Many residents of a small coastal town are refusing to pay for a $58 million debt that has crippled their local council and left them with the bill. Andrew Laxon reports

Bruce Rogan shuffles down to the water's edge, nursing his dodgy left hip, and poses for the photographer on the beach of the tranquil Mangawhai estuary outside his home. As the sun struggles to break through the clouds a couple of paddleboarders make their way across the inlet behind him, past some ageing fishing boats.

Rogan places the sign from his front yard in front of him on the beach for the picture; Another Striking Mangawhai Property. You see a lot of them round here - almost as many as the For Sale signs.

Rogan says he shouldn't be doing this. He's 67 and has a hip replacement operation due this week. He and his wife Heather came here from Auckland 14 years ago to spend a quiet retirement but he couldn't resist dabbling in local politics.

Now he's leading the country's biggest rates revolt, which has brought down his local council and threatens to turn even uglier.


The Mangawhai Ratepayers and Residents Association chairman has at least 500 local residents refusing to pay an estimated $1 million in rates this year because the Kaipara District Council secretly ran up an unsustainable $58 million debt building a sewage treatment scheme for about 2000 people who own homes here. The scheme has virtually bankrupted the council, which was forced to resign three months ago.

But many locals still face rates increases this year of about 40 per cent. Rates have more than doubled for some and several residents told the Weekend Heraldthey would sell if they could.

John Brown, who lives one street back from Rogan, is reeling from a 38 per cent increase in his rates bill to $3052. His five kids, now aged 13 to 25, have grown up at their Mangawhai bach over the past 24 years and Brown loves the place but he's almost had enough.

"The whole thing is an utter fiasco. It is incompetency of the first order. Mate, I've had a gutsful."

The rates strikers say they know that many rural people in the Kaipara district see them as a bunch of Auckland-based "rich pricks", who are whinging about paying for improvements that will ultimately enhance the value of their properties.

But the accusation simply isn't true, says Rogan.

Leaving aside the fact that the council's own legal opinion says it has collected about $17 million of rates illegally, residents never wanted the overly ambitious scheme in the first place. Records show councillors secretly agreed to expand the project - and more than double its cost - without telling the community for four years. Mangawhai residents are now expected to bail out the scheme again, when many have already paid a lump sum which was supposed to cover the capital costs.

"That is the big beef that this community had," says Rogan, sitting at his kitchen table overlooking the estuary. "It was never told about the debts that were being incurred in their name, so we're not responsible for paying. If you come and consult us about it and bulldoze us into it, that's one thing. But if you do it behind out backs without any consultation that's another thing altogether."

AS YOU drive into Mangawhai from the south a sign on the hill announces "Kaipara District Welcomes You". It's a reminder of the small coastal town's curious geography - sandwiched between Pakiri Beach and Waipu Cove, just outside the boundaries of the sprawling new Super City but closer to Auckland than Dargaville, where crucial decisions have been made about its future. Even the term Mangawhai is slightly confusing. Mangawhai township sits at the bottom of the harbour. The much bigger Mangawhai Heads, which swells to up to 8000 visitors for two weeks over Christmas and New Year, is 5km away towards the estuary mouth, sheltered by a sandbar from the sea.

The Rogans' house is easy to find, just past the golf club and down the road to the boat ramp, where faded holiday baches turn into the sort of homes people live in permanently. The couple have spent the past five years here in their comfortable two-storey second home, which has a council valuation of $1.1 million. They still keep a house in Auckland and haven't ruled out moving back there.

Rogan knows he fits the wealthy stereotype, although he adds that many others don't. He observes that the predominantly rural, Dargaville-based council seemed to have a naive belief that it could charge whatever rates it liked to a bunch of rich, ex-pat Aucklanders, who would never notice the difference.

The rates debacle started in the late 1990s when the council asked the community how it wanted to upgrade its unreliable system of septic tanks and long drops, which was sometimes polluting the estuary with human waste.

Rogan says locals wanted the council to inspect all septic tanks and make sure faulty ones were brought up to standard. Stand-alone treatment plants could be introduced gradually as the town was redeveloped.

These wishes, he claims, were ignored, in favour of a development-friendly sewerage system linking the village to the heads.

From 2000 to 2002, Rogan was a councillor for the local Otamatea ward. "I heard these presentations... saying this place would have the population of Hamilton in 10 years time." Rogan, who had worked in marketing and programming at IBM and for the former Northern Regional Health Authority, asked to see the models used to make these predictions but was refused.

Buoyed by predictions of an ever-expanding coastal property market which would vastly increase subdivisions and rates revenue, the council agreed to keep adding to the size and specifications of the scheme. It was originally costed at $13 million in 2002 but by 2005 had expanded to a $26 million "guaranteed maximum price" project serving 1216 homes. Council minutes show that one year later councillors secretly agreed to huge changes which blew out the cost to $58 million.

The extra costs included expanding the scheme to 4500 homes and paying $5 million to buy a local property for an effluent disposal site. Interest payments on the borrowed money, which were soon to bring the council to its knees, were lumped together with council charges at just over $10 million. Yet in December Mangawhai residents were told - at a meeting and by newsletter - that there would be no significant cost increases to the 2005 plan.

Rogan says the first the community knew of the $58 million blowout was in 2010, when it finally appeared in the council's long-term plan. The rebellion began soon afterwards as residents began to grasp how the council's grand plans had collapsed and what they were expected to pay for. The promised influx of new houses had dried up in the aftermath of the global financial crisis and many over-committed bach owners throughout the country were trying to sell, causing a crash in coastal property prices which persists today.

Rates revenue was well short because most Mangawhai residents had chosen to pay off their special targeted rate over 25 years, instead of up front as the council had hoped. The council tried to fill the gap by charging developers more for new subdivisions. Rogan says that policy flopped too, as developers went elsewhere and the council was forced to drop the high fees. Only 1400 sections are connected to the scheme today.

In July last year an independent report revealed the council was $80 million in the red, mainly because of the $58 million Mangawhai sewerage debt. At $4395 for every man, woman and child, it was by far the highest per capita debt in the country.

A few weeks later chief executive Jack McKerchar announced his decision to quit after 18 years in charge, citing health reasons. But the council insisted its finances were under control, even as farmers called for a statutory manager to take over, Local Government Minister Rodney Hide put the council "on watch" and angry Mangawhai residents officially began their rates strike.

The front crumbled this year, as the council under new chief executive Steve Ruru asked the Auditor-General to investigate its actions. As about 2000 residents staged a protest march in May, the Government appointed a review team.

The council finally took the hint in August, resigning en masse to make way for commissioners the day before the reviewers' report went to new Local Government Minister, David Carter.

Although a threatened 31 per cent rates increase has now been modified to 19.8 per cent this year and the debt repayment plan extended to 30 years, the council's debt still looks unsustainable. As former Whangarei councillor and accountant Frank Newman has pointed out, the council's debt is about 180 per cent of its income - Greece's is 160 per cent.

Local government expert Joel Cayford, who has a bach at Mangawhai and has blogged about the controversy, says the huge rates increases so far have only been paying interest on the loan, even though residents were told the special rates they have already paid were for capital costs. Next year they will be forced to start paying off the principal, which is expected to add an extra $1400 "annual connection fee" per household.

Cayford accuses the council of breaking a contract by doing this. "Ratepayers were told this is the full amount for you to be connected to the system. It's like a breach of a promise the council made with ratepayers. You can't just turn around and say; 'Sorry, we made a mistake, we're going to double or triple your rates'."

In some ways the council's belated attempt to spread the burden around the district has made things worse. West Kaipara residents have now started their own rates strike in protest at being forced to pay for a sewerage system they will never use.

Rogan dismisses as divide-and-rule tactics a comment by John Robertson, chairman of commissioners at Kaipara Council, that the majority of ratepayers are subsidising the strikers. He is furious the council's own legal advice has warned that $17 million of rates it has levied for the sewerage scheme and other projects would be thrown out if challenged in the High Court. Yet in the absence of a ratepayer lawsuit, which could be prohibitively expensive, it persists in demanding payment as if the rates are legal.

It gets a bit stressful sometimes, Rogan admits, standing by his front fence. A ratepayers association chairman should be sorting out weed control but an $80 million debt concentrates the mind on sheer survival. "As someone said to me; 'It's the council that should go broke, not the residents'."

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