Arts Village granted lease reprieve, but mayor warns 'no more free rides'

The future of Rotorua's Arts Village is secure, for now, after councillors rejected a recommended rent hike from $120 to $50,000 a year – and potentially triple that in future.

The council instead approved a temporary rent-free lease for the charitable trust that operates the facility.

Wednesday's decision followed a lengthy debate over the value of community arts, the mounting financial burden on ratepayers and the role of council-owned facilities in an era of rising costs.

Council staff had recommended a three-year lease at $50,000 a year, describing it as a transitional arrangement that would give the Rotorua Arts Village Trust time to work towards paying closer to the building's assessed market rent of over $163,500 a year.

Councillors voted to grant the trust a one-year lease at no cost, with future arrangements to be considered alongside the council's Long-Term Plan consultation and a wider review of community facilities.

The lease for the Arts Village, housed in a heritage building in Government Gardens, expired on July 1. The trust has remained in occupation as negotiations continued.

The village includes three galleries and a pottery studio. On-site cafe Piccalo Cafe closed in August.

Historically, the trust has paid a nominal rental of $120 a year.

The debate exposed differing views around the council table.

Mayor Tania Tapsell said the issue needed to be viewed in the context of the council's efforts to achieve long-term financial sustainability and contain future rates increases.

"We need to get real. There are no more free rides," she said.

"We need to make sure that facilities are paying for themselves so we can continue to reinvest in them."

Tapsell said the building had a replacement value of about $7.5 million and required substantial ongoing investment.

A council report estimated average annual maintenance and renewal liabilities at about $224,000 and noted the building had only about 14% of its useful life remaining, suggesting significant future investment may be required.

"Some may consider my view cold," Tapsell said.

"I actually consider it being very careful and considerate of the impact to our community and the role and responsibility we have to all of those in our district."

Staff argued the current arrangement left ratepayers carrying most of the financial burden.

In a letter to the council, Arts Village Trust chairwoman Anna Steele said the organisation could stretch to $50,000 a year, albeit with service reductions, staffing cuts, and a $40,000 annual shortfall to make up through fundraising or other revenue.

"A full market rental of $180,000 is beyond any combination of grants, earned revenue and cost savings available to us, and would force the Arts Village to close," Steele wrote.

She said the trust delivered arts education, exhibition space, affordable artist studios, community programmes and stewardship of a heritage building while attracting external funding into Rotorua.

Several councillors echoed her concerns during Wednesday's meeting.

Councillor Ben Sandford criticised the report for overlooking the facility's history and community origins.

Sandford said the Arts Village was created through a partnership involving community funding and heritage assets gifted for public benefit, and argued the council had a responsibility to recognise that legacy.

"We are not going to be getting $180,000 for this facility," he said.

"What will happen is if the Arts Village leaves, we will have an empty heritage building on a gifted reserve that we can't fill."

Sandford proposed granting the trust a nine-year lease structure, comprising three three-year terms, at $25,000 annually with rent reviews every three years.

Councillors Fisher Wang, Trevor Maxwell and Te Rika Temara-Benfell backed his call.

Temara-Benfell said charities across the sector faced an increasingly difficult funding environment.

"The Arts Village, among many other trusts in the community, contribute a huge and significant amount in terms of the vibrancy of our city," he said.

Others said the matter should be considered alongside dozens of other council-owned facilities facing similar questions.

Deputy Mayor Sandra Kai Fong said the issue had emerged "out of cycle" with the council's broader work on facilities strategy and the Long-Term Plan.

Councillor Robert Lee said the community should be consulted before long-term decisions were made about what level of subsidy ratepayers were willing to provide.

Councillors ultimately rejected both the staff recommendation and Sandford's alternative, before backing a compromise from councillor Gregg Brown.

Brown suggested the free one-year lease while the council gathered feedback on its facilities strategy, facilities divestment policy and broader funding priorities.

"It's not about the money," Brown said.

"It's about getting the bigger picture sorted."

Tapsell backed this as it was "crazy" for the trust to occupy the building without a lease, despite discussions ongoing since February.

"If it takes giving them a year free so that we can ensure the certainty, then I don't mind that.

"But from then on, once we take in the full consultation and views of our communities, we can make the strategic decision about moving forward."

The amendment was carried, giving the Arts Village certainty for the next 12 months while the council considers its longer-term approach to community facilities and subsidies.

That debate is now expected to play out during development of the council's 2027-37 Long-Term Plan.