THE Horsham Regional Livestock Exchange roof project budget has increased by $662,000.
Horsham Rural City Council initially budgeted $3.030 million for the project, but the total cost has now risen to $3.692 million.
The project received a federal grant of $1.490 million in March, with the remaining $1.540 million to be sourced from the council's 2019-20 reserves.
The council received four tenders for the project which were all over budget. Ballarat-based company MKM Constructions submitted the cheapest tender at a cost of $3.498 million.
In her report to the council at its September meeting on Monday, project manager Dianna Blake said additional costs would force the total budget to increase to $3.692 million.
She recommended the council extend the internal loan to the livestock exchange to $2.202 million to fund the difference between the budget and the government grant.
"It is anticipated that this amount would be able to be paid back by the livestock exchange over a period of 23 years, compared to the initial 16 years anticipated when the (federal government funding) application was submitted," her report said.
Her recommendation also suggested a review into the arrangements of the loan informed by preparation of an asset management plan for the livestock exchange.
She said a key risk of the project was developing a plan for the continued operation of the site during construction, while ensuring human safety and animal welfare was preserved.
The project will include 100 kilowatt solar panels, LED lighting, and water reuse and fire service tanks.
Councillors unanimously agreed at Monday's meeting to award the tender to MKM Constructions and increase the loan to the livestock exchange.
Councillor David Grimble is also the Horsham Regional Livestock Exchange board chairman and spoke about the importance of the project.
"The roof project will be one that provides a best practice standard which is especially important after the recent issues around animal welfare," he said.
"There will also be significant cost savings. A roof over the facility means we will no longer need to hose the facility out after every sale. There will also be some opportunities to harvest water."
Cr Grimble requested the council email weekly reports to the HRLE board and stock agents regarding the progress of the project and availability of areas at the site.
Cr John Robinson said the council in 2002 had developed a HRLE pricing policy and had committed to putting $255,000 aside each year for the livestock exchange. He suggested using that money to pay back the loan.
"That's about $4 million over 17 years; we should be looking at where that funding has gone and should be honouring that commitment," he said.
Cr Grimble moved a supplementary motion calling for council to:
- Prepare an asset management plan prepared in consultation with the HRLE board including internal served on the exchange
- Consider further financial implications of the asset management plan, internal HRLE loan and HRLE pricing policy in the next council budget phase
He said the increased budget would present challenges to the HRLE.
"This funding model is based around throughput. If that was to change and we see throughputs down, it means we might have to adjust our pricing model to make sure we can provide an affordable facility," he said.
"The livestock exchange is not looking for a handout for this project, but it must keep its yard fees affordable so we don't restrict ourselves from losing market share."
Horsham Regional Livestock Exchange is the state's fourth largest sheep and lamb market, with sales by auction averaging 500,000 animals each year.
Horsham council owns and operates the livestock exchange as a self-funding, discrete financial entity.
Construction of the roof is expected to start in November and finish by October 2020.
Read council's full September 2019 agenda below
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