Whangārei’s new $33 million Hundertwasser Art Centre is facing a loss of $800,000 this year, as Covid-19 restrictions, cyclones and closed highways cut international visitors.
A bail-out from Whangārei District Council has averted liquidation but the trust running the centre must start a funding savings plan.
The controversial centre has been 30 years in the making, since the late Austrian artist Friedensreich Hundertwasser first drew the building’s design on a napkin.
A public referendum in 2015 backed the unique building, which includes a Hundertwasser exhibition, Wairau Māori Art Gallery, afforested roof and restaurant.
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Work started in September 2018 but was delayed by Covid-19 restrictions, opening about eight months late in February 2022.
The centre has attracted 70,000 visitors in its first year and its operator, Whangārei Art Trust, was awarded a Qualmark Gold Sustainable Business Tourism Award.
But a lack of international tourists due to Covid-19 restrictions, the war in Ukraine and Cyclone Gabrielle resulting in closed highways and people being asked not to travel, plus rising inflation has left the trust with an $800,000 shortfall for the 2022-23 financial year.
The centre was set up with a $2m bond or guarantee to help cover unexpected loses in its first 10 years, with a maximum of $500,000 paid out in each financial year.
A sum of $200,000 was already budgeted to be paid in 2022-23.
On Thursday, Whangārei District Council agreed to a further $300,000 from the bond to be paid out in 2022-23 and up to $500,000 in 2023-24.
The council also had to dig into its own pockets for a $500,000 unbudgeted operational grant, to be paid in April, plus a further $100,000 grant in 2023-24.
The council will work with Whangārei Art Trust to create a financial remediation plan and will require it to find other external funding.
At the council meeting, the majority of councillors said it was unfortunate extra funding was needed but the centre was still a benefit to Whangārei, the wider Northland region and New Zealand as a whole.
Councillor Gavin Benney sympathised with the difficulties faced by the centre, saying the pandemic, cyclone and subsequent restrictions were unpredictable.
“It’s important that we set them up to succeed.”
Councillor Scott McKenzie said other options to the bailout were less desirable – as they included terminating the lease and running the centre as an art gallery or closing the centre entirely.
But not all councillors agreed with the bailout, raising concerns extra funding could be asked for year after year.
Councillor Paul Yovich said he had no problem with the bond money being paid out but did not agree to the extra $500,000 operational grant, which was an unbudgeted expense.
“I agree we’ve lost international visitors but we’re in this position because of poor management – that’s come through from the public.
“I still don’t see, in the material coming forward, I don’t see anything in it that’s going to change.”
The council is looking at a rates increase of 10.9% for the 2023-24 financial year, or an increase of 7.9% with reduced services. Consultations on these proposals will start in April.