Council rebuild costs top $2.2b
The Christchurch City Council's share of the city's rebuild costs is rising, with latest estimates putting the bill at more than $2.2 billion.
The council initially budgeted $982 million for its share of response and recovery costs. It signalled that figure could rise as the extent of the damage to the city's infrastructure became clearer.
It now believes it will end up with a bill of from $1.3b to $1.4b - an increase of more than 30 per cent.
The council must also increase its commitment to the anchor projects within the new central business district (CBD) from an original budget of $632m to $787m - an increase of $155m.
All up, that means the council needs to come up with another $550m in funding at a time when it is facing a $75m operating deficit because it is getting less money from rates, less dividends from its trading companies, and less income from other sources such as parking.
In October, Finance Minister Bill English launched a scathing attack on the council, saying it had not been open enough about its finances.
If a business were in the council's situation, it would be in danger of receivership, he said.
The finance minister also said the council might not be able to meet its 40 per cent share of the cost to rebuild infrastructure. However, it was not providing the Government with the information needed to plan a compromise.
But, in a full and frank interview with The Press, council chief executive Tony Marryatt says there is a sound strategy in place to meet the costs and no cause for concern.
The extra recovery costs would be funded through a combination of deferred renewals and a special earthquake charge, which would be used to service the council's debt over the next 30 years, Marryatt said.
The asset renewals budget, used to fund work such as new kerb and channelling, stood at about $100m before the quakes but has been roughly halved so that money can be diverted to earthquake recovery work.
The special earthquake charge - the equivalent of a 1.82 per cent rate rise - was put in place 18 months ago to cover the council's operating deficit and will remain in place until the 2015/16 financial year.
Marryatt said the council's contribution to the anchor projects was to be funded through borrowings ($330m) and insurance ($332m).
The extra $155m it had committed would be funded through the sale of council-owned land to the Christchurch Central Development Unit (CCDU), which was expected to net the council $72m, and through an additional $83m of debt.
The financial strategy put together by the council was not without its risks, Marryatt admitted.
It required this council and future councils to be disciplined and it assumed both the council's insurers and the Government would come to the party with their share of the funding.
Council staff had discussed the financial strategy, including the assumptions on which it was based, with the CCDU and there was an agreement on the funding split "at an officer level".
"When I retire and look back on what I'm most proud of, this financial strategy will be one of the top things that I'll talk about," Marryatt said.
The Press yesterday asked Earthquake Recovery Minister Gerry Brownlee whether he had confidence in the council's financial strategy, the assumptions on which it was based, and the council's ability to stick to it.
He declined to comment.
"While these matters are under discussion the minister has no comment to make," his press secretary said.
Finance Minister Bill English did not think it was appropriate to comment while Government and council officials were in discussion.