John is a senior reporter at the Bay of Plenty Times

Tauranga City Council goes for lease over owning new HQ

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Councillors voted 10-1 to lease. Photo/George Novak
Councillors voted 10-1 to lease. Photo/George Novak

The Tauranga City Council has agreed to pay $2.5 million a year to lease, rather than own, its new civic administration building.

The decision has helped set the platform for proposals to eventually spend up to $200m creating a civic heart for the city.

Councillors voted 10-1 yesterday to lease a new civic administration building from a developer, rather than own the building outright. It agreed to "work with the private sector to deliver a new civic administration building".

The chairwoman of the civic heart project steering group, Gail McIntosh, said afterwards that there was hardly any difference over 10 years between owning and leasing the building.

This was because the council would pay $22.3m of the capital costs to cover the building fit-out, with other costs like IT and organisation transition costs.

It would be left with leasehold costs of about $2.5m a year on developers' costs of $34.6m.

Yesterday's decision was to adopt the leasehold approach as an amendment to the council's current 2015-25 long-term plan. It was one of six projects adopted for inclusion in the 10-year plan.

But the council also left the door open by noting that the actual approach to procure the administration building may be altered, where additional benefits could be achieved by an alternative arrangement.

Cr McIntosh said the leasehold approach left room on the balance sheet for other expenses. "We have got to have the ability to raise capital expenditure when we need it."

She said the council had not proven itself to be a good building owner in the past. She was referring to years of leaking problems with the old civic buildings that reached a crisis point when a staff member fell ill from inhaling spores from toxic mould growing in his office. The council cleared out affected offices and moved staff to a leased building in Devonport Rd.

Cr Rick Curach failed to win any support to review the costs to redevelop the newer generation buildings in the civic complex for staff, instead of a new administration building.

Cr John Robson succeeded by a vote of 6-5 to include the council-owned land in Durham St, next to Baycourt, as a possible site for the new building.

Cr Kelvin Clout opposed this move, saying it was almost prevaricating and leaving it to the new council. But Mayor Stuart Crosby backed Cr Robson, saying the council needed to leave all options open for the land it owned.

Cr Steve Morris tried and failed to fund the $4.3m of open space improvements surrounding a new administrative building from the unspent $4.8m budget for streetscape improvements.

The council also reduced the $2.5m plan to redevelop Masonic Park into a community space through to the waterfront. Instead, the next council will be asked to consider a more modest upgrade, centred on relocating the existing carparks, toilets and bus shelters out of the park.

Council also agreed to spend $300,000 developing a detailed business case for a new museum that would include looking at the alternative site on Cliff Rd. The business case would underpin an investment proposal for when the 10-year plan was next reviewed in 2018.

Councillors agreed unanimously to spend $400,000 developing a business case for a "fit-for-purpose, future-proofed" city library. It would also be considered for the 2018-28 plan.

But the proposal to spend $100,000 developing an indicative business case for a multi-purpose performance centre in the civic block was lost 6-5.

Councillors agreed to spend $400,000 demolishing the leaky old administration building fronting Willow St, which was now empty except for computers and servers. Demolition would likely happen next year.

What the Mayor and councillors said:

Mayor Stuart Crosby: "The process has been going on for 10 to 15 years and it will carry on well into the future."

Bev Edlin: "The city is screaming for us to make this happen."

Leanne Brown: "Car parking was a big issue through the submissions process. We need to look at Mainstreet."

Kelvin Clout: "I still have doubts about the Masonic Park [redevelopment] and whether the money would be better spent on a new wharf."

John Robson: "$1.7 million has been spent visualising the city centre strategy and we have not got value for money out of that process."

Steve Morris: "Spending $18 million for five to 10 years of staff accommodation does not stack up."

Bill Grainger: "I don't want to see patch job after patch job [on the old buildings] happening again. "

Catherine Stewart: "We have ended up with a project bigger than Ben Hur ... the city centre strategy is a flawed document."

Matt Cowley: "It is for the next council to continue with this rolling maul."
Rick Curach: " My preference was to go out with an open book to get more interesting suggestions."

Gail McIntosh: "I am happy to support the business case for a museum."

- Bay of Plenty Times

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