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Lee Valley dam cost estimate rising rapidly

September 24th, 2014
[TDC press release]

[Editorial comment: Although this Council project is located in the Waimea/Richmond area, some of its costs will be paid by all TDC ratepayers. Furthermore, the costs for this project are one major reason why Council is stopping many other projects in the district for the present. This matter is therefore of direct interest to the people of Motueka - hence its publication here.]

Council Staff have recently advised the Tasman District Mayor and Councillors on the recommended approach to forecasting the likely cost of the proposed dam.

An estimated cost is needed for the budgets that will feed into the Council's 2015-2025 Long Term Plan, should the dam go ahead. The Council also needs cost estimates for the proposed community consultation on funding and governance later this year.

The cost of the proposed Waimea Community Dam (the formal name for the dam) remains the one fact that is unable to be finalised until tenders are received for its construction. This will not happen until the recently advertised Resource Consent for the site in the Lee Valley has been delivered with the conditions required by tendering companies.

The estimated cost most often quoted has been $42 million in 2009 dollars. Using construction cost indices, that cost would be $56 million by 2017/18 when construction is planned to occur.

Council staff have advised using a figure of $69 million in the Long Term Plan 2015-2025. The overall project costs will higher than this in light of the costs already incurred.

For the purpose of the consultation on governance and funding later this year a range of possible costs will be used - the range will be $60m, $70m and $80m - given the uncertainty about what the end result will be.

The recommended approach is based on information supplied by the Waimea Community Dam Company about construction cost. It includes project costs that were not in the construction costs and has been 'indexed' to take account of inflation between now and when the dam is proposed to be built (2017/18).

A further 'engineer's estimate' of the likely costs will be obtained before going to tender should the Council decide to proceed.

"The approach to estimating the likely cost of the dam has been clarified. It's timely that this occur now as Council staff are taking on some additional responsibilities for the project," said Tasman Mayor Richard Kempthorne.

"Providing reliable estimates for projects such as this with long lead times (10+ years) is challenging in the private and public sectors. The reality will be that we won't be 100% sure of the cost until after the dam has been built. Taking a range approach will also allow people to consider the possible effects on them", he said.

Arrangements for dam project formalised

A funding and support agreement that will formalise the relationship between the Waimea Community Dam Company Limited and the Tasman District Council was discussed at the Council's 18 September 2014 meeting. The agreement enables the dam company and the Council to work more closely on the project until June next year when the Council is expected to decide whether or not the project will proceed.

The Council also considered a report on the work that the Council will undertake for the project and in support of the dam company's efforts. That work includes overall project management, finalising design, procurement, finance and funding and community consultation.

Under the agreement the dam company's costs in obtaining resource consent, finalising design and in meeting its administration needs will be met by the Council. The Council also approved additional funding of $1.4M to get the project to the go/no go decision point. The dam company's additional costs account for about half of that amount.

The Council's decision formalises a funding and support arrangement that has existed between the Council and the community interest represented on the Waimea Water Augmentation Committee for many years.

"These decisions represent a significant milestone for the project and the proposed dam especially. The Waimea Water Augmentation Committee, the Waimea Community Dam Company Limited and the Council are working well together. Because Council has the resources and is responsible for some of the outcomes, we are assuming more direct responsibility for the project" said Richard Kempthorne.

"Community consultation on the funding and governance arrangements for the proposed dam is the Council's role. That is planned to begin next month and be completed before Christmas. The outcome will determine the future role of a company in the governance and ownership of the proposed dam", he said.

The Chief Executive's report to the Council advised that the funding and support agreement specifically provides for Council to implement the outcome of the community consultation that is planned for the 4th quarter of this year, whatever the outcome may be. He said in his presentation he hoped that the agreement would be signed in the next few days.


Comment by Jim Butler:
[Posted 25 September 2014]

Taking into account that Tasman District's rates are now amongst the highest in the country and so is its debt per number of ratepayers, this dam would only become affordable by an amalgamated Nelson / Tasman Council.

Comment by Phil Grimmett:
[Posted 28 September 2014]

I find this press release concerning on many levels. Motueka (and Golden Bay) have very different priorities. For example, the Motueka floodbank upgrade has been downgraded (and deferred) as has the Motueka covered pool. The apparent haste of this proposal doesn't allow for thorough analysis and consideration by the entire region.

I submitted on this proposal years ago when the justification was for horticultural expansion of the Waimea plains. Suddenly it has morphed into a scheme for the residential expansion of Richmond! Seriously, if this is a genuine issue the TDC should be promoting rainfall collection for all new residential housing development and reducing storm water, (and water reticulation) simultaneously.

Commercial interests are welcome to fund any irrigation requirements they may have without direct funding from the ratepayer, as outlined in this press release. This looks suspiciously like a commercial initiative masquerading as a common good seeking funding from a complaint TDC.

Enough said. I look forward to full details and justification from the TDC. I wish.

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