Thursday 23 February 2023
Port Otago and The Otago Regional Council (ORC) have finalised redevelopment plans for the Council’s Whare Rūnaka at the former central Dunedin Warehouse site on Maclaggan Street.
Port Otago and The Otago Regional Council (ORC) have finalised redevelopment plans for the Council’s Whare Rūnaka at the former central Dunedin Warehouse site on Maclaggan Street.
During the ORC’s first meeting for 2023 yesterday, Councillors voted on accepting Port Otago’s offer to move to construction of the Whare Rūnaka (council house) project in Maclaggan St. Port Otago is 100%-owned by the ORC.
Port Otago acquired the building in 2021 to re-purpose it as the new home for the ORC.
ORC Interim Chief Executive Pim Borren says the redevelopment will have long-term benefits for the region.
“The building is an important step together with the decisions made three years ago in increasing the investment in our regional council to ensure we’re fit for purpose and can achieve the ambitious work programme in front of us.”
“Currently our team of more than 300 staff are spread across multiple sites in the city in three different, temporary, offices which is less than ideal,” Dr Borren says.
Port Otago Chief Executive Kevin Winders says the $54.5m building redevelopment would utilise much of the infrastructure on the site to create a modern work environment which would cost considerably less than new-build options.
“We’re pleased this solution has been approved by Council. Several options were considered over the past 18 years. This option will create a modern workspace for council staff at lower cost and lower risk to the ORC and ratepayers, and will help revitalise this area of our city,” says Mr Winders.
The Whare Rūnaka was a priority in ORC’s Long-Term Plan 2021-2031, which has a commitment to relocate its Dunedin staff to a single head office site within the first three years of the plan.
Dr Borren says delivering on this commitment will not have any impact on rates that was not already anticipated in the current long term plan.
He says all parties involved worked together with mana whenua; through Aukaha, in a co-design process to weave mana whenua values and narratives within the building design.
Bringing staff together in a fit-for-purpose site that is also future proofed will be important for ORC’s ability to deliver its work programmes for Otago’s communities in an efficient and effective way, he says.
“It’ll also be a one-stop shop for our Dunedin activities and accessible to the public, partners and stakeholders who work with us.”
As part of the development Port Otago will acquire the Birch St/Kitchener St site for $7.9m; previously earmarked as the site of ORC new building from the ORC, which will help fund the $11.2m ORC fit-out of the new build to meet ORC specifications. The balance of this funding will come from the building reserve, which has been built up for this purpose.
The cost to Port Otago to redevelop the building has risen from $38m, estimated in 2021, to $45m (which is borne entirely by Port Otago), which includes recent increases in the cost and supply of construction materials costs, inflation and rising interest rates.
The cost to the ORC of leasing the new premises has risen by $339,000 to $2.59m per year.
While Port Otago pays for the core building redevelopment, ORC pays tenant-specific fit-out costs; which are later depreciated as leasehold improvements.
Dr Borren says the rental cost would have been higher, but that is offset by ORC is increasing its capital contribution from $5m to $11.2m in leasehold improvements.
ORC will be a long-term tenant at market rental, with any surplus earnings from the rental, less funding costs and tax would be available to be returned by Port Otago to the ORC by way of dividend, Mr Winders says.
“Port Otago will manage the project and take on the construction risk, allowing the ORC to continue to focus on delivering their critical work for the Otago region,” Mr Winders says.
Port Otago has considerable project management and construction expertise. The company’s property division develops three to four large sites annually and has a property portfolio of more than $600m across the country.
Mr Winders says the Whare Rūnaka building will be supported by key partners Calder Stewart, GHD and Octa.
“We have staged this so that the same team building the Port Otago Office and Museum extension can switch over to this new project, ensuring we have skilled expertise ready to go.”
The agreement with Port Otago is for a 40-year lease; initially for 20-years then two 10-year right-of-renewals. Construction is expected to be completed Christmas 2024.