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Sunday
Oct292017

Developers Get A $46.6m Bonus From TCDC

There is little doubt that Whitianga has become a ‘company town’ - Hoppers, and that the residents of Whitianga have every reason to be grateful to that company for the level of amenities that are provided, but the triumphant note present in the article in the Whitianga Informer last week relating the new and exciting Hopper/Abrahamson development on an island in the Whitianga Waterways gave pause for thought about the timeline of events surrounding Hopper’s involvement in the town, and the effect on the District as a whole.

Ever since Chris Lux fell into line over the demand by Waterways for the modern, and expensive wastewater treatment plant – a standard later extended to all three plants on the eastern seaboard for reasons of supposed “economy of scale” that ended up costing over $100m, our Council has been subjected the suborning of almost every aspect of its development policies by incredibly effective lobbying. This in the end, has put all rate-payers at a disadvantage, while Hoppers, and others are left looking squeaky clean, and hugely advantaged.

The wastewater project became very controversial in 2006 when the Barriball Council decided, with little or no consultation, to spread the enormously increased financial load to the entire District, on the grounds of  “un-affordability,” and thus commenced the inevitable move towards the ‘three waters’ (waste, water and storm) becoming a ‘common’ charge on our rates bill, rather than the previous ‘area of benefit’ rule that had applied since the outset of this Council.

These facts were obfuscated when certain decisions were made by the Leach Council in preparing the 2015-2025 Plan based on the following logic (see Page 15 of the adopted and printed document, that does not appear on the Website - only in abbreviated form):

“When the Council agreed to build the wastewater plants in 2006 the eastern seaboard had been experiencing very high growth for several years. Projections for future growth were also high. The debt for the wastewater plants was to be repaid by existing and new ratepayers through their wastewater rate and from developers through development contributions. Given the growth projected at that time, the majority of debt to build the wastewater plants would have been repaid over the following 10 years…… The proportion of the cost to be paid from development contributions was approximately two-thirds of the total cost. As such, Council would borrow in the short term to cover these costs.

The global recession in 2008 changed the situation and stalled development. In 2009, based on external advice, the Council reduced the growth projections for the next several years. In its 2012 Plan, the projections were again slowed, but we now know that even this advice was overly optimistic.

In 2014 (the Leach) Council recognised that the interest accumulating on debt to be repaid by future development contributions was not sustainable, and funded the interest on the debt in part through wastewater retained earnings (rates collected in previous years). As a result of the detailed review that followed for the Long Term Plan, the Council moved $46.6m of future development related debt to be repaid by rates……

The movement of debt from development to rates meant the wastewater rate would increase significantly in 2015/16 and thereafter from $674+GST in 2014/15 to $765+GST in 2017/18.”

Further explanation follows regarding the slowing the increase in plant capacity to align with the new growth rates, but the real effect remained to take the load off the shoulders of developers. At no point anywhere in this analysis is it suggested that this new policy may later be re-visited in the light of the changing fortunes of developers. Thus Leach, and his Council achieved a magnificent $46.6m pay-day for developers, and created an equivalent burden for rate-payers for plants widely regarded as over-engineered, and with excess, or ill-balanced capacity.    

These actions came to mind last week when I read about the glorious new development at Whitianga Waters, along with the extensive campaign advertising the luxury, and the success of the entire development. Now I don’t wish to denigrate Leigh Hopper and his associates who have achieved remarkable success, but I would hope that our Council has retained some of its cards in such a manner that it can re-visit the 2015 decision during the soon to commence 2018/28 Long Term Plan deliberations with a view to bringing the relevant developers back into the fold, and restoring the share of the wastewater development interest cost that they were previously required to shoulder.

Anything short of that should be totally unacceptable to ratepayers in view of what are clearly the changing fortunes of developers over the past 18 months as evidenced by the building and sub-division applications currently before Council. Our representatives may need a gentle reminder of their reponsibilities in this regard.

For those who are unfamiliar with all of the Hopper successes with our Council over the years, I will in a future post recap some of the events surrounding the building of the Whitianga Sports Facility, and the proposed Waterways Health Centre. That should raise a few hackles!

 

 

 

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Reader Comments (1)

Bill. As a relatively new arrival to Thames, and not having the background knowledge you have, nor the will and probably expertise to become fully informed on the matter, my following comment is only a very general one.
As I see it, the situation you are alluding to here, is the typical one in probably all but a very few local authorities, of developers always achieving much better 'access' to council members, than ratepayer groups (or individual ratepayers) ever seem to achieve. In my long experience, most local authority elected members (and most senior staff) are blindsided by the excitement of further 'economic growth', when substantial developers come forward with their proposals. In turn, within reason, they are prepared to almost fall over backwards to give developers what they want for the sake of 'progress'. We continue to live in an age where the drive for 'development at all costs', prevails! There may be more people in the community that now challenge such thinking, but in my experience they seldom get elected to local authorities, and when they do, they are downtrodden by the more 'progressive' members. The new Hawkes Bay Regional Council, and its decision to not proceed further with the Ruataniwha Dam proposal, is one of only a few exceptions.

November 1, 2017 | Unregistered CommenterTim

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