Financial update

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13 June 2018

Severe weather events have added to financial pressures for Rotorua Lakes Council this financial year.

As reported to the Operations and Monitoring Committee last week, Council is tracking to end the current financial year (1 July 2017 to 30 June 2018) about 2 per cent over budget.

“Council has worked hard to contain costs during what has been a financially challenging year but we are certainly feeling the impacts of weather events,” Chief Financial Officer Thomas Collé says.

Other factors which have impacted Council’s overall financial performance, include higher-than-budgeted costs for disposing of higher-than-expected volumes of general waste to landfill.

“We expect the variance related to this to total close to $1m by the end of the financial year,” Mr Collé says.

The closure of the Sir Howard Morrison Performing Arts Centre, Mudtopia not achieving revenue targets and electricity spot pricing, which has now stabilised back to budgeted levels, have also had an impact.

“Income continues to track $1.74m ahead of budget with rates, fees and subsidies all well ahead of budget and this plus things like the sale of surplus properties has helped to offset additional costs incurred during this financial year,” Mr Collé says.

“The organisation has made significant and concerted efforts to target savings where possible and the capital works programme has been under constant review.

“Efforts to mitigate additional costs had us tracking to end the year within 1 per cent of the overall budget. However, the impact of the April floods means we are now more likely to finish the financial year within about 2 per cent of overall budget.”

Mr Collé says there is always an element of contingency in budgets and spending priorities and budget contingencies are regularly reviewed.

Future spending priorities and budget considerations will need to take the impact of the increasing number of severe weather events into consideration, he says.

“That is something which is being discussed within the organisation and which elected members have also raised.

“Assessing current systems and infrastructure and how we can prevent or minimise future risk will follow the outcome of the independent panel which will look at what happened and what contributed to the 29 April event. We expect the findings will help guide future infrastructure planning and decision-making for the district which will, in turn, help guide spending priorities and budget considerations.”

Impact of flood and storms

The 29 April flooding caused an estimated $5m in damage, mainly to roading infrastructure. The repairs will fall into the next financial year, which starts 1 July, however about $500,000 in costs has been incurred in this financial year for initial response including clearing of slips, debris and trees and work required to stabilise damaged roads until the substantial repairs can be done.

The full cost of the April weather event won’t be known until the flood recovery phase is over. This phase is focussed on providing support and assistance for flood-affected residents, including those still unable to return to their homes. Some of the support roles have been filled by council staff who have been seconded to the flood recovery while several roles have had to be filled by people outside of Council.

Previous severe weather events which have occurred during the past year have also caused significant damage to roads, reserves and other infrastructure, which has impacted Council finances by another $500,000 for response work and repairs, some of which was ongoing when the April flooding occurred.

It is anticipated that New Zealand Transport Agency (NZTA) subsidies will cover about $3.5m of the $5m in damage caused by the April 2018 flooding and an approach has been made to Government to also assist with the remainder.

Rotorua Lakes Council Infrastructure Group Manager Stavros Michael says repairs to damage caused by weather events during the past couple of years have occupied a large chunk of time for his team and Council contractors.

“When the 29 April flooding occurred we were still working on repairing damage caused during previous weather events.

“Most of the damage from April was to roading with the major damage occurring in the Paradise Valley, Tarawera, Mountain Road, Rerewhakaaitu and Reporoa where parts of roads were washed away and/or flood waters caused significant scouring of road surfaces.

“Roading projects attract subsidies from NZTA so we are working through the application process regarding road damage from the April flooding.

“For the approximately $5m in damage from the April flooding, the first $1m attracts a 54% subsidy from NZTA and the rest a 72% NZTA contribution, leaving about $1.6m to be funded by Council. That’s the portion we are also asking Central Government to consider covering and we are yet to hear about that,” Mr Michael says.

Engineering designs for road repairs incorporate preventive measures where necessary for a particular level of risk management.

The district’s stormwater and wastewater systems have not been damaged during recent storms but were overwhelmed and overflowed in some areas on 29 April although the floodwaters quickly drained away again.

Practical measures Council undertakes prior to storms or rainfall to reduce the potential impact includes checking, and clearing if necessary, of drainage systems in areas prone to surface flooding, checking all systems (like pump stations), are operating as they should and emptying storage ponds at the wastewater treatment plant ahead of anticipated heavy rainfall to reduce the possibility of overflows. A proposed upgrade of the plant will include increased capacity.

The practical measures undertaken in relation to stormwater and wastewater systems are in addition to regular, ongoing maintenance and inspections which are carried out to maintain systems in the best practicable state to cope with inflows.

Council also asks residents to help by, for instance, checking drains and cesspits on and outside their properties prior to heavy rainfall and either clearing any debris or contacting Council to let us know if drains need clearing. Reducing water use during heavy rainfalls to reduce the load going into our stormwater and wastewater systems is another way residents can help.

Considerations regarding infrastructure are ongoing and the flood review panel’s findings is expected to provide guidance for mitigating the impact of the increasing number of severe weather events we are experiencing. The review may highlight long-term future modifications to infrastructure capacity, Mr Michael says.

Bay of Plenty Regional Council also undertakes work to mitigate the impact of storms and rainfall events.

 

 

Page reviewed: 13 Jun 2018 12:00am