Marlborough District Councillors have agreed the Council will act as guarantor for the loans taken out by the Marlborough Civic Theatre Trust as back-up for the new theatre building project.
Six companies are bidding for the contract to build the new theatre with tenders closing next month.
Two loan facilities, to the value of $2.75M, have been arranged by the Trust to cover a worst-case scenario whereby fundraising does not cover construction costs. In line with common practice with loans for major community projects, each lender has asked that Council act as guarantor.
Mayor Alistair Sowman said most councillors had accepted the need for the Council to stand behind such a big community project.
“Most councillors want the theatre to go ahead, we have been kept well informed by the Trust and as a Council we have already endorsed the project. Declining this request would have stopped the project in its tracks,” he said.
Mr Sowman said the Trust needed to arranged the loans to ensure its financial position was secure before awarding a contract for construction.
He said the Trust was confident it would be able to raise the funds itself and not have to call upon the loans but it had advised councillors that it was in a position to service the loans should community fundraising and government sources fail to yield the necessary funds within the project deadlines.
“The Trust has delivered everything it has promised since this project got underway and it was reasonable for the Council to agree to this request to enable the Trust to sign the contract for construction,” said Mr Sowman.
The Mayor said providing this guarantee was a far more financially attractive option that the alternative; refunding the cost of the theatre design work that has already been done and paying for the upgrade of the existing theatre.
“If Council had pulled the rug out from under this project now, it would have been liable for a minimum $1.5M in design costs, given that it had already approved the theatre plans. On top of that, the present theatre is at the end of its life and we would have been looking at more than $11M to refurbish it to meet the required standards.”
Refurbishment to meet the new building regulations would have been a big job, putting the theatre out of action for a year or more, he said. The other option would have been to close its doors permanently, leaving the town without a theatre.
No one wanted to see that happen, said Mr Sowman.