Whangarei ratepayers will have to pick up the $5.4 million bill to repair infrastructure subsidence at the failed Marsden City development while Whangarei District Council tries to recoup the money through the courts from those who designed, built and signed off the scheme.

The 83ha Marsden City development has been put up for sale after companies behind the scheme - North Holdings Development Ltd, NH Infrastructure Ltd and North Holdings Investment Ltd - were put into receivership. The scheme's roading and stormwater system was paid for by the developer and placed in council ownership after being signed off by engineers. But last year the Northern Advocate revealed that sections of the stormwater and wastewater systems on the multi-million-dollar development had "failed", causing pipes and manhole covers to slump.

The district council has now revealed the costs of fixing the slumping infrastructure - that it blames on the acidic soil in the development - and that it is taking legal action against the companies involved in designing, building and signing off the scheme before council took ownership.

"There are no winners in the Marsden City situation, where acid soils have damaged the concrete pipework installed underground by the developer," council Waste and Drainage Manager Andrew Carvell said.

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"The infrastructure was to be built to a standard set by council, and then to be handed over to the district to operate and maintain. It was to be a win-win arrangement where the developers paid for the assets, they were built to standards set by council, for use by the district's citizens. That way development could go ahead at the pace the developers were seeking, and high quality infrastructure would be provided at minimal cost to ratepayers."

Mr Carvell said unfortunately, the area has acid soil, a type not usual in New Zealand, which changed the acidity of the groundwater and damaged the concrete pipes, leading to a number of compounding problems, including drop-outs around manholes. This was discovered after the assets had been signed off and vested in council.

Mr Carvell said immediate repair costs are estimated at $5.4 million, but to fully replace the pipelines that would provide a useful life over 100 years is estimated to cost $12.9 million. "The stormwater activity is funded through general rates and this funding source will be used initially for any work associated with damaged stormwater infrastructure. "However, we are investigating other funding options, including making damages claims through the courts, against those who built and signed off the scheme before it was vested in council," he said.

"They are Cook Costello Ltd, who designed and oversaw construction of the development, HEB Smithbridge Ltd, who built the underground infrastructure, Kennedy and Associates Ltd, the engineering company that acted on behalf of council. It is with great reluctance, and after a thorough investigation of the causes and consequences of this problem that we take this action, but it is the responsible thing to do to protect our ratepayers' interests."

John Smith, from Kennedy and Associates, said he did not want to comment on the matter while it was before the courts. HEB Smithbridge Ltd and Kennedy and Associates Ltd were also approached for comment but had not done so by edition time.