The document, which was released to Hawke's Bay Today under the Official Information Act, states that "Sport NZ does not support the proposed Napier Multi-Use sports facility based on the inclusion of a velodrome which we believe is not an appropriate response to the needs of participants in the Hawke's Bay region".
"Sport NZ also believes consideration should be given to whether New Zealand has the population to sustain a third velodrome."
They found its most likely use would be men from more well-off communities, might not result in increased participation in cycling, and it's projected financials were "extremely optimistic".
While Hawke's Bay had a higher than average percentage of cyclists, it was believed less than 1000 people would cycle in an indoor facility, based on 2013-14 Active NZ data.
Sport NZ recommended any response to participation in Hawke's Bay should consider the needs of Maori and low-socio economic communities whose rates of participation were declining at a faster than national average rate.
This demographic were not expected to be key users. Sport NZ also had "some questions" regarding the expected use - the business case anticipated an uptake of 85 per cent in community use on that experienced at the Waikato Avantidrome.
Given Hawke's Bay's total population was only 37 per cent of the Waikato region, the paper queried if a significantly smaller population base could support the proposed level of use.
Sport NZ also did not think estimated club use figures were "realistic or sustainable" - a survey of cycle clubs indicated their 1000 members would generate around 15,702 rides per year, using the track for about 1044 hours per year.
There was also doubt over the anticipated school uptake. The business case indicated at least 12 schools were definitely interested, 10 maybe, and five possibly. At the Southland velodrome there is no regular school use. Only four schools use the Avantidrome on a regular programmed basis.
Projected track financials indicated the velodrome would generate $338,870 from total track fees in year one - however this "would not seem achievable" compared to the country's other velodromes.
Southland currently generated $32,000 from track fees annually, and required an overall subsidy of about $400,000 to operate and maintain the track.
So, the expected net operating surplus under Napier's proposed business operating model was "extremely optimistic".
Council chief executive Wayne Jack said they had taken all available steps to obtain evidence with "significant engagement" during the business case development.
The council followed the Treasury Better Business Case model, and had the business case peer reviewed twice - the second time being led by Sport NZ.
"Until just after our workshop earlier this year with Sport NZ in attendance, we had not heard any concerns from Sport NZ over the many months of our business case development and preparation, despite their involvement.
"We have communicated our disappointment with the process to Sport NZ and would have been happy to revisit aspects of the business case along the way had they been raised, which might have resulted in a different outcome."
Their research differed from some claims made in the Sport NZ paper, including that "we were not adequately addressing Maori needs in sport", and velodrome use data.
He added the facility provided a cost effective model for the operation of a recreational facility, "with potential commercial funders shouldering much of the cost".
"There is still a need to meet in terms of court space and we will work through the options available to us for meeting it and will work with PGA on this."
Sport NZ would support a different version of the proposal - the cost of a four-court standalone facility with no velodrome would be about $12million.
"With competing priorities, indoor courts and aquatic investment rather than a velodrome would arguably be valued higher and respond to community needs."
Mr Jack said the council were working on their Aquatic Expansion project, with three options for an expansion of the Napier Aquatic Centre soon to go out for public consultation.
