Wellington City Council (WCC) is now considering demolishing its Municipal Office Building to shore up the future of a much-touted National Music Centre.
The Herald revealed in October the cost to redevelop the building had blown out to $84 million - more than double initial estimates.
The council this afternoon issued a statement at the same time as next week's Strategy and Policy Committee was made public.
One of the agenda items recommends councillors pursue demolishing the Municipal Office Building, located in Te Ngākau Civic Square.
The original plan was for the council to strengthen it to at least 67 per cent of the New Building Standard and upgrade building services.
Victoria University and the New Zealand Symphony Orchestra would then fit out the floors above ground level and lease these at market rent for 25 years.
The deal meant the building would become home to the University's New Zealand School of Music and the orchestra, creating a National Music Centre.
But design work has revealed the cost to strengthen the building would now cost $84m.
The cost escalation is to do with the building's foundations. The strengthening is already a complex scheme for an old building on poor reclaimed ground.
The projected revenue generated by the lease income would be insufficient to fully recover the base build cost.
Tenants have indicated they are not able to pay rent prices in excess of market level, resulting in a funding deficit for the council.
That would need to be subsidised by ratepayers to the tune of up to $3.8m every year over the term of the 25-year lease and beyond.
But even if the building was strengthened, there is no guarantee it would be usable after an earthquake let alone the threat of climate change including sea level rise.
Civic Square is a heritage precinct, meaning the council would have to require consent to demolish the Municipal Office Building.
Councillors are being asked to put aside $750,000 in the upcoming Long-term Plan for the consenting process for demolition. This would then be taken to the public for consultation.
Mayor Andy Foster said the National Music Centre was an exciting partnership.
"It will hugely strengthen our reputation as the Creative Capital and bring more life to the heart of our city - Te Ngākau Civic Square."
Foster said the decision on the building's fate would be a difficult one for councillors.
"Under the planning rules the MOB is considered a significant building within the precinct. This would require a resource consent to demolish it and build a new structure. The planning laws set a high bar for demolitions to be approved, which may cause lengthy and costly delays."
The council recently settled an insurance claim for the adjacent Civic Administration Building, after a four-year wrangle with insurers. It received a $38m payout.
Foster said demolishing both buildings would provide more scope for the future of Civic Square, which needed to be resilient.
"Buildings should be accessible and encourage activity in and around them. There may be opportunities to look at rooftop places and accommodate a variety of activities that attract a broad range of people to the precinct.
"It needs to be adaptable, beautiful, a place for events, music, entertainment, protests, celebrations, a place to enjoy and be proud of – a place for everyone, a place for life."
While the council mulls over the future of the two buildings, strengthening projects for the Town Hall and Central Library continue to progress.