Ratepayers to be hit up for another $16m for city block development

Tuesday, 3 March 2020

Demolition is underway on buildings as part of Invercargill Central Ltd's city block development where an inner city block will almost be entirely demolished and rebuilt.

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 a rebuilt.

Ratepayers will now be asked if they will be prepared to invest a further $16m or the project could be 'unfeasible'.

It comes at a time when the council is forecasting a potential 8.1 percent rates rise for the 2020/2021 year.

* Demolition for the Invercargill CBD redevelopment begins

* Planned Invercargill CBD development reaches High Court in Christchurch

* Developers circle January 6 as hopeful demolition start date**

The initial proposed investor make-up for the city block was: Invercargill City Council [$25m], Provincial Growth Fund [$19.5m - loan], O'Donnell family [up to $25m], Community Trust South [$20m] and Geoff Thomson [up to $25m].

However, Thomson pulled out in November saying he was 'sick of hitting a brick wall' when working with council chief executive Clare Hadley.

Thomson 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.

Council held two public excluded 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 council chief executive Clare Hadley said a resolution was made that 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 on Tuesday that the council has 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.

There are two options 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 if 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 on the block started in January and is expected to take between four and six months, with the plan to start construction soon after.

Invercargill Central Ltd director Scott O'Donnell told Stuff 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 matters, including required Rugby Park maintenance, and an increase of $3.2m for its capital works programme.

Meanwhile, on Tuesday the council committed to setting its annual funding at $700,000 for Stadium Southland, $300,000 more than was set out in the long-term plan.

The engagement plan report says the total forecast rate increase, incorporating what will be consulted on and the matters which 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.