Sir Howard Morrison Performing Arts Centre: Increased costs and delay likely, says council

The performing arts centre at the end of August. Photo / NZME

Rotorua's Sir Howard Morrison Performing Arts Centre's reopening is likely to be at least another month later due to the impacts of Covid-19 alert levels in Auckland and Waikato.

In a report for this week's Rotorua Lakes Council operations and monitoring committee meeting by chief executive Geoff Williams, he said several important contractors were based in Auckland and Waikato, and this meant delays to asbestos removal and gib delivery.

Two applications to allow contractors to leave lockdowns and continue work in Rotorua were declined, he said.

"Sourcing of materials is challenging whilst alternatives are being sourced, time and cost are being impacted. Opening of the facility is now likely to be September/October 2022, but further delays can be expected if Covid-19 continues to affect material supply lines and contractor availability."

He said precast sheer walls had been installed since the last monthly operational update, and had been done by dropping them through the roof and bolting them to the existing heritage structure.

Local Democracy Reporting asked for clarity on the likely additional costs Williams referred to in his report.

In response, Williams, who was managing the community wellbeing deputy chief executive portfolio while there was a vacancy, said cost and time implications were "commercially sensitive at this time".

That was as the council reviewed any claims for variations or extensions of time from its contractor for the project, Hawkins.

"We can provide this information once cost and time implications have been agreed but that may be some months away."

Inside the performing arts centre in early July. Photo / NZME

The earliest estimated date set for the opening of the revamped building was February next year, which had been extended to March, then June, then August or September.

In July, it was revealed ratepayers would shell out a further $11.1m for the restoration and redevelopment of the building.

As a result, the project's previous budget of $22.5m was now be $33.7m, with the council contribution to this almost doubling from $11.5m to $22.6m.

The remainder from external groups such as the Lottery Board, Glenn Family Foundation, and Rotorua Energy Charitable Trust.

The original budget set in 2017 was $17.9m.

The council approved the budget increase in a confidential meeting in June.

In September last year, council performing arts director Cian Elyse White said the council had been "ambitious" in its renovation of the building, moving it from a venue-for-hire to take the renovation opportunity "to uplift and platform Rotorua as the indigenous arts epicentre of the Southern Hemisphere".

The building was found to be in a poorer state than had been expected and required additional funding to address the issues, the council said at the time.

The Sir Howard Morrison Performing Arts before renovation construction began. Photo / NZME

The centre was closed to the public in November 2017 after a seismic assessment concluded that the building - which was built in 1938 - was earthquake prone, at just 25 per cent of the New Building Standard (NBS). The threshold for a building to be considered earthquake prone is less than 34 per cent NBS.

Once complete, it's expected the building will be more than 70 per cent NBS.

Along with Te Whare Taonga o Te Arawa the Rotorua Museum and the Blue Baths, the centre is one of three council buildings closed due to seismic vulnerability concerns.

Council's monthly financial update

Thursday's committee meeting will also provide a council financial update for the month of September.

A report for the meeting by council finance business partner Michelle Overbeek showed the operating performance was tracking favourably to budget, with a surplus for the month of $105,000.

The year-to-date performance was a deficit of $353,000 to an annual plan budget of a deficit of $10.4 million.

Overbeek's report said total revenue was tracking slightly unfavourably for the month, driven by suppressed fees and charges due to alert level changes.

That had particularly affected parking revenue as well as lease rental income from markets and major events.

"We anticipate additional pressure on our fees and charges as the extended lockdown continues. Rolling forecasts are in place to identify and mitigate the full year impact."

Rates revenue continued to track "marginally" ahead of budget, at a surplus to budget of $211,000, and subsidies and grants were also ahead by $198,000, which Overbeek said in her report was mainly due to funding from the Department of Internal Affairs for professional services related to Three Waters reform.

Staff vacancies, which had assisted with a favourable budget for August, had saved $344,000 in September.

"It is worth noting that [the] council is working with [council-controlled organisation] InfraCore on a debt reduction drive, effectively resulting in a debt transfer from InfraCore to [the] council.

"InfraCore's historical outstanding loan with [the] council is $2.8m. An agreement was reached to forgive $1 of debt for every $1 debt repayment made up to and including 30 June 2022.

"The impact on [the] council's operating result is expected to be in the region of $1m."

Overbeek's report stated the council had spent $14m on capital projects in the year to the end of September, made up of $3.6m on the Sir Howard Morrison Performing Arts Centre, $2.3m on the lakefront, $437,000 on the Aquatic Centre, $1.6m on stormwater improvements such as Pukehangi west, $1.1m on transport improvements and $1.9m on information technology solutions.

The remainder was spread across smaller capital programmes, Overbeek said, which on an average were about $100,000 each.

The meeting will also cover operational updates from the council's three council-controlled organisations, Infracore, Rotorua Economic Development (Destination Rotorua) and Rotorua Airport.