The $16m question
Council to hit up ratepayers for more CBD investment
Invercargill ratepayers will be quizzed if they will fork out another $16 million for the city block development.
The council last year committed to investing up to $30m for the city block project, which will see an Invercargill block almost entirely demolished and rebuilt.
Ratepayers will now be asked if they are prepared to invest a further $16m, without which the project could be ‘‘unfeasible’’.
It comes at a time when the council is forecasting a potential 8.1 per cent rates rise for the 2020–21 year.
The initial proposed investor make-up for the city block project was: Invercargill City Council ($25m); Provincial Growth Fund (a loan of $19.5m); O’Donnell family (up to $25m); Community Trust South ($20m); and Geoff Thomson (up to $25m).
Thomson pulled out in November, saying he was ‘‘sick of hitting a brick wall’’ when working with council chief executive Clare Hadley. He agreed to leave the $4m he had already contributed towards the project.
However, his withdrawal still resulted in a $21m shortfall in the estimated $165m needed for stage one of the city block development.
The council held two publicexcluded extraordinary meetings in the days after Thomson’s withdrawal and voted to proceed with the city block project as planned, despite the shortfall.
At the time, Hadley said a resolution was made that the council would work with the remaining investors to ensure there would be sufficient funding to move the project forward.
Councillors also acknowledged that they would need to consult with the community should any further investment by ratepayers be proposed.
Hadley confirmed yesterday that the council had been approached by Invercargill Central Ltd, the company behind the build, asking if it would increase its investment.
The council will include the potential additional $16m ratepayer funding in its 2020–21 Annual Plan consultation.
Two options have been proposed. The first would be to agree to invest a further $16m, which would allow construction to start in July. The additional $16m has been estimated at a 0.7 per cent rates increase.
The second option was not to agree to the increase in funding.
An engagement plan report prepared by the council’s strategy and policy manager, Rhiannon Suter, says that if the council does not agree to the $16m increase, ‘‘developers would need to seek alternative funding, or reduce the project’’.
The report says feedback has suggested scaling the project back could make it unfeasible.
Demolition of the block started in January and is expected to take between four and six months, with the plan being to start construction soon after.
Invercargill Central Ltd director Scott O’Donnell told The Southland Times that it was a council matter and he did not want to comment.
The potential increase in city block development investment comes at a time when the council is set to consult on other issues, including Rugby Park maintenance and an increase of $3.2m for its capital works programme.
The engagement plan report says the total forecast rate rise, incorporating what will be consulted on and the matters that do not require consultation, is likely to be more than 8.1 per cent. That forecast does not include the expected increase in rates from recycling costs.