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Wairoa responds to Taxpayers' Union rates claim

Further to our questioning of the use of a rates figure that does not include new targeted rates, the Wairoa District Council has issued a media release:

Wairoa District Council Defends Against Negativity

Wairoa is transforming into a vibrantly energetic part of New Zealand and will no longer accept spin-driven criticism. This is the message from newly-appointed CEO of Wairoa District Council Fergus Power, in response to recent criticism by the New Zealand Taxpayers Union over a proposed budget increase.

Describing it as just another example of ‘Wairoa-bashing’, Mr Power said it was a cheap shot that distracted from the fact that the district is very much open for business.

“I have been appointed to bring about a transformation within Council, and within the district. The first step requires active rebut of the sort of nonsense that has been promulgated for years – that Wairoa is in decay, has inept leadership, and is incapable of a sustainable, prosperous future. In fact, Wairoa district has the youngest and most vibrant population structure of all of the cities and districts in the Hawke’s Bay region – with 25% of the population aged between 0-14,” said Mr Power.

“That is backed up with some of the warmest and most welcoming people, a rich and proud Maori culture, the kindest climate imaginable, and a surfeit of fish, game, and opportunities to recreate in the vast outdoors – which includes the stunning Lake Waikaremoana and Te Urewera National Park, and the world-renowned beaches of the Mahia Peninsula, with sun, sand and surfing”, he said.

Wairoa Mayor Craig Little said Wairoa would no longer accept baseless scaremongering.

“I will defend Wairoa district’s reputation aggressively. We are no longer a punching bag. We are punching above our weight and we have much work to do as a community”.

"When the punching bag looks like blue sea, warm sand, sunshine, and an energised and dedicated community committed to a complete transformation of the district – it becomes a slightly harder target. In fact, why would you even want to diminish it?

NZTU criticism was centred around the Draft Annual Plan 2014-2015, which is currently in the consultation phase.

The plan includes a 5.43 percent increase in the budget, which does not include the funding requirements for the Mahia and Opoutama Wastewater Schemes. Ratepayers not involved in either wastewater scheme are not affected by these funding requirements.

Participants in the wastewater schemes are being consulted with separately, as they have several options for repayment. Figures that relate to these schemes in the Draft Plan reflect the default repayment option, although the choices those participants make will have a significant impact on the projected rates requirement.

All Wairoa ratepayers are sent individual draft rates notices, which record the proposed rates amount for their individual properties under the Draft Annual Plan.

Visit www.wairoadc.govt.nz to view the plan in full and make an online submission. Consultation closes at noon on Thursday, June 12.

Ends

We reject that our comments were 'Wairoa bashing' and would rather stick to the issues. 

We accept that the Wairoa District Mayor and CEO were not intentionally misleading Wairoa ratepayers in relation to rate increases related to the Mahia and Opoutama Wastewater Schemes. We also accept that the Council has consulted widely on those schemes and those ratepayers affected are likely to be aware, or will soon be aware, of the financial implications of the schemes and following further clarification we without reservation apologise for any malignment of the character of the Mayor and CEO of the Wairoa District Council.

We still believe that the Council was wrong to use the 5.43% in material issued publicly, without making it clear that this figure did not include spending and rates related to the wastewater schemes. The draft annual plan shows that total rates income (including the targeted rates) is estimated to increase by 15.9%. We thought that it was proper, and still think it proper, to raise the matter publicly. In part we relied on a statement from a Council officer  that the wording was ‘loose’. After assurances from the Council’s CEO that the Council had not meant to mislead the public, we are happy to let the matter be debated as part of the normal draft annual plan consultation process.

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Where does 5.43% actually equal 15.9%?

Wairoa ratepayers should be furious with the Wairoa District Council for misleading the public on its forecast rate hikes. Earlier today the Taxpayers’ Union discovered that statements by the District’s Mayor and CEO that rates are forecast to increase by 5.43% are fanciful. The real figure is in fact 15.9%.

Earlier today the Taxpayer's Union were alerted to a slight problem with two statements contained in Wairoa's draft annual plan, currently open to public consultation.

In the introductory statement by the Mayor and Council CEO they claim that on average rates are increasing by 5.43%. But when we do the math, not based on the spin but on the financial numbers in the same paper, we come to a whopping 15.9%

So how do the two amounts reconcile? We wrote to the CEO to ask:

 

Here's the draft annual plan we quote. Note pages 1 and 91: 

Late this afternoon we received a call from a Council official who reports to the CEO and had a frank conversation. Amazingly the official acknowledged what he termed as 'loose' wording by the CEO and Mayor. Apparently when the figure was originally reported to the Council it included a significant proviso that two new rates were not included.

The 5.43% figure does not include two new rates which relate to two waste water schemes. Once you include those the rates increase is nearly three times the percentage the Mayor and CEO were trumpeting.

We're calling on the Wairoa Council CEO, Fergus Power, and Mayor, Craig Little, to apologise to Wairoa ratepayers, and correct their misleading statements in the draft annual plan.

What do you think? Acceptable spin, or misleading the public? Comment on our Facebook page here.

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Wellington Regional ratepayers on the hook for earthquake damage

This morning the Taxpayers’ Union went public (click here for the Dominion Post coverage) with concerns regarding the oversight of Wellington’s CentrePort by the majority shareholder, Greater Wellington Regional Council.

The Council owns 76.9% of CentrePort, which has invested heavily in the 'Harbour Quays' development – a series of office buildings adjacent to the Wellington train station.  

I am familiar with the developments, and the risks to ratepayers, as some years ago I acted for  group promoting Wellington’s liveable and compact central business district.  We submitted to the Council’s Long Term Plan and showed that the Council was not recovering a market return given the nature of the Port’s property development activities.

As an example we referred to the Majestic Centre to remind councillors how risky large scale office development is.  It was budgeted to cost $150 million. After the developers and the receivers finished it the total cost in 1991 was reportedly $205 million including funding costs.

It was sold to Kiwi Income Property Trust for only $48 million 3 years later.

The most recent annual report of Kiwi Income Property Trust Limited shows the current fair value of the Majestic Centre at $61.3 million, less than half the cost of development over 20 years ago. The same report also reports that $54 million is required to bring the building up to 70% of code.

In the most recent CentrePort Annual Report, the Chairman, Warren Larsen, says: 

"In 2014, the company will advance new plans for the popular Harbour Quays property precinct. These investments play a vital role in funding port growth plans.”

Mr Larsen goes on to say:

"Impact of recent events

On Thursday 20 June 2013, an intense cyclone brought strong winds and high waves to central New Zealand, causing damage to much of the region, including CentrePort. Wind gusts of up to 200km per hour were recorded.

Though outside the reporting period, it is important to note the 6.5 and 6.6 magnitude earthquakes that struck central New Zealand on 21 July and 16 August 2013, respectively.

Importantly, the port resumed operations immediately after the events, but the earthquakes caused damage to some CentrePort property, most notably the BNZ building which has been vacated for repairs to the interior of the building.

CentrePort is working with its engineers, insurers and affected parties to determine the exact cost of the repairs, which will flow through the business in the months and year ahead."

So, in January I asked the Council what the expected costs of the Earthquake were and whether impairment adjustments have been made to the value of CentrePort’s investment property portfolio.

Despite reports only in the last few weeks that some BNZ staff are still not able to work in the Harbour Quays building, Wellington Regional Council don’t know how much damage/cost resulted from the quakes.

The Council’s response to my information request is below.

Plenty of buildings were damaged by the Cook Strait quakes - why is it important in this case?

The key reason why ratepayers in Wellington should be concerned with CentrePort’s buildings, and the further development hinted at, is that unlike any other property investment company, Greater Wellington guarantee CentrePort’s debts.  That means, that unlike any other property developer, if things really do get nasty, Wellington ratepayers will be in the gun.

You’d think in these circumstances, Greater Wellington Regional Council would be keen to keep a close oversight of the Port and it’s property investments.

Apparently not…

Below is the Council’s response to our request for information.  Note that the Council only appears to be concerned with direct out of pocket costs (it words losses in terms of “the Council is paying NIL”).  As I experienced back in 2012, the Council does not appear to understand that losses and risks borne by CentrePort are tied to the Council thanks to the debt guarantee.

We think there are some key questions:

1. What was the extent of damage at the Port and it’s property development arm - “Harbour Quays”?
2. Who is bearing those costs?  The Port, the tenants such as BNZ or insurers?
3. Given the revaluation losses in the past, will CentrePort be forces to write-down (impair) the value of the Harbour Quay buildings as a result of the Cook Strait quakes?
4. Why doesn’t the Council have the information?  What oversight are they having of the Port?
5. Why does the debt guarantee exist in the first place? Why should Wellington ratepayers subsidise the Port to borrow cheaply to develop buildings that pull people out of Wellington’s CBD and onto Port land?

 

Click "Continue Reading" to view the Council’s response to our request for information.

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Update on Dunedin Mayor’s “Gentleman’s agreement”

We now have more details of the deal uncovered by the Taxpayers’ Union over the weekend between Dunedin’s Mayor Dave Cull and former MP, Pete Hodgson, which the Mayor described in the media as a “gentleman’s agreement”.

This morning’s Christchurch Press editorial analyses the deal:

Editorial: Gentlemen sign contracts too

...

There is no reason to believe that Cull and Hodgson are anything other than honest gentlemen, but the geographic accident that also gives them "southern man" status should not put them above the usual requirements by which local government business is conducted.

The standards that apply to council administration in the south should be no less rigorous than in Auckland city or the Whangarei district. Why should ratepayers in Dunedin tolerate a more easy-going attitude towards the spending of their money than anywhere else, just because of a romantic notion that southerners are somehow more honourable? Actually, they aren't.

Click here to read more.

Mr Hodgson has provided emails from him to the Council from August 2013, relating to 40 hours of “consulting” equalling $3,200 of the $3,400 total we questioned.

It appears the Council was wrong to tell us that no documentation or invoice was available.

Producing an invoice under public pressure is only one aspect of the matter settled. It raises a whole lot more questions:

  • Was it signed off by Council or did it come from a mayoral slush fund? 
  • Who authorised the payment?
  • How come the Council could not provide this information before? Why did it need to come from Mr Hodgson?
  • What other payments are made without the Council’s finance department holding documentation?
  • Was the Council deliberately misleading us when they told us no documentation existed? If so, why?
  • What else does the Mayor negotiate without documentation?
  • How is it appropriate to have the Mayor hire someone to do work with no authorisation, no contract, and not even retain the invoice?
  • With the Council's audit and risk committee be examining what's happened here?

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Wellington town hall strengthening cost blowout

Yesterday we issued a media release in response to a Dominion Post report stating that earthquake strengthening work on the Wellington Town Hall has been halted due to a $17 million budget blowout. The total cost of the work is now estimated to cost $60 million. We noted that this equals $871 per Wellington household.

Whilst the town hall is a lovely building, at this cost it seems unaffordable, and our understanding from a property expert is that it could be much cheaper to replace it with a new, fit for purpose building using the existing facade and features Wellingtonians treasure. Newstalk ZB covered our release here.

Today the Dominion Post followed up the story, reporting:

Wellington City Council has refused to reveal how much it has already spent on town hall strengthening work, which has been put on hold after a budget blowout of about $17 million.

The Dominion Post revealed yesterday that the cost to strengthen the hall had ballooned from a budgeted $43m to about $60m.

City councillors will have to go back to the debating chamber later this year to decide if it is worth spending that much.

They could look at cheaper alternatives, or at replacing the town hall on the same or a new site.

The council intended to use a base isolation system to bring the strengthened hall up to 140 per cent of the new building standards (NBS).

Engineers have assessed the building as meeting just 20 per cent to 25 per cent of the NBS. Anything under 33 per cent is deemed earthquake-prone.

Work has now stopped, just three months into the three-year programme, as the council considers its options.

Given that ratepayers are paying for the work, we think they should know how much has already been spent on the building, even if work has now been halted due to an overspend. We're requesting the information under the Local Government Official Information and Meetings Act.

The Council faces the same problems as many Wellington property owners. In some cases it has declined resource consents to demolish dangerous buildings that have been uneconomic to upgrade. It will be interesting to see what the costs (and solution) are.

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Update on Napier omnishambles museum

The Hawke's Bay Today has picked up the story on the omnishambles that is the Napier Museum.

The New Zealand Taxpayers' Union has labelled the MTG Hawke's Bay museum's problems an "omnishambles", while Hastings Mayor Lawrence Yule has denied Napier Mayor Bill Dalton's claim they knew about storage issues with the facility as early as last year.

At Wednesday's City Development Committee meeting, Mr Dalton said the previous council and Mr Yule were made aware last year that there were issues relating to storage at the museum. That was refuted yesterday by Mr Yule who said he would have taken steps to remedy the situation, had he known about it.

"Firstly, I would have told my council straight away, because we are governors of half that collection, and two, we'd have worked out - what is the plan and how can we fix this?" he said.

"There was a conversation a number of years ago about whether we should have off-site storage. It was decided not to do that, effectively because the operating costs of having two facilities would be high.

"Until a week ago, that was my understanding of what was happening."

Mr Dalton declined to respond to Mr Yule's denial.

This week it was revealed there were storage issues at the new museum, with only as much as 40 per cent of the collection able to be housed - a figure Mr Dalton said was inaccurate.

Furthermore, at Wednesday's meeting projected visitor targets were found to be grossly erroneous with this year's target of 690,000 visitors reduced to a more realistic 120,000.

At the meeting tourism services manager Neil Fergus said the targets were based on the old building, which allowed for a free public flow through the Century Foyer "which is no longer relevant to the redeveloped site".

Mr Dalton said yesterday he would not get involved in a debate with the New Zealand Taxpayers' Union.

"We've built a magnificent new building.

"We do require some fine tuning and we're going to undergo a review to get it fine tuned. End of story."

He was unsure when the planned review of the MTG issues would be completed as Napier City Council chief executive Wayne Jack was away on the Hawke's Bay Regional Council's dam fact-finding trip to the South Island.

"I'm not going to make any comment until we've done the review," Mr Dalton said.

"Let us get the review done and see what the facts are."

Meanwhile, Jordan Williams of the Taxpayers' Union said: "A three-children family doesn't build a two-bedroom house, but Napier has built a museum forgetting 40 per cent of its collection. It is a complete omnishambles."

Lawrence Yule contacted me this morning and said that not only did he not know of the situation in Napier, neither did Hastings District Council officials. I know Lawrence and accept his word. It appears that he's been dropped in it by Dalton.

Nevertheless Hastings ratepayers helped fund this museum and deserve answers (presumably from Napier!).

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Museum of omnishambles in Hawke's Bay

Omnishambles

It appears that Hawke’s Bay mayors may have known of the omnishambles at the new museum in Napier a year ago and apparently have failed to do much about it.

The museum and gallery opened last September and cost Hawke's Bay ratepayers $18 million to build.  To recap, last month we learned that the budgets were wrong:

Napier City Council has been caught short after discovering that thousands of people it thought were visiting its museum were just popping in to use the toilets.

Now it needs to revise its 10-year plan after finding that the projected visitor numbers for its new $18 million museum and gallery were based on inaccurate figures.

Then we found out that the museum cannot hold the collection it was built to accommodate. In fact, it is so small up to 40% will need to stored at an as yet unknown site. Radio NZThe Dominion Post and TVNZ covered the story. 

Then began the spin from Napier City Council that they knew of the problems all along, but were nevertheless conducting a 'review' on how it happened.

This morning the Dominion Post reported that Hastings Mayor Lawrence Yule was aware of the situation, an allegation made by Napier's Mayor but strongly refuted by Mr Yule. The whole saga appears to be resulting in a somewhat undignified spat between the mayors of the Bay cities.

I venture to suggest that there is more to come of this story...

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