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MDC in a fix: $27m road damage bill

Masterton’s storm-damaged roading network will cost about $27 million to fix, leaving councillors praying for a better-than-expected winter for the region.

And although it is anticipated that Waka Kotahi funding will foot the bill for the majority of the works, Masterton District Council [MDC] may need to take out a $5m loan for the rest.

This is because MDC’s Flood Damage Fund is in the red.

The estimated cost to restore Masterton’s roading network – to the previous level of service – is broken down into $8.2m [from June/July Storms 2022], $3.9m [Cyclone Hale], and $15.2m [Cyclone Gabrielle].

The council assume Waka Kotahi funding would cover $21.8m, while the council will fund $5.4m.

This is based on an enhanced Funding Assistance Rate of 77 per cent. At an extraordinary council meeting on Wednesday, elected members approved the programme of works and recommended that the chief executive applies for a bespoke funding arrangement with Waka Kotahi.

Chief executive David Hopman told councillors that with a bespoke arrangement, “the best case is still $2.5m council-funded”.

MDC’s Flood Damage Fund is expected to be in a deficit position of close to $1m by June 30, 2023, having been used to fund works this year.

External loan funding is recommended as the best option to fund the council’s share of the upgrades, if the sum required is between $2.85 and $5.55 million.

The debt will increase Masterton’s rates further from the 2024/25 year as it incurs interest and provision for debt repayment is built into the Long-Term Plan.

This in turn could restrict the council’s ability to borrow money for other projects, as it means prudent debt limits are closer.

Councillor David Holmes summed up the mood on Wednesday when he said: “God help us if we have anything like a normal Wairarapa winter.”

The 2023/24 Annual Plan has included a provision to restore the Flood Damage Reserve funds to a positive number over a number of years, initially with a $500,000 increase in rates funding.

Prior to the government’s Budget announcement, Masterton Mayor Gary Caffell said he wanted to see specific support to councils affected by the storm events for the reconstruction of local roads – in the form of an increased subsidy from Waka Kotahi.

He said the cost of borrowing will be “a burden on future ratepayers for many years to come”. – NZLDR

Public Interest Journalism funded through NZ On Air


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Emily Ireland
Emily Ireland
Emily Ireland is Wairarapa’s Local Democracy Reporter, a Public Interest Journalism role funded through NZ On Air. Emily has worked at the Wairarapa Times-Age for seven years and has a keen interest in council decision-making and transparency.

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