Update on worker accommodation complex

​29 May 2018

Given the interest by some parties in the development of worker accommodation on Cemetery Road, we thought it was timely to provide an update on that development.
 
On 16 December 2015, the Central Otago District Council approved the Cromwell Community Board recommendation for the sale of 7.2 hectares of industrially zoned land in Cemetery Road, Cromwell. At that time there was considerable community interest in the provision of accommodation for workers and an approach was received from a purchaser interested in building a substantial worker accommodation development. Concept plans were provided to Council. The overall design is as shown on the plan (below).
 
The need for a significant development like this was determined because of worker accommodation shortages in the Central Otago and Lakes areas. It was also recognised the accommodation situation in Cromwell was impacting on the ability of local businesses to secure staff and also a demand from workers who commute from Cromwell to other areas.
 
The concept plans show three groups of similar buildings that would occupy approximately one third of the 7.2 hectare block. The balance of the block would be developed by the purchaser for other uses. At the time the contract was signed, and based on the valuation advice at the time, a very strong market price was obtained.
 
The contract included a number of performance conditions that required the purchaser to complete the first group of buildings, which included two two-storey accommodation blocks, a shared kitchen/dining and lounge building and shared laundry building. 
 
While initial publicity talked about this first stage being 58 rooms of 400 beds (on the basis of two bunks per room) catering for the seasonal worker market, further market research through the design process recognised a need, and increasing demand, for different types of worker accommodation.
 
As a result, the developer proposed a design change from shared bathrooms, to each room having its own small bathroom. This design change will enable the bed configuration in rooms to be determined by the specific tenant for that space, whether several individuals sharing costs, single people or couples working seasonally or longer term in the region.
 
The final design is the same footprint, external look and site layout as originally proposed, but in order to meet the market need there is a revised flexibility around bed numbers. The final room number now sits at 74 rooms providing for a wider worker market. Building consent applications for the development have been lodged.
 
The delivery of this project is subject to reasonable progress milestones as well as financial penalties for non-performance. The level of those penalties is confidential until either settlement or contract cancellation. The agreement provides for settlement of sale on the portion of land planned for worker accommodation, a development area estimated at 1 hectare. This is so security for finance is able to be secured, and so that the balance of the block can be developed as sections. Non-performance would result in the contract for the balance of the land being cancelled, and a penalty payment to Council.
 
The purchaser advises a number of sites have been signed up and there has been indications of strong demand for accommodation from employers.
 
Performance provisions on the development are agreed and include:

  • Floors slabs poured and tilt slab walls up within six months of building consent or contract cancellation an option.
  • Buildings complete within two years of building consent issuing or penalty payment and contract cancellation options.
  • Operate as worker accommodation for two years or significant penalty payment required.
The focus of the development has never shifted from being worker accommodation, however the changes around design and understanding the changing market, as well as the facilitation of the extension to Harvest Road, have meant some delays to the overall development of the site. The end result is that there will now be a more flexible amenity for workers in the district.
 

 

 
 ​
Page reviewed: 29 May 2018 12:02pm