Tauranga Art Gallery: Who should be paying the costs?

At last the tender for the Indoor Sport and Exhibition Centre (ISEC) has been confirmed and awarded to Hawkins Construction.
Tender price, negotiated with Hawkins is $26,743,950. There were a number of alterations to the original specifications and some points of clarification that have been the subject of negotiations over the past few days. Access roading around the perimeter of Baypark and additional car parking adds $2.14m, professional fees $4.6m, consents $550,000 and fitout and contingency $5.01m. The total of $39,043,950 neatly fits the budget estimate of $41m of which $1.8m is in tax credits from TECT, who made a contribution of $7.8m of which $6m is cash. The big unknown in this project is the foundation work or ‘getting out of the ground'. Extensive pilot drilling to ascertain the likely ground conditions has been done but until excavations have been completed it won't be 100 per cent certain. Lotteries contributed $300,000 to upgrade the sprung floor which was part of the anticipated budget. Something like 65 per cent of the actual work will be local and elected members were adamant that this be an absolute priority wherever possible. Completion date is April 1, 2011 with the project starting now.

Costly consultation
A replacement for Mount Action Centre (MAC), a leased facility, the ISEC will be a major addition to the Bay of Plenty amenities funded by city ratepayers, TECT and other contributors. User fees will contribute about 17 per cent of operating costs with the balance coming from ratepayers. It's been a tortuous process and shows how with every man and his dog having six pennyworth, the costs skyrocket. This consultative process takes time (time equals money) which makes up part of the $4.6m professional fees and the Resource Management Act sucks $550,000 in consent fees. As Mayor Stuart Crosby has said transparency and consultation can add up to 30 per cent of any public project local government undertakes. Operational expenses including loan repayments will add about $65 to a household's rates when it's up and running.

Art talk
The long postponed (overdue) meeting with the Tauranga Art Gallery people finally happened last week, just after the departure of the director to pursue other challenges. Elected members had requested a meeting with a view to reducing the art gallery ratepayer funded subsidy/grant. Council seeks a contribution from them to its across the board attempts to reduce the rates burden. The art gallery staff say they require about $1 million to run, of which ratepayers chip in $800,000 or so. It does seem a lot of money for what's involved. Apparently about 60 per cent goes on salaries. The art gallery staff have volunteered to forgo the inflation indexed part of the contract which will peg ratepayers' contribution to this year's level. They also tabled a proposal to look at amalgamation of arts, culture and heritage under one umbrella.

Paying for the privilege
The art gallery staff's relationship with council isn't on the front foot to put it mildly and I think more changes are required. The statement of intent for 2009-2012 is quite definite and there are deficiencies in my opinion in their obligations to the council. I note for example in 2.2.4 'to ensure there are no surprises for TCC”. The council was alerted to the director's departure by SunLive. That rocked our socks off. 3.6 refers to revenue generation. They still strenuously resist admission charges (not required in the contract) but are required to 'encourage visitors to make a donation when they visit the gallery”. This is a subjective matter, but the present 'encouragement” is at the low end of the scale compared to say the 'encouragement” at the Auckland Museum. Tauranga Art Gallery staff say that paying deters some people from coming in. Wouldn't it be good if those ratepayers who involuntarily contribute, but don't use the gallery, had the same discretion? I mean all that is at stake here is who is going to pay the costs – the user or the ratepayers. And it's only a contribution at that.
Ratepayers make up the bulk of the funding like they do at all council amenities. At full council we discussed the possibility of increasing revenue to the library from user charges of 10 per cent to 20 per cent over five years. The intention is to have an element of user fees in the adult recreational reading section, top titles and DVDs more actively marketed. Libraries represent 11 per cent of your rates and if the level of service is to remain, more money has to come from someone. So that's either a user pays/ratepayer mix or solely ratepayers. The proposal is going out to public consultation.

A working holiday
Rick Curach jumped the gun and raised the matter of requiring the staff to chop either $2.5m or $5m out of the yet to be presented draft (first cut) budget. Elected members get the first draft for their perusal over the Christmas break and that's when it's time to absorb the figures, research options and come up with questions and solutions. A few years ago David Stewart and I worked through the ‘black hole' budget. It took a long time and we were able to get into minute detail and come up with questions, answers and arrive at a workable compromise reduced rate requirement. Rick is still intending to bring forward a notice of motion to council on December 16, despite having a lengthy and detailed explanation on the process from staff. CEO Stephen Town told Rick and council that the council 'was pretty bloody lean”. Compared to other councils, that's probably right, but that's not to say there aren't more economies to be made. This might mean reduced levels of service or getting out of some services altogether. Whatever comes, I advocate working within the existing budget system and not pre empting it. We don't want to create chaos and council does have excellent financial advice and process – probably the best in NZ. Rick said it's our job to come up with the questions and it was the staff's job to provide the solutions.

A more pragmatic approach is to do the hard yards yourself over Christmas, come up with realistic solutions and that way you provide the political direction and leadership the governance role requires.