Why didn’t you know the rock was unsuitable – weren’t geological assessments carried out?
A rigorous process was followed, including geological assessments. Waimea Water Ltd (WWL) have been upfront about the fact the site geology is one of the biggest risks, because underground conditions hold the greatest unknowns.
Who will pay for the cost over-run? Aren’t ratepayers required to pay for anything over the first $3 million?
Under the agreed funding model the Council and Waimea Irrigators Ltd share the first $3m in over-runs. The Council has committed to pay for cost over-runs above the first $3 million. How it recovers those costs hasn’t been discussed or decided.
Is it too late to stop the project to save ratepayers from these extra costs?
Yes. And if the project stopped the Council would have no solution to our community’s serious summer water supply shortages that put the economic and community wellbeing at serious risk, the ability to cater for rapid residential and business growth, as well as the environmental health of our natural water sources. Not to mention the significant investment that has already been made.
Is this just the first of many increases we’re likely to see? How confident are you in this new estimate?
The total cost will not be known until the project is complete. There is a risk that costs could increase. There is also opportunity to make savings through adjustments to design, methods and materials along the way.
Has Waimea Water already spent this money?
No, all the work so far has been within the current budgeted amount. The extra money will be required towards the end of the project.
How long have you known about this?
WWL alerted councillors and the public to issues with the drainage rock at a meeting on 13 February and undertook to provide more information as soon as possible. The scale of the cost implications was first reported to shareholders on the evening of Thursday 20 February, and councillors and the public were briefed via the media at the earliest opportunity the following day.
Can you save money anywhere to reduce the cost?
WWL have identified savings in some elements of the build already and would expect there be opportunities to find cost efficiencies along the way. However, there is not any significant opportunity to reduce the current $25 million increase.
What does this mean for the rates and debt cap?
The Council have at least a year to identify the source of the required extra funding. As a result the contracted obligation will not have any impact on the 2020-2021 Annual Plan or the associated general rates for next year. Until it is known, it is inappropriate to speculate.
Will you use targeted rates to fund the increase?
The Council is going to be looking at every other avenue of potential funding before considering any rate contribution. Any change to the way we rate for the project would need to go through proper process, including public consultation.
