Taupō District Council considers multi-million dollar admin building

Thursday, 7 February 2019

The proposed Taupō District Council administration building viewed from Story Pl, with the new Taupo museum on the left, under terraced seating.

Business experts have identified the Tongariro Domain as the best site for a new administration building for the Taupō District Council.

The building would cost ratepayers $12.3 million over 20 years but was needed because currently the council's staff were spread across six locations around the tourist city, after its old building in Lake Tce was demolished.

A concept design for the Taupō council's new administration building, if it were to be built at the Tuwharetoa St carpark, behind Burger King.

District councillors and the public heard details on the estimated costs of the various new building options at a meeting on Tuesday, presented by Kent Dustin from Howard Davies Group.

But councillors were wary the $12.3m cost did not include the entire 'Cultural Precinct' project, which involved redevelopment and consolidation of other public services at Tongariro St.

Consultant Kent Dustin (far left) presents to Taupō District Council at Tuesday's meeting.

A birds eye view of the current Tongariro Domain, which Cultural Precinct master planners are considering.

* Bowling Club removal raises tensions at Cultural Precinct discussion

* Buiness time coming for the Cultural Precinct project

A draft of the redevelopment of the Tongariro Domain proposed by Cultural Precinct master planners

* Master planners to work on Cultural Precinct design

Dustin's business case estimated it would cost an additional $33.5m for the project, which included $20.4m to build a new museum, $9.4m to transform Story Pl into a plaza and $3.3m to upgrade Tongariro St, including $6m in contingency costs.

Locating a new administration building on Tongariro Domain was the best option because it carried the lowest financial cost for council and would add to the vibrancy and viability of the new civic heart of Taupō, Dustin said in his presentation.

Funding from the government's Provincial Growth Fund would likely subsidise the museum-build cost, but not the Story Pl upgrade, Dustin said.

The second option for a new council building was at Tuwharetoa St, on the council-owned carpark behind Burger King.

This would cost $19m over 20 years and would include two underground parking levels with for 55 cars, so Taupō's free parking supply was not reduced.

Rebuilding at the council's previous Lake Tce location would cost $12.4m.

The fourth option, leasing a new, custom-built building from a private party, would be the most expensive option, at $19.4m over 20 years, Dustin said.

The leasing cost estimate assumed a developer would seek an 8 per cent return per year on the likely $21.8m investment needed to build a suitable building.

This would mean a lease cost to council of between $1.7m and $2m per year, Dustin said.

'The valuers are skeptical, [developers] would look for [only] a 6 per cent return,' he said.

'With the long-term lease, the upside is flexibility. The key risk that exists, however, is the cost of the lease. If there's a 20-year lease, there could be a rent review halfway through. That's inherently unpredictable - you can't really model it - but it sits there as a risk.'

Dustin said every option, including the status quo, had risks and costs.

The status quo had council staff dispersed across six locations in Taupō CBD.

'This is [currently] causing productivity and dislocation issues, as well as imposing lease costs on ratepayers,' he said.

'There are multiple reception areas, too few meeting rooms in some locations, too many meeting rooms in others, and duplicated storage areas, WCs and other service spaces,' he said.

Inefficiencies to the council were calculated at $81,000 per year in extra IT and cleaning costs and $11,000 per year in inefficient space utilisation.

'Staff are now spending more time travelling between buildings for meetings and co-working, with productivity studies showing a cost of 2-2.5 FTEs ($254,000) in lost time due to travel over the 178 staff affected,' he said.

Looking at the concept designs for Tuwharetoa St and Tongariro Domain building options, councillor John Boddy questioned the sense of including space for a privately-run cafe in each.

Dustin said leasing out the cafe space actually made the build cheaper for the council.

'Rather than building extra meeting rooms, with all that cost, council staff can have small meetings in the cafe.

'We would then charge the cafe operator ground rent [$70,000 pa] to run that. It's one of the mechanisms we're using to keep down the capital building costs.'

Cr Boddy asked whether the Reserves Act would permit the council to lease a cafe on the domain.

The council's legal adviser, Ella Howie, said the legislation allowed it.

'Council can have a cafe on the recreation area of the reserve if it supports the public use of and enjoyment of the reserve,' she said.

Cr Anna Park compared it to renting out the North Domain to Gypsy fairs and carnivals, as it does currently.

Dustin said the Reserve Act restricted future uses of Tongariro Domain buildings, though.

'My understanding is, from legal, it cannot be sold and cannot be leased commercially as a commercial structure.'

The council's finance manager Neil Ward said council staff were analysing each option's effect on council finances.

'Based on the initial work we've done, all options can be accommodated within the financial strategy,' he said.

Deputy mayor Rosie Harvey said councillors would ask Dustin further questions about the business case over the next week, in preparation for the next meeting on Monday, November 11.

At this meeting, councillors will decide which of the four options to put forward as an amendment to the council's long-term plan, and put forward for public consultation.

Public consultation and hearings on the proposal will take place in April and May. In June, the council will vote on the LTP amendment, subject to modifications following consultation and input from Audit NZ.

Next meeting: Monday February 11, Suncourt Hotel, 14 Northcroft St, 1pm.