Museum adds $2.2m in costs to council for 2025-2026
“From operating expenses, we are now in the position where we need to bring on the staff to get ready for the opening."
The looming new museum will add $2.2 million in costs to the Invercargill City Council in its 2025-2026 Annual Plan, equating to a 3.06% increase on ratepayers.
Invercargill City Council staff have indicted a 14% rate increase is required to carry out what is currently in the Long-Term Plan, while also covering rising costs that all councils are contending with.
Although Mayor Nobby Clark is pushing to get the rate rise to under 4%. It means some difficult discussions are now taking place and some difficult decisions loom at the council if Clark is to get his wish.
While outlining the council’s financial situation council CEO Michael Day highlighted the impact of Project 1225 - the museum - on the council’s financial situation.
Day said it was not a surprise that adding a new service, such as the museum, meant increased costs for the council.
The council hasn’t had the bulk of those museum costs attached since the old museum was closed in 2018.
“We had very little of our staff remain, in relation to supporting the collection. Therefore, we are putting in a brand new service in respective of your rating,” Day said.
“From operating expenses, we are now in the position where we need to bring on the staff to get ready for the opening.
“We are doing that, from the financials, as slow as we can to manage that. But also making sure the staff are trained and ready to open that facility on time.”
While the operational costs of the museum are increasing as staff come on board, potential revenue streams won’t kick in until the museum is open sometime in 2026.
The impact of having those increases in operational expenses equates to an additional 2.82% over both the 2024-2025 and 2025-2026 Annual Plans.
On top of that, there’s a capital cost increase on the council to build the new museum.
The museum project has increased the council’s borrowing by $38m through to 2024-2025, equating to an 1.48% rate increase.
A further 1.34% increase will be needed to cover the capital costs as part of the 2025-2026 Annual Plan.
That means between the additional operating expenses and capital costs, the council needs a further $2.2m - which is 3.02% on rates - for the museum in the 2025-2026 Annual Plan.
That 3.02% was already factored into the forecasted 8% rate rise for 2025-2026, as part of the Long-term Plan.
However, on the back of other rising costs, and now the talk of a potential 14% rate rise, everything financially at the council was again being highlighted.
Cr Alex Crackett asked the council CEO - Michael Day - at a recent workshop if future museum revenue streams were being modelled on the previous business offerings at the old museum, or possibly other facilities of a similar size.
Day said revenue forecasting wasn’t being modelled off the previous museum because there would be some new offerings provided in the new museum.
“The team are working through it. We’ve got a commercial manager in there that is working through all the different types of revenue streams we will be able to attract.
“But, yes, the cafe is obviously one of those components, but they are trying to think more broadly around what other streams they can actually attract,” Day said.
It will be 120million by the time it’s finished