Suter depreciation funding Summary

3 comments for Suter depreciation funding.

Emotion Chart

Summary of Comments on Suter Depreciation Funding

The feedback from residents regarding the Suter Depreciation funding as part of the Long Term Plan (LTP) 2024-2034 reveals a strong community interest in maintaining and improving the Suter Art Gallery. The comments can be categorized into general support for funding, detailed requests from the Suter Trust, and concerns about specific operational and environmental challenges.

General Support for Funding

  • Residents recognize the Suter Art Gallery as a valuable community asset and express a desire for continued investment in its maintenance and improvement. One comment explicitly asks whether the funding allows for ongoing improvements and maintenance, highlighting the community's interest in the gallery's upkeep.

Detailed Requests from the Suter Trust

  • The Suter Trust has provided a comprehensive submission outlining several key requests and concerns:
  • Reinstatement of Depreciation Funding: The Trust is seeking reassurance that depreciation and asset renewal will be funded, referencing a previous agreement from 2014 and 2016 where the Council and the Trust agreed to share the costs of redevelopment and establish a funding stream for ongoing depreciation and asset renewals. The Trust expresses disappointment over the proposal to not fund depreciation from 2024/25 as previously agreed.
  • Operational Grant Adjustment: An increase of at least 5.6% in the operational grant is requested to cope with inflationary pressures and decreased revenue from partial lease losses.
  • Infrastructure Improvements: The Trust requests support for infrastructural improvements around the Suter to mitigate risks from extreme weather events, specifically flooding, which has previously caused significant damage.

Environmental and Safety Concerns

  • The Trust highlights several environmental and safety concerns that need addressing:
  • Flood Mitigation: Due to past flooding events, the Trust urges the completion of stormwater management upgrades and proposes additional measures such as raising footpaths and maintaining clear drainage paths to prevent future flooding.
  • Tree Risk Management: A large Sequoia/Redwood tree poses a falling risk to the Suter facilities. The Trust proposes an assessment by a qualified arborist and subsequent actions based on the arborist's recommendations to mitigate this risk.

Recommendations for Council Consideration

  1. Review and Consider Funding Agreements: Reevaluate the decision not to fund depreciation as per the previous agreements and consider the long-term benefits of ensuring the Suter Art Gallery is maintained to a high standard.
  2. Adjust Operational Grants: Consider the requested increase in operational grants to help the Suter cope with financial pressures from inflation and revenue changes.
  3. Support Infrastructure Improvements: Implement the recommended infrastructural improvements to protect the Suter from environmental risks, particularly flooding, which has already proven to be a significant issue.
  4. Address Environmental and Safety Risks: Take immediate steps to assess and address the risks posed by the large Sequoia/Redwood tree near the Suter facilities.

These recommendations aim to ensure the sustainability and safety of the Suter Art Gallery, thereby supporting its continued contribution to the cultural landscape of the Nelson and Tasman regions.

Comment Point ID
Suter Depreciation funding - Does this allow to put money aside for ongoing improvements and Maintenace in the gallery? It's a gem of the community and should be kept as such.  773.21
****Suter At last a saving 828.20
1. Introduction: On behalf of The Suter Art Gallery Te Aratoi o Whakatu Trust [The Suter; the Trust], we would like to express our appreciation for the Council's support and partnership over the years. The Suter plays a vital role in enriching the cultural landscape of the Nelson and Tasman regions, and we are committed to upholding our shared vision of providing exceptional artistic experiences to our community. Considering the Long-Term Plan 2024-2034 [LTP], we respectfully seek the Council's consideration on the following matters: • Assurance that depreciation and asset renewal asset and infrastructure will be funded. • Assurance that the operational grant to the Suter will be adjusted by at least 5.6% as per the Draft Statement of Intent 2024-29 submitted by the Trust. • That consideration be given to the implementation of infrastructural improvements in the vicinity of The Suter to mitigate the risks posed by extreme weather events.  2. Council proposal to not fund depreciation in the Long -Term Plan 2024-2034 The Trust is disappointed that the Council is proposing to not fund depreciation on The Suter building from 2024/25 as previously agreed; and not for the duration of the LTP. As outlined in the 2014 Heads of Agreement and 2016 Addendum made between the Trust and Nelson City Council, both parties agreed to contribute equally to the redevelopment of The Suter and to establish a dedicated funding stream for ongoing depreciation and asset renewals. This Agreement is instrumental in ensuring that the facilities remain in excellent condition and meet the highest standards for our visitors. The Suter Art Gallery Te Aratoi o Whakatū 208 Bridge Street, Nelson 7010 P.O. Box 751 Nelson 7040 +64 3 548 4699 www.thesuter.org.nz With the redeveloped areas and major infrastructure approaching two decades of service by 2034, and the historic buildings continuing to age, we seek the reinstatement of the depreciation funding arrangements from the 2024/25 financial year onwards. This proactive measure will enable us to address major asset maintenance and renewals in a timely manner, mitigating the risk of disrepair and ensuring the long-term sustainability of The Suter's operations. The Trust wishes to remind Council of the background to the Agreement: • In 2014 The Trust and the Nelson City Council entered into an Agreement for the redevelopment of The Suter such that each party contributed 50% of the project cost i.e. $6M each; and to rate fund an ongoing depreciation and renewal funding stream, and make this available in the future as required. At the completion of the Redevelopment in October 2016 the Addendum providing certainty around ongoing operational and depreciation funding, was signed by both parties. • The reason The Suter Trust entered into the 2014/ 16 Heads of Agreement with the Nelson City Council with respect to Depreciation and Operational Funding was to ensure that major asset maintenance and renewals could take place in a timely fashion and that the facilities would not fall into the parlous state of disrepair that had occurred prior to Council involvement. • The Suter Redevelopment Project was completed on time and underbudget. The residual Project funds seeded the Depreciation/Asset renewal fund and the Trust has when it can, ring fenced cash into the renewals fund investments so it can meet its share of renewals expenditure. • The Trust has a comprehensive Asset Management and Maintenance Plan which is regularly reviewed and updated as required, to ensure the facilities continue to be fit-for-purpose and can alert Council to upcoming funding requirements. Cognizant of economic situation prevailing post-COVID 19 The Trust wrote to the Council in February 2021 to assist the Council with its budget challenges whilst still ensuring that the Council could still act in the best interests of the Trust. The rationale for the arrangements were set out as follows: • The Trust is obliged by Generally Accepted Accounting Practice to account for depreciation of its assets. • The Trust and Council agreed that NCC would fund 50% of renewals capital expenditure over time. • The Trust is concerned that in accounting for depreciation it does not report successive accounting losses as this does not reflect well on either the Trust or Council The Suter Art Gallery Te Aratoi o Whakatū 208 Bridge Street, Nelson 7010 P.O. Box 751 Nelson 7040 +64 3 548 4699 www.thesuter.org.nz • The Trust is actively ring-fencing cash into renewals fund investments. • The Trust is committed to seeking external grants and fundraising to assist towards major asset renewals as depreciation-based funds do not generally account for inflation which will push up the costs of such renewals. • It is a matter of reality that grant organisations and major benefactors value certainty in respect of such arrangements so it is important we have formal arrangements for such material financial obligations. The Trust accepted that the Council would not formally provide in its next 3 years’ plans and budgets for the half-depreciation obligations- this taking us to the end of the 2023/24 financial year. • The Trust also made the request that “in the event that there is a trading surplus that (the parties) will accrue the obligation for the year and if possible any arrears of the original arrangement”    The Trust Requests: • That the Council honour the 2014/16 Agreement and reinstates the depreciation funding arrangements from 2024/25 financial year forwards. • Should the Council not agree to reinstating the depreciation funding arrangement, the Trust asks that the Council confirm in an agreement, that in the event a major renewal is needed to be funded, and the accrued depreciation fund is in arrears in respect to our original signed Agreement, it will make good the cash requirements in the year of renewal. For its part the Trust will outline and forewarn in its draft Statements of Intent what major renewal is required.   3. Major Overheads and inflationary adjustment to the Operational Grant. In our draft Statement of Intent 2024-2029, we have proposed a 5.6% increase in operational funding from the Nelson City Council. This adjustment is crucial to offset the rising overheads and inflationary pressures, including energy costs, insurances, cleaning, repairs, maintenance, audit fees, and personnel expenses. Additionally, we anticipate a decrease in revenue from our Theatre due to the loss of a partial lease. The Suter is currently operating in a difficult climate for securing sponsorships and donations, potential sponsors and donors are currently more restrained with their philanthropic giving. While we are actively exploring mitigation strategies, such as seeking new business opportunities, introducing cost-saving measures, and diversifying revenue streams, the proposed funding increase will enable us to continue delivering high-quality services and experiences without compromising accessibility or operational efficiency.   4. Climate Change Mitigation Measures Recognising the importance of protecting our community assets and ensuring business continuity, we sought expert advice from Hans Peter Froeling of WSP on potential infrastructure improvements in The Suter's immediate external environment. These measures aim to mitigate the risks posed by extreme weather events, such as flooding, and safeguard the building, essential HVAC plant, and operational capabilities. This advice and recommendations follows below: The proposed mitigations, including improvements to stormwater drainage and addressing potential risks from nearby trees, will not only protect The Suter's assets but also enhance health and safety, minimize operational disruptions, and contain insurance cost increases We kindly request the Council's support in implementing these crucial climate change mitigation measures, ensuring the longevity and resilience of The Suter's facilities. The Suter Art Gallery remains committed to our partnership with the Nelson City Council and to serving our community with excellence. We are confident that by addressing these key areas, we can continue to foster a vibrant artistic and cultural destination that enriches the lives of residents and visitors alike. We look forward to further discussing these matters and working collaboratively towards a sustainable and prosperous future for The Suter and the Nelson-Tasman region. Hans-Peter Froeling Senior Project Manager Workgroup Manager Property & Buildings WSP Mobile: +64 27 291 9209 Email: hans.peter.froeling@wsp.com WSP Nelson; Morrison Square level 1, 03 548 1099; wsp.cpm.nz    Flood mitigation The August 2022 severe weather event caused major flooding issues at The Suter Art Gallery (The Suter) on Bridge Street. The lower levels of The Suter flooded by a combination of stormwater and sanitary sewer, causing substantial damage to the facility and its building services. The Suter undertook repairs and implemented preventative measures, as far as practicable, now running out of options, within The Suter’s control, to implement further measures avoiding the building to flood again. The Suter Art Gallery Te Aratoi o Whakatū 208 Bridge Street, Nelson 7010 P.O. Box 751 Nelson 7040 +64 3 548 4699 www.thesuter.org.nz We understand that mitigation works to the sanitary sewer have been completed by Nelson City Council (NCC) and that NCC has got a mitigation plan in progress for discharging stormwater from the Queens Gardens Pond. Part one of this plan has been completed by changing the outfall into the Maitai River, upstream from the Bridge Street bridge which connects to the Eastern outlet of the Pond. However, upgrades to the second outlet from the Queens Gardens Pond closest to The Suter Art Gallery, and its outfall to the downstream side of the Bridge Street bridge, are yet to be completed. While meeting on site with NCC staff it was confirmed that this outfall is likely, partially, blocked by tree roots (from the redwood tree standing over the outlet) and needs urgent attention. Based on the flood levels recorded in the August 2022 event, the undertaken and planned upgrades of the outlets of the Queens Gardens Pond will not resolve the flood issues experienced by The Suter Art Gallery: • The flood level recorded outside The Suter Art Gallery facilities at the Queens Garden’s Pond was RL5.37m (NZVD2016). • The floor level of The Suter’s theatre (lowest point) is RL5.17m (NZVD2016). • The floor level of The Suter’s basement is RL4.9m (NZVD2016). Parts of The Suter’s air conditioning system, critical to the operations of The Suter Art Gallery and preservation of the important art collection, are installed in the basement. In a similar weather event, this could result in approximately half a meter of water inside The Suter’s basement, threatening the functions of the air handling system. The Suter therefore proposes the following mitigations, which may require funding through NCC LTP: • NCC to complete the upgrades to the outfalls into the Maitai River on both sides of the Bridge Street bridge. • NCC to maintain the outlets from the Queens Gardens Pond, so that they will continue to flow freely. • NCC will install a new stormwater connection from the Queens Gardens Pond through Bridge Street to Ngaire Lane. This will allow stormwater discharge further downstream in the Maitai River, where August 2022 flood levels were recorded at less than RL5.22m, giving approximately 1m extra headroom for discharge, compared to the levels at the Bridge Street bridge. • To avoid water getting to the buildings, NCC will raise the footpath between the Queens Gardens Pond and The Suter Art Gallery, while maintaining the drainage alongside the north and east side of the facilities   Health & Safety concerns The large Sequoia / Redwood tree, which is identified as a protected tree by Nelson City Council, located to the north end of the Queens Gardens alongside Bridge Street footpath and besides the public toilets, is within short distance of The Suter Art Gallery. This tree is of major health and safety concern to The Suter as it will keep growing upwards (potential to grow to 60-90m tall) and outwards. The Suter has been damaged by falling trees in the past which were smaller than the redwood, and which fortunately has not resulted in injury or death at the time. Should the redwood tree fall over in a wind event it could fall on top of The Suter, causing injury or death to occupants of the facilities as well as major damage to the facilities itself. A similar tree on Collingwood Street, Nelson, was blown over in a wind event and damaged several houses, some of which had to be demolished. As The Suter understands from NCC staff, the roots of this tree are clogging up the Western outlet drain of the Queens Gardens Pond, which is nearest to The Suter. The roots also pose a risk to underground infrastructure, i.e. sewer connections for the public toilets which are in close proximity to the redwood tree. Overflow from damaged infrastructure could potentially flow into The Suter facilities, with raw sewer being another health and safety risk. The Suter therefore proposes the following mitigations: • As a first step, NCC will contract a qualified arborist to assess the health of the tree. • NCC will then follow the recommendations of the arborist, mitigating potential health and safety risks.  1056.2