Before this project started in 2017, a placeholder budget of $128.8 million was set aside in our 10 Year Plan for a new wastewater solution. Since investigating options and doing technical work, we now know that the cost will be far higher.
This project is likely to be the single biggest programme to be contemplated by Council next year for our upcoming 10 Year Plan. It will have very significant impacts on Council’s debt levels and the rates income required not only to service and repay the debt, but also to operate the treatment process and discharge.
The Council will as part of its decision-making process be faced with prioritising its investments in other facilities and services. This is so that its debt levels do not exceed the limits that will be imposed by its lenders and rates increases are not higher than ratepayers can afford.
This isn’t an optional project. We need to get a new resource consent, so these costs will need to be factored into long-term planning for our city. The challenge will be to determine the most cost-effective option that strikes an appropriate balance between environmental, cultural, social and financial considerations.
We are exploring government, external and industry funding, and these conversations will continue as we get closer towards choosing the best option for our city.
For each option we have outlined the lifecycle cost, which is the cost of purchasing infrastructure or land, upgrading facilities, maintenance and the operational costs for the potential 30-year life of the project. We’ve also given a very indicative view of increases in rates levels that might be necessary to fund the various options. We are showing what a potential increase could be, and as a result, what the total wastewater charge per year would be for ratepayers. Currently the charge is $253 for residential ratepayers per year. Non-residential ratepayers pay $253 per pan (toilet).
The rates impact assumes a very significant contribution by our trade waste customers. Around 500 businesses currently pay around $1 million combined per year. This could change to significantly more than that.
These costs are just estimates, and are likely to change as we investigate options more.
We have had to make assumptions to get to these rate impacts. These include:
- The Council will need to borrow the full capital cost of the project then fund the debt servicing and repayment over the life of the expected consent (ie 30 years)
- The additional charge will be borne by trade waste users and ratepayers with access to the wastewater network
- The average interest rate for loans raised and refinanced throughout the 30 years is assumed to be 3.5%
- There will be reductions in the present costs for treatment and disposal once the plant is commissioned. It is assumed this will amount to $2.4m a year and there will be an additional saving of $1.2m a year, being the amount that is being spent each year to investigate and determine the best practicable option for the way forward
- There will be operating and maintenance costs that vary for each of the options being considered
- There is no allowance made in the projected rates to fund additional costs that might be necessary to maintain the wastewater pipe and pumping station network through the city over the 30-year period
With options involving land, there is a potential chance of growing something on the land, like trees or hay, that could create revenue for Council. However, we won’t know if this is possible until we have identified locations for land.