Napier – A Blue Chip Stock?

Mayor Barbara Arnott sat down with BayBuzz recently to discuss Napier’s pending budget and long-term plan. I have my beefs with the Mayor, and I hear from others that do as well. But any city would consider itself fortunate to have as effective a champion as this mayor, whatever one thinks of her policies.

And what a contrast Il Duce and her city-state seem to cast against Hasting District and the Regional Council.

If, in financial terms, one were to take Napier as a blue chip stock (steady, stable, boring), Hastings might then be best described as a financial derivative (complex, speculative, mysterious to most investors, arousing suspicion, dangerous), and the Regional Council as a growth stock (optimistic, entrepreneurial, future-oriented, a bit risky … but exciting).

Napier’s rate increase for the coming year will be 2.68%, meeting the magical goal of not exceeding the consumer inflation rate, but rising by 5.53% the following year. And Napier’s debt will be about $22 million, with marginal growth projected. Small potatoes compared to Hastings.

In terms of major spending initiatives, there are a handful of projects on the Napier radar – redevelopment of Taradale centre, a new museum and art gallery, a business park at Prebensen Drive, a yet-to-be-determined “something” at Marineland, and upgrades to the city’s stormwater system.

During a dedicated consultation process, residents of Taradale supported the most ambitious redevelopment option that Council offered for that community’s central district. This scheme will be subject to further consultation in the LTCCP process. But whatever is done is to be financed via ring-fenced funds generated by local parking fees.

About $2.5 million is proposed for the Prebensen Drive business park infrastructure ($1 million), the Marineland/CBD refurbishment ($1 million), and the planting of $500,000 worth of new trees around the city. These projects, however, will not be rate funded. Instead, they are to be financed through a bit of a windfall NCC has received from its investment in the Parkland residential development. Some 200 homes sold quickly there during the housing boom, yielding a bubble of income the Council will devote to the aforementioned projects.

The new Museum and Art Gallery, a $15 million (plus inflation) project, was approved in the previous LTCCP review. Mayor Arnott says this project will not proceed further until all necessary funding has been lined up. Her goal is to finance one-third with central government funds, one-third from Napier ratepayers, and one-third from private sector contributions. Asked whether construction might actually begin during the next three-year period, Mayor Arnott commented: “Yes. We will trigger it within the next three-year period, all going well with our fundraising efforts, which will kick-off half-way through this year.”

So what are the “big issues” from Mayor Arnott’s perspective? She would say solid waste disposal and stormwater management. Proposed activities in each of these areas will be presented in the long-term plan for public consultation.

With regard to waste disposal, the issue is sharply escalating costs, due to a new central government levy and other cost hikes … leading to a 100% rise in city recycling bills in the last year. According to the mayor, Napier has almost achieved its goal of recycling 25% of its waste by 2011 (already at 23%), and the issue becomes what additional waste minimization can be undertaken at an acceptable cost to the public.

Stormwater management represents an even more expensive challenge. With Napier effectively sitting within a geological bowl, fully 73% of its stormwater must be collected and pumped over the lip of the bowl into the sea. One project alone, the new drainage system collecting stormwater from part of Taradale and Pirimai, is costing around $16 million. And, in the future, with climate change likely to bring more – and more intense – “rain bombs” to the region, the city’s stormwater systems are likely to be stressed. The LTCCP allocates $1.1 million to additional stormwater management capacity, and the mayor says this must be used “creatively … “the problem is totally manageable, but still a big issue.”

At this point in our conversation, I felt that we still hadn’t stumbled into anything really juicy. So I tried a couple of issues that I suspected might produce a bit more adrenalin – Napier’s funding for two “outside” projects … the “regional” sports park and Hawke’s Bay Inc, the region’s tourism and economic development agency.

Asked if there was any money in the proposed LTCCP specifically assigned to the “regional” sports park, Mayor Arnott replied: “No. No.”

Then she expanded. “There will be money in the plan for sport facilities. Park Island has a catchment of about 40 hectares that we can expand into. We just told the rugby league we’ll commit to supporting them and giving them a home at Park Island, and that will cost something. We can help them grow the sport and give them some stability.” Then she mentioned tennis facilities in Taradale and continued: “So if there’s funding in there for sport facilities, it will be for facilities like that … We’re quite proud of our sport facilities and we keep putting money in them because they are well-used.”

I badgered Mayor Arnott about the sizeable funding for the sports park requested from Napier by Mayor Yule and Sam Kelt. She acknowledged: “We’re having a meeting with the sports park people next week and I’ll be interested to hear what they have to say to me.”

Then she continued: “There’s no way this city will be putting in money of that magnitude until we build our own facilities. We’ve still got McLean Park going. We started that in a time of largesse and where sponsorship in terms of buying boxes and that sort of thing was reasonably easy to come by. We’ve got to follow through on that and make sure that we paid for it in total. And the Museum and Art Gallery needs to be paid for in total. And the business park needs to be well under way and its infrastructure solid before we can afford as a city to put money into anything else. And I wouldn’t think in the next three years we would be doing that.”

We moved on to Hawke’s Bay Inc. “There are two issues there,” she said, “equity in payment for our people and proof in the pudding in terms of performance.”

Mayor Arnott believes Napier has paid more than its fair share of HB Inc costs in the past, an inequity compounded by poor accountability. With the Regional Council taking full oversight and, as proposed in its own LTCCP, full funding responsibility for HB Inc, the issue of how much Napier ratepayers will be charged by the Regional Council remains a sore spot with Mayor Arnott, who wants the formula pro-rated against the population size of various local jurisdictions in the region.

Says Mayor Arnott: “Having the Regional Council take it over gives us a bit of confidence in terms of the accountability side. I haven’t yet got any confidence in terms of deliverables … We don’t mind our ratepayers paying if it’s for a service that adds value. If it doesn’t add value, then why would we, even if it’s taken over by the Regional Council.”

Listening to Mayor Arnott, it sounds like the sports park and HB inc are two “causes” that have not yet “made their case” satisfactorily to her or her Napier Council! Stay tuned on these items.

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