Council seeks balance between residential and industrial users
Consultation, resource-consent hearings and resolving the vexed question of how much trade-waste users will pay, remain key benchmarks yet to be reached before ratepayers will have a clear idea of how much Whanganui's new wastewater treatment plant will cost them.
Whanganui District Council signed off on the $38.7 million project on Wednesday but just what financial impact this will have on individual households is still to be determined.
The new plant will replace the original commissioned in 2007 but closed just six years later. That plant cost $15 million.
Council has managed to get rid of all debt owed on that plant, so it will build the new treatment facility from scratch. It will finance the wastewater treatment plant by way of loans, borrowing $16 million in 2016-17 and the remaining $22.7 million in 2017-18.
Before that, it will be seeking a three-year resource consent to allow discharge of treated waste through the existing marine outfall off South Beach.
That hearing is set down for March 21-22.
Officers are confident council can secure loan finance at around 4.5 per cent interest, down from the 6 per cent rate forecast in its 10-year plan.
But it still means the total debt council carries shifts from the current $77 million to $96 million (June 2017) before peaking at $131 million (June 2018).
There is an upside, with the addition of a dryer which reduces the amount of sludge from the treatment ponds and reduces annual operating costs by $2.3 million.
But the bottom line is that in 2018-19, just shy of $12 million in rates will be required for the plant, covering operating costs ($5.4 million), interest on loans ($1.7 million) and $1 million in debt repayments.
The trade-waste user charges remain key and discussions with major users are ongoing.
The formula for ratepayers to consider is simple: If the trade-waste dischargers pay more, then the "pan tax" (for each household toilet) is less. Conversely, the less the industrial users pay, the bigger the impost on householders.
If trade-waste users pay a total of $5.5 million, then the pan tax increases by just $16. If the industries pay $1.5 million, the pan tax ramps up by $226. Currently the pan tax is set at $331 but that's because the treatment plant isn't operating - and council is proposing setting the trade-waste rates at $1.5 million for this financial year.
What does it mean for the overall rates increase? Based on current figures, it would be 4.6 per cent for the 2016-17 financial year, which would include a $30 hike in the pan tax (to $361).
Since the plant shut down in 2013, council has incurred costs of $10.6 million, including $4.4 million for the newly designed plant.
There's another $5.8 million related to the old plant, which includes getting rid of the stinking sludge as well as costs for the legal case against designers MWH. Council has settled with the company but the amount remains secret. (The Chronicle has made an Official Information Act request for those details).
Besides the resource consent hearing, council will have to make changes to its 10-year plan and that means the changes will go out for public consultation.
At the heart of the issue is finding the balance between residential and industrial users.
There is the option of industries pre-treating their waste before they discharge it into the city system. That would mean significant capital and operating costs for those industries but two of them - Affco and Tasman Tanning - have taken steps to improve their pre-treatment.
According to the councillors, the decision to go with the Cardno BTO plant will give the city the most "affordable" treatment option. But affordability is highly subjective.
Council commissioned a report to look at the financial impact on ratepayers. Not surprisingly, the report said affordability depended on household circumstances. But it did conclude that sole-parent families and one-person households who owned their own homes were more vulnerable to rates increases. And those affected were likely to economise on food, heating and health-related costs.
It doesn't take much of a movement in interest rates to have an impact on households. Every 1 per cent lift in interest rates adds around $400,000 to the council's rates bill.
After Wednesday's meeting, Mayor Annette Main said council had been very careful to make sure it had all the information needed about costs and options before taking the ultimate step.
"All the groundwork has been done to ensure council has made the right and most responsible decision for a plant which is affordable and environmentally sound. The design has been peer-reviewed by two independent wastewater experts and the costs have been reviewed externally."
Ms Main said council earlier initiated a debt repayment programme and this, along with funds received from the sale of Wanganui Gas, had cleared debt owed on the failed plant.
Assuming the resource consent is granted - there is a strong indication that it will be - council has three years to build a new treatment plant at Airport Rd; a plant that won't create a stink.