Tensions increase as CEO, mayor double down on district's claim to Cromwell wealth

by Kim Bowden - Jan 31, 2024

Central Otago District Council's new chief executive says it is a "misconception" the Cromwell ward has wealth, as he and district mayor Tim Cadogan double down on their position assets sit firmly with the district as a whole.

The statement comes as discussions in the town about proposed changes to how community assets are shared heat up.

Crux understands residents are launching a campaign in protest at what they see as a "grab" of assets potentially worth hundreds of millions of dollars by the district, at Cromwell's expense.

Council chief executive Peter Kelly is proposing changes to the role the Cromwell Community Board and other community boards in the district have in decision making in a move he says will "better align with the local government legislation governing their powers".

Mr Kelly, who took over the top job at the council in September, is seeking to clarify what he claims to have been incorrect reporting of the issue by both Crux and other media.

"There is a misconception that the Cromwell ward has wealth; it does not," the chief executive says.

Crux reporting has referenced assets historically attached to the Cromwell ward, stemming back to pre-Central Otago District Council days, when the area was governed by the Cromwell Borough Council.

While the Local Government Act does not allow community boards to acquire, hold or dispose of property, in practice in the Central Otago district proceeds of land sales from within a ward have been ring-fenced, with community boards given the power to spend them on projects within their ward.

But, Mr Kelly says, "It should be stressed that these assets are owned by the council, not by the wards as such".

It is his view media coverage has been unclear on this point.

"There has been an implication in your article and other reporting that the assets belong to Cromwell. They do not and never have."

However, Cromwell residents, including former local government decision makers are rallying to challenge Mr Kelly's assertions, with one person telling Crux people they have spoken with are "horrified" by the unfolding events.

James Dicey, whose father Robin Dicey was a former member of the Cromwell Community Board, says the mayor and council chief executive are "ignoring where this money is coming from and the history of it".

In the last week he has garnered support for a campaign he is coining STAG, or Stop The Asset Grab.

He says assets in the Cromwell ward date back to a deal made between the Crown and local government in Cromwell prior to the flooding of Lake Dunstan.

“That money has been carefully managed by the custodians of Cromwell over a long period of time. They’ve turned it into just shy of $20 million worth of cash.

"They've held on to their land and have bought and sold land astutely...and at a conservative valuation, based on current pricing and not where it’s likely to go if you follow Queenstown prices…is somewhere in the vicinity of half-a-billion dollars."

Empty land in Gair Estate in Cromwell is being developed by the council, after decisions made by the Cromwell Community Board. Will this be a thing of the past?

He says while the land has to be in the ownership of the Central Otago District Council as a legislative requirement, "the effective control of the land resides with the Cromwell Community Board as a result of the delegations".

"They control the purchase and sale of the land and consequently where the funds are used. The removal of this delegated authority, which reflects the history of where the land has come from, will remove this ability to control the land.

"This gives the council the full scope to use the Cromwell land proceeds for the rest of the wards and not just for Cromwell."

It is his view the chief executive and mayor are "obfuscating or fudging the issue and ignoring the impact the loss of control will have". 

While the mayor continues to refuse to speak with Crux, he addressed the topic in his regular Facebook live on Monday, prefacing the discussion by talking about the looming costs for the district for three waters infrastructure and local bridges.

He indicated ratepayers could expect a close-to 25 percent rates rise next year, as his council goes into debt, "for the first time", to the tune of $25 million.

He said the way things operate now in the district means, "We can't even have the conversation of 'we've got to build a water treatment plant in x, do we pay some of that by selling some land in y?'".

"Or, you can put that another way, 'We have to build a water treatment plant in Central Otago, can we pay for some of that by selling some land in Central Otago that is owned by the Central Otago District Council?'."

Crux has been told by the council a headline 'Cromwell anxious at possible stealth grab of sizeable assets by Alexandra' published by Crux was "unhelpful", with the mayor commenting as such on a local radio show as well as directing his Facebook audience to coverage by the Otago Daily Times, who he thinks "has done a very good job of reporting on this".

Crux has asked the council for a breakdown of the assets that if sold the proceeds of which would, as things stand, be able to be spent by local decision makers on projects within each of the district's four wards.

We've been told the council has one-billion dollars in assets and it would "take considerable staff effort" to work through it to answer such a request. We have been directed to the LGOIMA process, which would take longer than the deadline given to the Cromwell Community Board members to feed in to the first decision related to the delegations re-jig proposal.

The Vincent, Maniototo and Teviot Valley Community Boards have all agreed to the proposed delegation changes already - according to the most recently published account of their reserve funds, they have $7.69 million, $847,000, and $1.14 million in reserve, respectively.

Meanwhile the Cromwell Community Board members are taking the opportunity to submit on the chief executive's proposal, after being given three weeks to do so.

Reserve funds for the Cromwell ward sit at $26 million.

Latest publicly available financial reports are published in the November community board agendas.

Crux has also asked the council for a clear-language explanation of the proposed changes to community board delegations and the impact they would have on the current practice of spending proceeds from the sale of assets within a ward.

Both the chief executive and mayor have talked about this being a topic for discussion in the Long Term Plan consultation due this year, but the chief executive has indicated the delegation change could eventuate as quickly as the scheduled February council meeting.

Even Cromwell Community Board members spoken to by Crux are unsure of the process going forward - yet they have just weeks to get their heads around it to make a submission.

Crux understands the council has sought legal advice on the chief executive's proposed changes.

Mr Kelly claims his changes are "not designed to erode the powers of community boards", and they "will continue to be the eyes and ears of the community at a grass roots level".

Read more: Cromwell anxious at possible stealth grab of sizeable assets by Alexandra






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