Hutt City facing huge bill to repair earthquake-prone buildings

Thursday, 19 September 2019

It subsidised a yet-to-be built hotel, spent $34 million on an events centre that is losing money and waived $29.6m in fees to developers.

Despite the money spent encouraging growth, the Hutt City Council is facing a potential financial headache.

A week after announcing the Petone Settlers Museum was earthquake prone, the council said the Little Theatre was just 15 per cent of the New Building Standard.

The nearby War Memorial Library is between 40 and 45 per cent and is to close temporarily for a geotechnical assessment.

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The Hutt City Council is facing an ever-growing bill to fix its earthquake prone buildings. The Little Theatre, left, is earthquake prone and more work is required in the War Memorial Library, right, to determine its status.

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The earthquake-prone Naenae Pool closed indefinitely in April and a replacement could cost $52m.

Uncertainty over cost has resulted in a number of projects, including a major revamp of tennis facilities, being put on hold.

The council also has to decide what to do with the Petone Library, which has a leaky roof and needs upgrading.

Finding the cash for repairs will be challenging and critics can point to a number of recent questionable financial decisions by councillors, including the events centre which it is now bailing out.

Earlier this year the council deferred fixing the earthquake-damaged Petone Wharf until 2031. The council budgeted $8m, although the cost could rise significantly.

The Petone Library has had a leaky roof for years but rather than spend $1.5m fixing it, the council is looking at building apartments on top of the library.

The council looks to have two options to fund the growing infrastructure bill, increase rates or debt.

Mayoral candidates Ray Wallace and Campbell Barry are campaigning to keep rates increases low and not increase debt.

Lower Hutt's Little Theatre is earthquake prone. The council has 15 years to strengthen the building, which is 15 per cent of the National Buildings Standard.

Barry believes the council has to live within its means and keep rates increases below inflation.

Wallace is campaigning on his record of delivering low rates and is promising not to change that.

'As mayor I will continue to ensure any rates increases are kept to a minimum and spent on essential core services not 'nice to haves'.'

Of the other three mayoral hopefuls David Smith suggests putting the money residents usually spend on gambling, into a fund to invest in council facilities.

Financial advisor George Mackay is 'not sure' what he will do but has a similar suggestion to Smith.

'Maybe a bonds offer with a 29-year loan at low interest rates.'

James Anderson believes rates are too high and he would look for efficiencies

'I would start by handing the keys back for the mayoral car, and ask councillors to accept a three-year pay freeze.'

Increasing debt will be attractive to politicians, as long as interest rates remain low.

City and Community Services general manager Matt Reid agreed the budget was 'tight' but after years of running a 'prudent' financial strategy, the council was in a strong position.

The strength of their financial strategy is reflected in their Standard and Poor's AA rating, which allows the council to borrow at a favourable rate, he said.

Council's annual revenue is more that $160m a year and with assets of $1.5 billion, it is in a healthy position to fund projects and to borrow, he said.

The 'big issue' facing the council is the Naenae Pool and until it becomes clearer how much that will cost, it is difficult to speculate on how to fund strengthening the Little Theatre, Settlers Museum and library, he said.

* Council debt 2016/17 ($126m), 2017/18 ($156m), 2018/19 ($172m), 2019/20 ($194m), 2020/21 ($211m), 2021/22 ($224m).

* In the five-year period from June 2014 to June 2019, Hutt City debt rose from $55m to $172m. That is $1821 per capita, considerably less than Wellington ($2975) and Kāpiti ($4256).