1. Infrastructure and Financial Strategies
Jim Palmer
Chief Executive
Waimakariri District Council

2. Hurunui District
Waimakariri
District
Christchurch
City
Selwyn District

3. Principles & Three Ideas
Risk Assessment and Financing Strategy
Risk–based Reticulation Renewals
Depreciation Funding – an alternative approach

4. Principles -the strategic fit

5. Infrastructure Strategies – must address
Anticipated Changes in Levels of Service
Forecasted Growth
Risk management, particularly natural hazards
Renewal & its funding – a whole of life view
Financial implications
Should consider all assets

6. Principles underpinning Infrastructure and Financial Strategies
Inter-generational equity – relative prosperity and demographics
Affordability – Council and the community
Prudent financial management – debt and whole of life funding
Risk mitigation

7. Risk Assessment & Financing Strategy
Hurunui District
Waimakariri
District
Christchurch
City
Selwyn District

8. Risk Assessment & Financing Strategy

9. Our Challenge
We’ve withstood one major event and it cost $127M – can we withstand another one?
We are a net-debt, high-growth Council with few realisable assets
The Alpine Fault failure is ‘overdue’ with a 30% chance within 50 years…. and we have other natural hazard risks

10. Our Response Developed a Risk Assessment and Financing Strategy
Considered largest natural risks - earthquake, flood, tsunami

11. Our Biggest Risk

12. Our Response Guestimated what the damage might be
Ground-truth it against the 2010 event
Considered funding strategy, both with and without insurance being available
Assessed impact on net debt & affordability
Developed as policy:
Limits for debt
Priority list for asset replacement

13. Council Funding Position
with Crown Support and Insurance
Estimated Reinstatement Cost $M
Crown/NZTA funding
Insurance
funding
Council Share
Above-ground Infrastructure and Buildings 30
Below-ground Infrastructure 67 40 27
Roading 28 12
Reserves 10
Emergency Response/repairs 20 15 5
Community Support
Total
172 83 57 32

14. Debt Limits with Headroom

15. Debt Limits - borrowing as % of operating revenue

16. Outcomes
Gives confidence the consequences of major events can be accommodated
Demonstrates prudent management in terms of debt levels and affordability
Provides priority for asset reinstatement

17. Risk-based Reticulation Renewals
Reticulation renewals were based on age, condition, and performance.
Now, we use a risk-based approach

18. Waimakariri DC – Renewals Profile

19. VULNERABILITY … TO LIQUEFACTION
Location relative to hazard is critical.

20. IT’S NOT JUST EARTHQUAKES

21. Risk-based Reticulation Renewals
Considered
The burst history of the Water mains & CCTV footage
The remaining useful life
The vulnerability, made up of:
Location
Material ductility
Jointing method
Criticality

22. Waimakariri DC – Renewals Approach
Wastewater:
CCTV inspection of ~2% network per annum based on risk profile
Risk score (renewals priority score) to schedule preliminary renewal programme
Renewal method determined from criteria
Water:
Burst history and pipe condition recorded
CCTV score
Blockage history
Vulnerability
Likelihood Score
Consequence Score x
Risk Score =
Remaining useful life
Burst history
Vulnerability
Likelihood Score
Consequence Score x
Risk Score =

23. Risk-Based Reticulation Renewals
Location
Diameter (mm)
Material
Criticality
Vulnerability
Remaining Useful Life
Risk Score
Sewell St, Kaiapoi
375
Asbestos Cement AA
Extreme 27
6500
Holland Dr, Kaiapoi
100
Polyethylene C
Medium 15
248

24. Outcomes Renewal strategy reflects risk
Mains have lower chance of failure
More resilient in future disasters
Quicker return of services for the majority of people

25. Funding Depreciation and the Capital Programme
Changed our approach to funding depreciation have considered the 100 year renewal profile.
Previously ‘fully funded’ depreciation.
We can invest ‘renewal’ funds at rates better than CPI or CCI.
Over time growth in those funds means we don’t need to fully fund depreciation each year - saved 10% in the first year.
Extensive financial modelling demonstrated we can revised our financial policies.

26. Waimakariri DC – Funding & Renewals Profile

27. Funding Depreciation and the Capital Programme
Changed our capital funding policy
Funding used to come from one ‘bucket’
Now
Renewals – separately tracked and funded
Level of service changes – loan funded
Growth projects – loan funded
Warning: this approach only works if you infrastructure peak is well into the future.

28. THANK YOU So… three ideas Risk Assessment and Financing Strategy
Risk–based Reticulation Renewals
Depreciation Funding - an alternative approach
THANK YOU