Claims Tauranga City Council debt on Route K will be paid off by 2026 are being challenged by Tauranga accountant Ian Stevenson.
In submissions on the council's draft annual plan Ian says the claim Route K debt will be paid by 2026 is unrealistic and questions where the money will come from.
The claim Route K will be paid off by 2026 is being challenged.
The only way the toll road can pay its way through operations is for it to produce annual profits each year of millions of dollars, starting in 2014 at $2.3million, reaching $4million in 2020 and $8.4million in 2026, says Ian.
If the city council does nothing, the debt and interest climbs steadily from $61million this year to $74million by 2020 and $91million in 2026.
He presented a graph of the debt versus profit curves for the councillors during submissions.
'Unless there is some other hidden agenda on this that is not yet disclosed publicly the only way out for TCC is to increase tolls or add the annual loss to the rates,” says Ian.
'TCC cannot prudently allow the debt to spiral upwards.”
Current Route K traffic volumes are at about 50 per cent of the initial budget projection in 2002.
'Just in case you do not yet appreciate the problem, the Route K debt is now of the same value as the Kaipara District Council debt for the failed waste water project,” says Ian.
Another council scheme Ian says is going to cost ratepayers millions is the Bell Road land purchase.
In 2006 Tauranga City Council borrowed $10million to purchase 171ha of land at $88,000/ha with $5million from the Western Bay of Plenty District Council.
Until 2026 all options lie with the vendors. They can take up the option to buy between 2016 and 2026 if they want to. Only after 2026 can the council sell.
In that time the interest rates on the $10million will cost the city $40million, says Ian. It means the land will have to sell for $235,000 per ha if the ratepayers are not to lose money.
In November council staff asked the politicians for ratepayers to pay $1.4million in interest in the 2013/14 year. The land values are considered unlikely to increase, while rising interest continues to be added to debt levels as no other funding source exists.
'I believe it's fair to say it's all gone pear shaped,” says Ian.
'Both councils and all ratepayers are out of pocket and it has just started. There's another 13 years to go.”
The city's audited annual accounts of June 30, 2012 state the city's share was then worth $6.4million or about $56,000 per hectare.
The cost to the council after about six years is $9million and rising by between $1-2million each year.
The council argument put by councillor Larry Baldock when Rob Paterson raised the same point in his submissions on Tuesday, is that by 2026 the land re-zoned residential, will be worth $235 per hectare
27 comments
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Posted on 08-05-2013 07:42 | By whatsinaname
why does the toll road need to be manned. Surely they can be automatic like there was at the mount years ago. . That would save a few thousand every year on wages. Yes sure jobs will be lost but that's a sign of the times unfortunately.
Council out of control...
Posted on 08-05-2013 07:48 | By wreck1080
The council believed Tauranga was going to have high population growth for decades and based their spending on such projections. Thank goodness someone has enough time to call the council out on their obfuscations.
Automatic
Posted on 08-05-2013 09:43 | By YOGI BEAR
Costs another $5-10m then maintenance annually, the staff would drop in part, other more costly staff would then be required to man the phones and collections. Hence NZTA could do this part but at a cost. There are no free lunchs on this watch.
Add more route choices
Posted on 08-05-2013 09:48 | By gummers
To increase the traffic flow on route K - which in turn increases the tolls, add more options such as a 15th Ave access to route K south. Access north to SH2 (both ways)and you will find more and more traffic will travel on it.
Toll collection
Posted on 08-05-2013 10:02 | By YOGI BEAR
Yes Gummers, they need a lot more toll revenue to turn the large losses around to have some money left to pay off the debt. Looks like the tolls revenue now is only 1/2 what it should be, way short of the planned amount at the beginning.
TCC needs to see the whole pcture
Posted on 08-05-2013 13:33 | By What?
Route K is horribly over-priced to use. $1.50 toll to save 90 seconds and 25 cents of fuel and wear just doent add up. Then there is the lack of access from the hospital area or from Judea, and from Tauriko to head to Bethlehem. Poor design, poor forecasting, poor bloody ratepayers. (now watch them drop the speed limit on Cambridge to try makinkg Route K look more attractive...)
Route K pay off challenge
Posted on 08-05-2013 14:51 | By algail
Ian is absolutely correct in his comments. Basically what the TCC did was gamble with ratepayer funds. If the council was counting on a higher population then they should have looked at the Rout K project more logically and installed on ramps for traffic heading south from Bethlehem and off ramps for traffic heading north. Adding those two ramps may have made a difference and may have kept some of the heavy traffic away from Cambridge road. Raising the fees won't solve the problem it will drive people away from using Route k lowering the fee may be the answer. Further if the huge mistake made by the TCC in removing tolls from the bridge hadn't been made there would have been more money available now to sort out route k and other problems. After what's one dollar in today's terms. A further gamble on land values increasing in the bell road land is another method of gambling with our money. From what I have read that land is virtually worthless right now because the great depth of peat makes the land unsuitable to build on. The TCC needs to stop spending and stop gambling and start running the Tauranga ratepayer funded business as a business and start making a profit rather than running at a continual loss. If Tauranga voters vote this load of faux councillors back in they deserve all they get and they may include losing the house when they can't afford the rates. Alastair Bethlehem
Algail
Posted on 08-05-2013 15:30 | By YOGI BEAR
NZTA said that the plan and budget were all rubbish and they said so. TCC went ahead anyway and built Route K, the cost in 2002 was $30m, that debt is now $61m and looks set to be $95m odd in 2026. The usual quality of budgeting from TCC says that the debt will all be gone by then, it just does not figure?
AlexW
Posted on 08-05-2013 16:00 | By YOGI BEAR
I think $1.50 is fair as the saving in time and petrol is worth it. The real issue is that road tolls are "so wrong" as we all pay huge amounts in petrol tax and road user charges yet not even 1/2 of that money makes it back to the roads.
I agree
Posted on 08-05-2013 16:40 | By enough
I agree with most of these comments other than tolling the bridge again, that would make more people go around route K, and is really another tax on the mount people who pay enough in rates already. Why don't the council just pay off this debt rather than other spending such as a boardwalk at Pilot Bay and no doubt other unnecesary spending till the debt level is under control.
I totally agree
Posted on 08-05-2013 16:51 | By Sambo
with algails comments, I use Route k twice a day 4x tolls, but the $6.00 is a very large saving on my time ( which is valuable), and better spent earning a dollar for myself, rather than crawling up Cameron road, trying to make sense of some very very anal drivers, getting wound up for what, its false economics though to think increasing the toll will increase useage, and yes the lack of planning is regretful, but its servicable, and without it the Port would not be what it is (to a degree), there are to me many more pressing problems in this city, that need money throwing at it, and a parting shot to the Councillers who led the "lets get rid of the tolls" campaign, "well the lets get rid of you all" one has started.
tolls
Posted on 08-05-2013 17:44 | By Glen Clova
Lets do away with the tolls and let the ratepayers pay a bit extra to cover the loan repayments,that seems to be the only way out. As for the tolls being collected automatically like the Mount years ago,they were not.The booths closed from i think midnight till 6am.I knew folk who went to work an hr early to save a $ and thats the problem we have in this district everyone wants everything for nothing. Have you ever driven in Australia ,then you will know what a toll is.
Fire Sale ..
Posted on 08-05-2013 21:03 | By Rusty Kane
To built Route K, the cost in 2002 was $30m, that debt is now $61m and looks set to be $95m odd in 2026. Surly that's a vote of no confidence in the council and the councillors involved .. might need to sell the airport ..
Sell it IMMEDIATELY
Posted on 08-05-2013 21:03 | By The Tomahawk Kid
Failing that, give shares to all the ratepayers in town. Allow them to buy, sell or keep the shares as they will. Have the shareholders elect a company to run the road and try to make it run at a profit. Give incentives to the haulage companies that own shares to use it. Run random competitons to random users to give them incentives to use it (give away a free week pass to every 100th user) Hire it out to car enthusiasts for the weekend. Sell advertising hoardings along the road. Re-locate the council offices halfway down route K and make the councillors who thought it was a good idea to pay the tolls! or, best of all SELL IT to the highest bidder and cut the losses and learn a valuable lesson. - ie dont interfere and mess in projects you have no idea how to run, and are not core council business.
Posted on 09-05-2013 09:27 | By TB
Wakey wakey councillors..It is election year. Some body has to stand up now and sort out TGA's escalating debt..Route K is just one of the issues. Tauranga citizens have elected you to lead our city, whilst we can not blame you for the incompetence of the day to day running, we can apportion at least some of the blame for the ever increasing debt and lack of effective management and accountability of TGA's finances. Rates should be reducing not increasing.
Decisions are overdue here?
Posted on 09-05-2013 11:41 | By Plonker
With the rising debt and losses annually will all hurt ratepayers for this folly.
Sell it?
Posted on 09-05-2013 15:33 | By YOGI BEAR
Who would want this "lemon" it makes a huge loss each year of millions and the debt is just so high, TCC would have to pay someone to take it away, they already Phailed at that when NZTA said "No way ... Bro!".
Who would take it away?
Posted on 10-05-2013 09:12 | By YOGI BEAR
Even if you paid them who would take it away? No one as the losses are huge, as soon as it has paid off the debt the tolls stop anyway, so I guess that the aim is to keep the debt up there so the tolls carry on endlessly. TCC made the mistake of paying off the debt and then they had to stop collecting tolls immediately.
The biggest looser?
Posted on 12-05-2013 15:55 | By Plonker
Ratepayers, Councillors come and go, staff just keep on getting paid, but ratepayers remain and have to foot the bill anyway and they don't even get to have a say in it.
Accountability
Posted on 13-05-2013 10:43 | By YOGI BEAR
Ratepayers put Councillors there to be "Accountable" not this run and hide stuff just looking for the "nice to haves" brigade.
The
Posted on 15-05-2013 08:36 | By Capt_Kaveman
extension built past 15th ave was a waste of time and i made my point at the time now look whats hap funny that
Capped Kave man
Posted on 15-05-2013 15:47 | By YOGI BEAR
Agree, but the motive was off somewhere in noddy land, TCC wanted to replace the toll revenue off the habour bridge with something else, so as the cash flow rolled on happily into the future and the spending could roll out for all teh "nice to haves" without to much pain to ratepayers, what has happened since is a big black hole has opened up and the spending has not stopped.
Bring back Stephen?
Posted on 15-05-2013 18:09 | By Plonker
Make him fix it as it is his mess to clean up.
What challenge?
Posted on 23-05-2013 16:09 | By YOGI BEAR
Can not see that there is any challenge, the mess here is so large that there is no way out unless ratepayers front up with the $$$ from rates to bail out TCC.
Winston v Larry
Posted on 26-05-2013 16:48 | By Crash test dummies
There is no contest here. Winston wind and Larry's true colours are obvious already. Larry not solve this even if he wanted to
Route K charges
Posted on 27-05-2013 16:34 | By jim.cantlon
Another reason why we must have a commissioner to replace there idiot councilors. Splodge
Larry Land valuer?
Posted on 29-05-2013 11:30 | By YOGI BEAR
Paid 85,ooo a hectare and Larry says it is worth $235 a hectare in 2026, looks like that is a prediction of failure with a glossy wonderful look about it now. But will Larry be around then to explain the gap?
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