SHELLHARBOUR City Council staff say the controversial $57-million city hub project is affordable – and ‘‘comfortably so’’.
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Last Tuesday night, Shellharbour councillors were presented with a financial update on the hub, a project to be funded by a mix of developer contributions, asset sales and loans.
The initial business case estimated that $35.1million of the $57million project cost would come from asset sales.
The proposed hub will provide new administration offices, new council chambers, a library, museum and civic auditorium.
Completion is set for December 2016.
A review by NSW Treasury Corp noted the maximum the council could borrow for the project was $16.3million
However, in the update report, council corporate policy director Lee Furness said the T-Corp review was based on 2010-11 figures, and the council’s borrowing capacity ‘‘is likely to have improved since that time’’ following the approval of the Special Rate Variation.
In June, IPART approved Shellharbour council’s application for a cumulative rate increase of 43per cent during the next four years.
In the report, a variety of scenarios were put forward. One is ‘‘a worst case’’, in which the council receives 20 per cent less than expected from asset sales.
However, even in this scenario, the amount to be borrowed was $17million, based on an interest rate of 6per cent and a term of 20 years.
Ms Furness said there had been concerns about how the hub would affect current and future expenditure levels.
However, the scenarios demonstrate that even if property sales fell short of the target by 20per cent, the increase in loan funding and annual repayments, when expressed as a percentage of annual income, would be ‘‘modest’’.
Mayor Marianne Saliba said the financial scenarios put forward so far had been ‘‘very conservative’’.
At the meeting, Councillor Kellie Marsh, a critic of the hub called for a referendum on the project, in order to gain an accurate indication of community views.
Cr Marsh also questioned how much would actually be raised from asset sales, and whether the proposed centre would provide adequate parking facilities.
Councillor Peter Moran said while the project may be affordable, that didn’t mean it was necessary, or wouldn’t result in other costs for the community, who he claimed were ‘‘overwhelmingly’’ opposed to it.
Deputy Mayor Paul Rankin said while he was still not ‘‘comfortable’’ with the hub, the amount gained from asset sales would ultimately determine whether it should go ahead.
Councillor John Murray said while there had been a ‘‘lot of talk about how unaffordable the hub is, this shows that not to be the case’’.
‘‘(Previous reports have demonstrated that) we have a big need for a new administration centre, and a whole lot of community facilities that we don’t cater for at the moment,’’ he said.
‘‘This is not a huge debt burden to put on an organisation like this... It’s just good business.
‘‘We do need this facility, and we can afford it.’’