Each Friday we will add responses to questions we have received over the previous week.
If you have a question submit it at facebook/cityblockconsultation, email policy@icc.govt.nz or phone us on 03 211 1777
What projects currently within the long term play may be delayed or not commenced and what impact assessment has been done on these in terms of community outcomes?
The projects which are currently known and included in the LTP are not directly impacted by this proposed investment. Any impacts on timing and commencement of those projects are from other factors. There have been a number of changes between our plans and actuals. We have also identified that there are a number of projects that have a high level of profile in the community that were not fully incorporated in the existing Long-term Plan. Also it is apparent that the reality of timing of a number of the capital works does not fit with a practical/ workable delivery. So some of the projects are delayed, but not due to the implications of this project.
What impact will proposed additional $16million investment in the CBD have on particularly the arts and culture projects in the LTP?
As detailed in the previous question, projects, including arts and culture projects are not directly impacted by the proposed investment.
Council is working on a strategic programme on how to progress a range of projects, including arts and culture projects. This work will feed into planning for the Long-term Plan.
What would be the impact on future projects not currently in the Long-term Plan?
Funding the additional investment does not breach Council’s financial strategy and would not cause it to exceed its debt ceiling, which is in place to help Council ensure it manages debt responsibly. However, the increased borrowings do get close to our debt maxima. Our Long-term Plan had increases on average of 3.1%. However as a result of Covid-19, Council has determined a rates increase of 2%. With the debt level rising, at some point Council will need to return to rates in line with the existing plan, around 3%, in order to deliver future as yet unknown capital works. Future projects may need to be timed differently in order to appropriately manage debt. This may result in a delay to other projects or projects not commencing. We do not know what projects Council may consider undertaking in the future, but the level of debt may limit the ability of Council to undertake these projects. This would depend on a range of variables, like size of the project, timing, interest rates and a range of other factors, which like the projects themselves, are unknown.
In considering the impact of this project we are maintaining a list of potential capital works for the next Long-term Plan and including these in our analysis. This does not presuppose that those project will be included but simply to determine that the option for inclusion or exclusion is not an unintended consequence of this project investment.
When did ICHL purchase $25M in Shares in Invercargill Central Limited? At present ICL only shows 2 Shareholders, neither of which are ICHL.
In the last month Council purchased more shares in ICHL, and ICHL has purchased shares in ICL.
If ICC fail to obtain Government funding for shovel ready projects, and invest the additional $16M into Stages 1-3, does this mean that ICC will invest further in stage 5 if there is no private investment of Government funding?
Irrespective of whether Council receives Shovel Ready funding, any spend required for Stage 5 which has not been consulted on as part of the 2018-2028 LTP would be separately consulted on. Specific projects consulted on as part of the Long-term planning process where there are options to include these in Stage 5 are the Arts and Creativity Invercargill project and Regional Museum Storage. There is no intention through this consultation document to enable further funding into projects not already consulted on.
Is this consultation being carried out using the special consultation process?
No, the consultation was assessed not to require a special consultation process.
Why could this consultation not be delayed until the outcomes of the Government shovel ready projects funding was known?
No firm indication has been received from the managers of the Shovel Ready Fund as to when a decision would be made on funding. Also there is some uncertainty of what entity would be the recipient of Shovel ready funding for this project. If it is, then Council would be investing it in this project and in doing so would consult. This impacts on timing constraints.
Demolition has already commenced on the City Block. The total amount of funding for Stage 1, 2 and 3 is required to be in place for contracts to be struck with building contractors. Work must commence in July for delivery and contractual milestones to be met. Funding from other funders has a number of requirements attached to it. This includes the total funding commitments being finalised prior to work commencing and meeting the original delivery milestones. If these milestones are not met, the Council has been advised in writing that the funding is at risk of being lost.
This requires Council to determine whether it wishes to invest the extra money required before the end of June. At this point, if the Council determines to invest additional funding, the project will commence. If they determine not to invest, the developers have indicated that the project will not be able to proceed.
Why is there not an option of no investment?
The reason there is no option to select no investment, is because this consultation does not relate to the initial $25million investment in City Block which was made after consultation in 2019. It asks you whether Council should repurpose the $5million initially allowed for design changes, as well as invest an additional investment of $16million, for a total investment of $46 million.
However, when you make your submission you can choose “No option selected” and share your comments in the box below.
Is this project something private or public?
This project has both public and private investment. Confirmed public funders include the City Council (Up to $30million); Central Government through the Provincial Growth Fund ($19.5m) and $20million from Community Trust South. There are two private sector investors who have invested a total of $29m.
When it is built who will be the owner?
Invercargill Central Limited (ICL) will be the owner. Council’s holding company, Invercargill Holding Co., as well as the other investors own shares in ICL.
Will it generate profits for the city beyond the taxes that can be generated locally or will the profits belong to private investors only?
The project is forecast to make profit, although not at a level normally required to attract private investment. The operation is not forecast to make a profit for the first ten years. All shareholders will share the profits at a level dependent on the size of their shareholding.
I know you are going to create jobs during construction and then, is that justification enough to spend our tax dollars?
Council is weighing up many factors in making this decision, including the impact of the project on jobs. The submission process is the opportunity for the public to share their views to help them decide.
Can I submit if I would be working on the development or otherwise benefiting from the project?
Yes you can submit. One of the potential benefits of this project is the creation of employment and economic development opportunities. For transparency we ask that you declare your interest in your submission.
After the place is up and running, whose responsibility will it be to maintain and keep the appearance up to a high standard?
The responsibility for the upkeep of City Block will be Invercargill Central Ltd.
Is there still a contingency, and can Council assure the project won’t be held up?
The project still has its own contingency. The timeframes have not been significantly impacted by COVID-19. Council is consulting now in order to enable developers to know whether Council will commit further funding. Depending on the decision made, this will enable the project to commence on time.
Can there be covered areas, like a playground, guest parking or a bus loading/unloading area?
The design takes into consideration the weather experienced in Invercargill. The car parking is undercover, and Council has yet to finalise its streetscape works, which will include the location of any bus stops. At this point there are no plans for a playground.
Can there be a reduction in the scope of stage 1 and could additional funding or developers be found?
Changes to the project are not being explored at this stage. Additional Government funding has been sought from the Shovel Ready Fund, but the outcome of this is not yet known at this time. Other funders and tenants have committed to the project on the current design and scale.
Can funding be secured from the Governments Provincial Growth Fund?
$19.5 million has been secured from the Provincial Growth Fund. Additional Government funding has been sought from the Shovel ready Fund, but the outcome of this is not yet known at this time.
Can there be any assurance that this will be Council’s final funding?
Any shortfall in development costs will need to be met by the Shareholders in ICL, including ICHL, the Council’s holding company. While nothing is ever certain there is nothing to suggest that further funding will be required at this stage.
Can funding be secured from the Governments Provincial Growth Fund?
$19.5 million has been secured from the Provincial Growth Fund. Additional Government funding has been sought from the Shovel ready Fund, but the outcome of this is not yet known at this time.
Could funding if not used, be used instead for green space?
If the project does not go ahead for any reason, Council would consult on changes to the plan.
Can the plans be scaled back and the funds used instead for a Museum/Art Gallery?
Other funders and tenants have committed to the project on the current design and scale. The funding Council has allocated to the City Block project cannot be allocated to another project. The developer has no plans to scale the project back at this stage. The plans for a Museum and Art Gallery are not contingent on the City Block Project.
Why can’t there be multiple smaller investors rather than 2 large ones?
A range of funding options has been explored. Funding has been secured from two private investors, a community funder and Central Government as well as Local Government. No further funding
sources have been secured.
Why did an investor withdraw funding, after Council had committed to the project?
There was no legally binding obligation on initial investors to invest further funds in the project. One of the private sector investors elected to leave his funds invested at that time in the project but not to invest further.
Can there be an independent reviewer of the project, to allow for greater community representation?
Other funders and tenants have committed to the project on the current design and scale. There are two independent board member representatives on Invercargill Central Limited.
Could the money be better spent on a green space instead?
Other funders and tenants have committed to the project on the current design and scale. If the project does not go ahead for any reason, Council would consult on changes to the plan.
Can there be flexibility for a staged development? Perhaps a staged plan with smaller retail and inner city apartments?
The development is staged. Stages 1-3 are integrated and required to be commenced together. Stages 4, 5 and 6 can be commenced separately.
Could there be asset sales, to offset the cost to ratepayers?
Additional funding has been allocated from the Provincial Growth Fund. Applications have also been made to the Government's Shovel Ready fund, the outcome of this is not known at this stage.
Can funding be increased through borrowing?
A minimum amount of equity is required in order to secure the loan funding required to complete the project. Changes to interest rates have resulted in a lower cost of borrowing. Our initial assessment was that funding of $900,000 from rates would allow the interest ($750,000) to be funded and also provide for some loan repayment. Overtime returns from the investment would enable more money for the repayment of debt. As a result, reductions in the cost of borrowing falling, means the higher level of investment ($46 million) is forecast to have an interest cost of $690,000 per annum.
Can bonds be used for funding?
Bonds are a form of debt and can be expensive. Council’s cost of borrowing through its Local Government borrowing facility mean it would be uneconomic.
Have any more investors been identified?
Funding has been secured from two private investors, a community funder and Central Government as well as Local Government. No further funding sources have been secured.
Can Council access the Provincial Growth Fund?
The developer has secured $19.5million in funding from the Provincial Growth Fund. Council has made a further application for funding from the Shovel Ready Projects Fund. The outcome of this application is not known at this stage.
Could there be more apartments in the CBD, or a farmers market?
Other funders and tenants have committed to the project on the current design and scale.
Can rates be kept at no more than a 2.5% increase?
Lower interest means that the cost of borrowing is lower than expected. As a result Council believes that no further rates increase is required to fund the additional proposed $16million investment. A 2% rates increase is planned for 2020/2021
Why did an investor pull out?
One of the private sector investors chose to leave his additional $4million invested in the project but not to invest further.
Can the plans be scaled down? How do Council expect to rent out shops with the downturn of the
economy?
Other funders and tenants have committed to the project on the current design and scale. The developer is aware of the current situation and taking steps to mitigate any impact that it may have on the project.
Can the build be scaled down and done in stages?
Other funders and tenants have committed to the project on the current design and scale. While the development can be “staged” there are certain requirements that need to be satisfied to enable other stages to progress and/or tenants to take up their leases.
Who will pay for future stages?
Those stages do not form part of this consultation. Currently stages 4 and 6 will be completed by third parties. A final solution for stage 5 is to be determined.
Could there be free parking to encourage shoppers?
Parking will be determined by the developer.
Could SDC or rural ratepayers donate money to help?
A range of funding options have been considered. It has been assessed as unlikely that ratepayers from the wider region would contribute to this project. Any mechanism to enable this to happen would be complex and would be unfeasible within the timeframe of the project.
Could Esk Street be car free?
Council is considering the streetscape. A consultant has been engaged and has commenced work on urban design options, which will include consideration of cars within the streetscape.
Can assets be sold to help fund the City Block, instead of using rates?
The sale of assets would require a delay in the project. Asset sales would be used to pay down debt related to those assets.
