Plans for a multi-million-dollar conference centre in Whangārei appear to be on the rocks after the government withdrew its share of the funding.

In 2020, Ōruku Landing conference and event centre was granted $60 million from the government's "shovel ready" Covid Response and Recovery Fund, with Whangārei District Council pledging just over $11m to the development in March this year.

The total cost of the on-again, off-again conference centre was put at $64m.

Private investors were expected to stump up another $140m for the rest of the project, which was to have included riverside apartments and a four-star hotel.

However on Tuesday, Finance Minister Grant Robertson said ministers were not convinced the project was financially sustainabl

e.

"The Ōruku Landing project has been complex which has affected progress ... The local council reconsidered their position on supporting the project and it has been challenging to make the project economically viable," Robertson said.

"There have been a number of changes to the proposal to get it over the line, but ministers did not have the confidence that the project was sustainable financially and in a challenging economic environment they have decided to decline the application for the project.

"We know this will be disappointing for those in the Northland community who have worked on developing Ōruku Landing. The government is doing its bit to support regions while responsibly managing its finances and restrain spending, and ministers are facing tough choices in a deteriorating global economy."

The decision came as a shock to Northland Development Corporation, the company behind the project.

Director Barry Trass said he was "extremely disappointed".

The project had been in the pipeline for four years and the government had already given three extensions, he said.

Reasons for the extensions included increased construction costs, which had forced the company to find more money.

"We've done everything the government asked of us, so we're extremely upset it's come to this, when we believe we've done everything that we needed to do," Trass said.

"It was such a fantastic project for the city, and the whole region ... We saw the event centre as a catalyst for the rest of the development, which is the hotel, a block of apartments and a marina," he said.

"For the $60 million the government was putting in, there was another $140 million of private money coming into the project ... It's really jeopardising the whole project now."

Trass said he wanted to meet government ministers and ask why they had declined the funding after the corporation had done what it had been asked to do.

"They're saying the project isn't financially sustainable. Well, all the expert advice we've had says that it is. We just want to sit down and ask, 'Where to from here?'. We can't just let this go."

Trass said $1m of the original $60m funding application to the Provincial Growth Fund had been spent on due diligence.

Whangārei Mayor Vince Cocurullo said councils and the government alike faced greater demands on their resources than ever before.

"It's always disappointing for people who have a vision and work hard on these projects to suffer setbacks like this. I also empathise with our Crown Infrastructure people who have had to make this call."

Cocurullo said he would be happy to be part of a delegation to discuss the matter with the finance minister.

The council had not yet put funding into the proposal, though staff time had been spent in meetings and preparing material for councillors to consider.

A short history of the Ōruku Landing plan

Although the Ōruku Landing project has some strong backing, it has also been controversial from the outset - in particular because of the degree to which it would be supported by ratepayers.

The proposal has gone through several iterations as a result.

In an earlier version of the plan, Whangārei District Council was to have contributed $57m and Northland Regional Council $7m.

The district council would have also underwritten any construction cost overruns.

However, district councillors voted against that proposal in 2021 after it was opposed by more than 80 percent of the 5000 submitters.

Under the current scaled-back plan, passed with a one-vote majority in March this year, Whangārei District Council agreed to a $5m grant for fittings and equipment plus an operating grant of $650,000 per year for the first five years, if needed.

The council also agreed to a marketing grant of up to $50,000 a year for three years.

Unlike an early version of the plan, the council would not be responsible for building or owning the centre.

Instead, the event centre would be owned by Prosper Northland Trust, while Northland Development Corporation would develop the rest of the 12,500 square metre site beside Hātea River.

Many Northland projects funded by the Provincial Growth Fund, and the subsequent "shovel-ready" Covid Response and Recovery Fund, have now been completed.

Others, such as a series of water storage reservoirs near Kaikohe and on the Pouto Peninsula, are well on the way.

Ōruku Landing is one of a handful of high-profile projects to have stumbled.

Others include an $8m Paihia breakwater project, which has been axed, and a boat ramp/reclamation at Rangitane, near Kerikeri, which has stalled amid sharp divisions in the local community.

This story was originally published by RNZ