The aquatic centre was built in 1984. Photo / Andrew Warner
Rotorua's council may ask the Government for $8 million for its aquatic centre redevelopment as the project is hit by burgeoning construction costs and supply issues.
Yesterday the council's Strategy, Policy and Finance Committee unanimously recommended the council support applying for funding to support stages two and three of the Aquatic Centre redevelopment.
A three-stage redevelopment of the centre was committed to in the 2021-2031 Long-term Plan. The plan estimated it would cost $28.3m with $17.9m from the council and the rest externally funded.
The plan included upgrading existing facilities and a new learn-to-swim
pool, hydro slides, outdoor areas, bombing pool and cafe.
The first stage - upgrading the 50m pool and outdoor changing rooms - is finished.
The second stage - refurbishing the main pool hall and front area - is in the
tender evaluation phase.
Stage three is a commitment to develop options and attract external funding for new services.
According to the meeting agenda, the stage two budget, set in late 2020, "did not anticipate the very high level of construction inflation that has occurred due to supply and demand impacts of Covid-19 both nationally and internationally".
"The tenders received for the construction of stage two have therefore exceeded the construction budget available," the agenda said.
Twenty council initiatives, including the aquatic centre, were assessed against funding criteria after the council earlier voted to apply for the $8.05m it was eligible for in the first tranche of the Three Waters Be Better Off Fund, after a prioritisation and evaluation process.
The fund is available for local governments to invest in local community wellbeing.
According to the meeting agenda the Aquatic Centre, built in 1984, is the most visited council community facility. Its upgrade was consulted on in 2018 and 2021.
"The overall condition of the building and associated services is generally poor and worsening. If these issues are not correctly addressed in the near future, the overall usable lifespan of the building will be significantly reduced.
"To not move forward now would risk further deterioration of the facility, increased health and safety risk, a frustrated community, losing the knowledge of the project team, consent expiration and losing credibility with major contractors."
The funding application must be made by September and a decision is expected four to six weeks after the submission and due by November 12.
At the meeting, Gaston said the funding would ensure the stage two delivery and seed funding to attract match funding and commercial investment for stage three, giving the project certainty.
"We're seeing significant cost escalations and concerns about capacity to deliver ... the chief financial officer has warned that will impact projects going forward.
"With anything we tender now there is a risk we simply do not get a price that fits within our budget and we either have to postpone, drastically change the outcomes we're seeking to achieve or wait and retender and hope there's a better price coming."
Councillor Tania Tapsell said she had "serious concerns" the project's final cost would be "significantly more" than when it started.
"In recent times the cost of construction and inflation has really impacted all of our projects.
"We can't underestimate just how significant those increases in prices are," she said.
Gaston said the project was largely debt-funded so, if approved, "this is $8.05m less debt we will incur".
Some of the other projects considered for the funding were the museum, Sir Howard Morrison Performing Arts Centre, reserve enhancements and the expansion of the CCTV network.
The project is not the first to be affected by rising construction costs and supply chain issues.
The cost of major Bay of Plenty state highway projects has increased from $632m to $1.2 billion because of shortages in materials, the impact of Covid-19 and other delays.
The Rotorua Museum renovation is estimated to exceed the current budget by between $18m and $20m partly due to Covid-related supply chain issues.
Demand for Gib is also soaring amid a nationwide shortage of building materials.
The issues have been so bad that the Government asked the Commerce Commission to look into the cost of building materials.
The commission's draft report into the factors affecting building supply competition is due to be released this month.
Local Government New Zealand president and regional councillor Stuart Crosby told the Rotorua Daily Post councils nationwide had been facing "significant challenges" to finishing projects due to rising construction costs and interest rates, and access to materials and contractors such as designers, consultants and engineers.
"All these issues affect local government and have an impact as they do on homeowners looking to do simple projects. Ours are very large and complex projects."
Asked if rising costs could be passed on to ratepayers, Crosby said "it could be inevitable" for projects already started but councils would look at the current marketplace then decide whether to proceed with projects in the pipeline.
"Councils are generally conservative by nature. They look at all the issues around a project and then can delay it or reprioritise it ... But many have to proceed."
Crosby said rates were not the only way projects were funded. Councils could use debt and development contributions.
New Zealand Certified Builders Association chief executive Malcolm Fleming said it was unsurprising there had been cost increases to a budget from 2020.
"The world has changed a lot since then.
"There has been cost escalation across projects, both commercial and residential. There's inflation pressures on products, labour. There's been inability to get products to construction sites ... such as Gib, laminated steel and some timber."
He said at one point contractors were reporting weekly price increases, making it difficult to set firm prices.
The council was asked for a breakdown of the increased costs of construction materials and how much stage two of the project had fallen short.
In response, Gaston said as the council was still in the tendering process it did not have final costings.
"We know that construction costs have increased across the board, we're facing rising inflation and rising interest rates and all of this impacts on project costs. These challenges are not unique to our organisation and have been widely reported, including in the [Rotorua] Daily Post."
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