Rotorua’s council has voted to finish restoring the city’s iconic museum building in spite of a steep cost rise — but aims to keep its share to its original $15.5 million and avoid what the mayor called a “black hole of spending”.

Wednesday’s decision came six years after Rotorua Museum, Te Whare Taonga o Te Arawa, closed due to earthquake risk.

The restoration was originally expected to cost $53.85m. Rotorua Lakes Council agreed to contribute $15.5m and took out external funding contracts for the other $38.35m.

After the estimated total cost of the project later rose to at least $81.4m, the council considered three options: fully restore and reopen the museum as planned, stretch the project out in stages or move the museum and find an alternative use for the Bath House building, which is more than a century old and has a category 1 historic places rating.

Public consultation on the options attracted more than 770 submissions, and elected members also heard from experts and staff in workshops.

On Wednesday the council voted to go ahead with the restoration and reopening of the museum, but only under certain conditions.

About 40 members of the public joined the meeting.

Rotorua's museum has been closed since 2016. Photo / Laura Smith.

The council’s Te Arawa partnerships deputy chief executive Gina Rangi outlined the project to date, including what submitters and funders had to say.

Of the submissions, 85 per cent wanted Option A - the full restoration with an extra $9m from the council to be funded through debt.

She said the key themes included it being an iconic building — a symbol of Rotorua.

This option was considered lower risk in a number of areas including actual costs going over budget and loss of existing funding.

Most external funders would not agree to extend the contracted timeframes, meaning staging the project, Option B, was not viable, she said.

Three per cent of submitters supported this.Twelve per cent supported Option C, to postpone restoration and find a new building for the museum.

If this option was taken, costs to date of about $9m would be written off as an operational expense. The risk for this option was assessed as extreme for most areas.

The risk of further cost escalation had been a worry for some councillors during the open-to-public workshop stage.

At a public-excluded workshop on risk, councillors were told there was a 95 per cent confidence the budget included sufficient contingency, Rangi said.

She also said if the funding gap was not fully filled by external funders, some scope of the construction contract could be ring-fenced and removed to ensure it only contracted works it could afford.

Rangi said “nice to haves” could be put off, such as cafe plans.

She said the council confirming its intention to proceed would give further potential funders confidence.

It was recommended the council note it would not be “prudent” to go beyond the $15.5m already committed.

Rotorua Lakes Council Te Arawa partnerships deputy chief executive Gina Rangi spoke to councillors on Wednesday. Photo / Laura Smith.

Councillor Robert Lee asked what the cost to ratepayers was. Organisational enablement deputy chief executive Thomas Colle said the cost of the council’s contribution equated to $45 a year per ratepayer for 20 years.

If the project did not go ahead ratepayers would still need to cover the $9m already spent, but would not get a building.Rotorua Mayor Tania Tapsell tabled what she called a “strengthened” version of what staff recommended.

The conditions included staff negotiating a construction contract and project management approach to “de-risk” the project and use a progressive approach to construction.

It also depended on existing and additional funding being confirmed for the elected members to then approve entering contracts for each stage, based on what money was available.

“The last thing I want is for this building to become a black hole of spending.”

Speaking to Local Democracy Reporting after the meeting she said this ensured the council could do its due diligence and for contracts to be negotiated before handing over money.

In the meeting, Sandra Kai Fong said the important decision could not have “come at a worse economic time”.

“What we are proposing is an extra level of scrutiny… I was uncomfortable originally with the decision to simply proceed without knowing what the project might look like.”

This enabled it to step back, check and confirm, she said.

Councillor Don Paterson said the project was the scariest thing that had come before them.

“We know there is a cost of living crisis, we know our people are suffering. This motion has made the butterflies in my stomach less bouncy.”

Councillor Conan O’Brien, however, was not persuaded risk would be mitigated. He asked for the decision to be delayed until after the election.

Councillor Fisher Wang said that would set a “dangerous precedent”.

“I would not be confident in us delaying a decision when we have heard from our community they want us to get on with it.”

His view was that projects will always have risk, but he believed the level of risk had been reduced and was confident it was “extremely low”.

Other councillor comments included Gregg Brown saying the motion brought more “discipline” to the process and Rawiri Waru opposing “leaving things for the next generation to fix up”.

Lee said the building had a “wow” factor.

“The worst case scenario is that it will take longer to get the museum done… but we are going to make a start and carefully watch as the project unfolds.”

He was comfortable there would be “no blowout”.

Councillors O’Brien and Wang voted against the motion. Wang made it clear following the vote he did not support Tapsell’s wording but agreed the project should progress.

Public Interest Journalism funded through NZ On Air.