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An Otago Museum plan to occupy and upgrade the vacant 132-year-old former post office building next door - at a cost of up to $1 million - has been approved by the Dunedin City Council.
The council's community development committee this week voted to approve the lease of a 420sq m slice of reserve land to the museum, which included the former post office building built in 1878.
The deal, subject to full council approval, would allow the museum to lease the site from the council for 33 years, at $12,000 a year, and upgrade it for conferences, functions and exhibitions.
The building was owned by the council and was previously home to the Otago Art Society, but has been vacant since the society moved to the Dunedin Railway Station about three years ago.
Museum chief executive Shimrath Paul and development and planning director Clare Wilson are overseas, and other staff were not able to comment yesterday.
However, a report by council reserves leases officer Tara Hotop, considered on Tuesday, said the museum's board saw the "iconic" former post office building as an integral part of a wider long-term redevelopment of the Museum Reserve.
The building would provide a "natural extension" to the museum and would be used for exhibitions, other revenue-generating events, meetings, functions and other community events, she said.
The museum's board was prepared to spend up to $1 million refurbishing the building, including the installation of a lift, while ensuring the work was "in sympathy" with its category two listed status.
The council was prohibited from making a profit from leasing the building, and would waive the rent for 18 months while the museum upgraded the building, she said. The building had to open to the public by January 1, 2012 as a condition of the lease.
The deal meant the empty building would be upgraded, maintained and available for public use, she said.
The museum would be responsible for maintaining the building's interior, and the council the exterior.
The deal had been developing since November 2007, when the council called for expressions of interest and later agreed the museum was the most suitable applicant.