ICC to ask public if it should spend up to $30m on CBD block development

Tuesday, 14 May 2019

Invercargill City Council meeting on Tuesday.

The Invercargill City Council wants to hear the community's views on whether it should invest up to $30 million in the $180m CBD block development.

The council will hold a public meeting to inform people about the proposal.

An artist's impression of the HWCP CBD upgrade in Invercargill.

At a council meeting on Tuesday, councillors adopted consultation documents, including a statement of proposal, having been asked by HWCP Ltd to invest $20 million in the development.

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Invercargill Mayor Tim Shadbolt and city council chief executive Clare Hadley at the city council meeting on Tuesday.

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Council chief executive Clare Hadley said the council would ask the community if it should invest up to $30 million in the development, allowing for a contingency of $10 million to be included in the budget.

Councillor Alex Crackett said the council was always going to consult with the public on a proposal of such magnitude, while Cr Toni Biddle said the council had to encourage people to have their say.

Cr Ian Pottinger highlighted the consultation document saying a 'new entity' would be formed to undertake the development.

People needed confidence it was going to be run well and he asked who the new entity would be.

Hadley said the council did not have the answer at this stage.

The consultation document says the new entity would be based on the most appropriate vehicle for public/private investment that meets the requirements of shareholders.

Public consultation on the council investment would run from May 18 until June 28, followed by a public hearing in July where submitters could be heard, and a decision in August.

HWCP has applied for resource consent to demolish the block between Esk and Tay streets, bordered by Dee St and Kelvin St and build a $180m development with retail shops, anchor tenant, food and beverage precincts, offices, medical centre, outdoor courtyard and multi-level covered carpark and childcare facility.

The council's proposal is to invest in the development, but its further involvement is not confirmed and its decision to proceed will be influenced by what the community has to say.

Hadley said there would be a public meeting at the Civic Theatre on May 20, 5.30pm, about the proposal and a Facebook page would be launched, while more opportunities for the public to hear about the proposal would follow.

The consultation document says any council investment would be loan funded with the cost of borrowing met through rates.

For an investment of $20m, council would have to pay about $600,000 in servicing costs each year which would result in a 1.2 per cent rates increase for the average ratepayer - if a ratepayer was currently paying $2000 annually in rates, their rates contribution to the investment in the first year would be $24.

Council says its motive for investing is for the social and economic wellbeing of the community rather than direct financial return.

Without council investment, the development was unlikely to proceed as the returns were too low to attract enough private investment, the document says.

Benefits of the development would include $180 million direct investment for the total project, increase Southland's GDP by $475 million in 2019-35, create 500 jobs in 3-4 year construction phase and 300 permanent retail and hospitality jobs, create a more liveable city, more public spaces and address safety risk of some buildings.

Risks of council investment include cost to ratepayers, other projects being deferred, disruption to CBD during build, impact on remainder of city's retail area, and the risk the council may have to satisfy any cost overruns.

The development would open in three stages and be completed in December 2022.

The cost estimate for the development is $180 million and it's anticipated there will be a number of potential investors; each investor may become a shareholder.

The council, through Invercargill City Holdings Limited, has so far invested $5.45 million in the project.

In a separate process, the HWCP application for resource consent for the CBD development was heard in March and the independent commissioners are expected to make a decision in early June.