Tender documents for the contract to manage the fitout of the Gateway 2 building in Stewart Avenue show the "target trade budget" for the work is $8.5 million.

This figure does not include a range of other costs, including construction management, project management, design consultants, engineers, internal staff costs, information technology (IT), furniture, removalists and some of the cost of moving the council meeting chamber.

One industry source estimated these extras would total about $2 million, while another put the figure far higher. Sources told the Herald last year that the overall total could be as high as $17 million. 

City of Newcastle chief executive officer Jeremy Bath referred publicly in late 2017 to the "one-off $7 million cost of the relocation", and it is understood councillors approved the move based on a business case which included that figure.

He told ABC radio three months ago: "Seven million dollars has been allocated in the budget for the relocation of council staff to the new building, and there's not been an additional cent requested for the project."

The Herald has been told other aspects of the business case have changed, including an allowance for rent from the City Administration Centre and Fred Ash building to offset the estimated $2.5 million annual rent, indexed for inflation, at Stewart Avenue.

The council refused to answer 16 questions from the Newcastle Herald this week about the move, including a request for the total cost, why the cost had increased, whether all staff would fit into the new building, and whether the $30 million-plus rental of the new offices over 15 years was still a good deal for ratepayers.

Instead, the council posted a statement on its website on Thursday quoting Mr Bath extolling the virtues of the move.

The council has sold the CAC "Roundhouse" for about $16 million to Syrian developer Ghassan Aboud for a hotel, and the Fred Ash building is about to go back on the market.

The council statement said a portion of the CAC sale would go towards fitting out the new offices, which were built by local developer Spartahori Pty Ltd.

Preliminary plans included in the tender documents show desks for about 310 staff across six floors of Gateway 2, but the council intends to move 425 employees into the building.

The documents say floors two to five will accommodate about 65 people each, the ground floor will include a service desk and room for about 33 call centre staff, and the top floor will house eight people.

The Herald has been told the council was planning to leave some staff in the Fred Ash building, which would have been contrary to the stated goal of bringing employees together under one roof, but the council statement said the Fred Ash building would be sold.

The council did not respond to questions about whether some staff would be asked to work from home.

Mr Bath said in the council statement that the move "provides City of Newcastle the opportunity to re-invent the way our staff work".

"We will be using an activity-based work model, which has been successfully introduced in many corporate offices in Sydney including Macquarie Bank, Blacktown Hospital, KPMG and PricewaterhouseCoopers," he said.

United Services Union organiser Luke Hutchinson told the Herald on Friday that the union had heard rumours the building might not be big enough to house all council staff.

"Council is proposing a different way of working and there's talk of flexibility arrangements," he said.

"We'll sit down and talk with council and raise any concerns of our members. We'd be strongly concerned with any widespread use of hot-desking."  

The tender documents show the first five floors will be fitted out with a "medium level of finishes", but the top floor, which will house offices for the lord mayor, chief executive and about six support staff, will have a "high level of finishes".

Mr Bath asked Mr Politis to add the sixth floor to the building when the council signed the 15-year rental agreement in late 2017.

Mr Bath said the extra floor would be for "an outdoor roof-top terrace, which would be for staff and community alike and would allow us to use the space both for collaboration during the day and for events at night time".

It was not clear at the time that the new sixth level would include executive suites.

The tender documents show the lord mayor and chief executive each will have a shower and toilet attached to their offices, which open on to an outdoor terrace with harbour views.

The top floor, which spans both towers, also includes a theatrette, another large terrace, a commercial kitchen, meeting rooms and a waiting room.

The council is renting the entire southern tower of the Gateway 2 building and the second floor of the northern tower. It said in December 2017 that the north tower second level would house its infrastructure division, but it now plans to sub-let this space to another tenant.

The council will save money by sub-letting part of the building but will pay extra to rent the sixth-floor addition.

Some of the works included in the estimated trade budget for the building fitout are $1.9 million for internal walls, screens and doors, $428,000 for floor finishes, $1.392 million for joinery and metalwork, $1.38 million for work stations, and $1.27 million for electrical services. 

Mr Bath said in 2017 that the cost of moving compared favourably with a "poor $6 million investment" in upgrading its existing Civic buildings, but the council has declined to elaborate on whether there is a report on the cost breakdown and necessity of that work.

Mr Bath said the move into a single, modern building would save the council $14,000 per staff member every year through “improved sustainability, reduced absenteeism, greater employee retention and increased productivity”.

The council statement on Thursday said: "The fitout will for the first time provide staff with kitchen and dining facilities. 

"A rooftop terrace on the sixth floor, accessible to all staff, will create an outdoor work space as well as a dedicated lunch area. Part of the rooftop will be fitted for civic functions.

"The new building will incorporate meeting rooms on each floor to encourage better communication and collaborative decision-making. Due to overcrowding in the City’s current staff buildings, entire floors have no dedicated meeting rooms."

Mr Bath said in the statement that it was "wonderful to know our exit from the Roundhouse has created arguably the most significant opportunity in our city’s tourism industry since the closure of BHP”.

The fitout of the second, third, fourth and fifth floors is due to be finished by September 30, according to the tender documents. The ground and top floors have a February 1 completion date.

Independent councillor Kath Elliott said she was concerned the fitout costs were "already above the $7 million publicly stated by the CEO".

"The bottom line is that we are moving from a very good building that we owned outright to rent a building that will cost millions to fit out as well as an undisclosed rent to a private developer for the next 15 years.

"At the end of the 15-year lease period we may well be looking for another building. This is not prudent use of people's rates.

"I have been asking many questions about this move since it was first mooted without satisfactory answers, and in some cases no answers at all.

"It looks increasingly like the money we got from the sale of the Roundhouse will have to be used to pay for the escalating cost of the fitout in a building we do not own."

Lord mayor Nuatali Nelmes said she expected precise costs on the fitout to inform a report to councillors in April and it would be premature to "speculate on the outcome of a competitive tender process currently under way".

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