Councillors approved a $3.5million loan to the Observatory Village Trust on Wednesday, and trustee Ian Hurst said the start of stage 2 at Observatory Village Lifecare would be "seamless" after the retirement village was opened this week.
In 2015, the council granted the trust a loan of $8 million to build the $22 million stage 1 of Observatory Village Lifecare on Observatory Hill. Construction began in February last year and on Tuesday, Five Forks Rural Women, Altrusa, the Oamaru Lions Club, and individual volunteers helped move 36 residents from the now closed Rendell on Reed rest-home to the new care facility.
Now "pegs in the ground" on Monday will stake out the retirement village’s new footprint as it begins to add 20 new care beds of the 40 care beds planned for Stage 2. Stage 1 — 41 care beds, 12 apartments, and 18 villas under construction — was full from the start.
Further expansion at the 2ha site would include "another 20 beds when demand requires" and an additional eight to 10 apartments, which the trust would fund from income generated from stage 1, Mr Hurst said.
The trust had a "social responsibility" to meet the needs of its community and the 20 care beds the $3.5 million council loan would fund were a priority, he said.Council chief financial officer Paul Hope said the loan was a "response to an identified need" in the community.
The $3.5 million loan, like the first loan now construction was complete, would carry an interest rate based on the one-year swap rate plus a 1.5% margin.
And while not referenced directly in the council resolution, the final loan document would stipulate the $3.5 million would be spent on the "care bed aspect of the development rather than more apartments", Mr Hope said.
The loan did not receive unanimous support from councillors on Wednesday. Cr Hugh Perkins was the only councillor to vote against the loan. He said he had "great difficulty" with the "council assisting a business in competition with our own ratepayers".
"This is and always was real estate speculation," Cr Perkins said.
"The villas and apartments drive profitability. The reality is the care bed business is very tough.
"And in due course, one of our small care bed operations will go to the wall and we will be partly responsible."
Cr Peter Garvan said he did not want residents to have to be "sending family out of the district" if they required rest-home beds.
Observatory Village Lifecare would be one of the highest ratepayers in the district and employ "a lot of people", he said.
Deputy mayor Melanie Tavendale said the loan allowed the trust to "invest in, and future-proof, the district", and the trust was the best placed organisation to fill the community’s need for care beds. Waitaki Mayor Gary Kircher declared a conflict of interest as the council-appointed trustee and was not present for the debate or the vote and Cr Guy Percival was overseas and sent apologies.
In February, the council decided to fund the planning for stage 2 through a $93,000 donation to the trust from a bequest and an interest-free loan of up to $157,000.
