In a report to this Thursday’s full council meeting, the council’s owner interface manager, Geoff Mayman, said at present there was "insufficient funding to complete" the stage 1 arterial project, which is due to be open and operational by Christmas Eve, and fully completed by March 31 next year.
It is the second request for more money in less than 12 months from the Alliance for the project, born from "shovel-ready" government funding in 2020. The initial 10-year-plan budget was $49.5 million.
That jumped to $88.23m in October 2021 and then to $108.84m last April following a public-excluded council meeting.
Mr Mayman’s report said the budget was subsequently escalated to $110.37m through the "annual process".
Under the funding agreements with Crown Infrastructure Partners (CIP), the total maximum amount payable by CIP was $50m.
Each month the council must confirm it had the funds to complete the project. CIP may suspend funding if the council, in CIP’s "reasonable opinion", was unable to fund the estimated costs.
CIP could also terminate funding if the council failed to contribute to co-funding, and/or abandoned the project, and it may recover funding already paid if the council did abandon it.
Council property and infrastructure general manager Tony Avery said staff were recommending "another significant increase for approval".
"I acknowledge how challenging that is for councillors in the current climate of uncertainty and funding constraints."
Should councillors agree, the revised budget would be $128.02m, though the estimated net long-term plan cost to the council would be $79.14m.
A recent report from the Alliance to support the funding bump attributed the increased cost to insufficient contingencies to cover complexities and construction methodologies needed to deliver the project; risks that materialised; changes in the specification for temporary traffic management; and the levels of cost escalation experienced.
Cost-saving options had been constantly reviewed, that report said, and some implemented before 2023.
That included removing a proposed pedestrian overpass from Ballarat St, and changing footpaths from concrete to asphalt.
However, due to the stage in the project where most scope was in construction, "significant cost-saving options are very limited".
Those being investigated included the removal of "schist decorative wall classing" and "decorative fascia panels from Glebe wall", the removal of a stormwater pipe from under Stanley St, and the use of locally sourced soil, instead of imported soil — that had been agreed, subject to soil testing.
But Mr Mayman noted none of the options would reduce the completion cost to within the council’s existing budget.
If approved by councillors, about 80% of the additional borrowing would be serviced by the Wakatipu roading rate, he said.
The balance would come via the Wakatipu stormwater rate and the Queenstown water supply and wastewater rates.
Should the council decline to approve the budget, Mr Mayman’s report said it could result in the Melbourne-Henry St link remaining unfinished and unusable, and Beetham, Ballarat and Malaghan Sts all incomplete and closed. It could be possible for temporary pedestrian links to be established on those streets.
Risks associated with not further increasing the budget included health and safety, and "reputational harm from having an uncompleted roading project in the heart of town".
