Reviews and studies
Council commissioned a number of reviews of Te Uruhi (previously known as the Gateway project) and the processes followed, in response to community feedback and to ensure a robust process and result.
Independent process review | Review of alignment with Maclean Park Management Plan | Updated economic impact report | Pricewaterhouse Coopers review | Indicative business case | Feasibility study | Related links |
In April 2021, Council engaged independent consultants MartinJenkins to review the process followed during the first phase of the project.
This review will examine the appropriateness of project phasing and timeframes, and whether the Council followed good practice in terms of what was communicated and when. See the Terms of Reference (PDF, 313.9KB) for the review.
As part of the review process, a select number of interviews have been conducted with key stakeholders, community representatives and Council staff who have been involved with the project over the last two years. MartinJenkins is in the process of writing their report.
Council expects to table MartinJenkins final report at a Council meeting in October 2021. The final report was initially due in June; the delay is outside Council's control.
In late February 2021, Council received the Review of Gateway Project against Reserve Management Planning documents (PDF, 1.87MB) from Geoff Canham Consulting, who Council engaged to investigate how the Gateway project and proposed activities aligned with the Maclean Park Management Plan and the Reserves Act 1977.
The review concluded that the:
- proposed Gateway project is aligned to the plans, and there is a clear process and set of thresholds, which includes stakeholder engagement, for assessing which activities may be permissible on the Park, and recommended that Council undertake an assessment of the specific activities against this process and thresholds, in this case at key development stages
- current proposal meets the requirements of the MacLean Park Reserve Management Plan and Development Plan.
The Council received an updated economic impact report (PDF, 956 KB) in early February 2021 from Sean Bevin of Economic Solutions Ltd.
Economic Solutions had been engaged by Council to provide a detailed assessment of the potential flow-on economic impacts on the Kāpiti Coast from the establishment and operation of the proposed Kāpiti Gateway (now known as Te Uruhi).
Council engaged Pricewaterhouse Coopers (PwC) in late 2020 to challenge the proposal and ensure it was thorough and robust.
PwC indicates the breakeven point (ie, the date when the facility will become self-funding) is within five to six years and will have a minimal cost for ratepayers.
The scope of PwC’s investigation was to:
- review the project, including available documentation, design and analysis
- identify potential uses of the space and key operating model options
- assess the identified options to create a shortlist of preferred options
- test the assessment and preferred options with Council staff
- to the extent possible, benchmark the options against other comparable tourism ventures.
The review report (PDF, 179.38 KB) concluded that a gateway facility would promote and enhance Kāpiti Island as a tourist activity, provide a focus for Kāpiti as a tourist destination, and promote other attractions and activities in the region. PwC recommended Council should support and agree in principle to fund and build the facility.
Uses of the Gateway
The report concluded that the core functions for the Gateway were to provide:
- a biosecurity inspection area for visitors to Kāpiti Island
- a visitor and discovery centre for Kāpiti Island and the district.
Other possible uses include:
- a display and exhibition space for local artists
- a small gift shop selling high-quality local art and crafts
- office space for boat operators
- a daytime café and evening bar and brasserie.
PwC considered 11 combinations of functions or uses. Each was assessed against the project’s objectives, plus financial feasibility, risk management, Te Ao Māori connection, promotion of ecology and the environment, meeting tourist demand and visitor cross-patronage. They also carried out a thorough risk analysis.
After assessing the 11 options, PwC concluded there are three viable options. Each has a similar period (5–6 years) before breaking even and not requiring a ratepayer subsidy in the long term. Some options carry slightly more risk but are also viable. The maximum projected shortfall to Council over the period prior to break even (5–6 years) is $349,000 (or around $58,000 per year).
Option K (including a biosecurity visitor/discovery centre, office, gift shop, a café and bar/brasserie) would likely be the strongest overall option for the Council, however the next two strongest options (J and F) are extremely close and provide equally viable options for Council depending on its preference for uses.
Option J includes biosecurity visitor/discovery centre, gift shop, café and bar/brasserie. Option F includes biosecurity, visitor/discovery centre, office, and a gift shop.
PwC also investigated other similar ventures across the country and the report includes lessons learnt and recommendations from those. The main lessons learnt from those ventures was that:
- well-managed, outsourced cafes are a good idea
- gift shops selling high-quality local artisan products are profitable.
Key recommendations are to:
- establish the option Council will support and agree in principle to fund and build the facility
- establish a project team and plan, and begin the developed design phase for the option that is supported in principle
- conduct due diligence in the next project phase on the space use options that are supported in principle, including layout and configuration, sponsorships and advertising, and any gift shop and/or food and beverage offering.
When developing the indicative business case (PDF, 3.42MB) in May 2020 to support our COVID-19 Response and Recovery Fund (CRRF) application (PDF, 1.5MB), a number of key assumptions needed to be made. These included:
- whether the Gateway centre would be self-sustainable
- whether the Gateway centre would be staffed or unstaffed
- projected growth in visitor numbers
- grants and sponsorships revenue
- potential revenue from venue hire
- whether there would be a biosecurity surcharge
- interest rates
- whether it would be Council owned.
The key variables used to inform the indicative business case were:
- The operation of the Gateway visitor centre will break even in the medium term (using a full accounting view).
- The visitor centre will be staffed seven days a week, with longer hours in summer and shorter hours in winter.
- The biosecurity area will be staffed by volunteers.
- We assumed the growth rate for visitors to Kāpiti Island will be 12.5 per cent per annum (less than 50 per cent of the average annual growth rate over the past five years).
- We would allow for a moderate level of grants and sponsorship revenue.
- There would be a low level of venue hire, commercial lease and advertising achieved.
- The biosecurity user charge would be $10 for adults and $5 for children.
- Interest costs on borrowings of $2.23 million were calculated at 4.8 per cent (this is Council’s standard business case rate, not the actual cost of borrowing).
- The Gateway would be a Council-owned asset and as such depreciation would be based on full asset value.
- There was no allowance made for repayment of capital.
On 28 May 2020, Council granted approval for the application to be made to the CRRF for up to 50 per cent of the Gateway project costs. At this meeting, Council also made it clear that the decision to proceed to the detailed design phase would be subject to receiving a robust business case.
The conditions of the CRRF required us to keep the indicative business case confidential until a decision was made and we had formal agreement from Government officials that our application could be shared in the public domain.
The proposed biosecurity fee has been set at $4 for adults and $0 for children, increasing $2 every second year until it reaches $10 and $5 in 2028 – subject to visitor growth.
The indicative business case proposed a $10 biosecurity fee for adults and $5 for children. This was reviewed following feedback from stakeholders and the community, and reflecting the impact of COVID-19 on tourism.
A Council survey of visitors to the island indicated that a modest increase in the overall cost per passenger, combined with increased benefit or amenity for passengers from the proposed Gateway project, is unlikely to have a negative impact on overall passenger numbers.
Changes to the indicative business case
Following confirmation on 6 August 2020 that the Government’s COVID-19 Response and Recovery Fund would provide funding to progress the project, councillors were briefed on 11 August, and agreed that staff would do further work to test the assumptions and refine the indicative business case. This included looking at a range of scenarios for how the ongoing operational costs of a Gateway centre might be met, and how it might operate.
Staff worked with a small group of councillors to make significant changes to the proposed operating model, reflecting the impact of COVID-19 on tourism, and feedback from stakeholders and the community.
Key changes include:
- revising the visitor growth forecasts, taking into account the impacts of COVID-19 and border closures; this now shows a decline in visitor numbers in forecast numbers for 2020 and 2021, before a lower rate of growth resumes
- biosecurity fee has been reduced from $10 for adults and $5 for children to $4 for adults and $0 for children, increasing by $2 every second year until it reaches $10 and $5 in 2028 – subject to visitor growth
- including a gift shop/gallery added, focusing on locally made, high-quality, artisan crafts
- sponsorship and grant revenue estimates are more conservative
- alternative sources of capital funding to be explored
- long-term borrowing rate has been reduced
- depreciation is now only on the building, bridge, decks and pou.
In June 2019, Council began reviewing the feasibility of a Kāpiti Gateway building (PDF, 1.58MB) at Paraparaumu Beach.
We worked closely with a large group of stakeholders to progress the study, including mana whenua, Department of Conservation, the Kāpiti Boating Club, the Underwater Club Kāpiti, Coastguard Kāpiti, Kāpiti Island tour operators and representatives from the Paraparaumu business community.
In the Kapiti Coast Gateway Feasibility Report (PDF, 1.58MB), consultants TRC recommended a small new building south of the Tikotu Stream in Maclean Park, to serve as the Gateway building.
- Terms of Reference – Independent Process Review March 2021 (PDF, 313.9 KB)
- Review against Reserve Management Planning Documents (G Canham Consulting – 25 Feb 2021) (PDF, 1.87 MB)
- Updated Economic impact report (22 Feb 2021) (PDF, 956.06 KB)
- PricewaterhouseCoopers Independent Review And Economic Impact Assessment February 2021 (PDF, 179.38 KB)
- Indicative Business Case (PDF, 3.42 MB)
- COVID-19 Response and Recovery Fund (CRRF)/Provincial Growth Fund (PGF) application (PDF, 1.5 MB)
- Feasibility Report – TRC (PDF, 1.58 MB)