Wellington Mayor Andy Foster has successfully got a proposal across the line to privatise a part of the central library building in the most challenging budget he says he has ever seen.
Labour councillors are fuming over the move that caught many by surprise. It was one of more than 10 changes Foster put on the table at the last minute.
City councillors spent more than seven hours debating Foster's proposed Long Term Plan today after he publicly announced it one week ago.
The capital is facing cost pressures including ageing water pipes, insurance hikes, seismic issues, transport plans, Covid-19 and the council's social housing portfolio.
The forecast rates increase for the incoming year is 14 per cent. There is also the option for the rates to go as high as 17 per cent, if there is an appetite from the public to pay off debt faster.
Privatising the Central Library
The proposal to privatise part of the central library comes despite Wellington City councillors agreeing to effectively rule that out mid last year.
In response to concerns the library would be privatised, Foster said at the time: "We are not going down that track as far as I can see and I don't think there is any appetite in council to do that."
Foster has flip-flopped on that sentiment today.
He told councillors they needed to "think creatively" about how the library is funded, while keeping their borrowing-to-income ratio below the proposed 225 per cent, and reopening the building in a timely manner.
The library was abruptly closed almost two years ago after the 2016 Kaikōura earthquake due to seismic concerns.
The mayor's preferred proposal is a shared ownership model where the council fronts the capital cost for community parts of the building and the private sector for commercial spaces.
Last year, councillors agreed to strengthen the building at a cost of up to $179m.
But today Foster said mounting cost pressures on the council meant the current funding arrangement would blow the lid on a proposed 225 per cent debt limit, which is already an increase from 175 per cent.
Libraries portfolio leader councillor Fleur Fitzsimons said the council has spent thousands of dollars consulting the public before making the decision the library should remain in public ownership, be strengthened and opened.
"We need to respect that process and decision and get on with the work needed. Selling the public library building is not the answer."
"Otherwise we have misled Wellingtonians."
Fitzsimons said public-private partnerships may be appropriate for other buildings in Te Ngākau Civic Square but not the library.
How councillors voted on privatising the library
FOR: Andy Foster, Diane Calvert, Jenny Condie, Laurie Foon, Sarah Free, Sean Rush, Malcolm Sparrow, Simon Woolf, Nicola Young
AGAINST: Jill Day, Fleur Fitzsimons, Rebecca Matthews, Teri O'Neill, Iona Pannett, Tamatha Paul.
Foster said he didn't think people cared whether the council was the landlord of commercial parts of the central library building.
"I don't think that matters, you can create a controversy about it if you want to, but that would be creating a controversy because it suits politically, not because it's good governance," he snapped at councillors.
Despite strong opposition from Labour ticket councillors in particular, Foster still found support to condense library costs into years three and four of the budget by relying on partnerships with the private sector.
He also successfully got an amendment across the line to reduce the investment in the council's library collection by 40 per cent over the next two years while the city was without a central library.
In fact, Foster got all his amendments across the line, despite criticism they landed too late and created a "shambles" of a meeting today.
Foster said when the proposed budget was publicly released last week the plan was still $122 million over the proposed 225 per cent debt limit in years two and three of the budget.
His 11 changes also include removing $6.5m for the Frank Kitts Park Garden Development, deferring $7m for footpath upgrades, and reducing civic property renewals.
Foster said he had to look for savings in real time for what is the biggest capital budget the council has ever had "by a country mile".
But the last-minute changes annoyed some councillors who only received them in bullet point form in an email on Tuesday night.
Councillor Jenny Condie said she was overwhelmed by the number of amendments which had contributed to "a bit of a shambles this morning".
Councillor Jill Day said it meant she didn't understand the implications of some of the proposals.
"It would have been good to have a bit more information to make those decisions with."
Councillor Rebecca Matthews was scathing about the situation.
"What some of this means, I don't even know."
She intensely opposed Foster's library proposal in the middle of which councillor Diane Calvert interrupted her and questioned whether it was actually privatisation.
Matthews replied: "Selling a public building, some of which to private people, is privatisation. Go and look in the dictionary."
Fitzsimons suggested the council's chief executive put a deadline on the mayor's future proposals so officers weren't working past midnight.
More money for climate change and cycling
Climate change portfolio leader councillor Tamatha Paul successfully passed an amendment to include "climate justice" in the mayor's guiding principles for the budget.
She said that meant acting urgently and investing significantly in the council's zero carbon transition to meet emissions targets.
She successfully changed the budget proposal to fund all of the council's climate change initiatives in Te Atakura, which is a blueprint to make the city a zero carbon capital (net zero emissions) by 2050.
The move equates to an extra $3.8m in operational and capital spending.
Paul also wanted to triple the cycleways budget to $200m, but that was narrowly voted down.
However, councillor Laurie Foon got an amendment across the line to increase spending on cycleways by an extra $45m over years 4-10 in the budget instead.
This would keep the council under its proposed 225 per cent debt ceiling.
The money would connect Seatoun to the rest of the city and improve northern and western links to Johnsonville and Karori.
Small wins for Island Bay cycleway fiasco
A request will also be made to officers to advise on how the Island Bay cycleway project can be included within that $45 million programme.
"I would like to put this to bed once and for all because I'm so over it," Foon said.
In Foster's original budget, no money was allocated to follow through with the promise to remediate Island Bay's botched cycleway through The Parade upgrade.
The cycleway initially cost $2m to build and was unsuccessfully pitched as a $14m shovel-ready project last year to fix.
It has been the subject of astronomical budget blowouts, court action, and safety concerns.
Foster told the Herald earlier this week Island Bay cycleway presented a value-for-money issue.
However, he has budged slightly on the situation with an amendment instructing officers to bring forward the resealing of the Island Bay Parade and simultaneously remove ghost markings, complete minor safety improvements, and install buffers between the cycleway and parking lanes.
Raising the council's debt ceiling
Last year the New Zealand Local Government Funding Agency hiked the debt cap for local council borrowers to 300 per cent of revenue until 2022.
WCC officers have advised a 225 per cent debt ceiling is the most prudent for the council, to allow for headroom in the future.
This accounts for the "unknowns" like infrastructure costs associated with growth, climate change adaptation and mitigation, or an earthquake.
But the council still has known costs on its plate that is yet to account for.
This includes $150m to process sludge and $400m to get the council's social housing stock up to scratch.
If the council can't get a deal for sludge off its balance sheet and discussions with the Government are fruitless on social housing, the debt ceiling might have to be raised anyway.
The difference between a 225 per cent and 250 per cent debt limit would free up about a billion dollars over a 10-year period, according to officer advice.
Sludge and social housing costs alone would soak up half of that.
Despite all the re-writing of the budget today, it's expected the changes can still be accommodated within the 225 per cent debt ceiling.
The draft budget still needs to be finalised and consulted on.