Private sector investment in a new $34.6 million council administration building for Tauranga will not necessarily free up money for a new museum or library, according to Mayor Stuart Crosby.

He was responding to the new funding proposal that could see the council paying rent of $2.5 million a year to lease the building off a developer.

The proposal will be debated by the council next Tuesday as part of a raft of recommendations to rejuvenate Tauranga's civic heart. However, the council would still pay additional capital costs of $22.3 million for the new building.

Mr Crosby was asked whether freeing up the capital meant the council could afford to build civic amenities like a museum and new library - as sought by many submitters to last month's civic heart redevelopment plan hearings.


He said it was "six of one and half dozen of the other" whether the council leased the building or was the owner and operator. The big advantage of leasing was that the council would not have so much debt on its balance sheet. "That is the important thing."

Mr Crosby said it would be wrong to link fast-forwarding the construction of a museum or library with the council leasing the administration building.

He said the council was financially constrained by growth pressures, such as the $70 million cost to develop a new water supply treatment plant near Te Puke in about four years. It would likely push the council up to or beyond its debt limit.

Quizzed on whether the money might also be earmarked to help pay for the widening of Turret Rd and 15th Ave, he said there were roading priorities.

''Anything the council can do to reduce short-term debt on its balance sheet, we need to seriously look at. We also need a bit of freeboard on the balance sheet for unexpected events like a natural disaster.''

The issue with a museum was not so much the capital cost, much of which would be funded externally, but the operating costs estimated at $2 million a year. There was a lot of research and consultation to be carried out on the civic heart amenity projects.

Tauranga lawyer John Gordon, who also spoke on behalf of property developer Paul Adams and retired property valuer Graeme Horsley, said he wanted the money liberated by leasing the administration building spent on community amenities to increase vibrancy in the city heart.

Mr Gordon favoured the city heart project being turned over to a council-controlled organisation, saying the ''optimal outcome'' was for the administration building to be developed and owned by a community-based organisation without a developer's margin.

''An outcome such as this would be a substantial win for everyone.''

What the mayoral candidates said:

Noel Peterson: ''This should be a matter for the incoming council to decide on. It seems unjust, just prior to an election, to decide on such an important issue. The incoming council will be saddled with the direction of an outgoing council. In my view the matter needs further discussion, there are many options that have not been discussed.''

Steve Morris: ''I have been highly sceptical of a lease option but in the long-term it reduces the risk to council and its ratepayers of another leaky building debacle. I won't be supporting $2.5m to pave Masonic park, I'd prefer this to be spent on the waterfront and a new coronation pier. I won't be supporting an additional $4.3m for a civic space around the new council building as we have sufficient for that in the budget already.''

Graeme Purches: ''I support leasing as it was the best and cheapest long term solution for ratepayers. The $64.3m and higher figures quoted by many as the cost of the building have always been incorrect. They were the worst case scenario costs of council building and owning the building. I hope that the recommendation will be for Council to approve expenditure, recommend the decision for the incoming Council, and leave it to the new Council to confirm, modify or decline those recommendations.''

Greg Brownless: ''Before council considers entering into any deal to build a new civic administration building it needs to be sure the current buildings can't be salvaged. With seemingly contradictory opinions about the state of some of the buildings and the cost to fix, this isn't yet certain. I'm also concerned that leasing a building from a developer could have some effects I see as negative.

''If council was a tenant it would subject to increasing lease costs as land values rose. Just ask the question, who is better off, the person or business that owned their own house or building for the last say 20 years, or those who rented.''

Max Mason: ''It's a positive move that the elected members will now be deciding on the leasing funding option. It is a bit frustrating that it's taken this long to take on board the leasing solution that was evident to everybody months ago. I would like to see the resolution expanded to include the possibility of a community bond. I believe local investors would love to invest in their city, and illustrates more of a partnership attitude from the council.

''I believe the recommendations don't go far enough with the Technical Advisory Group. They should be planning now for a fully fledged Urban Development Agency (UDA) with a much wider scope. What we have now is half a vision. A UDA would develop a strategic vision for the whole city centre, and have the skills and experience to implement it. There would be far less political interference.''

Larry Baldock: ''We need to focus urgently on getting private developers involved in providing the hotel and potential conference facilities on Durham St. I also agree that the old admin building on Willow St should be demolished as soon as possible to free up space for the new civic square development. I am pleased they have adopted my proposal to fast track the building of a new library instead of the civic admin building, which was supported in the survey poll I conducted.

"But $400,000 for a business case to be completed by January 2018 - why would it take so long and cost so much? This is bureaucracy gone mad.''

Murray Guy sought an extension of the period given to respond on the subject matters, saying less than two hours was unreasonable.

Candidates who did not respond prior to deadline were Hori Bop, Kelvin Clout, Doug Owens and John Robson.

Proposed new-look civic heart package
- Lease new council administration building for $2.5m a year
- $4.3m to develop open space around administration building
- Move straight to detailed business cases for a new library and museum ($700,000)
- $2.5m to redevelop Masonic Park into civic and community space
- $100,000 for indicative business case for performance centre