Waingawa River. Photo: Wairarapa Times-Age
Carterton District Council will be asked to scrap a multimillion-dollar water processing project in a bid to save ratepayers footing a hefty bill.
The project, which was announced last year, involved establishing a bore and additional water storage on land adjacent to the Waingawa industrial park in the Carterton district.
It was originally costed at $2.5 million and would have provided greater water security in an expanding business area.
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Of this, $1.75 million was secured government funding, $500,000 would be from Carterton District Council (CDC), and $250,000 from Masterton District Council.
But the projected costs have now increased to $2.77 million, and the difference would need to be met by Carterton ratepayers if the project goes ahead.
As a result, CDC staff have recommended the council scrap the project immediately.
In his report to the council's Policy and Projects Committee, which meets on Wednesday, infrastructure services manager Johannes Ferreira said that since the project was endorsed in September last year, more information had become available "which has changed the risk profile of the project deliverables negatively".
This included anticipated revenue being scaled back due to reduced raw water demand forecasts from wood processing company JNL, the major water user in the industrial area.
A geotechnical report had also indicated risks with drilling a bore on site, due to the earthquake fault line, and there would be further cost escalation in moving the bore to an alternative site.
"Due to these changes and some new risks being identified, it is now unlikely that the project outcomes can be successfully delivered without a significant increase in the project budget," Ferreira said.
"The increase in investment required, and reduced revenue mean this investment is now uneconomic, even before additional risks or cost escalations are considered."
He said the project would deliver non-financial benefits, such as the environmental effect from reduced chlorine treatment of potable water; lower demand for potable water during summer months; and the potential to better manage fire risk at the Industrial Park are difficult to measure.
However, "these benefits will not be seen by Carterton ratepayers in the immediate future, nor will they show on our balance sheet", he said.
The CDC Policy and Projects Committee would consider two options when it meets next week: increase the project budget, or "terminate the project with immediate effect".
The Waingawa park is a key heavy industrial area for Wairarapa and is forecast to grow by up to 60 sites in the future.
It relies heavily on a commercial water supply from the Waingawa River via Masterton's municipal water supply.
This single water supply means businesses were at risk of having work interrupted if restrictions were applied.
During low river flow in the Waingawa River, the intake for Masterton's urban water supply could be restricted to residential use only, meaning those businesses faced down-scaling operations.
Finding an alternative water source for affected businesses would offer a medium-term solution to reduce the risk of water restrictions during times of drought or low river flow.
LDR is local body journalism co-funded by RNZ and NZ On Air.
