Infrastructure and Financial Strategies 40 Combined Infrastructure Forecast

Infrastructure and Financial Strategies 40 Combined Infrastructure Forecast - Capital (inflation adjusted) 35 Greenspace Solid Waste Roads Stormwater Sewerage Water 25 20 15 10 Jim Palmer Chief Executive Waimakariri District Council 2040/41 to 2044/2045 2035/36 to 2039/40 2030/31 to 2034/35 2025/26 to 2029/30 2024/25 2023/24 2022/23 2021/22 2020/21 2019/20 2018/19 2017/18 0 2016/17 5 2015/16 Millions 30

Hurunui District Waimakariri District Christchurch City Selwyn District

Principles & Three Ideas • Risk Assessment and Financing Strategy • Risk–based Reticulation Renewals • Depreciation Funding – an alternative approach

Principles -the strategic fit

Infrastructure Strategies – must address § Anticipated Changes in Levels of Service § Forecasted Growth § Risk management, particularly natural hazards § Renewal & its funding – a whole of life view § Financial implications Should consider all assets

Principles underpinning Infrastructure and Financial Strategies § Inter-generational equity – relative prosperity and demographics § Affordability – Council and the community § Prudent financial management – debt and whole of life funding § Risk mitigation

Risk Assessment & Financing Strategy Hurunui District Waimakariri District Christchurch City Selwyn District

Risk Assessment & Financing Strategy

Our Challenge We’ve withstood one major event and it cost $127 M – can we withstand another one? § We are a net-debt, high-growth Council with few realisable assets § The Alpine Fault failure is ‘overdue’ with a 30% chance within 50 years…. and we have other natural hazard risks

Our Response Developed a Risk Assessment and Financing Strategy Considered largest natural risks - earthquake, flood, tsunami

Our Biggest Risk

Our Response § Guestimated what the damage might be § Ground-truth it against the 2010 event § Considered funding strategy, both with and without insurance being available § Assessed impact on net debt & affordability § Developed as policy: § Limits for debt § Priority list for asset replacement

Council Funding Position with Crown Support and Insurance Estimated Reinstatement Cost $M Crown/NZTA funding $M Insurance funding $M Council Share $M Above-ground Infrastructure and Buildings 30 0 Below-ground Infrastructure 67 40 27 0 Roading 40 28 12 Reserves 10 0 0 10 Emergency Response/repairs 20 15 0 5 Community Support 5 0 0 5 172 83 57 32 Total

Debt Limits with Headroom

Debt Limits - borrowing as % of operating revenue

Outcomes § Gives confidence the consequences of major events can be accommodated § Demonstrates prudent management in terms of debt levels and affordability § Provides priority for asset reinstatement

Risk-based Reticulation Renewals • Reticulation renewals were based on age, condition, and performance. • Now, we use a risk-based approach

Waimakariri DC – Renewals Profile

VULNERABILITY … TO LIQUEFACTION Location relative to hazard is critical.

IT’S NOT JUST EARTHQUAKES

Risk-based Reticulation Renewals Considered § The burst history of the Water mains & CCTV footage § The remaining useful life § The vulnerability, made up of: § Location § Material ductility § Jointing method § Criticality

Waimakariri DC – Renewals Approach Wastewater: • • • CCTV inspection of ~2% network per annum based on risk profile Risk score (renewals priority score) to schedule preliminary renewal programme Renewal method determined from criteria Likelihood Score CCTV score Blockage history Vulnerability x Consequence Score = Risk Score Water: • • Burst history and pipe condition recorded Risk score (renewals priority score) to schedule preliminary renewal programme Remaining useful life Likelihood Score Burst history Vulnerability x Consequence Score = Risk Score

Risk-Based Reticulation Renewals Location Diameter (mm) 375 Sewell St, Kaiapoi Holland Dr, 100 Kaiapoi Material Criticality Risk Score AA Vulnerability Remaining Useful Life Extreme 27 Asbestos Cement Polyethylene C Medium 248 15 6500

Outcomes § § Renewal strategy reflects risk Mains have lower chance of failure More resilient in future disasters Quicker return of services for the majority of people

Funding Depreciation and the Capital Programme § Changed our approach to funding depreciation have considered the 100 year renewal profile. § Previously ‘fully funded’ depreciation. § We can invest ‘renewal’ funds at rates better than CPI or CCI. § Over time growth in those funds means we don’t need to fully fund depreciation each year - saved 10% in the first year. § Extensive financial modelling demonstrated we can revised our financial policies.

Waimakariri DC – Funding & Renewals Profile

Funding Depreciation and the Capital Programme § Changed our capital funding policy § Funding used to come from one ‘bucket’ § Now § Renewals – separately tracked and funded § Level of service changes – loan funded § Growth projects – loan funded § Warning: this approach only works if you infrastructure peak is well into the future.

So… three ideas • Risk Assessment and Financing Strategy • Risk–based Reticulation Renewals • Depreciation Funding - an alternative approach THANK YOU