Dunedin City Council has confirmed nine years of annual funding of $45,000 to Sunnyvale Sports Centre.
The facility is managed by Green Island Combined Sports Bodies Inc.
Board member John Moyle said the decision could not have come at a better time, as steep insurance premiums had crippled the centre’s maintenance budget.
Built in the 1970s, the community-owned venue contains expanded polystyrene (EPS) panels in some areas.
Once deemed state-of-the-art, they are now viewed as a fire risk.
That has driven insurers to hike premiums from about $24,000 to roughly $64,000 a year.
"We were all going well until the insurance killed us.
"So now we really need to try to replace it, because that is just eating all of our income."
The venue has been successful in establishing varied funding streams, including partnerships with sporting clubs and a lease to Village Green Cafe & Bar.
Earlier, yearly support from the council had ended and rising insurance costs were draining funds set aside for maintenance.
Replacing the panelling alone could cost up to $750,000, but the new long-term pledge may help the board leverage council support into a bolder project worth as much as $1.5 million that could ease Dunedin’s shortage of courts.
"That is why we came to the council and said, ‘look, you know, is there a place for us to have six volleyball courts or two basketball courts’.
"But we don’t know, that is all completely to be discussed."
The organisation may also look at other improvements, such as replacing showers and toilets that are nearing the end of their lifespans.
A priority will be cutting insurance costs to a more manageable level.
"If it was a brand new building, we would be running in the black."
The yearly grant, paid throughout the council’s nine-year plan, depends on a service-level agreement being finalised.
The agreement may dictate exactly how the grant can be spent.
"The council may put stipulations on it — they may say it is only for the project, not for running costs."
A prior arrangement let the board use council funds as collateral for a loan, but new rules mean the city no longer guarantees community borrowing.
However the money was ultimately used, the decision would be a turning point for the venue, he said.
He thanked the council for its support.
"Because it does give you the impetus to move forward," Mr Moyle said.
