The Invercargill City Council-owned 66 Dee St building has been deemed insanitary with recommendation made to demolish it.

The Invercargill City Council is set to put $1.4 million towards demolishing a council-owned Dee St building, which is deemed insanitary.

The building at 66 Dee St has been issued with an Insanitary Building notice which requires the demolition or repair of the building.

Invercargill City Council property manager Paul Horner will put a report to councillors on Tuesday, which recommends that a $1.4m budget be approved to carry out the demolition.

The council bought the building in 2012 given it is situated beside the Invercargill Public Library.

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The plan was that it would provide future expansion space for the archive building.

The report says little maintenance had been carried out on the building structure and roof prior to council buying it.

The roof and downpipes, which were in a state of disrepair, continued to let water into the building. This saturated carpet and timber in the building led to insanitary conditions inside.

The council was first made aware of the situation in 2017 and resource consent was granted to demolish the building in November 2017. However that work has not been carried out.

The resource consent expired but a new resource consent was applied for and granted in August last year.

Horner's report says the project was complex given the presence of asbestos, an underground fuel tank, statutory heritage and archaeological requirements, and the adjacent buildings at 62 and 68 Dee Street.

Included in the proposed $1.4m budget was a $250,000 contingency for structural work needed to support the adjacent building at 68 Dee St.

The Building Intelligence Group (TBIG) has been engaged as the project manager, while it has been recommended council agrees that a tender for demolition be awarded for the sum of $714,642.

The original buildings at the 66 Dee Street site were constructed in 1885.

They were extensively modified in 1932 when it became the retail premises of Whitcombe and Tombs. Further modifications to the retail space and façade were carried out in 1941 and 1960.

In 1971 the Whitcombe and Tombs business was merged with Coulls Somerville Wilkie to become Whitcoulls.

The Whitcoulls retail business vacated the building in the 1990s before the Invercargill City Council leased the building in 2001 for three years for a youth drop-in centre.