Bungled infrastructure at Bream Bay's Marsden City development will have an $8.7 million impact on the district council's bottom line. The sum, revealed in Whangarei District Council's 2014/15 annual report, is on top of the $5.4 million repair bill the council is fighting to recoup from those who designed, built and signed off storm and wastewater systems that are now "slumping" as a result of acidic soils.
However, the mayor said the $8.7 million was a "non-cash adjustment" - it took into account the depreciation of assets vested free to council - and that overall the annual report revealed financial management that was "bang on".
WDC's operational spend was $124.3 million during the 2014/15 financial year, against a budgeted spend of $125.7 million. This was against actual revenue of $118.6 million, meaning council ran at a $5.6 million deficit. It had allowed for a $5.9 million deficit in its budget, giving a $300,000 favourable variance.
At a glance, the books looked much gloomier, with a total deficit of $19.8 million. Mayor Sheryl Mai stressed this was down to a series of "unrealised" adjustments done to comply with local government accounting standards. The $19.8 million took into account the $8.7 million downgrade of Marsden City infrastructure, estimated to be worth $11.2 million when it was vested to council by the developers who paid for it. The original lifespan of the piping was 80-100 years, since downgraded to 18 years, which reflects the decrease in value. The final deficit also had to take into account $7 million of unfavourable interest rate "swaps", an arrangement where council's fixed interest rate on its debt took into account what money would have "saved" over a specific period had it gone with a floating rate.
Ms Mai said again "this would not be realised in real terms".
