Councillors have backed proposals to pay for a new Aberdeen Exhibition and Conference Centre – and to dramatically reduce the burden on taxpayers.
A business case for the £333million development was unanimously approved at a private meeting yesterday.
The local authority currently subsidises the existing venue at Bridge of Don to the tune of about £1.55million a year.
But officials believe that sum could be cut to as little as £100,000 when the north-east premier concert and conference venue is moved to Dyce.
The council would enter into a 35-year “strip lease” deal – similar to that agreed for the Marischal Square development.
The new AECC – which remains subject to planning permission – would include a 15,000-capacity concert hall, conference facilities, two hotels, an energy centre and a plant to generate gas from household waste.
It is understood the council would retain a percentage of the revenue generated by the privately-operated hotels and an “anaerobic digestion (AD)” facility, which would feed power into the national grid.
At the end of the 35-year lease, the council would be entitled to purchase the AECC development, including the land, for just £1.
Last night, Labour council leader Jenny Laing hailed the decision as a “key element” of the infrastructure needed to maintain Aberdeen’s position as a “world energy city”.
Council officers had been instructed to investigate methods of reducing the financial exposure of a new AECC to the council, which was previously estimated as £54.1million over 35 years.
The headline capital cost of the development has ballooned, however, from original estimates of £185million, to £333million.
The council said yesterday that would be offset by the new “income streams” – calculations of which have been based, in part, on industry standard occupancy figures for the hotels.
Councillors approved the proposals unanimously with the proviso that any change in the proposals should be reported back to full council.
Mrs Laing said: “The new AECC, which is a key element of the business infrastructure needed to promote Aberdeen as a world energy city and the energy capital of Europe, represents a significant, but very affordable, investment for the city.”
Council chief executive, Angela Scott, added: “We have worked very hard to reduce the council’s financial exposure for this essential new facility.
“The AECC generates more than £80million for the north-east economy each year and approximately £140million in Offshore Europe years, but the existing centre is no longer fit for purpose or big enough to accommodate the growing industry conferences or entertainment events.
“Without a new facility, there is no doubt Aberdeen will lose out on these events and the significant economic benefits they bring.”
The opposition SNP group, which had previously expressed grave concerns about the potential cost to the taxpayer, performed a U-turn earlier this week to back the plans.
Group leader Callum McCaig said the revamped business plan had forced a change of heart, adding: “It would be churlish not to support it now.”
The proposed new AECC would be built on the site of the Rowett Institute in Dyce, subject to planning permission.
A “mixed use” residential-led scheme is proposed for the existing Bridge of Don site.
Brian Horsburgh, AECC’s managing director, said the new venue would help retain key energy-related events such as Offshore Europe in Aberdeen, while the arena would ensure Aberdeen attracted “many more major artists to bring their tours to the city”.
Ed Gillespie, chairman of AECC, added: “Today’s announcement is welcome news, both for AECC and for Aberdeen and the wider region. This a tremendous opportunity and we can’t wait to get started.”