$4.5 million build blowout surprise
INVERCARGILL City Council chief executive Clare Hadley believes the council was ‘‘naive’’ to budget for 100% occupancy at an innercity property development, and ratepayers are set to pay the price.
Yesterday, Mrs Hadley revealed that completing the ICCowned business house development in Don St would cost ratepayers $4.5 million more than initially budgeted.
The Don St development was 100% ICCowned. The council originally approved $11.9 million for the complex, which was officially opened in October last year.
The development has a cafe — the Auction House — and is home to various businesses, including McCulloch and Partners, Cruickshank Pryde, Craigs Investment Partners, Vodafone, and Media Works.
Soon after Mrs Hadley started as ICC chief executive in March, she became aware the total cost had blown out and that it had not been explained to councillors in reports in 2015, 2016 and 2017.
Mrs Hadley said a key factor behind the blowout was the building being bigger than the council had approved.
‘‘If you are going to ask me why we built a bigger building, I’m sorry I can’t tell you, because there was insufficient reporting on these matters,’’ she said.
‘‘There was no apparent record of council approving either the increase in the size of the building, or the increase in budget to construct it,’’ she said.
The project remains incomplete, and to finish it would push the total construction cost to $16.4 million.
The council had been able to fill only 66% of the building with tenants, which had also played a role in the budget blowout.
The original budget was drawn up in the belief there would be the demand for 100% occupancy.
‘‘We — and I say we because it is the council — were naive in accepting a budget for 100% occupancy from day one. Even if it was 100% from day one, it will never be 100% occupancy year round.
‘‘Tenants come and go — that’s a reality.’’
The finance and policy committee met in a publicexcluded session last week to discuss the situation.
It was recommended to approve funding to complete the Don St project and for an external review of the project to be carried out.
Councillors will vote on the recommendation at a full council meeting today.