LTCCP: HELLS DANGER

The most disastrous danger with the Nelson City council's LTCCP, is that it is flying in the face of government directions and giving a one finger salute to Minister Rodney Hide, by totally ignoring the government's public statements and directions on the subject of the economic need to bring rates and spending under control, and particularly so in the current economic climate.
Minister Hide has always made it abundantly clear to local government that double digit rate increases are simply not acceptable and has explicitly and publicly made that particular statement many times over.
He has also made it extremely clear that he intends to introduce a rates cap to counter, the out of control spending being indulged in by local government.
However as previously discussed the fundamental underlying effect of Nelson's LTCCP is, that it locks into place double digit plus, plus inflation, rate increases for the next ten years or more, and that puts the NCC on a head on collision course with the governments stated objectives.
Therefore when the government puts that rates cap into place, at around the rate of inflation, the Nelson City council will be caught with its backside hanging out in the wind.
If council lock these double digit plus, plus inflation, rate increases into place, then, when the government puts a rates cap into place at inflation levels, the effect is, that the NCC is left with negative or minus double digit rate increases locked into place.
Effectively Nelson will be going backwards out the back door in reverse gear at reverse double digit warp speed.
If this LTTCP is allowed to survive it will lock into place minus rate increases and negative progress for many years to come, which will oversee the disastrous ruination of Nelson.
This is an extremely dangerous game of head on chicken that this council is playing with the government, and any resulting pissing contest will see this council staring down the loaded barrel of long term backwards progress. This LTCCP is outright insanity and must be stopped.

PAC: COST CRAZINESS

The craziest financial tap dancing that the Nelson City council is indulging in over the PAC are the illogical and incomprehensible costings of this foolhardy flight of fancy. This project has not even made it onto the drawing board yet and its costs are rocketing into orbit at warp speed.
The councils previous LTCCP proposed a regional performing arts and conference centre structured as a three way regional partnership equally funding a total capital commitment of $30M with the capital costs very roughly split at around 50% for the arts venue and 50% for the conference venue.
However the collapse of that regional arrangement caused council to secretly change the project to a community facility and that secret change has forced council into a structural change, with the PAC now being touted as a public private partnership. While information is being deliberately limited, it currently appears that this new partnership will be a two way public private partnership with one partner being responsible for the performance venue and the other for the conference venue.
However that structural change is being covertly used to camouflage and hide a massive ratcheting up of the scale and costs of this rogue economic white elephant. The LTCCP just issued states

Council's estimated contribution would be up to $32.4 million, NOT including any other funding provided through a Public Private Partnership.

Therefore on the assumption that the partnership will be a roughly equal one, then that LTCCP statement is actually declaring that there has been a massive blow out and escalation of the costs of this dreamtime project.
If councils equal share of this project is budgeted at $32.4M then the financial extension of that figure says that the whole project cost has massively escalated and is now estimated at $64.8M.
Whatever the actual figures are, they indisputably reveal a massive hike in this foolhardy project which is responsible for an unacceptable distortion of the rate burden. This project is out of control financial madness and totally imprudent to boot.

LTCCP: BLATANT GREED

Among the most reckless and disastrous side effects of the Nelson City councils proposed LTCCP Holiday from Hell, is the massive imbalance it wreaks on ratepayers.
One of the most fundamental indicators of proper and prudent governance that can be found in any council plan is the balance between income derived from compulsory rates, versus all other non rateable income.
That other income is major funding derived from sources such as, local bodies fuel tax, central funding of roads and other government plans, policies and social initiatives; council charges, development contributions, consent and permit charges, and fines income from legislative infringements, etc, ad infinitum.
There is a fundamental administrative principle that income from rates should not exceed 50% of councils total income, and the recent commission of enquiry into rates reconfirmed that principle and went even further stating that councils should be actively working to reduce that rates percentage to well below the 50% mark.
As there is a geometric progression involved in shifting that ratio, the next 1% shift takes a progressive doubling of the previous shift, to achieve the next step.
It is therefore staggering that this LTCCP proposes to increase that rates ratio by stretching it out from around the 50% mark, to around a mind boggling 66%, and because of that geometric progression, that is a massive blow out, and exponential shift of the funding burden, onto the ratepayers shoulders.
That shift is an abuse of the power to levy, and is simply unacceptable. If that shift of the funding burden is a knowing shift, then it is nothing other than a reckless rort, but if on the other hand, it is an unknowing shift born of council ignorance then it is simply incompetent.
If there is any symptom that reveals the agressive cancer of this councils financial objectives, it is this shift in the rates burden ratio, which is so untenable and unaffordable, that it cannot be allowed to survive. This LTCCP must go.
Unfortunately there are even worse effects of this Holiday from Hell yet to be revealed and they will be addressed next.

PAC: CON JOB

Nelson City Council vested interests, are so desperate to force a performing arts centre [PAC] onto the community, against the will of the majority, they are resorting to extreme sleight of hand and outright deception in their attempts to justify this rogue economic white elephant.
The worst of these deceptions centres around the bafflingly inexplicable and hugely excessive costs of this flight of fancy. These costs are so illogical and incomprehensible they can only be described as foolhardy madness.
The previous LTCCP sold a $30M PAC to the public on the basis that it was a regional facility to be funded as an equal three way partnership between the NCC, the TDC, and the Millenium Trust. That plan explicitly committed each partner to a $10M share. Thus it has always, only ever been proposed, that the Nelson ratepayers commitment to this project was but $10M.
Since then the TDC has backed out of the project and the Trust has never raised a cent, and has since evaporated off the face of the earth. As a consequence the PAC no longer enjoys the status and therefore funding, as a regional facility.
To avoid that irritating inconvenience, the city council has covertly and without any declaration or notification or consultation, secretly altered its plans to change the status of the project from a regional facility to a community facility.
However the implications of that secret little stroke of the pen are massive, and hugely expensive. That covert change alters the whole economic and funding structure of the project, by landing the entire $30M plus commitment and responsibility for the project, solely at the feet of Nelson ratepayers.
Those vested interests are so desperate to force this project through, they are prepared to fly in the face of this 300% shift in financial commitment, and that desperation is unacceptably distorting the rating burden. It is this single issue that is currently forcing the imposition of those diabolical funding practices, such as the holiday from hell, and the doubling of rates, interest and debt.
There is a lot more of this financial tap dancing going on over the PAC which is so grossly distorting the rating burden. Accordingly we will explore this subject further over the coming days.

LTCCP: HELL BOUND

So why is the Nelson City council's LTCCP such a wolf in sheeps clothing, that gives such a false appearance of prudence and belt tightening. How does it achieve a reduced rate increase while still increasing expenditure.
Simply put, it is an exercise in smoke and mirrors, achieved by putting future grocery bills on the credit card. Increased expenditure and the consequential increase in the rate burden, will be disguised and hidden by stopping payments on mortgage, rent, and hire purchase payments. Those payments, will instead, all be put on the credit card. Council intends taking what is called a repayment or mortgage holiday. Effectively what council are doing is changing the method of rates funding from cash funding to debt funding.
But nationally, economists are all unanimous in their condemnation of such mortgage holidays, describing them as

Holidays from hell.

They show their stong criticism by illustrating the debt carnage that those holidays wreak on borrowers, and because of that fiscal carnage, they all give exactly the same advice;

Those holidays from hell should be avoided like the plague if at all possible.

Credit card debt doesnt just evaporate. It bites us on the bum, by just sitting there and compounding while steeply increasing our debt levels and repayment problems. When people are forced into mortgage holidays they are always in dire financial straits.
Does this mean that the Nelson City Council has dire financial problems or is this just gross financial greed and recklessness.
The particular carnage that this imprudent holiday will wreak on Nelson ratepayers is that it, doubles the rate take [$40M - $80M] and triples interest charges [$3.5M - $11M] and just on triples debt [$57M - $170M] over the period of the plan, and that doubling of interest, rate take and debt, irrevocably locks this and future councils into imprudent ongoing rate increases of at least 11%, and probably more, plus inflation of 3%, for the forseeable future.
What ratepayers are agreeing to by this LTCCP, is a minimum of ten years worth of rate increases of at least, 11% or more, plus inflation of 3%, and that is irresponsible if not reckless.
However, even more serious and disastrous effects are created by this trip to Hell and they will be analysed next in this series.

WRC: HYPOCRISY

The Nelson City Council is claiming all sorts of Alice in Wonderland economic benefits from hosting WRC games. But if, as previously shown [17 April 09], council's own economists have assessed the economic impact as being "ZERO", and as the consequential cost benefit analysis must be 100% negative [19 April 09], then how does council even begin to claim such fanciful fairyland figures.
The answer to that question is, simply by good old deception.
Economist Berl's economic activity assessment states that

The proposed $7m upgrade to Trafalgar Park is essential to being able to hold a RWC game in Nelson Tasman and has been factored into the analysis.

So, because the game hosting figures have proven to be such a dismal economic lemon, those figures have been boosted by including the Trafalgar Park upgrade figures as being part and parcel of the WRC economic activity figures.
So much so, Berls assessment shows that the Park upgrade figures comprise 80% of the claimed WRC economic activity.
So, what is wrong with that? Well bluntly put that is just plain old deception and gross hypocrisy.
During notification of the Park upgrade council went to extreme lengths to divorce the two proposals. Council loudly and repeatedly stated that the two proposals had nothing to do with each other, and publicly castigated any ratepayer who even dared to draw any connection between them. Council further attempted to distance the two proposals from each other by insisting that the upgrade was for the provision of a multi purpose outdoor events venue rather than being an upgrade driven by and for the WRC.
To now embrace the upgrade as such an essential part of hosting WRC games, that it requires inclusion of all costs and expenditure connected with the upgrade as being a fundamental part of the WRC economic activity assessment, is at best gross hypocrisy and at worst an outright deceit.

LTCCP: DISASTER

The Nelson city council has just published their LTCCP accompanied by an extensive PR blitz giving the appearance of emminent prudence and reasonableness and which achieves the holy grail of a rates increase of around the rate of inflation.
However do not be fooled and duped by this smooth PR talkfest.
This plan is quite the opposite of what it appears, and any level of serious analysis shows this LTTCP to be a wolf in sheeps clothing, and an absolute calamitous disaster in the making, locking into place ruinous long term effects, which will drive Nelson backwards for the forseeable future, and will stymie progress for many years, even decades, to come. This plan is so ruinous on many levels that it cannot be allowed to survive and must be ditched before it sends Nelson broke and out the back door.
It is automatically assumed that for any plan to achieve a rate increase of 3%, that it is the result of prudence and responsible belt tightening in response to the current global economic crisis; but quite the opposite is true.
This plan actually and irresponsibly loosens the fiscal belt and increases spending, and does so by particularly imprudent methods.
So how is a reduction in rate increases possible while spending is actually being increased. Quite clearly that is just physically and mathematically not possible. Simply put that decrease is a mirage that has been manufactured by smoke and mirrors, and is a fundamental deception. The reality is entirely the opposite.
The disastrous reality of this imprudent LTCCP must be laid bare and will thus be explored in a series of blogs over coming days. While this is a dry subject the ruination that it will bring about deserves serious analysis and exposure.

OPERA: IN THE DARK

Two years ago, the Nelson City Council owned and run, Opera in the Dark, incurred a financial loss which cost Nelson ratepayers, well in excess of $100,000.00.
Subsequently, and some time prior to the next opera, that is, the one held just three months ago, council were directly asked, what financial controls were in place to prevent that event from blowing out and again being run at a similar or even greater loss.
Staggeringly Council admitted that it had no such controls in place.
That loss and the resulting questioning over those non existent controls should have rung sufficient alarm bells, warning council that it urgently needed to impose and implement proper budgetary controls and financial management over events staff, especially as, uncontrolled budgetary over runs were becoming a familiar refrain in the councils events calendar.
Therefore when the jungle tom-toms started to claim that this years opera had made another loss, of even far greater proportions than the last, council was asked to confirm and detail the size and nature of those losses.
Stunningly council has simply refused to provide that information. Not only is such a refusal highly improper, it is also arrogant, as these are ratepayer funds that are being grossly mismanaged and ratepayers have a right to that information.
Unfortunately for council when people are kept in the dark, or an information vacuum, speculation becomes rife and replaces informed commentary, and that speculation is saying that, this out of control events situation, exactly parallels the Beckham soccer match debacle and that the loss, on a per capita basis, rivals and may even exceed that Beckham event.
Council needs to understand that such sloppy financial management is totally unacceptable when dealing with public funds and that like the Beckam event it must be investigated and proper accountability must happen and heads must roll.
It is becoming increasingly apparent that council events management is out of control and regards itself as having some sort of priveleged political patronage that does not have to conform to proper financial and budgetary management and other required governance norms.
If council is so incapable of running properly budgeted and controlled events, that it has to deceive by secrecy and ommission then it should get out of those activities. This arrogant secrecy over Opera in the Dark is wholly unacceptable and the public must be kept properly informed.

SEWAGE: INSANITY

The Nelson City Council is proposing to spend up to 54 Million dollars to upgrade the Bells Island sewage plant.
The formal statement of proposal provided to the public admits and accepts that many of the options given were selected because of pressure on council over cultural sensitivities about sewage lines traversing the Waimea inlet.
That formal proposal also stated that after the upgrade was finshed, council would sit down and consider whether the method of sewage disposal should be changed from disposal at sea, to disposal on land, which would necessitate the sewage plant being shut down and relocated to an inland site. It was again admitted that this option was also being considered for reasons of cultural sensitivity.
In fact some of this cultural pressure is in the nature of formal submissions demanding that Bells Island be shut down within the next ten years.
Therefore this situation staggeringly proposes that council having just spent up to 54 million dollars upgrading the sewage plant, would then immediately after that upgrade and considerable expenditure, turn round and consider whether or not to shut down and relocate that newly upgraded plant. Such a proposal is sheer insanity, and must be stopped dead in its tracks.
Before one single cent, of ratepayers money is spent on any further new works at Bells Island, one of two things must happen. Either all consideration of relocation of the sewage plant must be scrapped and permanantly taken off the table, or, that possibility must be embraced and properly considered and a decision made one way or the other. To do any thing else is outright madness.
Despite media reporters being present during submissions on this pivotal issue, that crucial information appears to have again been supressed and kept from the public.

WRC: RECKLESS

For any proposed items of significant expenditure, councils are required to provide a cost benefit analysis to ratepayers so that a properly informed debate and decision can be arrived at during subsequent planning processes.
The Nelson City Council have loudly and repeatedly proclaimed that just such a cost benefit analysis exists in respect of the World Rugby Cup proposal, but it was to be kept secret. However council promised that, that cost benefit analysis would be publicly released prior to the LTCCP planning round so that ratepayers could make properly informed submissions to the LTCCP.
Given economist Berl's stunning conclusion in their economic activity assessment that, "the economic impact generated as a result of holding the games is effectively ZERO", then it becomes patently obvious that any calculation of cost benefit to ratepayers must also be "ZERO", at best; but in reality it is actually a grossly negative benefit. As any and all expenditure is a direct cost to ratepayers, and as there is "ZERO" balancing income or benefit to ratepayers, then any cost benefit must be 100% negative.
The fact that both the economic activity assessment and the cost benefit analysis existed, prior to any decision being made, seriously calls into question the prudence of that decision. To proceed in the face of such seriously adverse economic assessments, data and analysis, can now be seen as, at best, entirely imprudent and foolhardy if not reckless.
In the light of these economic revelations, that cost benefit analysis must be made public. The LTCCP planning round is now in full swing and the promised cost benefit analysis is still being kept secret, and that continued secrecy raises the distinct suspicion that no such cost benefit analysis actually exists.
It is time for council to put up. They must publish that analysis or admit that it does not exist. If it does not exist then clearly council has been misleading the public. When politicians are found to have been deceiving the public, the usual practice is for resignation or removal. Ethically, they should jump before they are pushed.

SEWAGE: PLAN FLAWED

The Nelson City Council is proposing to spend up to 54 million dollars to upgrade the Bells Island sewage plant.
Both the council and the Nelson Mail have repeatedly pushed a corporate spin to justify such large expenditure. That spin being, that the Waimea Estuary section of the pipeline is, "in imminent danger of total failure."
However that spin was challenged on the basis that, if that was in fact the danger or risk being faced, then why was council not immediately undertaking urgent maintainence by way of repair or replacement, and at the probable cost of only a couple of million dollars or so.
Council then admitted that, that was not in fact the risk being faced, and that automatic shut down systems were in place to prevent such catastrophic spills.
Council also admitted, that the real risk, actually being faced, was that if sometime in the future the pipeline ever did somehow or other fail, then no duplicate pipeline existed as a back up against that future contingency that may or may not ever happen.
Therefore the risk currently being faced is, no different, or no greater, a risk than has always been present, since Bells Island was first commissioned.
If that is so, then the risk analysis underpinning the proposed 54 million dollar expenditure can only be regarded as deeply flawed, and the consequential risk benefit analysis, and cost benefit analysis, must both be equally as deeply flawed.
Alternatively, if any risk of failure does actually exist, then a proper risk analysis would seem to indicate, that the project being proposed is the wrong project to address that risk.
Despite media reporters being present during submissions on this pivotal issue, this crucial information appears to have been supressed, and kept from the public.

WRC: REVELATIONS

The Nelson City Council and the Nelson Mail loudly trumpet that there will be 14 million dollars worth of economic activity generated for Nelson, from hosting the World Rugby Cup. However it appears that the harsh economic realities of that imprudent financial adventurism are hugely different to those claimed by them.
Councils own economic impact assessment commmissioned from respected economists Berl, quite simply and startlingly states that;

"The revenues generated from admission (ticket) sales at the match, goes direct to the New Zealand Rugby Union.
Revenues generated from food and beverages to spectators at the match grounds are retained by Rugby World Cup Limited (RWCL).
The hospitality spending by spectators and in hosting VIP guests outside the games precinct would normally be included in the overall spending estimates used to generate GDP in the analysis. However, these revenues (or certainly profits) are retained by the RWCL.
In the event that all revenues associated with hosting Pool games at Trafalgar Park go direct to the RWCL, the economic impact generated as a result of holding the games is effectively ZERO.
The cost of hosting a game will effectively be paid by the council and ultimately the ratepayers.
This suggests that all expenditure associated with hosting a match is effectively a diversion or transfer of expenditure (by council) rather than additional expenditure coming into the region and conferring economic benefits to the region.
Only in the event that a portion of the Pool game revenues (either ticket revenues or other on site match revenues) is allocated to meeting the cost of mounting any games would there be downstream benefits into the regional economy."

That economic assessment is a sober and altogether stunning revelation of council imprudence and financial adventurism, and no wonder it was being kept secret.