Bank caps CBD lending as potential Invercargill City Council investment upped to $25m

Monday, 12 August 2019

Councillors at a Invercargill City Council meeting discussing the potential $30 million investment into the HWCP Management Ltd's CBD block development.

The Invercargill City Council is being asked to invest an extra $5 million into the city block development after the bank limited its lending.

HWCP Management Ltd, which is the company behind the proposed inner-city block development, initially approached ICC asking if it would invest $20m in stage one, two, and three of the project.

Mike Cullen, left, of Urbacity, and Stuart Niven of Stafford Group addressing Invercargill City Councillors at a meeting on Monday night.

The initial proposal was based on five investors of $20m each which would make up $100m of the build, with the remaining $80m of the total $180m cost to come from bank funding.

Speaking at a council meeting on Monday night ICC executive officer Andrew Cameron said that changed because the bank did not agree to the $80m figure.

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'The reality is the bank funding will not go to $80m,' he said.

'The bank for a number of reasons, predominantly because it's in Invercargill, have set some parameters around the amount they will invest and have capped that at around $50m.

'A consequence of that is there might be changes in design to reduce the overall build cost, to bring it to the $150m-$160m that is now available to complete the project.

'Council has been asked to fill some of that gap from the bank, along with the other equity investors.'

Cameron told councillors he would discuss the situation further in public excluded given the commercial sensitivities surrounding the other investors.

Councillor Darren Ludlow asked Cameron for clarification on the statement that the bank had limited its lending because the project was in Invercargill.

'There is a premium which they have put on which applies to Invercargill,' Cameron said.

While the $25m figure was $5m extra than HWCP Management Ltd initially requested, it still remained within the scope of what Council has consulted with the public on.

The consultation was based on the Council potentially investing up to $30m in the project.

It included the $20m initially requested, plus the potential to invest a further $5 million if there was to be a budget overrun.

Given the request has been bumped up to $25m, that $5m would already be soaked up.

There would also be a further $5m contingency fund for any design enhancements which Council might seek.

Also at Monday night's meeting, Mike Cullen of Urbacity and Stuart Niven of Stafford Group delivered a presentation in relation to their thoughts of the project.

The Council enlisted the pair to assess HWCP Management Ltd's design and work through how it would fit in with the rest of the inner city.

Cullen and Niven met with HWCP Management Ltd representatives on July 24 and 25 to work through their thoughts, before presenting recommendations at Monday's meetings.

Cullen and Niven both said the goal was to have something that did not feel like it was one big complex and also ensure it did not feel inward-facing.

The design changes they have recommended included introducing a direct lane from Esk St and Tay St for pedestrians, similar to what was already in place with Cambridge Place Arcade.

Cullen said HWCP Management Ltd was receptive to the idea and he did not believe it would add to the overall cost of the build.

They also suggested some changes to the Esk and Tay Streets facades to break up the look that the complex was one big building.

In their conclusion they said; 'The response [from HWCP] does not yet deliver the wider urban relationships that benefit the city, but the changes required are in the design detail, and easy to do.'

The meeting was adjourned on Monday night and will return on Tuesday at 3pm when councillors would finally vote on if it would invest up to $30m in the project.