Lakes Environmental reports deficit of more than $56,000

The past six months were "much tighter than it has ever been" for Lakes Environmental Limited, which yesterday reported an operating deficit of more than $56,000.

Lakes Environmental, a Queenstown Lakes District Council-controlled regulatory organisation, presented its six-monthly report, ending December 31, to the finance and corporate committee.

Board of directors chairwoman Anne Urlwin said revenue was down almost $450,000 compared with the previous year because of "difficult trading conditions" and a resulting drop in consents.

The net deficit for the period sits at $56,489 compared with the previous year's surplus of $86,381, after an overall $447,459 (11.3%) reduction in revenue.

Ms Urlwin said the outlook looked similar for the following six months, and the lack of cash on hand was a reflection of the council-controlled companies model of "not for profit, not for loss".

She said consent-application levels would continue to be monitored and, if the situation became desperate, the council would be alerted under the company's "no surprises" clause.

In the meantime, Lakes Environmental had the flexibility to scale back loan repayments in order to balance the loss in revenue, she said.

However, there was a "green shoot" of hope: a small increase in construction was going on in subdivisions, and an increase in consent applications was projected in the long term.

"There is always the risk of continuing softness for resource consent numbers, but the outlook is looking better for that than it was."

Despite the projected increase in consents, the revenue decrease meant Lakes Environmental might have to scale back loan repayments and would be in trouble if the company had to accept liability for two unresolved leaky homes claims.

In certain circumstances, Lakes Environmental may be liable to pay repairs on building defects advised to it directly or by the Weathertight Homes Resolution Service.

Ms Urlwin was unsure whether they would turn into costs for Lakes Environmental, but said it would be "rigorously defending" the claims.

The QLDC had already successfully defended a claim of negligence against Lakes Environmental predecessor Civic Corporation Limited from a matter that occurred in 2003.

In doing so, it incurred legal costs, partly recovered from its insurer Riskpool, which last October filed a claim seeking recovery of the net legal costs of $94,000 plus interest and costs.



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