Council to review Three Waters assets ahead of reforms

An extensive review is to be carried out into the value of the Dunedin City Council’s drinking water, wastewater and stormwater assets.

The examination will take place ahead of city assets being transferred to a new regional water services entity.

The impact of the Government’s Three Waters reforms — which would result in councils no longer having responsibility for Three Waters infrastructure and service delivery from July 2024 — was identified as an area of uncertainty in the city council’s annual report, due to be adopted by councillors today.

"There is still a number of uncertainties associated with the new Three Waters delivery model, including the mechanism for how assets will be transferred to the newly established entities and the control and governance of those entities," the report said.

Senior management at the council would commission a review that would cover matters such as replacement cost of assets and accumulated depreciation, a report by staff said.

External experts are expected to be involved.

The review could materially alter the carrying value of the council’s Three Waters assets, staff said.

It would be commissioned in the coming months and be completed in time for preparation of the 2022 annual report.

The replacement cost of stormwater assets has been estimated at almost $544million.

Water treatment plant and facility assets are estimated to be worth more than $166million and other water assets more than $924million.

The cost of replacing sewage treatment plants and facilities has been put at more than $200million and other sewerage assets almost $858million.

The Government has said the new regional water entities will own and operate Three Waters infrastructure on behalf of councils — they would hold Three Waters assets and associated debt.

The Department of Internal Affairs has said a thorough due diligence process to assess assets, debt and revenue will be carried out ahead of the 2024 transfer.

Uncertainty about Three Waters followed uncertainty about Covid-19 and that affected the council’s budgeting process for 2020-21.

The council chose to approve an unbalanced budget, because of the anticipated impact of Covid-19 and the cost of putting Dunedin Railways into hibernation.

However, the council ended up in the black.

Total operating revenue was more than $306million, or almost $28million up on budget.

Total operating expenses were about $290million, or more than $7.5million higher than budget.

 - grant.miller@odt.co.nz

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