Option 1:

Delivering water services through a standalone business unit within Council while we continue to explore establishing a joint water services organisation (preferred option)

Under this option, the average residential ratepayer could pay….$4,210 to $4,430 by 2034, depending on how much debt the Council takes on to specifically fund water services. Compared with around $2,254 today.

Option 1

Overview

Under this option, we would continue to manage and deliver water services on our own, without partnering with other councils. We would be fully responsible for all day-to-day operations, maintenance, planning for future water needs, and repaying any water-related debt.

To help meet new government requirements, we would operate water services through a ringfenced delivery unit within our existing structure. We could share certain services with other councils or contract some operations to an external water services organisation, but this would not provide the same level of cost savings as being a part of a joint water services organisation.

This is Council’s preferred option in the first instance. While pursuing this option, Council would continue to explore the impacts and opportunity a joint water services organisation (option 2) would have for our district.

Overview of key elements

Ownership

Council-owned (no change to current arrangements)

Governance arrangements

Council oversight

Decision making

Elected members continue to decide on levels of service and investment intentions (within legal requirements)

Accountability

Accountable to the public through the legal framework

Accountable to elected members through existing mechanisms

Community involvement in decision making

Through submissions processes and access to councillors

Approach to allocation of costs, revenues and efficiencies

Water revenues would be ringfenced and targeted, that is, separated from general rates

Council will access borrowing for water infrastructure via the Local Government Funding Authority, subject to its limits

Tangata whenua involvement

Council can use existing mechanisms for tangata whenua involvement

Legal compliance

Meets legal requirements but will be subject to new ringfencing requirements and economic regulation

Summary of key advantages, risks and disadvantages

Key advantages

Key risks and disadvantages
  • Local decision-making: The Council would decide on services and investments, solely focussed on the needs of the District.
  • Seamless integration: Water services can be easily coordinated with our other responsibilities (such as district planning and transport).
  • Community accountability: Communication remains straightforward, with us continuing to engage directly with residents on water issues.
  • Familiar structure: Day-to-day operations remain largely as they are now, which can help minimise transition costs or confusion.
  • Opportunity to share services: We could share services with other councils to try and reduce costs or contract another water organisation to deliver services on our behalf. This is not expected to lead to significant cost savings.
  • Higher prices: Analysis indicates that this option would be more expensive than if we joined a water services organisation. While the average cost per connection looks similar over the next ten years, after that a joint water services organisation is expected to become noticeably cheaper.
  • Limited financial flexibility: Our investment plans require substantial borrowing and may limit our ability to invest in other important areas.
  • Longer-term challenges need to be funded: We need to fund major water infrastructure upgrades over the next 15–30 years, which could become more expensive over time.
  • Increasing requirements: We must meet tougher government regulations on our own, which may lead to higher water charges and more borrowing in the future.
  • Limited opportunity for efficiencies: We wouldn’t benefit from economies of scale that might come from partnering with other councils, potentially raising our long-term operating costs.

Summary of key metrics

How the option will impact Ōpōtiki District Council…

Rates

Rates will increase to cover the cost of water services.

Debt

Council debt relating to water services will be high and could constrain the amount Council can borrow for other activities.

Levels of service

We expect levels of service to improve under this option but the focus over the next ten years is on achieving compliance with regulatory requirements.

Charges for water services

Charges for water services will continue to be collected through general rates system but will be separately identified on rates bills. Volumetric charging will continue through water rates billing.