Construction costs rise 15%, Waikato spa costs could rise with it

A new destination spa proposal in Waikato could reach $21 million as construction costs rise at their fastest pace in 10 years.

The Matamata-Piako District Council agreed to go ahead with the $18.9 million Te Aroha Mineral Spa project in May last year as part of its 2021-31 long-term plan. .

But at a meeting of the Te Aroha Spa project’s governance group in February, Craig Jones of Visitor Solution said nationwide construction costs had risen 15% in the past two years.

Based on this percentage, the project has the potential to reach $21.7 million.

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Due to rising inflation, the cost of redevelopment of Te Aroha Mineral Spas in the Waikato has increased.

Kelly Hodel / Stuff

Due to rising inflation, the cost of redevelopment of Te Aroha Mineral Spas in the Waikato has increased.

The elected members agreed that the multimillion-dollar project would only go ahead if the business case stacked up and investigations of potential risks were favourable.

The group was created and on Wednesday the elected members were informed about the progress of the project with the key tasks and the key tasks of the upcoming project.

Deputy Mayor Neil Goodger said it was good to see a “bit of reality” included.

The only way the project could get off the ground was through staged development, he said.

“It will be a decade before we get that out of the way…If we can’t get anybody to do a job now, how are we going to get somebody to do a $20 million build for us,” a- he asked.

Deputy Mayor Neil Goodger wants to see a phased approach to the Te Aroha spa project.

KELLY HODEL/STUFF

Deputy Mayor Neil Goodger wants to see a phased approach to the Te Aroha spa project.

But spa project manager Graham Shortland said it was the type of project that would attract contractors.

“We know their situation and they’re busy, but the nature of the project is kind of sexy.”

There was also the possibility of reducing it, he said.

But Goodger was not afraid to reduce it: “I don’t want anyone to come and tell us that it’s all or nothing. If we said we could build this within five years and this within 10 years, I think the average person would accept that as more than just a big chunk that seems to become.

It’s too early to say what the final cost would be, however, until the concept and designs are revealed later this year.

The multimillion-dollar project would only go ahead if the business case was complete and the investigations of potential risks were favorable.

KELLY HODEL/STUFF

The multimillion-dollar project would only go ahead if the business case was complete and the investigations of potential risks were favorable.

The council applied for an $16 million provincial growth fund in March 2022 to turn Te Aroha Spas into an $18.8 million resort, but it didn’t get the money.

The existing spa and hot pool business is successful when measured by customer demand and financial metrics, but the existing facility does not have the capacity to meet annual customer demand. It is also relatively old with outdated furnishings, decor and surroundings and has a limited experience compared to others on the market.

Matamata Councilor James Sainsbury said there was no good track record of public entities investing other people’s money in business ventures, referring to a “huge transfer of money from the council district of Hurunui in Hanmer Springs” and the “disaster” of Waiwera Thermal Spa Resort.

“I was hoping during the fact-finding mission that this risk was somehow unpacked and it was not,” Sainsbury said.

“What I’m looking for is reassurance that when we get to that big meeting, my questions that I had for the mayor and the deputy mayor when it was passed into the long-range plan are actually answered. .. but I brought it up several times and there was a reluctance to discuss it.

Te Aroha Mineral Spas are a popular spot for locals and tourists alike.

KELLY HODEL/STUFF

Te Aroha Mineral Spas are a popular spot for locals and tourists alike.

The governance group is expected to provide costs, analysis and recommendations to the board at the end of June, with the board’s chief executive, Don Good, saying the next phase of the task force is essential.

“Their mission was to look at an installation based on the conceptual work that was done previously and look at its feasibility,” Good said.

“The critical phase is once the report comes back from Visual Solutions which will be truly eye-opening – it will reveal concepts, potential locations and estimated costs.”

This is the stopping point, he said. “That’s where we decide if it’s getting too rich for us or if the risks are too high.”