Fast-track disinfection

Rates to rise faster if council adopts recommendation

Rates to rise faster if council adopts recommendation

THE next stage of treatment for the city’s wastewater will be brought forward if a staff recommendation, which would reverse a previous council decision, is adopted at this week’s council meeting.

The council is now being urged to fast-track the disinfection stage of the process, rather than implementing it by 2023/24 as decided for the Long-Term Plan (LTP).

This move would mean rate increases over the next five years that will be close to the maximum figure of 5 percent set in the council’s long-term financial strategy.

The proposed change in direction follows opposition to the previous scheduled programme by iwi representatives and the wastewater management committee. The committee told the council that the completion date in the LTP was unacceptable and that significant commitment to completing the necessary upgrades to install disinfection needed to be made immediately.

The committee was opposed to the council seeking a variation in its consent, which would be necessary if the timetable in the LTP was followed.

When the committee’s recommendation was brought before the council in December it was left to lie on the table until the financial information was provided to show the effects of bringing forward this major project, which has an estimated cost of $24.4 million.

The recommendation now before the council meeting, subject to it adopting the committee’s recommendations, is to:

  • Fast-track further treatment options with a $3.3 million capital spend in 2019/20
  • Include increased operational costs within the 2019/20 annual plan which includes interest and ground leases
  • Pre-fund a proportion of the costs within the 2019/20 annual plan of $100,000 and up to $600,000 in year three of the plan.
  • Review the timing and prioritisation of projects through the 2021-31 LTP.

Staff considered two scenarios for bringing disinfection forward and are recommending what has been described as the fast-track scenario, under which the project would take 2.75 years. Scenario two would have taken 3.25 years compared with the LTP timing of four years to complete the project.

The council is being asked to increase rates faster than was planned in the earlier years of the LTP, and to smooth rates rises by pre-funding some of this project for the “pressure years” of years four and five of the LTP in years two and three — which had more of a buffer in relation to the 5 percent cap in rates rise.

Rate rises 'within reach' of 5 percent cap

The council report says a possible 25 percent increase in costs was considered “normal variance” but would equate to an extra $5m-$6m in base costs.

Pre-funding some of the project to smooth rates rises, and allowing a deficit of $325,000 in year five, “allows the ability to be within reach of the strategy 5 percent rates increase threshold”.

Negatives of this preferred option were that the council would have less ability to react to higher costs in year three, and that with rate rises close to the 5 percent threshold in years one to five, “there will be limited ability to react to unforseen costs”.

However, the option was “flexibile enough to recognise that deficit funding could be used as a back-up to cover any shortfalls”.

A legal opinion has been obtained which says the council does not need to amend its Long-Term Plan for either 2019/20 or 2020/21 as there is not a change in the intended level of service.

The council faces an increase of $500,000 a year in operating costs when the disinfection process is installed, which is the estimated cost of disposing of biosolids out of the district.

Studies on alternative use and disposal were continuing but the shorter time frame created more pressure to deliver these, said the report.

The council is applying to the Provincial Growth Fund this month for $500,000 for a wastewater treatment options feasibility study.

The Wastewater Management Committee and Consent Review Group have also recommended that mortuary waste be removed from the domestic wastewater system.

Council staff are seeking direction from councillors on whether to do further work on the practical aspects of separate treatment of mortuary waste.

A number of funding options for fast-tracking the overall treatment project were considered, including using the council-controlled organisation Gisborne Holdings Ltd. This was not recommended because the council’s cost of borrowing was relatively low.

THE next stage of treatment for the city’s wastewater will be brought forward if a staff recommendation, which would reverse a previous council decision, is adopted at this week’s council meeting.

The council is now being urged to fast-track the disinfection stage of the process, rather than implementing it by 2023/24 as decided for the Long-Term Plan (LTP).

This move would mean rate increases over the next five years that will be close to the maximum figure of 5 percent set in the council’s long-term financial strategy.

The proposed change in direction follows opposition to the previous scheduled programme by iwi representatives and the wastewater management committee. The committee told the council that the completion date in the LTP was unacceptable and that significant commitment to completing the necessary upgrades to install disinfection needed to be made immediately.

The committee was opposed to the council seeking a variation in its consent, which would be necessary if the timetable in the LTP was followed.

When the committee’s recommendation was brought before the council in December it was left to lie on the table until the financial information was provided to show the effects of bringing forward this major project, which has an estimated cost of $24.4 million.

The recommendation now before the council meeting, subject to it adopting the committee’s recommendations, is to:

  • Fast-track further treatment options with a $3.3 million capital spend in 2019/20
  • Include increased operational costs within the 2019/20 annual plan which includes interest and ground leases
  • Pre-fund a proportion of the costs within the 2019/20 annual plan of $100,000 and up to $600,000 in year three of the plan.
  • Review the timing and prioritisation of projects through the 2021-31 LTP.

Staff considered two scenarios for bringing disinfection forward and are recommending what has been described as the fast-track scenario, under which the project would take 2.75 years. Scenario two would have taken 3.25 years compared with the LTP timing of four years to complete the project.

The council is being asked to increase rates faster than was planned in the earlier years of the LTP, and to smooth rates rises by pre-funding some of this project for the “pressure years” of years four and five of the LTP in years two and three — which had more of a buffer in relation to the 5 percent cap in rates rise.

Rate rises 'within reach' of 5 percent cap

The council report says a possible 25 percent increase in costs was considered “normal variance” but would equate to an extra $5m-$6m in base costs.

Pre-funding some of the project to smooth rates rises, and allowing a deficit of $325,000 in year five, “allows the ability to be within reach of the strategy 5 percent rates increase threshold”.

Negatives of this preferred option were that the council would have less ability to react to higher costs in year three, and that with rate rises close to the 5 percent threshold in years one to five, “there will be limited ability to react to unforseen costs”.

However, the option was “flexibile enough to recognise that deficit funding could be used as a back-up to cover any shortfalls”.

A legal opinion has been obtained which says the council does not need to amend its Long-Term Plan for either 2019/20 or 2020/21 as there is not a change in the intended level of service.

The council faces an increase of $500,000 a year in operating costs when the disinfection process is installed, which is the estimated cost of disposing of biosolids out of the district.

Studies on alternative use and disposal were continuing but the shorter time frame created more pressure to deliver these, said the report.

The council is applying to the Provincial Growth Fund this month for $500,000 for a wastewater treatment options feasibility study.

The Wastewater Management Committee and Consent Review Group have also recommended that mortuary waste be removed from the domestic wastewater system.

Council staff are seeking direction from councillors on whether to do further work on the practical aspects of separate treatment of mortuary waste.

A number of funding options for fast-tracking the overall treatment project were considered, including using the council-controlled organisation Gisborne Holdings Ltd. This was not recommended because the council’s cost of borrowing was relatively low.

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