Our long-term plan risks
Planning for the next 10 years has uncertainties and risks. Our draft long-term plan sets out what we think is the best way forward based on our current knowledge. However, we know things change and will need to tweak and adapt as we go.
Our proposed long-term plan has 2 particular areas of uncertainty and risk that it’s important for you to understand and share your feedback on:
Uncertainties and risks around Nature Calls
As explained on the Nature Calls page, we’re legally required to get a new consent for treatment and discharge of our city’s wastewater for the next 30 years. At the moment a very high-level estimate of the cost is up to $647M, which is made up of upgrades to the treatment plant as well as a new discharge point, pipes and pumps, irrigation systems and land purchase or leases.
Currently Horizons Regional Council is assessing our consent, and we won’t have a better idea of costs until that consent is granted. We have no timeframes for
that, as large infrastructure projects like these can take many years.
The high cost does mean that we cannot fund Nature Calls through normal Council borrowing mechanisms. That is why we are proposing to fund it by setting up a special purpose funding vehicle, in conjunction with Crown Infrastructure Partners (a Government agency) as provided for under the Infrastructure Funding and Financing Act. This type of arrangement was set up to assist councils in our circumstances.
Two risks around Nature Calls
There is a risk that residents and businesses consider the final cost of the project to be unaffordable or not value for money. The funding would need to be repaid by ratepayers through a levy on top of rates. Once we have a consent and know more about the cost, we will be able to look at the affordability of it. On the other hand, we know our community value our awa (river) and strong environmental outcomes- which do have associated costs.
There is also a risk that Crown Infrastructure Partners will not fund the project – or will only partially fund it. At this stage we intend to fund Nature Calls entirely through this funding tool. That’s because it allows us to debt-fund other vital projects (like roading improvements and upgrading our community facilities). and remain within our debt limits. Other Councils have 100% funded their projects through this tool. For example: Wellington’s Moa Point sedimentation tanks.
However, we know some Councils are using a mix of Council debt and IFF for their specific projects.
We are aware of these risks and are working to minimise them
- We are working through the consent process to get more detail and certainty on the costs.
- We have held talks with Crown Infrastructure Partners and will have much more detailed conversations them about Nature Calls and the implications of funding it through this arrangement.
- We are talking with our neighbouring Councils about their plans for water. This aligns with the new Government’s Local Water Done Well model, which includes the option of Councils setting up Council Controlled Organisations for water, wastewater and stormwater to help fund improvements.
- We could look at other funding sources, such as a public – private partnership (PPP) where a private company finances, build and operates components of the treatment and discharge and charges Council (and therefore ratepayers) over a period of time. Some form of government assistance could be another option.
- If it becomes clear that, however it is funded, the total cost of the project is too high, we would need to reconsider some elements of the project – but would still need to meet the conditions of the consent.
We will revisit the project through our 2027 LTP (or earlier if necessary). By then we will have better information on the costs of the project. We will also have firmer ideas on potential funding sources. At that point we might need to reconsider the project against our other projects and services, especially if we cannot fund the project in a way that keeps some or all of the debt off our books. This could mean reducing the Nature Calls project and/or reducing our other projects and services.
We will keep you informed as we work though the details of the project.
Whatever happens, we do need to make sure we maintain our infrastructure for our community and meet all legal requirements for our wastewater treatment and discharge.
Our ability to complete our proposed capital programmes
Most of the services that Council provides – water, roading, libraries, public toilets, sportfields and playgrounds rely on Council infrastructure. Our capital programmes ensure that this infrastructure is well maintained and new infrastructure is built when necessary.
The 2 factors below could influence our ability to deliver the capital projects proposed for the LTP.
Availability of external funding
Many of our capital projects involve external funding. We have assumed external funding of $1.2B for our total capital programme of $2.3B – or 53%. This includes the potential Nature Calls funding, NZ Transport Agency Waka Kotahi funding as well other assumptions regarding funding for our growth programmes. This external funding reduces the financial impact of the projects on Council’s debt limits. However, it also introduces some risks that, despite our careful considerations in developing this LTP - the funding will not be available as expected. If this happens for any particular project, we will look carefully at our options. This could include delaying, scaling back or stopping the project. For legally required projects like Nature Calls and seismic upgrades it could also mean not doing other work so that we can fund these.
Ability to deliver projects
In the past we used to struggle to complete all the capital projects we’d planned on doing when the year started, for a range of reasons. But we’ve stepped up our game and this year we’re expecting to achieve at least 90% of what was proposed (compared to 67% in 2022/23).
We are continuing to focus on improving these figures further through:
- making sure our Project Management Office (PMO) is fully staffed
- early planning and design work to spread out the time we have to plan and build the works and reduce the number of project risks we face during the building phase.
- building good relationships with the construction sector. Our roading contractor has confirmed they can resource themselves to do the work we want.
Currently we’re doing a range of projects that vary in size and scale. In our proposed long-term plan, many of these are large and high cost projects that are a one-off, e.g. seismic strengthening of a facility.
These large projects can be delivered more efficiently than many small projects as they require less project administration compared to a large number of smaller projects. This all gives us strong confidence we can successfully deliver our projects. However, we will review our projects through each LTP and Annual Budget and can move projects around if necessary to make best use of available project delivery resources.