Mangawhai Wastewater Strategy and Options 7 August 2017

Mangawhai Wastewater (MWW) Objectives & Background Part 1 System, Options, Growth & Demand Part 2 Connection policies, Anomalies & Alternative funding options Decisions required MCWWS Advisory Panel recommendations Conclusion

Objectives of MWW scheme & extension Need to protect the Mangawhai Harbour Support growth (Mangawhai Community Plan) Honour commitments Purpose of Local Government

Background Past Ground zero 2012 Phase 1 2014 Phase 2 2015 Phase 3 now

Ground zero & now Attribution of MWW debt to communities 2012 2017 $m   2012 2017 $m Existing community (connected and connectable) 9.4 12.1 Mangawhai Harbour Restoration community 4 13.4 District wide- tranche 1 (balance capital cost) 11.3 9.8 District wide- tranche 2 (prior operating deficits) 7.1 0.6 18.4 10.4 Note 1 Sub-total current communities 31.8 22.5 Development years 1 – 10 6 Development years 11 and over 20.2 26.5 Sub-total future communities 26.2 Total 58.0 49.0 Note 1: to be finalised for year end

Need for MWW extension (ME3) Growth is happening:- Disposal will require expansion; Treatment plant can handle more with $1.8m upgrade; Reticulation needs to be extended.

Risks Managing capacity Estimating pace of growth Debt high peak loading over the Christmas / New Year period; long term increases in the average flows into the system due to ratio of permanent to holiday homes increasing Estimating pace of growth too fast, too slow changing demographics Debt Potential for stranded debt Managing extension

Part 1 ME3 System components & capacity Options, costs & funding Growth and demand

System components & capacity Private connections Currently 1,956 connected; 486 capable (total 2,442 at May 2017) Reticulation network Capacity 2,500, 2020 based on medium growth (77 pa) Treatment plant Disposal of effluent Capacity 2,600, 2021 based on medium growth (77 pa) Total equivalent dwellings approx. 2,200

ME3 - Option 1- Do minimum Extend disposal system, upgrade existing reticulation, upgrade treatment plant; Capacity 3,300 connections; reached in 2030 based on medium growth scenario; Cost over 10 years $4.35m.

ME3 - Option 2 - Reticulate Pockets Extend disposal system, upgrade existing & extend reticulation, upgrade treatment plant; Includes $3.7m to extend the reticulation; Capacity 3,300 connections - reached in 2030 based on medium growth scenario; Cost over 10 years $7.65m. 24 pockets.

ME3 - Option 3 - Ecological plus pockets Extend disposal system, upgrade existing & extend reticulation, upgrade treatment plant; Includes $12.4m to extend the reticulation; Capacity 3,300 connections - reached in 2030 based on medium growth scenario; Cost over 10 years $16.35m.

ME3 - Option 4 - Additional Disposal Extend & additional disposal system, upgrade existing & extend reticulation, upgrade & augment treatment plant; Includes $17.6m to extend the reticulation; Includes $12.8m to augment the treatment plant; Capacity 4,700 connections - reached in 2052 based on medium growth scenario; Cost $34.78m mostly over 18 years.

ME3 – comparison of options   Uninflated 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 2026-27 2027-28 2028-29+ $m $ m Option 1 - Service 3,300 connections Extend irrigation system 0.95 - Upgrade existing reticulation 1.20 0.20 1.00 Upgrade WWTP 1.80 0.80 Additional Capacity for Growth - Council 0.40 0.04 4.35 1.24 1.84 0.99 Option 2 - Reticulate pockets, 3,300 Extend reticulation (8 years) 3.30 0.41 7.65 1.40 0.45 Option 3 - Ecological + pockets, 3,300 12.00 1.50 16.35 2.49 1.54 Option 4 - Additional R, T & D, 4,700 New disposal system 2.23 1.49 Extend reticulation (13 years) 17.20 1.30 6.50 Augment WWTP 12.80 0.50 10.50 34.78 2.39 1.44 1.34 18.49

Growth & Demand Growth Demand Using the medium growth scenario (77 dwellings pa) Same basis as for the Mangawhai Community Plan Demand Determines where reticulation should go Ecological option may divert away from demand areas

Summary of financial modelling Base ME3- Op1 ME3- Op2 ME3- Op3 ME3- Op4 MCP w Op2   average for 10 years Rates $m 33.9 34.8 Rates increase % 2.6% 3.0% Operating revenue 50.4 46.6 51.3 Capital revenue 9.8 10 10.1 10.2 10.6 Total revenue $m 60.2 56.6 60.5 60.6 60.4 61.9 Activity operating costs $m 37.5 38.2 38.1 38.5 39.6 Capital expenditure $m Growth (base) 0.3 Level of service 4.3 Renewal 16.6 New 0.7 1.7 2.1 Total 21.2 21.5 21.9 22.9 23.3 position at year 10 Debt $m 36.5 45.7 47.6 60.9 61.7 62.5 Net debt as % of revenue (LGFA 175%, policy $170%) 103.7% 70.6% 73.6% 94.5% 95.7% 93.7% Net interest as a % rates (Limit 25%) 9.7% 6.1% 6.3% 7.6% 7.7% 9.1% Debt as a % net assets 8.9% 6.6% 0.3% 6.8% 13.1% 6.9%

Summary of Funding implications Development contributions $ (excl GST) Current DC 21,237 Base 13,784 ME3 option 1 (do minimum) 17,111 ME3 option 2 (pockets) 17,959 ME3 option 3 (ecological) 20,193 ME3 option 4 (additional R, T & D) 20,027 ME3 option 4 - 25% 23,880 ME3 option 4 + 25% 19,966

Summary of Funding implications Rates

Part 2 ME3 Connection policies Anomalies Alternative funding options

Connections Policy Three parts to the Policy Requirement to connect Private costs and funding Operation and maintenance of private connections

Five Groups of Properties Property Groups with connection potential A Existing connectable properties with an existing dwelling (83[1]) B Existing connectable properties without a dwelling (384) C Future connectable properties with an existing dwelling (297) D Future connectable properties without a dwelling (149) E New properties created by subdivision or development (Estimate 2,765)   [1] All rating unit data is at 7 April 2017

Requirement to Connect Options Property Group A B C D E Option 1 – Connection optional   Option 2 – Connecting promoted As soon as practicable, eg on development or building consent or failure of on-site system At time of development or building consent As soon as practicable, eg on reticulation network extension or on development or building consent or failure of on-site system At time of development or building consent At time of development or building consent

Private Costs and Funding Options for ownership, operation and maintenance Property Group A B C D E Option 1 – Full private cost All full private cost including grinder pump. Grinder pump to vest in Council Full cost including grinder pump. Grinder pump to vest in Council After calendar 2009 - Full cost including grinder pump. Grinder pump to vest in Council Option 2 – Partial assistance   Before calendar 2009 - Grinder pump funded by Council Note: The Advisory Panel recommended that Council fund a grinder pump if required if the dwelling existed pre-2009

Operation and Maintenance Situation X - Single dwelling private drain directly between the dwelling and the public drain; or Situation Y - Multiple dwelling common private drain serving a number of dwellings/ premises and connecting the public drain; or Situation Z - Cross-property private or common private drain, with the drain crossing other properties to reach the public drain.

Operation and Maintenance cont.… Options Option 1 – Full private responsibility Option 2 – Council provision/ private responsibility Option 3 – Private provision/ Council responsibility Option 4 – Full Council responsibility  Situation X – Single dwelling (Gravity) All full private costs to be met by owner   Situation X – Single dwelling (Pressure) Electricity costs only A, B C, D, E Groups D, E Groups A, B, C and replacement D, E Situation Y – Multiple dwelling – common private drain (Gravity) A, B, C, D, E Situation Y – Multiple dwelling – common private drain (Pressure) Situation Z – Cross property common or private drain (Gravity) Situation Z – Cross property common or private drain (Pressure)

Anomalies Property “C”s Historical exemption from paying “capable to connect”

Subsidised connection costs Policy Costs Grinder costs Gravity/pressure ratio No. of additional grinders required Funding of any new grinders plus all depreciation Subsidised connection costs Capital contributions v DC’s Group “C”s PDA’s Approx. $9,200 to supply & install a domestic grinder pump station.

Alternative funding options Additional targeted rates for Undeveloped land, and/or Mangawhai harbour restoration or some other area The purpose would be to manage Debt & timing (financial exposure risk) issues, and/or Reduce per unit DC’s, and/or Reduce per SUIP network charges, and/or Fairness & equity issues.

Decisions Required Provide for current requirements Option 2 recommended Plan for the future Option 4 recommended Policy decisions Council policy stance Connections policy Financial & funding policies

MCWWS Advisory Panel recommendations Material: Advisory Panel Report - July 2015 Draft update on MCWWS Advisory Panel Recommendations - August 2017

Conclusion Must go forward Growth - but what pace? The past is always with us Significant policy & financial considerations Debt management Affordability Distribution of costs Fairness

Questions?