Auditor General Lyn Provost noted in her 2013 inquiry into the Kaipara District Council when their wastewater treatment plant costs escalated from $8 million to $63.3 million over 15 years: "KDC relied too heavily on its professional advisers."
She also said: "There is a need for members of a governing body to have the courage to keep asking questions until they understand what they are deciding."
These are words that, as a Whanganui district councillor, I pay attention to. We are facing the most pivotal financial issue in this community's history and what is decided will have an effect for a generation.
Council has decided, by majority, to build a $41.5 million replacement plant which has a lifecycle cost of over $100 million.
Council debt is expected to rise to $126 million to pay for it, and average rates are expected to rise 15.20 per cent over the next three years.
When the plant is completed in 2018-19, the residential pan tax is expected to rise from $331 per household to $407, and the trade waste levy paid by six contributing companies is expected to rise from this year's $1.755 million to $4.5 million per annum (annual plan 2016-17). Importantly, any reduction in the trade waste levy will need to be added to the pan tax.
Council spent $23 million on the MWH-designed plant in 2007, but it never worked as it was supposed to. Council took a lawsuit against MWH and there was a mediated settlement with no fault admitted. The councillors of 2003-2005 (three are still on council) took advice from professional advisers and this advice proved problematic.
When council approved the Cardno designed replacement on April 29, 2013, the capital cost was $18.79 million with annual operating expenses of $1.93m.
We are now at $41.5m and $5.4m operating costs. There are sound reasons for this increase - new plant has been added as the tolerance for risk was exhausted during the summer of 2012-13, and certainty in the cost of sludge disposal is necessary.
But all this has changed and I have withdrawn my personal support for the Cardno scheme.
The two major industrial users, Affco and Tasman Tanning, have advised council the new scheme is unaffordable for them and they cannot take part as it is proposed. Building this $41.5m plant will place an unaffordable financial burden on this community.
Infometrics reported in 2012 that Affco/Land Meats/Tasman employ 1070 people, and value add over $135 million to the Whanganui economy each year. Essentially, this new plant is an industrial plant - without the load from the six wet industries, it will service a residential population of 300,000. These six industries are 87 per cent of the biological load and Affco/Land Meats/ Tasman are 85 per cent of that.
Council has been advised that if Affco/Tasman pull out only minimal design changes would be made but there would be savings in operating costs.
This advice is in conflict with other consultants who say that without the load from Affco/Tasman, the old plant could be inexpensively salvaged. Cardno in their first report in November 2011 advised an upgrade of the old plant at a cost of $1.37m.
This report never came to the council table. Affco have put forward a scheme that is about 50 per cent of the Cardno-designed plant cost. They put this proposal to council over two years ago, as well as asking: "If we put in our own plant, what would the concession be for making that investment?" Their frustration is understandable as council have have only ever said: "We still don't know that".
Without Affco/Tasman, the $9.3 million thermal dryer would not be justified - 85 per cent of the sludge results from the industrial load. Only one clarifier would be needed instead of two and there would be other cost-saving changes.
The way forward is to work with the trade waste users in making any changes needed. This means independently evaluating their proposal.
Affco/Tasman must not be allowed to unreasonably delay this scheme thus a Memorandum of Understanding needs to be signed urgently.
Council also needs to financially model a scheme without Affco/Tasman participation, or with a reduced load from them. And the financial burden on the ratepayer if the $41.5m scheme proceeds without Affco/Tasman needs to be revealed. It threatens to be unaffordable.
Affco/Tasman are critical to how the scheme is shaped. Without their agreement, and without understanding the implications of their withdrawal, it would be reckless of council to proceed. ¦Rob Vinsen is a Whanganui district councillor and a member of the Wastewater Advisory Group.