Tauranga City Council is formalising plans to shift ownership of its toll road Route K to central government.
It intends holding on-going discussions with the New Zealand Transport Agency about having Route K declared a state highway.
Tauranga City Council and NZTA will continue to talk about the future of Route K.
It is an open ended plan with no dates set. The decision acknowledges the unwelcome news the NZTA's rules prevent it from taking over the road's $61 million debt from council.
The council agreed yesterday to support on-going discussions with NZTA on the basis that Route K will be declared a state highway with the timing being by agreement between TCC and NZTA.
TCC is hoping that from the declaration all Route K maintenance costs will be paid for by NZTA and not TCC, therefore not adding to the council's Route K debt.
The $61million Route K debt will remain on the council's books, and an associated risk share agreement will be developed between TCC and NZTA with the view to recognising the Route K debt as the first order of repayment from toll revenue. This will support repayment of debt as soon as possible.
A risk share agreement will be established around the delivery of supporting routes such as the 15th Avenue connection to Route K, the SH2 northern link and the SH29 Tauriko bypass.
The council also want an assurance that if NZTA removes the tolls, the council's debt will be repaid.
Route K's estimated debt as of the end of June 2013 is $61.1 million, based on the figure of $60.9 million at the end of May.
Route K revenue currently pays for all operating costs and about 50 per cent of the debt servicing costs. At the current rates the project is expected to start paying more money than it owes by 2021-2022 – when the debt is estimated to have grown to $65.5 million.
Monthly revenues on the toll road are increasing with a $100,000 rise in the last two years. In May 2011 monthly revenue was $208,000 and in May 2012 it was $295,187. This grew again in May 2013 to $308,118
The boost is coming from an increase in truck traffic, up to 960 in May 2013 compared with 880 in May 2012. Car traffic is remaining fairly static. In the last three years average daily car numbers were 3895 in May 2011, 4045 in May 2012 and 3969 in May 2013.
It's basically a ‘keep calm and carry on' agreement after NZTA Waikato/BOP regional director Harry Wilson told city councillors in March that the agency isn't legally empowered to buy debt with public money.
6 comments
Unbelievable
Posted on 25-06-2013 12:37 | By Fun in the Sun
How could TDC even in their wildest fantasies believe NZTA would/could take over the $61 million debt, and for how many years have they being deluding themselves and telling the residents of Tauranga about this dream as if it would happen. Just read past issues of Bill Faulkners column to see how deluded they were. As for declairing the Toll Rd a State Highway, well the main purpose of the road is to feed the Port of Tauanga which I believe is of national importance and not a local body job.
I understand
Posted on 25-06-2013 14:48 | By morepork
... the NZTA can't take on the debt, but then who gets the (slowly increasing)revenues from the Tolls? If TCC continue to receive it (and as long as they are required to reduce the debt with it) then this is a step in the right direction. If they don't get it, then how is the debt to be cleared? As the average toll revenue is around 3 million a year, and the interest alone on a 60 million debt at, say, 5%, is 3 million, even if the NZTA take on the ongoing servicing costs of the road, the debt will never be cleared. There are 3 factors involved here: 1. the interest rate, 2. the amount of traffic paying toll. and 3. the ongoing cost of maintenance. This deal could alleviate point 3, but the other 2 points mean we are still saddled with it and there is no guarantee that point 2 will continue to increase; a downturn at the Port, for instance, would be disastrous. In hindsight, it is easy to see that this was a stupid project to ever undertake and the financial planning (if there actually was any...) was dreadfully inaccurate. Why aren't checks and balances in place to prevent grandiose projects like this from wasting our money? Now we have to eat it and it is not clear what the best course should be. Should TCC divert other resources to reducing the principal? Can the lender be approached to consider a more viable package? Transparency and Public accountablility have to be the 2 best safeguards that we, as Ratepayers, have. Sadly, they don't seem to be in place.
More Pork Point 3
Posted on 25-06-2013 15:49 | By YOGI BEAR
This one is minor TCC have spent around $50,000 annually on repairs, not really that much at all.
More Bollicks Part 2
Posted on 25-06-2013 18:59 | By ROCCO
Stop the interest running and stop capitalising the bloody debt . The solutions are there TCC just do not want to know about them.REMEMBER TCC constructed this lemon after being told by Transit to steer clear because it was not viable. No good bleating now!!
Preaching to the converted
Posted on 25-06-2013 22:10 | By Plonker
NZTA condemned it before it started when TCC asked them to look over the numbers, NZTA are hardly going to leap on to this "melon" or is it a "lemon" now are they. That would be just another bailout that would dwarf everything else that we have seen so far.
Look to the Port.
Posted on 26-06-2013 08:50 | By bridp
When these roads (including the Harbour Bridge) were being proposed, the Port of Tauranga was the main proponent. The extension roads were then built, once again at no cost (or risk) to the Port of Tauranga. It is now time to ask the Port to stump up and take on some of this debt. Port of Tauranga says "yes we want it, but we are not prepared to pay, it is a council matter". Time to cough up P.O.T.
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