By CATHY ARONSON
WAIHI - Waihi's $3 million town centre upgrade, designed to save the local economy, has backfired after an outside contractor went bust and left a trail of debts and ruined businesses.
A Te Kuiti-based civil works firm, Fieldway Services, went into voluntary liquidation last week, only weeks after completing an $800,000 curb, footpath and drainage contract for the Hauraki District Council.
But the company has left a $175,000 debt in the small town, which has fewer than 100 businesses.
Businesses claim the debts have had a snowball effect throughout Waihi as they cannot afford to pay each other.
More than $75,000 is owed to 15 small, family-owned retailers and contractors and at least two businesses are already selling up to re-coup their losses.
The retailers, who asked not to be named for commercial reasons, were both owed about $5000, a debt they could not sustain after a slow year and loss of business because the works had disrupted custom.
"It's disastrous. We were sailing close to the wind anyway but this bad debt was the nail in the coffin," said one retailer. "What was designed to save us has killed us."
Fieldway liquidator Peter McLean said initial estimates showed it owed about $2.2 million throughout the Coromandel, Waikato, King Country and Bay of Plenty.
After deducting assets, there was still a $517,000 shortage and Waihi businesses believe they will not be paid.
Carter Contractors owner Dave Carter said it was the biggest financial disaster in the 30 years he had been in business in Waihi. His company was owed $5000 but was originally owed $17,000.
Mr Carter said the council should be held financially accountable as it gave the contract to the lowest tender without checking credit ratings and did not listen to the businesses when they first raised their concerns six months ago.
"They are spending my money to beautify the town which has cost me money. The main reason why these businesses trusted them was because they were contracted to the council."
Council engineer Langley Cavers said the council did not credit check companies unless it was lending money. He said the contract was awarded to Fieldway based on its normal tendering policy, including relevant experience, resources and track record.
Otorohanga District Council Mayor Eric Tait said Fieldway had worked with his council for at least the past four years and was reliable and competitive. He said the liquidation would be a sad loss for Te Kuiti businesses and employees.
Four of the 32 workers on the Fieldway payroll have already been laid off and the remaining positions would be dependent on existing contracts and the possible sale of parts of the business.
Waihi councillor Sel Baker said the bad debts had put a dampener on an upgrade that was designed to boost business and put Waihi on the tourist map as the gateway to the Coromandel.
Mr Baker said the council was prepared to spend $3 million on the upgrade, which has a strong gold mining and heritage theme, to generate more business in preparation for the closure of the Martha Mine in 2007.
Despite the bad debts, local businesses are looking forward to the finishing touches being completed before Christmas and hope it will generate enough business to keep them afloat.
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