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Auckland convention centre cost jumps by a fifth

SkyCity Entertainment Group, the casino and hotel operator, is in talks with the government on how to fund the increased cost of as much as $130 million to build an international convention centre in downtown Auckland, with further gambling concessions ruled out.

The Auckland-based company has increased its estimate to build the centre to between $470 million and $530 million as the construction boom across the country drives up building costs and design changes add to the bill, it said in a statement. The casino operator had previously estimated the centre would cost $402 million, which it had agreed to cover in return for extensions to its Auckland gaming licence.

The company today lodged its application for a resource consent.

"It is expected that further refinement of the detailed design and careful management by SkyCity of the tendering process will ensure a competitive total fixed construction cost is obtained from the market," chief executive Nigel Morrison said. "However, the Crown and SkyCity will work constructively to identify additional options to address the funding of any costs over and above SkyCity's $402 million contractual obligation."

The government and SkyCity agreed on the concept design in May, including shifting the site of a planned hotel development on a piece of land previously owned by state-owned broadcaster Television New Zealand. The decision to build the hotel on the former TVNZ site was made just months after SkyCity bought it on the premise it was needed to build the convention centre.

Morrison today said they have agreed with the government to push out the date for formally approving the design, and are aiming to sign a binding construction agreement in the final quarter of 2015. Building the centre is expected to take three years.

Economic Development Minister Steven Joyce said he expects the cost difference to be bridged through cost-cutting and in the procurement process, though would consider other funding options if needed.

"Any such options would not involve granting SkyCity more or different gambling concessions, or making further changes to any legislation that affects casinos or gambling," Joyce said.

Shares of SkyCity fell 1.5 percent to $3.88.