The fate of the Dunedin City Council's eco-housing retrofit scheme will be back in councillors' hands this week when they decide whether to proceed with a modified scheme or axe it.
A staff report to be considered at tomorrow's planning and environment committee meeting recommended councillors proceed with a modified scheme, based on one adopted by the Greater Wellington Regional Council.
However, faced with additional liabilities and risks, councillors could instead decide not to proceed with the scheme, the report noted.
The $2.25 million scheme unveiled last year aimed to help people insulate and heat their homes, by targeting homeowners who qualified for the Energy Efficiency and Conservation Authority's Warm Up New Zealand subsidies.
The council's scheme would offer those homeowners additional council loans of up to $5000 loans to help cover the cost of installing insulation and clean heating.
The money was to be repaid, with interest, over 10 years using a targeted rate, meaning the scheme was designed to be cost-neutral to the council.
A trial due to start on July 1 this year had already attracted interest from more than 100 homeowners, but had been delayed after it was discovered insurance and health and safety costs to be faced by the council could be higher than expected, while EECA subsidies available for the scheme were dwindling.
Council energy manager Neville Auton, in a report to tomorrow's meeting, said the council had planned to provide funding to homeowners, allowing them to contract service providers for the installation work.
However, discussions with staff at EECA and the Greater Wellington Regional Council had identified problems with that approach, he said.
Homeowners making use of the scheme would end up paying GST twice, while the legal basis for a targeted rate was "doubtful" without a service being provided by the council in return, he said.
Instead, council staff now proposed to follow Wellington's lead and contract companies to do the work, and secure EECA subsidies for the work itself.
That approach means the council could find itself liable for product or installation failures and health and safety risks, but legal advice was the risk was "minimal", he said.
The council would also face greater costs, due in part to the need for indemnity insurance to protect itself for the duration of the scheme, and the cost of health and safety audits of providers, responsibility for which would also rest with the council.
Mr Auton suggested the interest rate attached to the loans would need to rise by 1%, to 8%, to keep the scheme cost-neutral.
His report recommended the additional risks and costs be noted, but that councillors proceed with the modified scheme.
