Council enters into wastewater services contract



29 July 2020

From the meeting – Rotorua Mayor says wastewater contract provides certainty for community

Council enters into wastewater services contract

At today’s full Council meeting Councillors voted to enter into a 10-year collaborative contract with a consortium for the delivery of Rotorua district wastewater services.

With the goal to ensure a stable, reliable and safe network, Rotorua Lakes Council has agreed to contract a consortium for the provision of wastewater related services, including operation of wastewater treatment plants and network maintenance and renewal.

Rotorua Mayor, Steve Chadwick, says the decision provides certainty for the community.

“This has been a long journey. Since 2015 we have made some significant improvements to the district’s infrastructure and we seriously turned our minds to the waters network in 2017.

“Today we have adopted a contract for wastewater services that will provide certainty for our community; certainty of delivery, quality and maintenance of the district’s wastewater services network.

“Council retains effective control over the service and through the management of the contract locks in certainty of cost of service during the next 10 years. Given the interruption of COVID-19, cost certainty being protected is important,” she says.

“Our ageing network, with a replacement value of over $400m, has now reached over half of its useful life. Action was needed to ensure the resilience of our system into the future.

“This contract allows us to move forward with expert partners. The partnership brings greater experience and technical expertise. It should be seen as our commitment to protecting our environment, to enabling growth in our district and to giving certainty to Government that we are taking responsibility and investing in our future.

“To not go down this road would have been making the decision to stay with a system that isn’t working. To have not made this decision today would have been irresponsible,” says Mayor Chadwick.

The consortium – Trility NZ Ltd, Fulton Hogan and Stantec – was selected as the preferred partner following an extensive three-year procurement process where six other consortia participated.

The recommendation to enter into the contract came from last week’s Strategy, Policy and Finance Committee meeting and has today received majority support from Council. Councillors Sandra Kai Fong, Peter Bentley, Reynold Macpherson and Raj Kumar voted against adopting the contract.

Under the contract with Trility NZ Ltd, the ownership of the wastewater networks and related assets will remain under the Council stewardship on behalf of the community who have funded them over many generations.

Council’s Infrastructure Group Manager, Stavros Michael, explains how the contract will benefit Rotorua.

“This contract is about proactively identifying emerging risk and about putting in place a plan that reduces that risk for an acceptable cost.

“Historical underinvestment in Rotorua’s wastewater infrastructure means there is a high risk that our system is highly likely to experience a critical failure in the next ten years. This issue is not unique to Rotorua. It’s being experienced across the country and recent changes in Government’s expectations around wastewater requirements reflect this awareness.  

“The impact of a failure in a critical part of our network, both financially and environmentally, could be huge. Additionally, wastewater contaminating our waterways is considered completely unacceptable by iwi, the wider community and Government.

“The way our current wastewater services maintenance programme is conducted cannot keep up with these expectations. In order to mitigate this risk and to find a way forward that would result in a safer, more reliable, wastewater system, we needed to look at doing things differently.

“We consulted extensively with the sector and asked what model we should be using to achieve improved outcomes for our wastewater services. The recommended model was the one Council has agreed to today.

“Through our 30-year Infrastructure Strategy, first implemented in 2015, Council committed to a goal of funding the renewal of the wastewater network appropriately, 1.5% per annum, an increase from the 0.5% allocated for many years previously. While this is an improvement, it doesn’t have the immediate impact we need to make real change.

“Currently between 70-90% of our wastewater services are undertaken by a variety of contractors. But no one contractor has the ownership of responsibility for the network as a whole and Council carries all the risk.

“What we have achieved with this contract is a one-network and holistic approach to the management and delivery of our wastewater services. We are not outsourcing, we are partnering with an expert consortium who will share the responsibility of identifying effective solutions to the issues we are experiencing with our wastewater services and help us create a more resilient network for the future.

“We can guarantee the cost of maintaining and improving our wastewater network will increase in the next ten years for many reasons. Without a holistic approach contract, there is no certainty about what this will cost Council. With the contract, we achieve a significant degree of cost certainty.

“Yes this is a progressive contract and a different way of doing things. But, the development of the proposal accepted by Council today has been a robust, three year process, which has had multiple touch points with experts, with elected members and has gone all the way out to the community for consultation twice.

“We need to do things differently if we want to see different outcomes. I am confident that through this contract we are taking another step towards building the resilient and reliable wastewater services our community demands.”

 Key information

  • The partnership with Trility NZ Ltd will see a large number of current contracts for wastewater services consolidated into a “one network” approach for delivery and holistic management. Most wastewater-related services in Rotorua (70 to 90%) are currently undertaken by a variety of contractors.
  • The consortium is committed to employing locals, providing training and career opportunities to locals and maintaining relationships with local iwi.
  • The process to now – including the selection of the preferred consortium – and the final proposed contract has involved and had input from various expert consultants, iwi representatives and the Amalgamated Workers union, alongside Council and the consortium partners.
  • Over the past three years consultation has included: four weeks of public consultation as part of the 2019/20 Annual Plan consultation, four weeks of public consultation specifically about this proposal, 27,000 information packs were delivered to ratepayers, over ten updates were provided to the Operations and Monitoring Committee, five Council forums were held, a two-page spread was included in the local paper about the proposal, and two information evenings were held.
  • The proposed contract is for 10 years.
  • If either party breaches the contract, contractual remedies will apply.
  • Under the contract, the risk of network failures resulting from poor performance is transferred to Trility NZ Ltd. Council retains earthquake insurance for a major natural event outside the contractor’s control.
  • Central Government’s 3 Waters reforms do not constrain Council’s ability to enter into the consortium contract. Council has yet to discuss and determine its position with regards to the reforms which propose the transfer of total control away from councils.
  • Consolidating currently diverse services in wastewater under one contract will not immediately address the challenges of Rotorua’s ageing network, but will significantly reduce the risk of critical parts failure through a contractual requirement for reliable service provision.
  • Investing in and expanding current networks will remain a Council decision and the contract does not constrain those decisions.
  • Under the contract, Council’s operational wastewater services staff (10) will be transferred to the consortium, as agreed with their union, under agreed terms and conditions.
  • Trility NZ Ltd has been established by Australian company Trility Group.
  • Council will maintain the appropriate level of engineering skills and capacity to manage the proposed contract through its Infrastructure Group.
  • The development of this wastewater services contract is part of an ongoing review and improvement of Council infrastructure and services that has included the capping and sealing of the district’s landfill, the introduction of wheelie bins and kerbside recycling, roading resilience improvements, the establishment of an urban shared pathways network, introduction of UV treatment of all water supplies and progress on wastewater reticulation in lakes communities with work on stormwater networks planning now also underway.

Want to know more?

Go to pg10 of last week’s Strategy, Policy & Finance Committee meeting agenda to view the report on this matter. The report provides background and highlights the main themes and issues identified by submitters, alongside council staff’s responses to the matters raised.

View the Statement of Proposal that went out to consultation HERE at Council’s Let’s Talk/Korero Mai engagement platform, where you will also find more detail and information about what was proposed and why.

You can view the presentation slides from today’s presentation HERE.

Today’s presentation and deliberations were livestreamed and you can access the recording HERE on Council’s YouTube channel.

Infracore capital injection approved

Today Council also approved a $750,000 capital injection to Infracore as equity. Infracore (a Council Controlled Organisation) has recently undergone a change in leadership and stands ready to further enhance its already existing relationships with Rotorua Lakes Council and other local contracting providers. This investment will ensure Infracore is well placed to start having strategic discussions with other parties and enable them to take on further work streams where possible.

Today’s meeting was livestreamed and you can access the recording HERE on Council’s YouTube channel.

You can view today’s Council meeting agenda HERE.

Page reviewed: 29 Jul 2020 3:55pm