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Development Contributions (2)

The LTCCP is built around growth projections - get it wrong and you are constantly chasing your tail. This is amply demonstrated by the totally inaccurate projections provided by the University of Waikato in 2006 that led to the crazy overbuild of the Eastern Seaboard wastewater schemes.

This gross error has provided our District with wastewater schemes that will still be adequate in 2040 and beyond,  based on current projections. This in turn has burdened our District with a level of debt that is preventing other needed infrastructure from being put in place in a timely manner. Hence the scramble within Council for resources. It remains the basis of the so called East/West split that caused the Mayor a great deal of angst when comparative revenue/expenditure came up during the wastewate discussion yesterday.

Fast  foward to 2007 when Council finally fired the University and hired Berl to do their projections. This followed the advent of the new Council, when serious questions were raised as to why our Council had persevered with these shonky figures for so long.

Enter Berl, and the growth projections were cut in half - the fact that they were still too high is obvious from the fact that over the entire period of the previous Council and into the new - as late as the 28 February when the last accounts were presented, development contributions have been over-estimated. Not once in that entire period did contributions reach budget. This has led to shortfalls amounting to millions of dollars - money that has to be found elsewhere.

At last we have evidence of this on page 19 of the LTCCP papers presented to Council on 12 May where the Chief Executive glosses over the previous 'stuff-up', and states the following:

The revised growth projections outline a more conservative growth scenario than was used in the 2009-2019 Ten Year Plan. An impact of having lower than previous growth projections is that there will be a higher than previous forecast debt, as the repayment of this debt (through collection of contributions) will not be realised as quickly as was previously forecast. The cost of this debt needs to be serviced whether or not the growth occurs, and therefore is funded from existing rate-payers. (my underline)

Of course, one would have to question every aspect of infrastructure build planned for the next ten years in the light of the revised growth projections - why is anything new being built when we have such a lag? the answer is of course the growth is not even, and largely isn't able to be controlled - at least until some of the Blueprint recommendatuions are adopted into the District Plan - faint hope!




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Reader Comments (1)

Looking at the 11/12 Draft Annual Plan I found $124m as our borrowing, i.e. from the Australian owned banks and if we calculate interest at 6% that will mean every ratepaying property will be paying $270 as interest mostly to the banks as their straight profit from us. There is no choice in this matter as rates are legally levied. Capital to be repaid is extra.
So this council is setting the rate increases for the future ratepayer folk while looking as if they are holding the rates down. It's a pleasure having comment from someone as dedicated as Bill because of his erudite background.

May 16, 2011 | Unregistered CommenterPeter H Wood

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