Representatives of the Marlborough Civic Trust outlined financial details and banking arrangements for the new Civic Theatre to Council’s Community and Financial Planning Committee meeting yesterday. The meeting was attended by the Mayor and all Councillors.
The matter was considered in Committee as the Trust finances, including terms and details of bank loans, were discussed. Tenders information was also presented to the Committee. Six companies have been invited to bid for the contract and tenders close early next month.
Councillors were told that in order to award a contract for construction the Trust had to be in a position to meet contractual obligations and, both lenders were asking for the Council to act as guarantor. This is normal for major community projects.
Mayor Alistair Sowman said most councillors realised that it was important to send a signal to the Trust, its fundraisers and supporters, and especially to those submitting tenders, that the Council had faith in the project.
“The loan from ASB is simply a back-up in the unlikely case that the Trust is unable to secure any government assistance,” he said.
“The financial details presented to the Committee demonstrated that the Trust has the ability to service loans of approximately $2.75 million. I have confidence the Trust will be able to meet its financial targets and it is highly unlikely that Council will be asked to meet the guarantee obligations.”
Mr Sowman says it is normal practice for banks and charitable trusts to require Councils to guarantee loans for community projects such as theatres. The reason for this is that the assets of a project such as a theatre have little commercial value. Council has guaranteed similar loans in the past.
Councillors who’d been involved with the Stadium 2000 project reminded their colleagues of the critics who’d said that project would fail yet it had proved to be a great community amenity.
Mr Sowman said Councillors also needed to be mindful that, if the Civic Theatre project foundered through lack of Council support, the Council would be liable for the $1.5M already expended on theatre design work as well as at least $11M that is going to be necessary to upgrade the existing theatre.
A working group of the Mayor and Councillors Maher, Dew and Leggett were delegated the task of finalising loan guarantee arrangements and reporting back to Council for final approval.