At its meeting in Balclutha yesterday afternoon, the Clutha District Council revealed the $15 million, mainly council-funded Clutha Community Hub project would require an additional $7 million in funding.
Concern about the news was only partially offset by an earlier announcement that the Otago Community Trust would provide a $2.2 million grant towards the existing budget.
The new total cost of the complex, being built by Calder Stewart to replace the former Balclutha War Memorial Hall in Clyde St, is expected to be $22million.
This increases to $24 million when direct council-related costs such as landscaping and car parking, and third-party funded memorial gardens are included.
Clutha Mayor Bryan Cadogan said although the budget blow-out was "frustrating", it was in no way down to mismanagement by the community trust established to oversee the project.
"Despite the hub trustees’ diligent efforts, they now find the project at a critical stage that requires additional funding to complete the fit-out and completion of the project. They have rightly turned to council requesting our assistance."
Instead, Mr Cadogan blamed global inflationary effects caused by the Covid-19 pandemic.
"Areas that have come under increasing pressure are construction industry supplies and personnel, and inflation. Both of these are having an impact on [this] project."
He said the trust was seeking an additional $2.5 million from the council, which it hoped would be funding-matched by Ministry of Business, Innovation and Employment regional economic and investment unit Kanoa.
The trust would seek further grants to meet the shortfall.
The deficit took some of the shine from the Otago Community Trust’s announcement of a $2.2million grant towards the hub yesterday.
Mr Cadogan said the grant reflected the "defining" nature of the hub project for the district, and thanked the trust for its confidence in Clutha.
The council will consult ratepayers on the additional project funding as part of its annual plan process, under way now.
Options include funding through rates, or from council reserves — the council’s preferred option.
Submissions close on April 21.
