127 19PE Council 2019-06-26 Civic Centre Project - Masterton · 2020-03-10 · the Civic / Events...
Transcript of 127 19PE Council 2019-06-26 Civic Centre Project - Masterton · 2020-03-10 · the Civic / Events...
127/19PE
To: Your Worship and Elected Members
From: Kathryn Ross, Chief Executive
Date: 26 June 2019
Subject: Civic Centre Options
DECISION
Recommendation:
That Council:
a) Notes the information and recommendations of the Steering Group contained in Report Civic Centre Options 127/19PE.
b) Agrees to consult the public using the special consultative procedure
i. on not proceeding with a Civic / Events Centre at this time due to the lack of demonstrated need and cost
ii. on complete demolition of all buildings on the site in the interim
c) Requests staff to prepare a Statement of Proposal (and associated material) to not proceed with the Civic / Events Centre
d) Requests that the Statement of Proposal highlights what Council could do instead (e.g. alternative projects).
PURPOSE
To report the recommendations of the Steering Group to Council on whether the Civic / Events Centre project should proceed to design and then construction.
BACKGROUND
The existing Town Hall and Municipal building at 64 Chapel Street were closed in 2016 following a
structural assessment that identified that the buildings were earthquake prone and no longer fit for
purpose.
Council identified three options:
1. demolishing the existing building and replacing it with a performing arts and events centre at
a cost of $15.5m
2. strengthening the existing town hall at a cost of $12–15m
3. demolishing the building and not replacing it at a cost of $850,000.
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In 2017, Council undertook two rounds of public consultation to engage with the local community
about the possible options. 65% of respondents favoured Option 1 – demolishing the existing structure
and developing a new building.
The Council decided to proceed with building a new Civic Centre in its Long Term Plan 2018‐28 and
made provision for this development ($15.5m). The Council committed to considering options on the
current site and options to retain the existing façade with the replacement facility as well as future
consultation on any final proposal.
In August 2018 a registration of interest was issued seeking interest in developing the municipal
building and town hall into a new Civic Precinct containing a hotel and events centre. Council received
four responses to the ROI. Only one ROI came close to meeting the brief scoring 18/30. Staff
recommended having further discussions with (and requesting a proposal from) Kiwi Hospitality NZ
Ltd once a project manager had been appointed, noting that the interest shown has been low and
concerns with effectively direct negotiations with a single potential partner.
A competitive recruitment process was undertaken to appoint a specialist project manager. Xigo was
engaged to undertake project management services until feasibility work is completed. Upon
completion of this work, Council would receive a recommendation for a go/no go decision on the
project proceeding to the design and then construction phases for a new events centre.
In December 2018 Council resolved to establish a steering group made up of elected members, iwi
representation and staff.
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Stage 1 of the project (feasibility) is now completed and the Steering Group is reporting to Council its
recommendation for the go/no go decision on the project proceeding to the design and then
construction phases for a new events centre.
DISCUSSION AND OPTIONS
The work to date has focused on replacing the Town Hall with a civic facility that:
meets the needs of the Masterton community and the Wairarapa
is sustainable and affordable
is multipurpose, eg. caters for performing arts events, concerts, conferences, meetings and
potentially accommodation
future proofs requirements for the next 50–80 years
reflects our Maori culture and our bicultural heritage
contributes to the wellbeing and liveability of the Wairarapa
contributes to the economic development of the district and vibrancy of the town
utilises Green Building design for efficiency and to meet environmental objectives.
Market Demand and Financial Analysis
As reported previously, the Steering Group oversaw the production of a Market Demand and Financial
Analysis (please see Attachment 1 for a copy of the full report which is confidential).
Underpinning the analysis is an assumption that the Civic Centre would have a Gross Floor Area (‘GFA’)
of approximately 1,500m2 (including a Centre approximately 750m2 of main event space, 250m2 of
foyer / exhibition space and 500m2 back of house facilities) which could cater for up to approximately
750 or more attendees in theatre‐style seating and approximately 50 tables of 10 for a banquet. This
is a larger venue than the Carterton Events Centre (for the reasons outlined in the report).
The report itself does not tell Council whether it should build a Civic / Events Centre. It establishes
that there is a desire within community groups and event organisers for a Centre but not a compelling
need. It establishes that “there is no strong commonly shared view about the needs and requirements
for a new civic venue space. In addition, there is little advocacy for meeting / conference facilities in
addition to those already available in the District.” If a facility proceeds the report notes it could be
done in two stages (a flat‐floor event venue and breakout / meeting space component with a
moveable seating block like Carterton as stage one and a theatre / auditorium with retractable / more
permanent seating as stage two).
In reviewing the report, the steering group considers that the projected usage of the Centre is realistic.
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Based on the above usage the report projects net cashflow for the first five years of operation. This
includes three components:
Cost of operations
Costs associated with financing activity
Provision for future investment (sinking fund).
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What is immediately evident is that the Civic / Events Centre is projected to run at a loss, particularly
with community groups utilising it at a community rate.
The above figures are based on the repayment of $20m loan and retention of the Municipal Building
which has the façade, and civil defence building. On those assumptions, the cost of having the Centre
to the District is therefore in excess of $2m pa.1
The report estimates that at year 5, based on a Net Operating Cost of $449,809 the cost per rate payer
would be $36.75 pa plus $122.55 pa to service the loan (or $159.30 pa in total). On top of this would
be the costs incurred by users of the facility for example concert ticket prices, hireage etc.
The report estimates that the average economic impact associated with the Civic Centre over the first
5 years of operation is $983,000 per annum.
Staff have also looked at a lower capital cost of $17.0m (see option 5 in the next section which
incorporates demolition of existing buildings and a new events/civic centre) for comparison. The
ratepayer subsidy (or operating deficit) of the facility, per annum once it is up and running is estimated
at $478,000. The costs of debt servicing is estimated at $1,275,000 pa, so total annual costs of
1 An indicative cost for an Event Centre of the same dimensions etc without strengthening the Municipal
Building and retaining the existing façade would be @$13.5m.
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$1,753,000. That is a 5.5% increase in rates. A 5.5% rates increase translates to the median value
house in Masterton paying $128 more per annum.2
Amongst other things, the steering group is primarily charged with advising the Council on whether
the project demonstrates value for money so that the Council can make a decision whether it should
proceed with the project or not at this time. Based on the analysis contained in the Market Demand
and Financial Analysis the steering group concluded that the project (with an ongoing cost to the
ratepayer of @$2m) did not have a demonstrated need, did not represent value for money and the
group had significant concerns about the affordability of the project.
On this basis the Steering Group does not recommend proceeding with a Civic / Events Centre (at this
time) and consulting the public on this. In making this recommendation the Group acknowledges
that at a future time a Civic / Events Centre could be built on this or another site (noting the Market
Demand and Financial Analysis is not restricted to the current site).
Council may however think there are other reasons to justify such expenditure that are beyond the
Steering Group’s terms of reference that would enable it to proceed to design or to include in a public
consultation on whether to proceed.
The Council may wish to consider what other projects it would like to pursue or accelerate should it
decide to consult on not proceeding with a Civic / Events Centre. For example, the redevelopment of
the library (which may be able to accommodate some of the activities that were envisaged for the
Civic Centre), town centre rejuvenation (town square revamp, landscaping and potentially increased
use and or parking) etc. and what it will do with the existing buildings in the interim. Further
information is provided in the next section on the latter point.
Options Considered
Options and costs to strengthen, refurbish and demolish the existing buildings
In addition to the Market Demand and Financial Analysis the Steering Group also investigated options
and costs to strengthen, refurbish and demolish the existing buildings. The question of whether it
would be more expensive to strengthen the existing Municipal building than to build a new structure
altogether was also examined. (Please see Memorandum dated 11 June 2019 and accompanying
information at Attachment 2 for the full information.) This information was specifically sought to
enable the Council to consider what next if it does not proceed with an Events/Civic Centre at this
time.
Upon discussion, the option to create office space within the retained Municipal building (and civil
defence building) was dropped in favour of simply retaining and strengthening those areas for a future
(yet to be determined) use. The rationale for this was that it was not possible to determine the
specifications that should be incorporated, that the indicative costs ($11.6m‐$13m) were prohibitive3
for office space in the Masterton market.
The costs associated with demolition, demolition with retention of the façade, retaining and
strengthening the Municipal and Civil Defence Buildings were then compared with options that
2 The LTP had allowed for 4.3% rates increase resulting from the capital project.
3 Drawing on purchase price for Waiata house and the empty office space within the town.
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included a new Events Centre and the status quo. These are provided in full in the options report
dated 20 June 2019, attachment 3, and summarised below.
The options:
Option 1 – is the do nothing option (i.e. leave as the status quo) and has not been costed as there is
no capital outlay (however there are risks associated with this approach)
Option 2 ‐ Complete Demolition of all buildings on the site (contaminated material removed,
landscaping and carpark surfacing)
Option 3 ‐ Complete Demolition with the Retention of the Façade (structural support for the façade)
Option 4 ‐ Demolition of the existing Auditorium (Hall) only and seismically upgrade the MOB and Civil
Defence Building. (Hall beyond strengthening and must be demolished.)
Option 5 ‐ New Events Centre (demolition of all existing buildings and façade)
Option 6 ‐ New Events Centre with façade retained
Option 7 ‐ New Events Centre, façade and seismically upgrade the MOB and Civil Defence Building
The capital costs associated with each option are as follows:
In discussion, the Steering Group felt that Option 2 was the better value for money option that
presevered options for the future (based on its assessment that there was not a compelling case as
described above to proceed with the Events Centre at this time). In coming to that conclusion, the
Steering Group considered allowing the existing building to stay and decay over time was not a
prudent option (reference was made to the old Hospital buildings) and acknowledged the earthquake
prone status of the building.
The Group acknowledge that the strength of public feeling about the façade4 has not been specifically
tested (although we know there are those that love it, loathe it and others that are indifferent). The
original question had 65% support for demolishing the existing structure and developing a new
building (but there was not explicit reference to what should be done around the façade). 65%
4 The façade does not have national heritage status (and as such does not have significant heritage values) but
the district building is a heritage item in our Combined District Plan. Facadism is an approach that is not
generally supported from a heritage perspective due to the significant loss of heritage value that generally
results.
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support for can be taken as support for losing the façade, although the Steering Group has not
operated as if this is a given and has assumed that the options for Council’s initial consideration must
include options that retain the façade.
Propping the façade would have a five‐year life and would incur downstream costs (maintaining the
support structure). It would also create an expectation that the façade would be incorporated into
something in the future. This was not favoured by the Group. Creating a bare shell while retaining the
façade would preserve options for later development / sale / lease however constrains future
development opportunities compared with a level site.
The Steering Group therefore recommends consulting the public on complete demolition of all
buildings on the site, which would test the community’s desire to retain and pay for the retention of
the façade (with or without other strengthening work).
In proposing this, the Steering Group recognises that such a proposal is very controversial and
significant for the community. A full statement of proposal would be prepared and presented to
Council for adoption prior to consultation (using the special consultative procedure given the nature
of the decision and financial implications) beginning.
The earliest this could be done is August 2019 as it is extremely important to get the questions, options
and supporting information right as well as the channels for communication. This creates timing issues
for the consultation and opportunities to be heard with the impending elections, and the pre‐election
period commencing on 12 July 2019. Staff would not recommend commencing consultation during
this time.
Conclusion
The Steering Group do not recommend proceeding with a Civic / Events Centre (at this time) as there
is not a demonstrated need for the project, it does not represent value for money and the group has
significant concerns about the affordability of the project. As a result of this recommendation the
Steering Group considered what should be done with the existing buildings including the façade and
recommend Council consider complete demolition of all buildings on the site to preserve
opportunities for the future.
In addition, the Steering Group recommends Council prepare a statement of proposal for consultation
outlining its preferred options (and alternative projects that could be pursued) and staff recommend
that consultation commences post the elections in October 2019.
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SUPPORTING INFORMATION
Significance, Engagement and Consultation
A decision not to proceed with a Civic / Events Centre would be a significant decision. The significance
level is high. The reasons for this are that the potential decision affects a strategic asset, a level of
service, there will be a high level of community interest and controversy, and there will be an impact
on rates and debt potentially leading to an LTP amendment. As such the decision requires public
consultation using the Special Consultative Procedure as outlined in the report. A consultation plan
will be prepared for Council consideration alongside the draft Statement of Proposal.
Stakeholder and community group engagement occurred during the Market Demand and Financial
Analysis that underpins the Steering Group recommendation and in the lead up to the adoption of the
Long Term Plan 2018‐28.
Financial Implications
Public consultation on the Civic Centre has not been specifically budgeted for but can be
accommodated within (as yet draft) 2019/20 budgets. The financial implications of the eventual
decision to proceed or not with the Civic Centre range from
Treaty Considerations/Implications for Māori
One of Council’s iwi representatives and Council’s kaumatua were included in the Steering Group. No
specific Treaty considerations have been identified at this time. Council will engage with Iwi/Māori as
part of the consultation and engagement process should the Council agree to consult.
Communications/Engagement Plan
A consultation plan will be prepared for Council consideration alongside the draft Statement of
Proposal.
Environmental/Climate Change Impact and Considerations
The environmental and climate change impacts and considerations arising out of a decision to
consult are minimal. There are a range of impacts that need to be considered in the decision to
construct a facility and options to achieve a Green Building should the Council wish to do so. There
will also be environmental impacts associated with any demolition. These impacts will be
considered fully through the design and consenting phases of the project.
ATTACHMENTS PROVIDED UNDER SEPARATE COVER:
Attachment 1 ‐ Market Demand and Financial Analysis
Attachment 2 ‐ Xigo Memorandum 11 June 2019 Strengthening options and supporting consultant information
Attachment 3 ‐ Xigo Report 20 June 2019
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