Work on the $43.8 million overhaul of Newcastle Art Gallery will start next month after a contractor was appointed to construct the new space.
The 18-month project will double the exhibition size of the Laman Street gallery, which can currently only display up to 1.5 per cent of its $126 million collection.
Newcastle councillors voted on April 26 to accept a tender from Hansen Yuncken for $43,840,386, which is several million dollars more than the $40 million estimated in January 2022.
City of Newcastle CEO Jeremy Bath said price escalations in the construction industry in that time had contributed to the new dollar figure, "particularly in regard to the cost of labour as well as steel".
The project has been long in the works - Newcastle lord mayor Nuatali Nelmes even described the project as "a fourth child" for her.
"A city of our size should have a purpose built gallery," she said.
"It was a wonderful addition to Newcastle 40 years ago this gallery, but it hasn't been fit for purpose and really up until now the only funding that has been going into the continued operation of the gallery has been the City of Newcastle.
"But when you can only display with a gallery this size, [between] one and one and a half percent of your collection, you realise you're missing out on a huge opportunity to show what are nationally significant works."
Cr Nelmes said the additional space would also create a revenue stream through a cafe and gallery shop.
The council in July 2021 committed to a contribute up to $22.6 million, which would be borrowed from the state government's low cost loan initiative.
Mr Bath said that amount would not need to be exceeded in the accepted tender cost. Mine grouting works have cost about $3 million, he said.
The state and federal government committed $5 million each to the project, while the Newcastle Art Gallery Foundation will contribute $10.5 million and the Margaret Olley Art Trust $500,000. A further $2.5 million is being sought through the gallery foundation's fundraising campaign.
The council voted to write to the NSW and federal governments to ask for their committed funding to be indexed in line with inflation.
Hansen Yuncken was one of three tenders submitted after four companies were shortlisted.
Newcastle lord mayor Nuatali Nelmes said awarding the tender was a "very major milestone" and the construction was "much-awaited".
"It has been a battle for many many years," she said.
"So this really is an exceptionally important decision of council this evening and an exceptionally important milestone that allows the project to move to the next stage."
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