Route K deal welcomed

The transfer of $63million of Route K debt from Tauranga City Council books is being hailed as a 'significant move” that will benefit the city in the long run.

But opposition political parties say the announcement today the NZTA will take on all but $1million of the $63m debt from TCC when the road is transferred in June 2015 is politically timed.

The announcement was made in joint by TCC and NZTA today after the recommendation was unanimously supported by council.

NZTA Waikato Bay of Plenty Regional Director, Harry Wilson, said it will make a one-off payment to TCC using existing NZTA funds and will not require a debt facility.

The tolls, which recently increased from $1.50 to $2 for cars, will remain, and tolling revenue used to cover all costs, with tolls paid back into the National Land Transport Programmes' Fund.

'This arrangement means the Transport Agency avoids taking on debt and there will no impact on any other Bay of Plenty roading projects.

'The initial plan was for the Route K debt to stay with TCC and be repaid through tolling after the Transport Agency took over the road, however recent legal advice has made it clear that was not possible,” he said.

NZTA approved the transfer at a meeting on Friday, as a result of ongoing discussions over the road for the last five years.

"Clearly this is a significant decision; it will have a positive impact on our balance sheets,” says Tauranga City Mayor Stuart Crosby.

'This has been a challenge to everybody. It's been a challenge to get it over the line in any shape or form because of the restrictions that NZTA particular work in.”

Stuart says council are still putting up $1m – as a reduction in council's financial costs due to the payment - but overall it's a good financial result for the council and the city.

In the meantime TCC must apply to the Regional Transport Committee to include the arrangement in the Regional Land Transport Programme.

Funding will be provided by the National Land Transport Programme's New and Improved Infrastructure for Local Roads Activity Class.

'Currently we have just under $400m of debt that has been an issue for this city. It's all into major infrastructure of course.

'So to get that amount off our balance sheet will certainly improve our debt-to-revenue ratio quite significantly and also improve our credit rating which has a benefit across our whole portfolio of debt as well.”

Tauranga City councillor and New Zealand First Tauranga candidate Clayton Mitchell admits the issue of Route K was politically motivating for him but is 'beaming like a Cheshire cat” following the joint announcement.

Clayton and NZ First leader Winston Peters earlier this month pledged that if elected they would remove the council debt by making Route K a road of national significance and a toll free highway.

'When we first came on [as a new council in 2013] NZTA were looking at the ownership, management, and control of it.

'But without taking that debt over that didn't make any sense. This idea makes complete sense.”

NZ First leader Winston Peters believes the government's decision to pick up the TCC debt, almost six years after doing nothing, shows the influence his party is having even before the September 20 general election.

But Winston says the job is only half done.

'Clearly the government was panicked into doing something, which New Zealand First welcomes, but not the continuation of the tolls.

'Either Route K is to become a state highway or not and the tolls therefore should be removed.”

Tauranga MP Simon Bridges welcomes the decision in what is great news for Tauranga and the wider Bay of Plenty.

He says National is the party of infrastructure, having invested more than ever before in roading in the Bay of Plenty - $700m spent locally since 2008.

'I expect the benefits of this windfall to Council to pass through to ratepayers. This is Tauranga City Council's responsibility.

'By the end of next year when the Tauranga Eastern Link is scheduled for completion and this debt is wiped, this figure will be comfortably heading towards $1 billion.”

New Zealand Independent Coalition Tauranga candidate Michael O'Neill labelled the announcement a 'cynical election bribe”.

'The sole reason for an announcement 33 days before the election is that John Key thinks Simon Bridges and Todd Muller are at risk of losing the Tauranga and Bay of Plenty seats,” he said.

'The reality is that the only effective MP in the area, NZ Independent Coalition Leader Brendan Horan, has been on the case of Route K for 18 months.

Despite this, Michael said it is great news for ratepayers that Tauranga will be free of the $10,000/day interest cost of the debt.

'What today's announcement is silent on is how much the Route K tolls are going to be. Will they rise to the high level of the Tauranga Eastern Link? Or will tolls rise even higher? That question must be answered.”

National Party Bay of Plenty candidate, Todd Muller, says NZTA's decision to clear all but $1m of the $63m debt is great news for the Bay of Plenty.

'By the end of next year when the Tauranga Eastern Link is scheduled for completion and this debt is wiped, this figure will be comfortably heading towards $1 billion. The National Party has invested more than ever before in roading in the Bay of Plenty.”

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9 comments

Rates rebate

Posted on 18-08-2014 18:22 | By Johnney

Yeah can't wait for the rates reduction next year!!! Yeah right!!!!


Up, up, and away...

Posted on 18-08-2014 18:54 | By dgk

What's the bet the NZTA will raise the tolls?


gr8

Posted on 18-08-2014 20:08 | By Wonkytonk

Brilliant news, why does every have to see bad in good things...


It's not an open cheque book

Posted on 19-08-2014 07:27 | By Mike Lehan

Mr Crosby and council, remember we are watching, this is not an open invitation to increase debt, how about investing some of that cash back to the rate payers, I'm guessing we could get a sustainable 5% reduction in rates from this so I'm with johnney.........


Lolly Scramble

Posted on 19-08-2014 09:50 | By Deborah Cunliffe

Whilst this announcement is great news for Tauranga, its timing, along with other similar announcements throughout New Zealand does have the potential to look like vote buying. It is also distracting voters from the real issues such as raced based policies, the need for tougher penalties for serious crime and money going to those who need it, not roads. Deborah Cunliffe Conservative Party BOP


14 GK

Posted on 19-08-2014 09:53 | By 1 4 GK

So, NZ First said they'd wipe the debt if elected. How clever, especially given their candidate for Tauranga Clayton Mitchell already knew as a City Councillor negotiations were well advanced! NZ First achieved NOTHING accordingly. As for Brendan Horan - he's been as effective on this issue as he was in the boxing ring last weekend


Many authors

Posted on 19-08-2014 13:41 | By Fun in the Sun

As the saying goes success has many authors. The mayor says it is the result of 5 years negotiation, I would have thought he had been trying for a lot longer then that to get rid of the Route K albertros. All it is is political manoeuvring.. As a ratepayer I'll take it thanks and hope we never again have a council that likes digging financial holes to lumber the ratepayers with.


It's a CON JOB, smoke and mirrors

Posted on 20-08-2014 08:39 | By Murray.Guy

Route K debt has 'next to no impact' on the ratepayer as the interest is compounded and was to be paid through the tolls. The transfer to the NZTA of the debt likewise has NO impact, comes at NO cost as it is met by tolls. The removal of the 'no ratepayer impact debt' will now enable the Mayor and like-minded big spenders to borrow another $60 million or so which WILL BE debt to be paid by ratepayers and or new home buyers. There is also the $11 million of ratepayer debt that does cost us, that went towards the NZTA Route K extension through The Lakes. Former CEO Stephen Town assured us this would be repaid by the NZTA when it took over Route K. No mention of Central Corridor $60 million or so theft from ratepayers or the toll increases, a $10 million toll electronic collection?


SMOKE AND MIRRORS YES

Posted on 20-08-2014 11:49 | By FunandGames

You know Murray it doesn't matter how the the debt is intended to be funded or repaid, all council debt is underwritten by the ratepayers. So when the grand plans turn to custard it always comes back to the ratepayers.


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