A cost over-run of up to $12 million on Auckland's 12,200-seat indoor arena will not cost ratepayers a cent, says Auckland City Mayor Dick Hubbard.
The Vector Arena at Quay Park on the waterfront was described as the single worst job builder Mainzeal had taken on in a decade by
Richard Yan, chief executive of Mainzeal owner Richina Pacific, on Monday.
He said the $80 million project was running six months behind schedule and would not be completed before July.
Mainzeal had made a provision of $12 million for losses on the arena and the Scene apartment projects, also at Quay Park.
Mr Hubbard said that under a private-public partnership to build, own and operate the largest and most advanced indoor entertainment and sporting venue in the country, the private partner carried all the financial risks.
The council had given $68 million towards the $80 million and there was "no risk" to the ratepayer of further contributions.
The only downside was a "growing sense of frustration at the delays".
Talk last year of the Rolling Stones, U2 and Coldplay performing at the arena have come to nothing. A New Zealand tour by the reborn Split Enz has been mooted.
The arena is a private-public partnership between the council and Sydney company Jacobsen Venue Management.
Under the partnership, Jacobsen will build, own and operate the arena for 40 years.
It will then revert to council ownership.
Doug Armstrong, the chairman of the council's finance committee at the time of the agreement in 2003, said that under the arrangement Jacobsen tendered for the job.
The council took legal advice at the time to ensure the build, own, operate and transfer (Boot) scheme did not come back to bite ratepayers. "No matter what happens at the end of the day, ratepayers of Auckland City are safe and secure," Mr Armstrong said.
Mr Yan said he regretted that Mainzeal had entered into the contract to build the arena and blamed inadequate job specifications, incomplete working drawings, chronic labour and skill shortages, rising material prices and the unusual nature of the job.
