Reykjavík City Council agreed at a meeting yesterday to contribute additional funding from the city and state of ISK 160 million (USD 1.3 million, EUR 1.0 million) to Harpa 2013-2016—ISK 73.6 million annually—to secure future operations. Harpa’s financial need in excess of income is ISK 1.2 billion (USD 9.4 million, EUR 7.0 million).
Harpa. Photo: Páll Kjartansson/Iceland Review.
Also, owners’ loans worth ISK 794 million will be changed to initial capitalization for Harpa. Debt was accumulated due to construction costs not foreseen in the estimate of Reykjavík City and the Icelandic State when they took over the concert hall in 2009 and operational costs that were originally underestimated, as stated on Reykjavík City’s website.
The funding from the state and city come in addition to indexed disbursement of almost ISK 1 billion, which the owners (city and state) are obligated to pay annually for the next 34 years, Fréttablaðið reports.
Therefore, direct additional contributions of the owners to Harpa amount to at least ISK 1.434 billion (USD 11.3 million, EUR 8.3 million).
The statement outlining the concert hall’s financial need reads that “the alternative to not taking the above measures is that the company Harpa will shortly go bankrupt and operations come to a halt at significant cost to the owners.”
Furthermore, a bond issue by Landsbanki will be used to clear several other debts and a new loan of ISK 311 million is to finance the estimated deficit of Harpa until 2016, which funding from the city and state will not be able to cover.
Councilperson Kjartan Magnússon of the opposition’s Independence Party commented to RÚV that it is “absurd” to spend ISK 1.4 billion in additional funding to Harpa when many other issues are in need for funding, such as maintenance of public schools.
The additional funding was approved by the majority coalition of the City Council but Kjartan and other opposition members voted against it.
Kjartan added that when the building was taken over in 2009 it was claimed that no further funding would be needed. “I believe it is clear that the planning did not work out.”
Notably, the Independence Party was in the majority coalition of Reykjavík City Council at the time.
In other news of Harpa, Sítus, the concert and conference center’s operator (owned by the Icelandic State and Reykjavík City) has given German company World Leisure Investment an ultimatum: either they decide to go ahead with plans to construct a Marriot Hotel next to Harpa by the end of this week or the agreement, which was drafted in May 2012 but has yet to be signed, will be revoked and other investors approached, ruv.is reports.
Reportedly, the agreement hasn’t been signed because one of the investment company’s partners, Interhospitality Holdings, which is part of the IKEA conglomerate, has doubts about investing in Iceland.