13 November 2023

Media: Local Democracy Reporter

Topic: Tarawera sewerage scheme

Enquiry

I spoke recently with some of the Tarawera community and have their comment for response and some questions too.
Owen and Margaret Dawe have not worked for the last 20 years and have been left “horrified” by what they described as an impossible situation that would “ruin or change a lot of people’s lifestyles”.

”I don’t think it’s democratic at all.”

He said while there were affluent people at Lake Tarawera, there were also retirees, young families and homeowners who have had their property handed down through generations.

While these properties may now be worth millions, that did not mean the people who owned them had much money in their pockets, he said.

He knew of one elderly woman with two properties and so would need to pay twice.

Owen understood there was a need for reticulation in the community, but said it was the cost that was unfair.

He wanted the community to be able to pay for the scheme like other communities had, over a 25-year period.

Initially, Tarawera residents were told it would be a lump sum to be paid by 2026, and were later offered a 10-year payback period.

The cost for the scheme was averaged across homeowners - Owen believed their home would cost significantly less to connect to the network than houses further away and more difficult to access.

He did not know what would happen if payments were not made, but assumed it would be the same as if rates went unpaid, and would be “virtually kicked out”.

The pair would need to dip into money set aside for if they got sick or needed the dentist.

“Do we let our teeth fall out then?”

The Dawes’ concern was they would need to sell their home.

They wanted an extended pay-back period or the council to cover stage one costs - about $12,500 per property excluding existing subsidies.

Lake Tarawera Community Group president Fred Stevens said all the group was asking for was a fair deal.

Stevens said if the 10-year option was taken that would equate to about $600 a month as well as an extra $700 - $800 per year targeted rate for scheme maintenance.

He also felt the council was making it “impossible” for homeowners to do the work themselves.

Stevens said there was no guarantee the near $50,000 cost per property was the limit.

If, as the project progressed, costs escalated to $60,000, Stevens said if people paid under a 10 year payback option, interest alone could equal $10,000 a year.

Stevens said he felt there was pressure for the community to sign up to the project as the council “threatened” it would lose $6.5 million of Ministry for the Environment funding and cost homeowners more.

He believed if the payback period had been set to 25 years, homeowners would have said, “okay, that’s reasonable” to the initial cost.

He said the ten-year period was “better than nothing”.

Tarawera resident Rohan Wells worked in the area as a scientist for more than 40 years. This included in aquatic ecology for National Institute of Water and Atmospheric Research.

“In 2014 the regional council reported the water quality of Lake Tarawera had declined markedly.”

The trophic level - which indicates lake water quality - was posted as ‘good’ at 2.7 in 2009.

This declined in 2014 to 3.1, ‘average’, triggering the septic tanks becoming illegal.

But Wells said, in 2019, the University of Waikato notified the regional council that its water analyses had been done incorrectly for a number of years, and when corrected, the 2020 water quality was in fact the same as it was in 2009.

In a memorandum to the council, authors Chris McBride and Troy Baisden recommended problematic regional council data be substituted with NIWA data.

The issue had been raised following “abrupt increases observed in phosphorus concentrations” at the lake post-2010.

They noted the council’s methods for phosphorus analysis post-2010 appeared highly prone to inaccuracy and/or interference by the unusual chemistry of the lake.

Wells also said the regional council’s website said resident sewage accounted for 8 per cent of the nitrogen sources and 10 per cent of the phosphorous sources for the lake in 2014.

The university calculated resident sewage contained 1 tonne of nitrogen and 0.2 tonnes of phosphorous and Wells said overflow from residents' septic tanks, with soil retention, would be “well below” 1 per cent of the total nutrient sources to the lake.

Using estimates from the university and the regional council in 2012 on resident, visitor and public toilet usage, Wells said visitors contributed 82 per cent of the nitrogen and 64 per cent of the phosphorous.

He felt a ‘user pays basis’ would reduce resident’s contributions to the scheme.

“The last update for residents from the [district] council was virtually $50,000.

“This absurd sum is an unprecedented targeted rate. It will put a number of residents out of their homes and markedly change retirement quality for many others.”

Questions and to check:

In 2020, the council agreed to the present project and estimated the cost per household would be $30,300.

The current estimate was $48,300 with GST.

Late last year, the council estimated the project’s total gross cost would be $23 million to $32m. What now?

What total cost was the cost estimate provided to residents based on?

$7.25m is externally funded - as said in LTP workshop.

In April Stavros Michael said the project had been split into two stages to safeguard a $6.5m subsidy from the Ministry for the Environment. Rotorua Lakes Council and Bay of Plenty Regional Council jointly contributed about $1.5m, for a total of $8m in subsidies. Did it lose some? How and why?

When were residents offered the ten-year payback option?

Cost for each stage? Excluding subsidies and with subsidies per property?

How many properties?

Was the need for the project questioned after the error in regional council data was found?

How much, with GST added, will the community be paying for the scheme in total?

Is the council aware of what contribution to the trophic level the public toilets have and was this taken into consideration?

Why is the council not contributing more to the scheme?

Response

From Rotorua Lakes Council Group Manager Infrastructure and Environmental Solutions Stavros Michael:

In 2020, the council agreed to the present project and estimated the cost per household would be $30,300. The current estimate was $48,300 with GST.

NB#, this is not entirely correct. The Council included the project into its Long Term Plan (2021-31) based on the 2018 concept estimate. Subsequent to that, detailed design and procurement further clarified the estimate which was communicated to the Lake Tarawera property owners through a number of letters. You have, in this part, only included the highest estimate of the expected cost range with GST. It is important to have both the high and low estimates (I refer you to the yellow highlighted content below).

Late last year, the council estimated the project’s total gross cost would be $23 million to $32m. What now?

The initial pricing received in June 2022 for Stage 2 (the on-property system) was too high to accept, prompting the decision by Council to proceed with an open procurement to fully test the construction market. Stage 2 gross scheme costs are now projected to be within a range of $26.5 M – $29.0 M

What total cost was the cost estimate provided to residents based on?

It was based on the concept plan proposed by the Lake Tarawera Sewerage Steering Committee (LTSSC)* in 2018. That was prior to detail design and tender prices and included $8.0 M known subsidies.

*LTSCC representatives include Tūhourangi Tribal Authority, Te Mana o Ngāti Rangitihi, Māori landowners, the Lake Tarawera Ratepayers Association, Te Arawa Lakes Trust, Bay of Plenty Regional Council (BOPRC) and Rotorua Lakes Council.

Based on the latest tenders the average net capital cost to each property, for the whole scheme (Stage 1 and 2), would be in the range of $38,000 – $42,000 (GST Excl). The range of expected average net cost for each property outlined above is on the basis that no further funding assistance additional to the currently known sources ($8.0 M) is available.

The financial contribution is broken down into 2 parts:
Part 1:

A share of the cost of installing the Tarawera reticulation network. The cost will be divided by 550, so each property will pay 1/550th of the network construction cost. Undeveloped sections will pay Part 1 only. This would cover the section’s contribution to the cost of the network construction and would leave a connection point in the street pipe for any future installation. This cost distribution assumes an extra 100 future property development. Those new properties will pay their contribution when they apply for building consents.

Part 2: An equal share of the total cost for installing Low Pressure Grinder Pump (LPGP) systems onto all properties. Future operational, maintenance and renewal costs will be carried out by all ratepayers in the district connected to the council wastewater networks as part of the wastewater targeted rate (an estimated extra $30- 40 additional to the current rate annually).

Each property benefiting from the scheme will pay both Part 1 and Part 2 contributions.

Properties with two or more dwellings will be assessed for additional Part 2 payments covering the additional connections required. This depends on the size of each additional dwelling and will be calculated in accordance with the %HUE each additional dwelling represents. The %HUE calculation is explained as follows: