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Water Facilities Build Decisions This Week

Hastings District Council will decide on a lead contractor and budget for the district’s two largest and most critical drinking water infrastructure projects this week – the new Eastbourne and Frimley treatment facilities.

Providing safe drinking water and increasing the capacity and resilience of the network remain Council’s number one priority; as set out in its 2018 Drinking Water Strategy. The Eastbourne and Frimley water storage and treatment facilities are the last major components of the strategy.

The tender being considered this week is for the building of water treatment facilities over the two sites (subject to the Eastbourne site receiving Resource Consent), the fit-out of the specialised treatment equipment, and the construction of associated pipe work.

Details of the tender remain confidential due to the commercial sensitivity of the information.

The decision, to be made at a Council meeting this Thursday [April 8], is preceded by a report recommending that the budget for water strategy projects be increased by $9.8m - $6.8m by loan-funding and $3m through the reallocation of central Government funds granted to Council.

This would take the total cost of the drinking water projects (including the eight small community supply upgrades; the second mains water pipe connecting Hastings and Havelock North, and the Frimley and Waiaroha storage and treatment facilities), to $81.9m. Subject to Thursday’s decision, $67.8m will be loan-funded by Council and $14.1 central Government-funded.

Hastings District Council Chief Executive Nigel Bickle said a number of factors had led to increases in costs, including the impacts of COVID-19 on both international and New Zealand supply and construction markets, and the complexity and highly technical requirements of the Eastbourne and Frimley projects.

“These are large projects that depend on both a head contractor and a broad range of subcontractors. With central Government ramping up major construction projects across New Zealand to stimulate the economy amid COVID-19, the resulting high demand has led to a shortage of available contractors with the skills to carry out the projects.

“Compounding this, the number of projects underway in Hawke’s Bay and nationally has also resulted in a shortage of some construction materials, including concrete and timber. Shipping delays stemming from the global impact of COVID-19 are also impacting costs.”

Mr Bickle also said estimating the cost of highly specialised equipment some years out from purchase was always problematic, with Council aware at the time the water strategy budget was set in 2018 that the true cost would only be known as each stage of the six-year project went through the tender process.

Waiting for the construction market to return to ‘normal’ was not an option, given central Government deadlines for councils to achieve new drinking water standards.

Mr Bickle said while cost increases were never welcome, in light of the size of the project, the timelines that must be met, and the impacts of COVID, they were unavoidable.

“The Major Projects team has combined the key elements of the two projects to realise efficiencies.,

“I am confident that we have realised the best value for money for our community, for a project that goes to the very heart of keeping our people healthy and safe.”

Options for funding the increase included consulting with Government on allowing Council to reallocate funds it had provided for other projects, and increasing debt funding.

“We have a number of projects in the capital works programme that the latest review shows will not be completed within current time frames, and therefore this loan-funding will have a limited impact on Council’s overall borrowing levels.”

The budget decision will be made in an open session of Council on Thursday, while the tender decision will be made in a public-excluded session.

Also well underway are the upgrades of the small community supplies with Te Pohue and Haumoana/Te Awanga supplies complete and the Waimarama, Clive and Whirinaki/Esk supplies in the construction phase. Planning work has been completed for Waipātiki with construction scheduled to start soon, and community consultation on the Whakatū upgrade is underway. Discussions with the Waipatu community are due to be held.

Two of the first major elements, the second 4.8km water main linking Hastings and Havelock North and the Havelock North booster station, were completed in 2020.

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