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‘Major projects’ will cost ratepayers dearly.

Auckland Council’s expanding involvement in ‘major projects’ will cost ratepayers dearly.

Mainzeal collapse and leaky-building liabilities should prevent councils going on spending sprees

Within the space of two days the Auckland Council is taking on projects and facilities which will be underwritten by ratepayers and will almost certainly lead to higher rates or a reduction in council services.

The proposal to build a SkyPath walkway/ cycleway strung under the Harbour Bridge carries a cost of between $31-$41 million dollars, and over a 20 year period could cost ratepayers at least $27 million, plus any shortfall in the cost of maintenance, repairs and lower than expected income.

The Council approved the project in last year’s Long Term Plan but it was shown as an ‘unfunded project’ with no funding allocated.
Neither Auckland Transport nor the New Zealand Transport Agency will fund this project on the grounds that it ‘does not represent value for money’.
A financial report from Ernst & Young highlighted numerous risks associated with the marketing and projected income from operating the tolled facility.

Today, a further proposal has been reported, the takeover by Auckland Council from the Government of its interests in Eden Park, the Cloud, and the Government half-share ownership of Queens Wharf.
Eden Park alone has debts of more than $55 million - $47.5 million of which is owed to the Council [ratepayers].
The last annual report [2012] from Eden Park Trust Board reveals that despite a small operating profit the stadium will be unable to afford the cost of any improvements or major maintenance as they become necessary over the years.
Ownership of the stadium itself does not pass to the Auckland Council but remains with the Trust Board, but the Council is unlikely to see much of its loan repaid anytime soon, if ever.

Taking over all these assets and projects will lead directly to increases in council rates – but the ratepayers have not been asked to support the cost of these increases.

These decisions are being taken at a time when the Council is trying to calculate how many millions it will need to pay out in ‘leaky buildings’ claims as a result of the Mainzeal crash.

This is not a time for any council, but especially Auckland, to take on un-quantified risks which must ultimately be guaranteed by ratepayers.
Mayor Brown may claim this year’s 2.9% rates increase as a sign of his commitment to keeping rates under control. But what about next year, and the following years, when the costs will bite?

The choice will be higher rates, or a reduction in other council services.


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