Council paying out more for theatre ‘slim’
Stephen Ward
The chances of the city council having to pay more for the Waikato Regional Theatre’s construction are “very slim” but “never say never”, according to the general manager.
Gus Sharp’s comments at a briefing yesterday came in response to questions about project finances at the community and natural environment committee.
It follows news that opening night for the $80 million theatre has been pushed out to 2025, about a year later then originally planned, due to a tight market for materials and other factors.
The council has previously granted $25 million to the project and has also committed $1.1 million annually for 10 years for maintenance and renewals.
Councillor Geoff Taylor said there were a range of “gloomy” stories and predictions doing the rounds during the current difficult economic climate.
“Are we on budget, is there going to be a cost overrun?” he asked.
Sharp replied that this was a question he loved because the theatre was the only project he’d been involved in where he could confidently say there wouldn’t be construction-related overruns.
A maximum price arrangement had been signed with Fosters in 2016 and “that price hasn’t changed”.
But the project worked with Fosters to bring costs down for them where possible, although it wasn’t obliged to do this.
Examples of cost-savings to Fosters included using timber in place of steel where appropriate or polished concrete instead of vinyl flooring.
“So we will pay the same amount no matter what it costs them,” Sharp said.
Taylor asked whether this meant no unexpected construction costs for the council.
“Are you able to assure us that this council is not going to be asked to put in any extra money?”
“In terms of construction, yeah, absolutely,” Sharp replied.
He outlined how the project may incur extra costs that would be resolved by a contract variation - this had been done already for “minor” things.
But these were matters the project could fund itself or was confident of being able to fund.
“So, I think the odds, never say never, but I think the odds of coming back to the council for construction-related funding are very slim.”
Finance and monitoring committee chairperson Maxine van Oosten noted that calls on the council’s $1.1 million annual contributions for maintenance and renewals would probably not be high in the theatre’s early years of operation. She wanted to know how this funding would be protected from being used for other purposes.
Sharp said the money would go into a trust that the theatre’s operating company couldn’t access.
“So it can’t get sucked into operational [activities].”
Events and economic development general manager Sean Murray said the annual funding was designed to assist the theatre project to build up a reserve of funds.
“It drip feeds it to an extent.”
This would help prevent the council from being approached for a large amount of cash some years down the track, Murray said.