Tauranga City Council will finish the half-done Durham St upgrade in spite of a $3.3 million budget blowout elected officials labelled "disgraceful" and "another botch-up".

The project included streetscaping 300m of Durham St, plus Durham Lane, to make it more pedestrian-friendly and renewing and upgrading underground services including sewer pipes.

The $6.9 million budget was expected to blow out to $10.2 million, an increase broadly blamed on unexpected underground issues and deficiencies in planning and design.

A staff report presented in a meeting today said the design would normally take a year to develop but was squeezed into three months to accelerate the project and time it with the construction of the new University of Waikato campus on Durham St, which opened in February.

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Councillors voted 9-1 today to finish the project and fund the overspend.

Councillor Catherine Stewart. File photo
Councillor Catherine Stewart. File photo

Councillor Catherine Stewart voted against the motion and Councillor Leanne Brown was absent.

Stewart said the council should be looking for ways to cut project costs.

Acting infrastructure manager Martin Parkes said that had been tried but it was "not possible".

"We are too far along with the project to make any significant savings."

Stewart said the overspend was "known in September 2018" and should have been brought to the council earlier.

Councillors debated where the blame for the blowout should sit.

Most shared that burden between elected officials and management, but Councillor John Robson said it was the elected members who agreed to rush the design phase.

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"Haste makes waste.

"We have done enough projects in council to understand how long takes to do things properly."

Councillor John Robson. File photo
Councillor John Robson. File photo

Councillor Larry Baldock said the money was not being wasted as the project would beautify the city as well as future-proof vital services for its residents.

He said all elected members, except Robson, had been part of the decision in September 2017 to fast-track the project.

Councillor Bill Grainger described the situation as "another botch-up" while Councillor Steve Morris said it was "disgraceful".

"The public should be able to have confidence this council can build a road," Morris said.

Deputy Mayor Kelvin Clout said the council had to "take the hit" and learn from its mistakes.

Deputy Mayor Kelvin Clout. File photo
Deputy Mayor Kelvin Clout. File photo

"We can't have half the street in asphalt and leave the other half in pristine cobblestones."

Mayor Greg Brownless said the council should be taking up issues with costs and designs with the consultants who prepared them.

The council heard lawyers were looking at whether the council had any legal recourse.

It will all be cold comfort to owners of struggling Durham St businesses, with the project - initially expected to be finished this month - not expected to be done until October.

The council has asked affected businesses to apply for a rates rebate.

Durham St business owners Peter Dromgool and Graham Whitaker with the roadworks. File photo
Durham St business owners Peter Dromgool and Graham Whitaker with the roadworks. File photo

Smiths Motorcycles owner Peter Dromgool said that after 12 months, the whole thing was "nothing but a mess" and the council needed to "pull their finger out".

He said all Durham St businesses "should have had a rates holidays from the word go".

"I know of at least one business who is ready to shut and go."

Graham Whitaker, owner of Eastern Hi Fi, said the council had no other option but to finish and needed to "spend what they needed to get the city moving again".

The Durham St revamp has had a cost blowout

He said a rates rebate would be a kind gesture, but would not even cover a fraction of business' losses.

Another store manager on Durham St, who would not be named, said the works had devastated the business with customers ringing to say they could not find a park and were going elsewhere.

Downtown Tauranga chairman Brian Berry. File photo
Downtown Tauranga chairman Brian Berry. File photo

Downtown Tauranga chairman Brian Berry said the council couldn't leave the job half done but it was an unfortunate cost blowout.

The rates rebate was a step in the right direction, he said.

- Additional reporting Caroline Fleming