Katikati Heritage Museum is closing its doors from today due to a lack of cash flow meaning it can no longer sustain its daily operating costs.

Katikati Heritage Museum trustees have informed Western Bay of Plenty District Council they are now in discussions with Bank of New Zealand and legal representatives regarding the winding up of the trust.

Katikati Heritage Mueseum is closing its doors today.

At this point the main concern for Council is to ensure that the Museum collection is kept intact and safe for the future of the community.

The closure comes just as Western Bay of Plenty District councillors decide whether to give the museum a $65,000 grant in it 2014/2014 draft annual plan.

Katikati Heritage Museum manager Paula Gaelic made her last plea for council to gift the money in her annual plan submission on Monday, saying the facility needed annual council funding to survive.

In statement today, council says it has decided to secure the entire collection from the trust, so the collection can be put in secure storage until such time as the community decides where it should reside.

Western Bay Mayor Ross Paterson says the council regards the collection as precious to the community and to the legacy of those who have invested so much in the museum in the past.

'I have been a staunch supporter of the museum and I continue to see this collection as an important cultural and historical asset to use within the wider town centre development that we will be undertaking over the next few years,” says Ross.

While the museum has been challenged financially to get on its feet for the last two years, council has gone to unprecedented lengths to keep it operating, says Ross.

Last year, in its capacity as guarantor, council allowed the museum to draw down $15,000 of the $25,000 it had already paid to the BNZ, and set up a future facility of $30,000 for the payment of interest and principal on the first mortgage.

It also supported the museum with a grant of $10,000 from the Katikati Community Board and a direct grant of $3000 from the district.

The present financial situation has left the trustees with no recourse but to put the museum land and buildings on the market so the trust can repay its mortgage to the BNZ.

KMHT trustee Mike Williams says the trust has reached an agreement with the council that entails the council acquiring the museum collection to hold it in storage until the community decides where it could be housed in the future.

By passing over the collection to the council the trust has been able to repay all creditors owed by the museum and ensure the collection is retained in public ownership, on behalf of the community.

This will allow time for the trust, council and community to decide what form and location the future of the museum and collection will take.

'We have really made a good go of it and now there is a significant collection that reflects the rich history of the Western Bay,” says Mike.

'It is imperative to look forward and work together with the community. This has been a big learning curve and will stand us in good stead for the future.”

The Trust is now in the process of putting the museum's land and buildings on the market so it can repay the mortgage held by the BNZ. Any surplus money will be paid to the second mortgagee – the Merriman family, who were the former owners of the museum.

Mike says this decision has hit the trustees hard, particularly because of its impact on the museum staff, who have lost their jobs and on the many volunteers who have devoted so much to being part of the facility.

'These volunteers have put a huge effort into this operation – it has not only been the work they have loved doing, but it has become a social hub for them – and all this will be lost with the closure.

'The trust sincerely thanks everyone for their huge support and effort and look forward to working with everyone on the options for the future.”

Before the seriousness of the Museum's financial situation came to a head this week, council proposed in this year's draft annual plan to rate-fund $65,000 of principal interest costs to enable the museum to continue operating for the 2014/2015 financial year.

The draft Annual Plan process is a statutory process and final deliberations are yet to begin.

Council's statement today says when it meets to deliberate on the draft annual plan, it will be reviewing this proposal in light of the museum's closure.