Benefits & costs

The most recent study on the benefits that the HAC will bring to the region is by Northland Inc. who say:

“Northland Inc has calculated the HAC’s direct economic impact for Northland at $37 million with an ongoing economic impact of $26 million per annum. For every $1 invested by government a return into the regional economy of $9 after the first year of operation has been calculated.”

An earlier report was commissioned by Whangarei District Council and prepared by international consultants Deloitte in 2011 and updated in March 2015. This is the relevant section regarding benefits:

5.5. Benefits to Whangarei and the Region
In 2011 an economic impact analysis was completed of the HWMAC proposal which conservatively estimated that the HWMAC would provide:

• 68 Full time equivalent jobs (FTEs) in the 2 year construction period of the HWMAC. The economic impact of the construction was not calculated.
• An ongoing 10 FTEs in the HWMAC operation and a further ongoing 21 FTEs in the leased café.
• An ongoing economic benefit of between $3.5 million – $3.7 million per annum from opening onwards from the development. 
These estimates were considered by the Crowe Horwath and other reviewers to be conservative because: 
 They were limited to the HWMAC only and did not consider possible complimentary developments that may occur as a result of the HWMAC attraction to visitors. For example, we are advised that there are two possible hotel projects near the Town Basin that are waiting on the outcome of the HWMAC facility as an attractor of visitors to Whangarei and to stay in Whangarei.
• An increase in foot traffic to the HWMAC would provide flow on benefits to existing and new businesses (café, galleries, etc) near to the HWMAC.
  Cruise New Zealand and Northport believe that the HWMAC (which Northport describe as a potentially giving Whangarei as “point of difference” for the cruise market) could act as a catalyst for Cruise itineraries to include a stopover in Whangarei with flow on impacts for Whangarei in terms of transport, bunkering, food supply, retail spend, other visitor attraction visits, etc.
• The feasibility study visitor volumes are estimated based on current and projected Northland visitor forecasts and do not take into account a growth in visits that could arise as a result of adding an iconic HWMAC to the available Northland reasons to travel. There is a strong interest in art in Auckland and the point of difference of the HWMAC could act a reason for travel to Whangarei from that nearby market.The Tai Tokerau Northland Growth Study Opportunities Report identifies the HWMAC as one of the highest rated economic development opportunities in Northland.

You can read the updated Deloitte Feasibility Study in full here.

The Deloitte findings were used for the WDC-produced Referendum Brochure sent to all registered voters on May 14th, so that they can evaluated the project alongside the rival options.

The report concluded:

The Hundertwasser Wairau Maori Art Centre provides Whangarei with a unique opportunity to establish a nationally and internationally recognised cultural facility and tourist attraction. Not only is its proposed location in the former Northland Harbour Board building at the town basin linked directly to the artist, it is strategically located to incentivise investment in the local economy.

The conversion of the building to a Friedensreich Hundertwasser-designed art gallery housing contemporary Maori art and Hundertwasser originals could make Whangarei a sought after tourist destination and help transform the perception of the city.

The building itself will be an artwork on a grand scale and will immediately become one of New Zealand’s few iconic buildings. It could have an impact on Whangarei which parallels the impact of the Guggenheim building in Bilbao, Spain and could put Whangarei on the international stage.

Updated: in a May 21st 2015 article, the Northern Advocate quoted a developer who has stated his intention to scope a high-end hotel project for Whangarei, should Hundertwasser go ahead.

Visitor numbers for the Whangarei HWMAC have been estimated between 140,000 and 220,000 a year (in reports from Visitor Solutions, Crowe Horwarth & Deloitte). A peer review of the figures by marketing research firm Nexus questions the methodology and veracity of the figures and suggests further research is required.

While there is no directly comparable destination in New Zealand, as an indication of the attraction of Hundertwasser’s architecture, some 160,615 people were recorded in an 11-week period visiting the toilets he designed in Kawakawa.

The Kauri Museum at Matakohe (on State Highway 12, which has a traffic count only one quarter of SH 1 immediately south of Whangarei) attracts 80,000 paying visitors every year.

The Kauri Museum had admission revenue of $721,000 plus GST in 2012, which could be seen as a guide to the level of revenue the HWMAC  could generate even if only around one third of those who come to see the building also pay to gain admission.

To help put potential visitor numbers into some context, here are some figures from similar destinations in Northland, NZ and abroad:

• Southland Museum & Art Gallery: 227,670 visitors per year (actual figures for 2012/13 year)
• Hobbiton Farm, Matamata: 240,000+ visitors in 2013 (tour fee $75)
• Matamata Visitor Centre: increased from 50,000 pa to nearly 400,000 pa since 2003 (due to LOTR interest in town and iSite redeveloping in a ‘Hobbit-house’ design)
• Otago Museum: 343,000 visitors per year (actual figures 2013)
• New Otago Settlers Museum – 182,000 visitors in first 6 months (actual figures)
• Rotorua Museum: estimated 100,000+ per year and growing
• Sky Tower Auckland: 1,150 visitors per day (415,000pa), $28 entry fee
• Te Manawa (Palmerston North) 142,869 per year (based on 2012/13 actual visitors)
• Auckland Art Gallery: 670,000 visits in 2012 (paying + non-paying)
• Museum of Old & New Art, Tasmania: 280,700 (2013) tourist visitors (28% of the 1 million total tourists who visited Tasmania), entry fee
• Uelzen Train Station, Germany: 450,000 visitors per year since re-opening after being refurbished as a Hundertwasser building in 2000

Northland already has more than 5.5 million visits a year and almost all of them travel on SH1 through Whangarei.

Deloitte International used government figures on domestic and international visitors who visit art galleries and museums on their holidays to calculate HWMAC attendance. The Deloitte estimate does not take into account the number of new visitors who may come to Whangarei especially to visit the HWMAC.

The cruise ship industry has stated that they would seriously consider adding a Ruakaka/Marsden stop to their New Zealand itineraries if the Whangarei HWMAC was built. Passengers would be bused to Whangarei for a day trip that included the HWMAC and other Whangarei sights while the ships were refueled. They do not currently stop here simply because there is not a ‘draw-card attraction’ that offers a significant enough point of difference.

In addition, the HWMAC will be a study destination for university art and architecture students from around the country, and it is anticipated it will be the subject of field trips for secondary school art students from throughout the Auckland region.

Ref: Ministry of Economic Development’s NZ Regional Tourism Forecasts Norrthland RTO 2010 – 2016 report stating number of visits (current and forecast) to Northland.

Nothing.

Prosper Northland Trust fully expect the HWMAC to be profitable before its 4th year of operation. However, in order to ensure WDC ratepayers have peace of mind they have undertaken to secure a $2m underwrite to cover any potential shortfall for ten years of operation.

As with the funding the underwriting will be subject to due diligence before the project starts.

Deloitte forecast the HWMAC will achieve an $800,000 per annum surplus by it’s tenth year of operation.

No.

Here is what the Foundation says in relation to the artworks it will provide for the Art Centre:

“As an act of love and respect the Foundation agreed to provide free of charge the architectural design of a Hundertwasser architecture as well as to organise and provide most of the exhibits without a fee which would be the norm.

“In other words the Foundation is providing a gift of economic assets to the Council of Whangarei.

“Hundertwasser’s art, architecture, ecological and environmental concerns are internationally respected, known, and cherished. The millions of books distributed and bought all over the world which are continuing and increasing after his death are witness to the validity of his art and his philosophy. His architectures are visited by millions of people as well.

“The Hundertwasser Art Centre in Whangarei and the Hundertwasser architectural image by itself is a unique economic asset as well as a carrier of the name of Whangarei and its existence into the world through multiple avenues.

“The Hundertwasser museum will include original paintings, original graphic works, tapestries, objects, architectural models of realised Hundertwasser buildings, installations of his ecological and environmental work and concerns. All this accompanied by publications and a multitude of merchandise and information offered in the museum shop.

“Hundertwasser loved New Zealand so much that he chose to become a citizen and his wish was to be buried here. This is witness to his connection to New Zealand.

“This is in addition to his engagement and contribution to New Zealand with activities like his original conservation poster which has now sold over 800.000 copies all over the world, his Koru flag and the campaign to present it to New Zealanders and the manifesto that he wrote as a spiritual background to the reason and meaning of the Koru flag.

“At the same time it was his wish during his life time and our duty to see to it that he had peace of mind here avoiding admirers, tourists, and other fans by protecting his presence in NZ, avoiding any publications, any exposure as well as any activities in NZ to make this sanctuary possible. Hundertwasser enjoyed this quality only in NZ as in other parts of the world he was always inundated by the media, admirers, collectors, publishers, fans, colleagues, etc, etc. NZ was his refuge.

“Therefore, the Foundation feels it can now give back and reciprocate to NZ with this project in Whangarei.”

The Whangarei HWMAC will meet the costs of insuring the Hundertwasser works displayed in the Hundertwasser Gallery, as per usual art gallery curatorial arrangements.

Insurance costs are specified in the project feasbility report prepared by Deloitte as part of usual annual operating expenses.

Absolutely.

The projected visitors to the Hundertwasser Art Centre will find themselves in the centre of Whangarei District Council’s strategy to increase the length of visitor stays (and the value of tourist spending) in our District.

The establishment of the Hub at the Town Basin is to provide a one-stop shop for visitors to learn about Whangarei’s many other attractions.

The Hub, which also contains the Whangarei Art Museum, will be a centre dedicated to Whangarei tourism.

Here our visitors will learn that within reach are one of the best coasts in the world, pristine beaches, tranquil bush walks, an aquatic centre, an outstanding waterfall and giant kauri, as well as a wide range of museums and galleries.

The Whangarei Hundertwasser Art Centre is a key part of a drive to bring more visitors to the District and entice them to stay longer.

It is conservatively estimated that the Hundertwasser Art Centre will lead to an additional $5.4 million of visitor spending on food, accommodation and other tourism products and experiences.

That has not been definitively established, but the Whangarei HWMAC itself will have a number of staff and more will be employed at the café/restaurant which will be part of the development.

The hotel industry is excited about the Hundertwasser project, and states that a 4-star hotel of up to 130 rooms will be viable as a result of the increased tourist traffic.

The Hundertwasser project and a hotel together would likely provide around 100 jobs.

Increased visitor numbers to Whangarei and the Town Basin will undoubtedly result in increased employment opportunities within businesses servicing visitors.

The refurbishment of the building will take two years and utilise local building contractors and craftspeople wherever possible.

UPDATED: 23 February 2017

At their most recent meeting (21.2.17) the Northland Regional Council voted to contribute $1.5m to the HAC project, after receiving a recommendation for funding from Northland Inc (the Regional Economic Development Agency and Regional Tourism Organisation).

In early 2016 Northland Inc (NINC) identified the HAC as vital to Northland economic development and included it as a key project in their Te Tai Tokerau Northland Economic Action Plan. Crown Minister Steven Joyce announced national government funding for the HAC when he launched the TTT Action Plan in Kerikeri in February 2016, but also made it clear that the Crown expected the NRC would also back the project financially.

Wasn’t WDC ratepayer funding capped?
Yes. 2015 Referendum material stated that the WDC would commit $2.8m (inflation adjusted) of ratepayer funding to the project, provided PNT could raise the rest. PNT confirmed they would seek no further WDC funding. Potential contributions from NRC (which is partially ratepayer funded) were not addressed in published referendum material.

We understand Northland Inc put the proposal to the NRC – requesting they allocate some of their economic growth funding to the project – because NINC is committed to ensuring the HAC will proceed (the project meets NINC’s own economic action plan goals). We know that PNT was supportive of the NINC recommendation.

The NRC funding came from the Investment and Growth Reserve, which is funded from revenue and managed with advice from Northland Inc. Funds in this reserve are evaluated to ensure they are invested to provide economic growth.

The NRC overwhelmingly voted to support the NINC proposal (7 for, 1 abstained, 1 absent).

For more information about the NINC, see their website.

For more on the Te Tai Tokerau Northland Economic Action Plan, see this webpage.

November 2016: Will the NRC help fund the HAC?
(our original post on this topic)

At this stage we don’t know. We do know they are discussing it, and considering a contribution in order to progress the Tai Tokerau economic action plan.

Here is a statement from Prosper Northland Trust (11.11.16):

“We are pleased that the NRC are considering a contribution and respect that the councillors are taking care and consideration around their fiscal responsibilities.

Our understanding is that any money the project received would come from NRC funds earmarked for economic development, and not from income derived from rates.

The HAC is identified as a major project in the Tai Tokerau economic action plan. The forecast benefit of $22 million dollars into the Northland economy motivates our volunteer-driven team everyday.”

The Te Tai Tokerau Northland Economic Action was launched in March 2016. Full details on the plan can be seen here.

Before we can start building we need get to tender for contracts for the building and fitting out of the Art Centre. Our current estimate for this is $20,977,000

Prior to the referendum it was estimated at $16,250,000, independently verified by a Klu’dup on behalf of WDC.

The HAC Project Group have undertaken a variety of work, since the referendum, to review the original WDC costings for accuracy & to take into account the long delays forced on the project.

The Project Group commissioned core sampling of the ground under the building in September 2016, and engaged engineers to review the build based on this new information and learnings from recent seismic events. The resulting plan meets a higher structural standard and has commensurate build cost increases. This means the revised build cost is $20,977,000. 

The pre-referendum costing was done by an independent quantity surveyor, based on a design that was considered to be consent-ready and independently verified by Klu’dup on behalf of WDC.

As part of due diligence, PNT pro-actively commissioned a review of the plans in September 2016 –  with the report finalised in March 2017. Based on this review it was recommended to improve the structure of the building to incorporate learnings from recent seismic activity and results of the core sampling.
PNT advises that they have strategies in place to cover the additional build costs and that these potential sources are from outside of the region.