The Government and Auckland Regional Council (ARC) are each stumping up $20 million to buy Queens Wharf from the Ports of Auckland.
Prime Minister John Key confirmed the deal today. He wants the wharf in Auckland's central business district, currently mainly used for importing cars, to be "party central" during the 2011 Rugby World Cup.
"We consider this joint purchase excellent value for money," Key said.
In an unusual twist, the ARC is effectively paying to buy something off itself as debt ridden Ports of Auckland is owned by ARC subsidiary, Auckland Regional Holdings (ARH). Ports of Auckland has until December to repay $105 million of debt.
Nonetheless, Ports of Auckland CEO Jens Madsen said the $40 million sale proceeds would be used to reinvest in replacement cargo-handling capacity and facilities.
Cargo currently handled on Queens Wharf would be transferred to the Bledisloe terminal, Captain Cook and Marsden wharves.
Under the terms of the deal, Ports of Auckland will continue to service cruise ships- which currently dock at Princes Wharf, from the new terminal on Queens Wharf.
ARC chairman Mike Lee said the ARC would finance its purchase via a drawdown from ARH. He said the deal would enable the development of an international standard cruise ship terminal and public open space on the wharf.
"Research carried out for the Government in 2008 found that a cruise terminal on Queens Wharf could generate an additional $713 million in direct spending to the New Zealand economy over the next 10 years," said Lee.
"Each cruise ship visit contributes on average an estimated $1.6 million to the economy."
Lee added that the deal came after months of negotiation between the ARC, ARH and Ports of Auckland. The ownership transfer is expected on April 1 next year.
Meanwhile, Key said Auckland city leaders now needed to "move swiftly" to start the infrastructure programme that would transform the wharf into a world-class waterfront attraction.
The deal requires the approval of the Auckland Transitional Authority, which is overseeing the creation of the Auckland super city.
The present concrete Queens Wharf structure was built between 1906 and 1914. It replaced the original wooden Queen Street Wharf which extended 474 metres from the foot of Queen Street out into Commercial Bay.