Our Place has been given another chance, with Tauranga City Council agreeing to let it stay open after an outpouring of community support.
Yesterday the council also agreed to contribute $160,000 to help launch a new initiative that would help fill up some of the vacant containers in the Willow St village for at least another year.
It also voted to trial two-hour, free, on-street parking in the CBD for five months, at an expected revenue loss of about $500,000.
More than 5500 people signed a petition to save Our Place after the council proposed to close it in May, subject to community feedback.
Our Place opened two years ago aiming to add vibrancy to the CBD and to the demolition site of the council's old administration building.
It was a placeholder until the council decided what to build on the site.
Our Place is run by Chris and Rachelle Duffy of Little Big Events, who lease the Willow St site for $1 a year. They pay operating costs and collect rent from tenants, mostly hospitality and retail shops.
Financially, the village has struggled to fill its containers to a level where it could be self-sustaining, resulting in the need for funding top-ups from the council.
This frustrated some other CBD businesses who saw the village as competition.
The council has spent $537,000 on the site, including preparations for the village. Of that, $120,000 was in grants or operating subsidies for Our Place.
Council staff recommended closing the village to reduce the risk of further costs. Decommissioning the site would cost $200,000.
The $160,000 grant approved yesterday will go towards a new initiative called Remaker, which would create a space where waste headed for landfill could be reused or made into something new.
The idea was pitched by John and Jackie Paine - founders of Good Neighbour - and Lavina Good in a submission to the council's Annual Plan.
The submission said council funding would cover Remaker hiring 15 vacant containers in Our Place, providing the village with income security. It would cover its own operating budget through grants, workshop fees, product sales and corporate sponsorships.
John Paine told the Bay of Plenty Times the team behind the proposal - the Linkd Community Trust - was really excited and appreciated the council's support.
He said the trust, which would receive the council funding to establish Remaker, was separate to Our Place but the groups were working together.
He said the Remaker would bring together experts, volunteers and students to form "a "community of makers" creating inspirational and creative products from waste.
"This is a creative, community space. It's aimed at being innovative and practical. There will be workshops and training involved that involve a high level of education and the onus to us to unlock unlimited potential."
Chris Duffy said the Our Place team was "extremely satisfied" with the council's decision.
"This project has provided many challenges and at times tested our fortitude - but we think the decision made today is one that has the best interests of the CBD and the greater community at heart - and we're really excited about the next stage of the project."
"We've always felt it imperative that we continue to build Our Place Tauranga as a point of connection, responding and withstanding to challenges and meeting community needs, so with renewed community impact aims and sustainable development goals - we believe the future of Our Place is certainly one of optimism, that should be shared by the community, our tenants and local businesses within the CBD."
He said Our Place looked forward to making an announcement in the near future about the "instrumental" Remaker proposal.
Alan Sciascia of Hospitality New Zealand, however, said he wanted to know what, if any, "contribution the council was making to other businesses who have made a long-term commitment to the CBD".
"These businesses are competing against these subsidised short-term businesses."
Through projects such as Our Place and the Wharf St streetscaping, the council was "spending a lot of ratepayer money to benefit very few businesses at the cost of other competing businesses".
Tauranga mayor Tenby Powell said in response the council was doing a range of things to support the CBD, including a programme to activate vacant spaces, the free parking trial and more.
Real change would not come until there were people living in the CBD, which the council was also working to encourage.
Elected members were split on the Our Place decision in yesterday's meeting.
Councillor Steve Morris said the council should turn the site into a carpark.
Councillor Jako Abrie said that would be a poor use of money as it would only be ripped up when the council decided what to build on the site.
Abrie said that decision was "still a number of years away" and the council should keep the vitality offered by Our Place in the meantime, with Remaker as an "anchor tenant".
Councillor Heidi Hughes said Our Place was a "really cool community space" that would "spin the wheels" of the CBD's growing student population.
It was used for a wide range of community activities, from crop swaps to extreme knitting according to a list she read out.
At the commercial end, she said the businesses in the village still paid commercial rates.
The Our Place decision was made as part of the council's revised draft Annual Plan 2020/21 deliberations, which will continue today.
At the end of yesterday, the decisions had lifted the average rates rise from 4.7 per cent to 5.35 per cent. Today, the council is expected to try to lower it again.
As with all decisions about what to fund and what not to fund, it would not be set in stone until the council signs off the final plan - a budget and work plan for the next year - and sets the rates.
This was expected to happen later this month.
- Additional reporting Kiri Gillespie