The off-site collections of Auckland's Motat museum are covered in asbestos, and ratepayers will pick up the bill for salvaging what's worth keeping.
Auckland councillors have agreed to increase the museum's annual funding by $2.1 million next year, to $15.222 million.
In the long-term, it's seeking another $100 million from the council and $50 to $60 million from private sponsors to fund a much larger redevelopment.
Motat director Michael Frawley said its off-site collection has been covered with asbestos, and it will need to recover the items that are worth keeping.
"Our off-site storage facility has been sprinkling asbestos over the top of our major collection items.
"We store approximately 80 per cent of our collection off-site ... and we have to move those items, clean up, and relocate them."
He told a council committee meeting the museum would have to employ extra staff who could review the affected items.
He said they would need to decide "whether it is worth retaining those items because they're historically significant or have some other importance to the museum, or whether they should be disposed of".
The technology museum has been under new management, after a report was leaked to the Weekend Herald in 2014 criticising the way the museum operated.
The report, written in 2012, said under the previous management the museum was "dysfunctional", riven with "childish" infighting, had exhibits of doubtful quality, and spent ratepayer funding poorly.
Frawley said since its relaunch, the museum had been trying to rebuild its reputation, to attract corporate partners and private sponsors who could support future development.
He said in addition to issues with its off-site collection, the museum also needed to make major improvements to its on-site buildings.
"The roof leaks in most of the buildings, most of the building contains asbestos in some shape or form. We don't know where the pipe work actually goes."
The revelations come as Auckland councillors have agreed to launch an independent review's into the city's cultural institutions.
Mayor Phil Goff said funding agreements and legislation have prevented Auckland Council from having proper oversight of how institutions like Motat spend council funding.
"We're investing a huge sum of money. To have a 21st century governance and accountability framework, I think, is absolutely essential.
"We certainly don't have the ability to set priorities, and ... a system that ensures transparency, accountability and value for money."
A council report shows the review will address "tensions" between the council, and Auckland Museum and Motat, and the need for long-term storage facilities for Auckland Libraries and other institutions.
It will also address the future of the Maritime Museum, whose waterfront lease expires in 2025, and Auckland Stardome, whose lease may expire in 2027.
Mr Goff said minister for arts, culture and heritage Maggie Barry had indicated the Government would be open to law changes.