28 May 2009

Support for mayor's plan to save building sector

8:43 am on 28 May 2009

A plan by the Queenstown Mayor to try to save the town's construction industry has been mostly well received.

Clive Geddes says he will not stand by and watch the industry be wiped out as companies associated with the luxury $1 billion Kawarau Falls Station Development go into receivership.

Receivers KordaMentha have been ordered by the Bank of Scotland to take over Melview Kawarau Falls Station Development Ltd and Melview Kawarau Falls Station Investments Ltd from owner Nigel McKenna.

The receivers will carry out a review of stage one of the three-stage development and has asked 500 contractors to continue building on the basis that funding will be available.

Stage one of the project is 70% complete and valued at $250 million. It includes two hotels, including The Westin, three apartment blocks and a convention centre.

Brendon Gibson from KordaMentha said on Wednesday that at this stage, sub-contractors will stay on the payroll. A decision on their future is expected in two weeks.

Mayor Clive Geddes says the council must go ahead and build millions of dollars worth of public infrastructure to ensure the sector survives. He says the consequences of losing between 500 and 900 construction workers is untenable.

Mr Geddes says even if the Bank of Scotland gives the green light to finish stage one of the development, it is now unlikely that stages two and three will proceed.

He says Queenstown was relying on that to see the construction industry through the next two years.

Local construction companies have praised Mr Geddes' plan to keep the industry in work.

But District Councillor Cath Gilmore is urging caution, saying while the plan seems right, she is worried the community will be saddled with millions of dollars of debt.

KordaMentha representatives were on site to meet with contractors on Wednesday.

Steve McLean, of Rilean Construction, whose staff and sub-contractors were unaware of the financial difficulties, says the receivers were positive, but he is worried about the final outcome.

General manager of The Westin, Scott Robertson, says he had no idea of the problems and only last week was being assured that everything was going ahead normally.