Joining CCO ‘only viable option'
The Waitaki District Council is on the verge of a major decision that will shape how water services are delivered and paid for across the region, as it prepares to vote next week on whether to join a four-council joint water entity, Southern Water Done Well (SWDW).
The proposed partnership would unite the water services of the Waitaki, Clutha, Central Otago and Gore districts into a single regional organisation, with a shared cost of $13.8 million for establishment.
The DIA's report, made public yesterday, firmly recommends the four councils adopt this model in order to meet the government's Local Water Done Well reforms and sustainability requirements.
Speaking ahead of Tuesday's formal vote, Waitaki District Council chief executive Alex Parmley acknowledged the public resistance but emphasised the urgency and necessity of the decision.
"DIA has done an initial assessment of the options we were looking at. So they're going to mark our homework at the end of this when we submit our water services delivery plan and their assessment, which is going to be contained in the report, is that the joint CCO is the only financially sustainable option for the four councils,"
The assessment, included in the agenda for next Tuesday's meeting, states "the establishment of a Southern Water Done Well water CCO comprising of the four councils' water services is likely the only viable option for delivering a water services delivery plan that meets the legislated financial sustainability requirements for both water services and councils while managing the affordability impact of required water services charges on household budgets".
Public consultation across the four councils drew in over 1000 submissions, 57.5% favouring the in-house business unit model, the preferred option in Waitaki (54%) and Clutha, while only 26.7% supported the joint-CCO, most popular in Gore and Central Otago.
In the Waitaki district, the stand-alone CCO option was favoured by 21% of submitters, while the council's preferred joint CCO (SWDW) option was favoured by just 15% of submitters.
However, Mr Parmley said the recommendation was about long-term viability, not short-term popularity.
"A regional water CCO will result in lower charges for communities than council in-house delivery," the DIA assessment stated.
Waitaki ratepayers can expect a 51% increase in water charges under the joint CCO, less than the projected 62% rise under an in-house model. Regardless of the model chosen, households will face higher water costs, and a key change across all options will be the separation of water charges from general rates.
"A lot of the detail around what does this look like and what will bills look like. That's the stuff that still needs to be developed, but we need to get a decision first.
"Whatever route we go down, we're going to need to separate out the water bill from the rates bill. The government said that needs to be clearly shown differently now and be produced as a separate bill."
If approved, the SWDW constitution would guarantee that each district's water charges reflected its own costs — with no cross-subsidisation.
"Waitaki is not paying for Central Otago's water and vice versa," Mr Parmley said.
Governance of the CCO would be via a shareholder group where each council got one vote, regardless of asset size. Although Waitaki has more assets and would hold a larger shareholding, it would still hold only one vote in decision-making. Directors would be appointed jointly by the councils.
The new company's constitution and shareholder agreement are still under development, including details around voting thresholds for future changes.
Mr Parmley said the councils did not want to tie the company up so it could not decide anything, but for the most important things, all shareholders would need to agree.
"That's about establishing that link between ownership, so it's clearly shown that we still own those assets and, if the company was to be wound up for whatever reason, those assets would come back."
The joint-CCO's initial $13.8m establishment cost would be loan-funded, with each council responsible for repayment.
Waitaki's portion would be loaned to the CCO and repaid over time, without being directly passed on to ratepayers via water bills.
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Otago Daily Times
a day ago
- Otago Daily Times
Joining CCO ‘only viable option'
As unpopular as it is with the public, the Waitaki District Council joining a four-way, multi-district water company is the "only viable option" for the district, an initial assessment by the Department of Internal Affairs (DIA) says. The Waitaki District Council is on the verge of a major decision that will shape how water services are delivered and paid for across the region, as it prepares to vote next week on whether to join a four-council joint water entity, Southern Water Done Well (SWDW). The proposed partnership would unite the water services of the Waitaki, Clutha, Central Otago and Gore districts into a single regional organisation, with a shared cost of $13.8 million for establishment. The DIA's report, made public yesterday, firmly recommends the four councils adopt this model in order to meet the government's Local Water Done Well reforms and sustainability requirements. Speaking ahead of Tuesday's formal vote, Waitaki District Council chief executive Alex Parmley acknowledged the public resistance but emphasised the urgency and necessity of the decision. "DIA has done an initial assessment of the options we were looking at. So they're going to mark our homework at the end of this when we submit our water services delivery plan and their assessment, which is going to be contained in the report, is that the joint CCO is the only financially sustainable option for the four councils," The assessment, included in the agenda for next Tuesday's meeting, states "the establishment of a Southern Water Done Well water CCO comprising of the four councils' water services is likely the only viable option for delivering a water services delivery plan that meets the legislated financial sustainability requirements for both water services and councils while managing the affordability impact of required water services charges on household budgets". Public consultation across the four councils drew in over 1000 submissions, 57.5% favouring the in-house business unit model, the preferred option in Waitaki (54%) and Clutha, while only 26.7% supported the joint-CCO, most popular in Gore and Central Otago. In the Waitaki district, the stand-alone CCO option was favoured by 21% of submitters, while the council's preferred joint CCO (SWDW) option was favoured by just 15% of submitters. However, Mr Parmley said the recommendation was about long-term viability, not short-term popularity. "A regional water CCO will result in lower charges for communities than council in-house delivery," the DIA assessment stated. Waitaki ratepayers can expect a 51% increase in water charges under the joint CCO, less than the projected 62% rise under an in-house model. Regardless of the model chosen, households will face higher water costs, and a key change across all options will be the separation of water charges from general rates. "A lot of the detail around what does this look like and what will bills look like. That's the stuff that still needs to be developed, but we need to get a decision first. "Whatever route we go down, we're going to need to separate out the water bill from the rates bill. The government said that needs to be clearly shown differently now and be produced as a separate bill." If approved, the SWDW constitution would guarantee that each district's water charges reflected its own costs — with no cross-subsidisation. "Waitaki is not paying for Central Otago's water and vice versa," Mr Parmley said. Governance of the CCO would be via a shareholder group where each council got one vote, regardless of asset size. Although Waitaki has more assets and would hold a larger shareholding, it would still hold only one vote in decision-making. Directors would be appointed jointly by the councils. The new company's constitution and shareholder agreement are still under development, including details around voting thresholds for future changes. Mr Parmley said the councils did not want to tie the company up so it could not decide anything, but for the most important things, all shareholders would need to agree. "That's about establishing that link between ownership, so it's clearly shown that we still own those assets and, if the company was to be wound up for whatever reason, those assets would come back." The joint-CCO's initial $13.8m establishment cost would be loan-funded, with each council responsible for repayment. Waitaki's portion would be loaned to the CCO and repaid over time, without being directly passed on to ratepayers via water bills.
Otago Daily Times
2 days ago
- Otago Daily Times
‘Only viable option' councils told
As publicly unpopular as it is, the option of Waitaki District Council joining a four-way, multidistrict water company is the "only viable option" for the district , an initial assessment of the Department Of Internal Affairs (DIA) says. A report has now been sent to the four district councils involved, Waitaki, Clutha, Central Otago and Gore, recommending councillors adopt the option of establishing a joint council-controlled organisation, Southern Water Done Well (SWDW), at a cost of $13.8million to manage water assets and delivery services. Speaking to the Oamaru Mail in the leadup to next week's decision on how the district will implement the government-mandated Local Water Done Well reforms, district council chief executive Alex Parmley said the DIA report would be made public today, ahead of Tuesday's council meeting to formally adopt a water option, following the conclusion of public consultation. "DIA have done an initial assessment of the options we were looking at. So, they're going to mark our homework at the end of this when we submit our water services delivery plan and their assessment, which is going to be contained in the report, is that the joint-CCO is the only financially sustainable option for the four councils," Mr Parmley said. The assessment, included in the agenda for next Tuesday's meeting, states, "the establishment of a Southern Water Done Well water CCO comprising of the four councils' water services is likely the only viable option for delivering a water services delivery plan that meets the legislated financial sustainability requirements for both water services and councils, while managing the affordability impact of required water services charges on household budgets". "A regional water CCO consisting of the four councils' water services will result in lower charges for communities than council in-house delivery of water services, or the establishment of individual council-owned water CCOs." SUBMITTERS' FIRST CHOICE In the Waitaki district, the in-house business unit option was the first choice of 54% of submitters. The stand-alone CCO option was favoured by 21% of submitters. The council's preferred joint-CCO (SWDW) option was favoured by 15% of submitters. Across the four councils combined (a total of 1072 submissions) 57.5% chose the in-house business unit option (overwhelmingly, the most popular choice in both Waitaki and Clutha) and 26.7% chose the joint-CCO option which was the most popular choice for Central Otago and Gore submitters. A chosen option must be presented to DIA by September for approval. However, details around the billing structure and how water will look is still uncertain with only some things already decided, no matter which option is finally chosen. "That isn't going to be decided until later on," Mr Parmley said. "In fact, that's probably going to be decided if we go down the CCO route by the CCO itself. "A lot of the detail around what does this look like and what will bills look like, that's the stuff that still needs to be developed, but we need to get a decision first. "Whatever route we go down, we're going to need to separate out the water bill from the rates bill. The government said that needs to be clearly shown differently now and be produced as a separate bill. "The government said that the idea of a water rate, which is related to the value of your property, goes [away] with the legislation that's being put in place." Mr Parmley said it was "baked-in" to the SWDW agreement that each area will have its own, separate charges. 'So, Waitaki is not paying for Central Otago's water and vice versa. The basis of what we've put in the consultation document analysis is a projection of what the average water charge will be for a domestic user," Mr Parmley said. That principle would also form part on the establishment constitution of the joint venture. "If they all agree to go down this route, the four councils will develop that constitution and shareholder agreement and that will need to go back through each of the councils for agreement. "So there'll be a shareholder group and what they've agreed so far is that it'll be one council, one vote on the shareholder group. Now, whether it's one or two representatives attending each meeting, that is to be decided, but it's one council, one vote on the shareholder group and they (the shareholder group) will jointly appoint the directors of the CCO." Waitaki had larger assets than Clutha and Gore, so it would have a larger shareholding, but with just one vote around the table, Mr Parmley said. "That's about establishing that link between ownership, so it's clearly shown that we still own those assets and, if the company was to be wound up for whatever reason, those assets would come back. "The Waitaki assets will come back to the Waitaki community." Detail on how the constitution might be amended in future years was also still under discussion, he said. "There'll be some things in there which will require everyone to vote in favour, to be able to amend, but there might be some things in there where it needs a majority or a qualified majority. So that detail hasn't been decided on which factors. That's all under discussion at the moment. "I think, bearing in mind we've only really been working on this since the beginning of this calendar year that is all detail to come. "We don't want to tie this company up so it can't decide anything, become like the United Nations Security Council, where one veto and that's it, nothing moves forward but for the most important things where all of the shareholders will need to agree for it to change and what are the things will have a bit more flexibility. "Those are things that are all going through the process at the moment." Establishment costs of the new CCO, should it be chosen, will be shared by participating councils. Mr Parmley said for Waitaki the establishment costs would be covered in the form of a loan taken out by the CCO and paid back to the council. It would be up to the CCO to decide on how long it would take for the CCO to pay the loan off but it would not be part of water charges, he said. Mr Parmley said to the end of May, Southern Water Done Well councils had spent $380,000 on the joint-CCO project. "This covers modelling, expert opinion, legal, project management and communications support. "The project has received $360,000 of grants funding from the government. "Individual councils also have access to their remaining 'Better Off' funding allocations to progress the work." No matter which option is chosen for the future, ratepayers will pay more than they do now. Water charges in Waitaki will rise by 51% under the joint-CCO, and by 62% under the in-house business unit.
Scoop
2 days ago
- Scoop
Local Water Done Well: Central Hawke's Bay Remains At The Regional Table For Local Water Done Well
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