QLDC $42 million blowout stalls Kingston water project

Costs have close to doubled on a project to connect Kingston to a town drinking water and wastewater network, with an additional $42 million needed to see it through, bringing the entire project into doubt.

Further complicating the budget blow-out, is a secretive development agreement between the Queenstown Lakes District Council and Kingston Village Limited, which has plans to deliver up to 750 new sections to the small lakeside township.

Exactly what the council has committed to providing the developer, as well as any costs or risks associated with that, remains hidden.

When asked if the agreement provides wriggle room for the council to recover costs from any project overrun, a council spokesperson says, "For legal reasons, at this stage council is not in a position to publicly discuss the DA (development agreement) terms".

Queenstown-Whakatipu ward councillor Niki Gladding is a go-between for the Kingston community and the council.

She says there are limits to what level of detail she can provide on the current situation.

“But I can say this: The development agreement with KVL is another example of why councillors need to see the detail of these DAs before they’re signed off.

“Delegating authority for the chief executive to negotiate and enter DAs has been standard practice at QLDC but it needs to stop.

“We need to ensure the organisation carefully and thoroughly assesses, manages, and reports on the risks associated with entering development agreements.  

“Councillors and the Audit, Finance and Risk Committee need to step up.”

In 2019, when the council entered into the development agreement, the total cost estimate for the planned three waters infrastructure project for Kingston was $44.9 million.

Now, it has jumped to $87.8 million, according to the council spokesperson (although they point out this figure is adjusted for inflation, and in 2023 dollars the figure would be $73.9 million).

In June, when the council signed off on this year's annual plan, elected members agreed to lock in close to $30 million in the 2023-2024 budget for three waters work in Kingston, during an eleventh-hour mark-up to the annual plan.

It was approximately $19 million more than was indicated to ratepayers in the draft annual plan put out for consultation.

But, this huge spending commitment, at a time when the council is fast approaching its debt ceiling and other key infrastructure projects or upgrades across the district have been deferred, will not bring even existing households onto the new network.

It is reserved for stage one of the project and does not include any costs for the reticulation required to service households and businesses already in Kingston and relying on private septic tanks, stormwater pipes and soak pits, and drinking water supplies, much of it ageing infrastructure.

Provision of three waters infrastructure for the older parts of Kingston was something of a sweetener in a subdivision deal that would quadruple the size of the township, but when, or even if, that ever happens now seems far from guaranteed.

For now, the whole infrastructure project has stalled, while council and the developer talk about who's delivering what, and who's footing the bills. 

There are three directors of Kingston Village Limited – the Goodman brothers, Craig, Gregory, and Patrick.

When their father, prominent businessman Sir Pat Goodman – co-founder of food giant Goodman Fielder - died in 2017, the family was reported to be worth $1.47 billion.

A NZ Herald story on the “Goodman dynasty” from 2005 says the offshore brothers were returning to New Zealand for visits at that time on a private $18.7-million 11-seater Learjet.

The council spokesperson says an "updated timetable" on the Kingston three waters project will be made public "when it is available", leaving local residents and ratepayers in limbo.

The Kingston Community Association (KCA) has asked the council for clarification of what impact the budget blowouts will have on the original plan to hook up residents and ratepayers to the new scheme.

The KCA has been told, "There are no immediate plans to service the existing township as revised costs are seen as unaffordable".

Lake Whakatipu at Kingston, where water samples show signs of E.coli contamination (Image: See the South Island).

The lack of any certainty is problematic - if things change moving forward, and properties in the old town do come onboard with any new scheme, locals will be forced to contribute to costs through a targeted rate as there will be no option to opt out of a town three waters network.

The QLDC has told the community a 10 year rates amnesty will apply to new onsite septic systems.

The community group says it has viewed test results from QLDC's sampling of water taken from Kingston creeks and the foreshore, as part of the council's discharge consent required from the Otago Regional Council for the proposed new wastewater treatment plant.

The results confirm the presence of E.coli at levels, in almost all cases, over the recommended limit.

Many Kingston residents get their own drinking water from the ground or waterways - others collect rainwater. The culprit for contamination, largely, will be old septic tanks, as well as farming surrounding the town.

While newer dwellings will have modern septic systems that are regulated well by local authorities, whether or not to invest in upgrades to ageing infrastructure is a difficult decision for owners of older properties, especially when for many years it had been indicated a new system was just around the corner.

Stephen Osborne, the KCA chairperson, thinks the situation is emblematic of three waters funding issues being experienced everywhere.

"Kingston is typical of lots of places around the country. If you want to bring in mains water and sewer to meet modern standards you're talking, 30, 40, 50, 60 million for a township like Kingston. That is not affordable for the township's rate base."

Crux has repeatedly requested an interview with the council chief executive or a relevant staff member in an attempt to better understand the evolving situation in Kingston. To date, our requests have been declined.

Main image: Trip Advisor