THE risk of not providing a bank loan and further investing in Invercargill’s CBD development was greater than doing so, a council manager says.
The Invercargill City Council (ICC) held a breakfast last week for retailers and residents to discuss further investment in the development and streetscape projects.
It had already invested $46 million to support the first three stages of the project, but now the council was proposing to further invest up to $7.5 million in the development and provide a $22.5 million short-term loan for the project in light of a shortage of funding.
ICC group finance and assurance manager Michael Day said another option was to provide a $10.7 million loan to Invercargill Central Limited, the company behind the $165 million development, as it was the minimum required by the current shareholder agreement.
H&J Smith chief executive John Green supported the investment but asked Mr Day if ICC considered other options, including pursuing a third party for the investment or even selling part of council’s shares.
Mr Day said ICC considered all options and he felt confident this was the best proposal as it was almost like a bank loan replacement and would not impact rates.
“There is funding capacity available for that period. If it goes outside those [estimated] three years, then it would be a risk.”
He said ICC gave this security for the development. It “lowered the risk” and guaranteed the project completion as planned.
ICC also proposed investing an extra $13.3 million in its streetscapes upgrades aiming to create more vibrancy and connection between Don, Kelvin and Esk Sts.
Neighbouring Retail Group chairman and Shoe Clinic owner Ben Fokkens was also at the event and believed there was no other option than to invest the money.
“It is better doing something properly than cutting corners because this is something that we will live with for a long time to come… An extra couple of millions spent now will be worth it in the long-term.”
Consultations about the proposal will close on February 11.