The two options will undergo community consultation in March/April next year, with the preferred option indicated in the report offering lower short-term cost, while the other requires a higher upfront investment but provides long-term savings.
Councillor Debbie Gregory said, “For the ratepayer, [Local Water Done Well is] going to achieve nothing more for them.
“It just adds another layer of bureaucracy ... They will still get all their water services ... The only thing that’s going to change is it’s going to cost more.”
The first option for consultation is modifying the pre-existing in-house delivery model that would retain the council’s direct management of water services.
The report states the preferred option is modifying the status quo instead of creating a new entity as it is more affordable, has the ability to meet financial sustainability and regulatory compliance standards, and lowers household charges in the short to medium term.
Co-author Kevan Scott said one of the considerations the recommendation of option one is based on is “the balance in risk between short term and long term”.
“The longer-term you look at financial term analysis, the more vague it gets,” he said.
He said with this option, the new legislative requirement from the Government meant the revenue collected for water services must be sufficient to fund all water activities, including debt services.
“So you can’t use rates to cross-subsidise water debt,” he said.
The second option would see the creation of a council-owned water company focused on water services but owned and guided by the council.
“In 30 years' time, the difference between those two entities is significant,” said report co-author Stuart Cross.
“If you carried on as council alone, we would have three waters debt sitting at $700 million ... The entity would only have $347m.”
He said they have included establishing costs for the new entity – which would be around $8.5m.
“Because that entity is loan-funded, it doesn’t have an immediate impact on rates or water charges.
“The impact on that is about $50 over five years,” he said.
He said another thing to note is there would be $2.5m in corporate costs to bring in things like IT systems and to hire a new office.
“No CEO of a water services entity is going to want to operate out of a council building – they will want separation.”
He said this would include their own financial systems and executive leadership team over time.
Deputy Mayor Josh Wharehinga said he preferred option two but stressed the importance of consulting with the community over the “very difficult” decision.
He also thought it was an opportunity to discuss new ways the council could implement rates going forward.
He said he was an intergenerational, long-term thinker.
“What that means is heavily sacrificing right now for things to be easier later on.”
Councillor Ani Pahuru-Huriwai said intergenerationally, she thinks about rural communities and what the council are setting them up for – when they have “no water services or benefits currently”.
She lives at Wharekahika, where people have to pay to have water delivered when they run low, “paying $1500 for half a tank”, she said.
“A constant question I get is what are we getting for our rates.”
Mayor Rehette Stoltz said those areas' ratepayers were paying 10% instead of 100%.
“It is reflected in how we rate,” she said, noting the 10% was for other council services like local roading.
The other options on the report for councillors to consider were a multi-council-owned water organisation, a mixed council/consumer trust-owned model, or a consumer trust-owned option.
The council is mandated to develop and deliver Water Service Delivery Plans to the Secretary for Local Government by September 3, 2025.
Stoltz said the consultation needs to be easy to digest, and include the risks, finances, and community benefits.
