The Waimea Community Dam project will continue, thanks to a revised funding proposal that reduces the cost and risk to ratepayers of proceeding.
The Tasman District Council has voted 9-5 to revoke an in-principle decision it made on 28 August not to continue with the dam.
Tasman Mayor Richard Kempthorne said the decision was overturned after new information was presented to councillors that showed the cost to ratepayers of a $23 million increase in the overall project price would be minimised. The information also showed the risk of the Council’s credit support for a loan to irrigators through the Council-Controlled Organisation had significantly reduced.
“We’ve still got a lot of work to do to reach financial close and the final decision point for the dam,” Richard said.
“However, today’s decision means we keep the ability to draw on $73 million in external funding for a project that will give us 100-year water security and protect the health of our precious water resource.”
After the 28 August decision, the Council’s dam joint venture partners, Waimea Irrigators Limited (WIL) working with investors and central Government, proposed a revised funding model that limits the impact of the price increase on ratepayers.
The revised funding model means:
The District-wide fixed rate remains unchanged at an estimated peak of $29 a year
The Zone of Benefit rate based on capital value remains unchanged
A small increase in water charges for urban water users on top of the increase consulted on in 2017 - equating to about 50 cents a week for the typical residential user
The Council’s decision not to proceed with the project on 28 August came after the price of the dam increased by about $23 million. Under the existing funding model, the Council faced an increase in its contribution to the project of $11.5 million – taking its total share of the costs to $38.3 million.
Richard said the revised funding model meant irrigators would be effectively contributing 75% of the servicing costs for the $23 million price increase.
“That significantly limits the effects of the increased price on ratepayers, which was the Council’s key concern on 28 August. There were also concerns about the level of risk the Council was carrying, and that is significantly reduced as well because of the introduction of a reputable New Zealand institutional investor into WIL.”
Full resolution and voting division
Moved Cr Tuffnell/Cr Bryant
That the Full Council:
receives the Waimea Community Dam report RCN18-09-02; and
revokes resolution CN18-08-26 made at the Full Council meeting on 28 August 2018; and
re-confirms its decision of 27 July 2017 (CN17-07-20) that the proposed Waimea Community Dam in the Lee Valley is the best solution for meeting the community’s need for good quality, local water supply infrastructure; and
agrees, that for financial modelling and Joint Venture negotiations purposes, that Council’s share (51%) of the $23 million(m) projected capital cost increases in the proposed Waimea Community Dam Project will be funded by:
a. borrowing through the Local Government Funding Agency of approximately $11.5m and back to back on-lending of $5.75 m to the proposed Council Controlled Organisation (CCO), with the CCO finance for the costs for that $5.75m being met by a CCO finance charge to Waimea Irrigators Limited (WIL); and
b. accepting an increase in the term from 10 years to 20 years for the zero interest rate $10m Crown Irrigation Investments Limited (CIIL) Environmental Loan with four equal $2.5m repayments at five yearly intervals; and
c. utilising approximately $150,000 per annum of the money saved by the reduced repayments on the CIIL Environmental Loan, to service finance costs in relation to the environmental and public benefit Council loans.
instructs staff to progress negotiations and work streams through to a final agreement for Council approval as part of the project financial close in late November 2018; and
notes that the reason for reviewing the Council’s funding position is the offer of additional financial support by Waimea Irrigators Limited and Crown Irrigation Investments Limited;
agrees that the reasons for supporting the Dam include:
• the broad range of benefits offered by the proposed Waimea Community Dam compared to the alternatives, including addressing Council’s water management obligations under the Resource Management Act; the National Policy Statement on Freshwater Management; and the National Policy Statement on Urban Development Capacity;
• the costs, lower level of benefits, risks and uncertainty associated with the alternatives; and
• the obligation to provide good quality infrastructure that is most cost effective for households and businesses; and
notes that Waimea Irrigators Limited and Crown Irrigation Investments Limited have reviewed their position and funding in order to directly address concerns raised by Council and to facilitate reaching financial close and that all parties to the Joint Venture will make their final decision at that time; and
agrees to report the above resolutions into the open meeting and to release the revised Table 1 (Proposed Funding), Table 2 (Typical Rates including GST) and the content of paragraphs 1.2.1 to 1.2.4 of the Executive Summary from the report.
Cr Greening called for a division.
• Brown For
• Bryant For
• Canton Against
• Greening Against
• Hawkes For
• Kempthorne For
• King For
• Maling For
• McNamara Against
• Ogilvie For
• Sangster Against
• Tuffnell For
• Turley Against
• Wensley For
With 9 FOR and 5 AGAINST the motion was CARRIED.