Complaint laid over Don St cost blowing out

The auditor-general has been asked to investigate the Invercargill City Council's handling of its Don St development.

Invercargill Ratepayer's Advocacy Group spokesman Nobby Clark said he had lodged a complaint with the auditor-general calling for an investigation into the project, which has had a $4.5million budget blowout.

An spokesman for the auditor-general confirmed the complaint had been received.

The council has so far spent $18.2million on the development, including $1.8million to buy the land - the $1.4million purchase in 2015 of Todd's Auction House and an additional $460,000 land purchase.

Last year, it was revealed construction costs had ballooned by $4.5million from the budgeted $11.9million, to $16.4million.

Invercargill City Council chief executive Clare Hadley showed in a report to the council last December that the city had paid $1.4million for Todd's Auction House which was ''funded from reserves''.

The development, which opened last October, has a cafe and other businesses.

Soon after Mrs Hadley took up her post in March 2018, it became apparent the project's costs had mushroomed and councillors had not been appraised of the increased costs in reports in 2015, 2016 and 2017.

According to the minutes of a January 29 meeting, the council approved ''the completion costs of $2.2million for the final claim from the building contractor''.

Mr Clark sbelieved the other $2.3million of the $4.5million blowout was indirectly financed by a 2017 mortgage taken out against properties on lower Esk St that the council had bought in 2011.

Interim director of finance Dave Foster yesterday confirmed ''the loan which was drawn down against the Lower Esk St properties was drawn for the purposes of contributing funding to the Don St development, and has been used for such''.

He said that the $4.5 million blowout was the amount ''to bring the project to completion''.

He said the blowout ''will be funded from an increase in net debt, which is total borrowings, less investments''.

So far, the council had yet to spend the balance of the blowout as there was ''still approximately $1.2million to $2.3million of work to be completed''.

In December, the council also approved an external review of the project be carried out.

On Tuesday, Mr Foster said the review had been commissioned, but ''we cannot yet identify a date for completion''.

giordano.stolley@odt.co.nz

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