Christchurch City Council paid more than expected for new Central Library to speed up the process
Christchurch Mayor Lianne Dalziel says the city council paid more than expected on the new Central Library site to get construction started quickly.
The Government had agreed to put up to $19.63 million towards the library, but its net contribution has been just $7.11m.
In a June 2013 agreement, the Government and the Christchurch City Council agreed to share the costs of the library, with the council paying the bulk of the $89.4m project.
According to information released by the Department of the Prime Minister and Cabinet, the $19.63m committed by the Government to purchase the land "included broad provisions for demolition, land clearance and remediation".
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But the land cost less than expected and Government did not pay to decontaminate it because the council, as project lead, was expected to pick up that tab, Greater Christchurch Recovery Minister Gerry Brownlee said.
The council also ended up reimbursing the Government $5.5m in a historic "land swap" deemed "fair" by Dalziel.
The Government purchased the land for $10.91m and spent $1.7m on "acquisition costs such as demolition and land clearance" – totalling $12.61m.
Brownlee said it was not fair to say the Government had failed to deliver its share, as the cost of purchasing and clearing the land was less than budgeted.
"The Crown contribution for the central library, as laid out in the cost-sharing agreement, was for the land."
The council's costs had increased since signing the agreement.
Soon after signing the agreement, the council voluntarily upped its original budgeted contribution from $60m to $75m, bringing the total project budget to $104.4m at that time.
As of 2017, the council's budgeted contribution is $85.23m, and the total project budget is $102.34m.
The council paid $1.93m to decontaminate and backfill the site, which was not part of its original budget.
Despite the provisions for land clearance and remediation, Brownlee said the Government's contribution was for the land only.
He said remediation costs in central Christchurch were usually covered by the agency in charge of the project, in this case the council.
The Government paid remediation costs on other rebuild projects where it had taken the lead.
In May 2016, the Government transferred the land to the council, which in turn reimbursed the Government $5.5m – essentially a swap for the cheaper old library land on Gloucester St it bought off the council nearly three years earlier.
If this transaction is included, the net amount spent by the Government on the new library site was just $7.11m.
Dalziel said the council believed the payout for the old site was settled and the Government would pay for the new one, but Brownlee interpreted the situation differently.
"It's clear to me that the Minister never expected to pay money for [the old library site] and then give us land on top of that," she said.
Dalziel said she came up with the land swap deal and presented it to the council – along with the remediation costs – with the idea that paying up would allow work to start.
"Council decided it was better to get on with building the library than to quibble . . .but to me a land swap is a fair result,' she said.
Brownlee said the transaction was a "good deal for both the Christchurch City Council and the Crown".
The Government originally said it would raise an additional $10m in "philanthropic donations", but last year conceded it would not be able to do so.
In January this year, the council said it would make up the $10m shortfall through partnerships with other organisations.
Christchurch City Council: $60m
Philanthropic donations (to be raised by the Government): $10m
Christchurch City Council: $85.23m
"Partnerships" (to be organised by the council): $10m