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The council issued a statement last night saying a ''prominent'' public safety notice is to be attached to the hall suggesting people make their own decision on whether to use the building. The notice says regular users and others with bookings are being contacted with the information.
Queenstown Lakes District chief executive Mike Theelen said the hall was assessed as part of the council's routine seismic assessments of all its buildings.
''We have accepted advice from structural engineers that the building may have a weakness in its design relating to its unreinforced mud brick exterior cladding.''
A detailed seismic assessment would now be carried out.
This would involve removing portions of the cladding and interior wallboards to look at the internal structure and would provide a much higher level of certainty about the building's condition.
There would also be computer modelling of how the building would perform in a moderate earthquake.
Mr Theelen said staff had considered engineering and legal advice on whether the hall should be closed immediately.
They had also considered the likely inconvenience to users, including the Festival of Colour this month and Luggate community groups on a regular basis, as there was no alternative building for many of their activities in Luggate.
Once further investigations had been carried out, the council would discuss with the Luggate community the options for the long term.
Festival of Colour general manager Lindsey Schofield said the council had alerted the organisers of the festival about potential issues with the hall but it would not affect any of the scheduled performances.
''The QLDC has advised us of the situation and allowed the hall to stay open and we will be informing the performers and audience about the situation.''
Changes had been made to the festival's emergency plans for the building, she said. The Luggate Hall is being used for two festival performances, the play Every Brilliant Thing and the musical performance Dangerous Song.