality. In the early days of the Kilburnie Sports facility, management told him they expected 100% occupancy evenings and weekends and 50% during weekdays. “In reality that doesn’t happen.”
Essential to the success of the velodrome vision would be shared management, a single operational structure and a design that’s “open to wide use,” possibly hosting large concerts, rather than simply placing another building adjacent to PGA.
“Involve operators and people in the facilities and events industry, don’t just leave it to designers,” warns Rope.
Jack’s not averse to extended indoor concert and function capabilities. A category 2 velodrome should have 500-750 seats with additional seating possible in the centre. The Cambridge velodrome has hosted a thousand person dinner. “It all helps offset the costs”.
Issues like noise control and parking in the built-up residential area are still being considered.
The proposal for a regional velodrome in Hastings was thoroughly consulted on and drew very little criticism. So why the negative feedback now? Political rivalries, misunderstandings, misinformation, people from different sports codes fearing they may lose members or use of their facilities?
While the Wanganui velodrome is cited by critics as being unsustainable, Ivan Aplin reminds us it’s an older wooden facility. Over the next four months a refreshed business case will attempt to rebut the projected cost overruns and meagre returns on investment so glaringly obvious in the initial council report.
The velodrome may yet prove more than a vanity project, but there’s always the risk of spending so much on a business case you just keep going, bringing to mind projects such as art deco buses, a museum with inadequate storage, and possibly a humungous high country dam that critics love to hate.