Hastings District Council has accessed external funding to significantly increase its investment in the Hawke’s Bay Opera House. Here’s how.
Councils face complex challenges when trying to finance good community infrastructure. There are only so many ratepayers and, without rates rises, the ratepayer dollar will only go so far. There are huge pressures on where to spend the money. Adding to this is the demand on external funding sources by multiple organisations and projects.
What if a rates increase didn’t always have to be the answer? What if councils could leverage with external funding streams the investment that ratepayers are already making?
Some councils are finding the answer is about more than public-private partnership and more than accessing central government funding.
Giblin Group director Jenni Giblin says that while not all infrastructure requirements will lend themselves to external funding, a significant portion of projects do.
“These will be ones that sit in an environmental, economic development, arts, sporting, tourism or cultural context.”
Initially the best place to start is to look at the Long-term Plan and Section 17A reviews of infrastructure priorities with a funding lens. This means gaining an understanding of what kind of project can access external funds, understanding the various funding streams and getting to grips with the processes or methodology around seeking external funding.
“External funding poses its own challenges,” says Jenni. She adds that from her 13 years’ experience of sourcing external funding, the best advice she can give is that everyone needs to be funding-ready.
“This means proving the project is fit-for-purpose, that it’s feasible, that the community needs it, and that it will add value and improve economic outcomes for the community,” she says.
“These ideas need to be evidence-based. It’s about showing how the project will add benefit back to the community.”
Once you get beyond the need, you also need to prove that the project will be well managed, has a realistic budget and has mitigated the risks.
These aspects may be demonstrated through a feasibility study or a Treasury model Better Business Case. These sit in the background before any applications to major funds are submitted.
Jenni says each project is unique and requires a slightly different approach.
“Community engagement will take the project across the line with either the Better Business Case or feasibility study. There’s always a mix of elements. But it’s the proportions in the mix that can make or break support for community infrastructure projects.”
Hastings District Council
Take, as an example, the Hawke’s Bay Opera House. In 2006, significant funding was raised to refurbish this landmark theatre. Through extensive community engagement it was revealed how dear to the hearts of the community the theatre is, with 80 percent of the community supporting the restoration.
In 2014, it was found to no longer meet earthquake requirements and was forced to close its doors.
To minimise the expense to ratepayers of $11 million to raise and maximise the $6 million investment by the council, external funding advice was sought.
The first stage was a revenue generation strategy for the entire Hawke’s Bay Opera House complex. This identified that each individual building in the complex had its own unique characteristics that could be leveraged for external funding.
The heritage status of the theatre and municipal buildings lends them to environment and heritage funding, for example, while the multi-use plaza has better alignment to community funding and corporate partnerships due to its conferencing capabilities.
The next step was a feasibility study for the theatre to support an application to the Lottery Environment and Heritage Fund, and the Regional Culture and Heritage Fund and developing other supporting documents such as a business plan and an economic impact report.
Other supporting documents were developed for an application to the Ministry of Culture and Heritage’s Regional Culture and Heritage Fund. This resulted in a grant of $4 million.
Alison Banks, group manager of community facilities and programmes for Hastings District Council, says, “For us the community engagement side of the project was extremely important. Eleven million dollars is a lot of money for any district council to find on top of regular operational demands.
“By following processes that proved community demand, we showed how the facility would be used in the future and showed that it was effectively costed and project managed.
“The need for the project was well-established before any of the actual funding approaches were made.”
Waipa District Council
Meanwhile, in the case of the Discovery Centre in Te Awamutu, the foundation underpinning applications is proving pivotal.
The project started 10 years ago with the development of a Town Concept Plan for Te Awamutu. That plan talked about a heritage facility / museum as part of a town “hub”.
This gave Waipa District Council an opportunity to look strategically at what the offer could, or should, be.
The concept of co-locating public facilities with social space and enabling public engagement and interaction has become the accepted norm and is well received by communities.
Tony Roxburgh, manager heritage and museums at Waipa District Council, says, “We went right back to the start, defining objectives and getting our stakeholders involved through a series of workshops. From this point, we followed best practice and developed a Better Business Case. This was essential in understanding what the best outcome would be and getting the councillors on board.”
The business case was thorough and examined the strategic, economic, commercial, financial and management cases for the proposal.
Within this was a high-level summary of the revenue generation strategy that determined the affordability of the project, identifying from where the project could access external funding and what the council would need to commit to the budget. The project is currently getting concept plans developed.
This article was first published in the September 2017 issue of NZ Local Government Magazine.