It is all about the water for ratepayers over the next 10 years, with the Central Otago District Council having to make some big decisions on infrastructure and future service delivery.

At yesterday’s first meeting for the year, Council approved the draft Long Term Plan (LTP) consultation document for Audit New Zealand, as required under the Local Government Act 2002. 

The consultation document would then form the basis for the final 2025-34 Long-term Plan which was planned to be adopted by Council in June.

At this stage Council was looking to consult on an average proposed rate increase of 11.63 per cent - a huge drop from the initial 23.4 per cent starting point in late 2024. 

In her opening statement of the consultation document Mayor Tamah Alley said council had worked hard to reduce rate surges for households, and made the decision to reduce the depreciation they collected on water services assets for the next two years.

While only an average increase, for farmers in the Teviot Valley and lifestyle block owners in the Manuherikia area, rate increases could be as high as 25 to 28 per cent.

Meanwhile, residents living in Alexandra, Cromwell and Teviot might only face proposed rates increases of 5 to 6 per cent.

Mayor Tamah said the council was facing continued pressure in the delivery of water services, and like the previous government, required higher standards of councils than ever before. 

"With these requirements comes cost. For example, in year one of this plan, wastewater investment is required which will impact all residents with a wastewater connection – motels and hotels being most impacted. 

‘’We need to decide in this Long-term Plan how to continue providing water services to this district in a sustainable way, and we want your feedback on this.” 

Mayor Tamah Alley SUPPLIED

Going into the long term plan, the council would continue to fund its extensive capital programme through raising debt. 

Debt levels at council were expected to increase from $45million to $85million by the end of 2025, and up to $140million by the end of 2026.

That would then reduce significantly as the water services activities and their associated debt were transitioned into a new entity.

By September Councils across the country must provide a Water Services Delivery Plan to the Government outlining how they will deliver financially sustainable water services (water, wastewater, and stormwater) in the future.

“Councils such as ours with relatively small ratepayer bases, do not have sufficient equity to access debt for significant water and wastewater upgrades. Moving water services to a separate council owned organisation would increase our ability to finance these upgrades, as the loan thresholds are 500per cent of revenue, compared to our current 285 per cent,” Mayor Tamah said.

Of the models available, Council was looking at the establishment of a regional independent Water Services organisation owned by all the councils as equal partners (a council-controlled organisation, or CCO).

The community would then be consulted separately on that in April/May when new information on those options became available.

But Council also had reasonable cash reserves and while much of those were set aside for asset replacement, there was a significant amount that had come from Cromwell land sales. 

In the next 10 years, sale of land was forecast to have a net value of $4 million, which will also add to the estimated cash position. 

On top of rates increases, some ratepayers would be hit with a new volumetric water charge as the council moves to reduce its high water usage.

Council said in its draft document that 8 per cent of the water connections were using 43 per cent of the water. 

Those were properties which used over 700m³ of water per annum. 

Low or average water users were currently subsidising those who have high use, through high fixed charges. 

By increasing the volumetric charge and lowering the fixed charge it was hoped to change the behaviour of high water users.

The proposed water charge increased from 60 cents to $2.40, but offset with a decrease of $304.16 in the fixed annual charge from $756.45 per connection to $452.29.

Deputy Mayor Neil Gillespie SUPPLIED

However deputy Mayor Neil Gillespie believed all they were doing was “replacing one inequitable system with another.”

“I think we have the mix all wrong.”

Group manager Three Waters Julie Muir said however you chose to allocate the costs, “there are some winners and some losers.”

Mayor Tamah summed it up by saying that in a district which was effectively a desert, “we don’t do conserving water well.”

The final document would come back to council on March 17, and then be out for public consultation from March 19 to April 16.

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