Section 4c Our services: Land transport
Land transport LAND TRANSPORT Local roads and footpaths Bridges Road safety Amenities Contribution to public transport Cycle ways Our land transport activity is one of our biggest spend areas. Our local transport network connects to the national state highways network. We maintain a range of assets including 633 kilometres of roads (518 kilometres sealed and 115 kilometres unsealed), 112 kilometres of footpaths, 160 bridges, street lights and signs and stock underpasses. The New Zealand Transport Agency provides subsidies for a lot of our road works. We promote road safety and having an increasing focus on improving how our residents with more limited transport options can get around, including children, the elderly and the mobility impaired. We have a small role in supporting public transport. Our plans for land transport services We re proposing to invest more to keep our sealed and unsealed roads to a standard our users expect, and would like your views on whether this is something you re willing for pay more for. The land transport group mainly contributes to the following community outcomes We want your feedback The issue We aren t able to keep our local roads to the standard our road users expect without extra funding. Roads need to be regularly resealed (resurfaced) so that they last longer and stay smooth and comfortable for driving. We can only maintain and reseal the road so many times, before it needs rebuilding (the official term is rehabilitating). It s like the roof of a house which can only be repainted or repaired so many times before it s no longer economic and needs replacing. Our roads are quite challenging because the soil types they re built on especially peat move much more than other areas in the country and need more maintenance. This costs us more. Historically we were rebuilding about 3-5 kilometres of our rural roads each year, when they reached the age of 50 to 60 years old or had deteriorated too much due to environmental conditions. We wanted to find out how much we could reduce our rebuilding work before the roads would reach their peak age, so we started reducing the amount of sealed road we rebuilt each year to an average of 2 kilometres per year. 4c-2 Our services
We also looked at extending how often we sealed our roads in between rebuilding them. Road sealing helps provide a durable surface for driving by protecting roads from water getting under the surface and protects them from the elements. When these seals are not maintained it leads to increased maintenance costs and early ageing of the road. As we ve mentioned, we face an extra challenge in our district as the type of soil our roads are built on (including peat) means the surface quality of our roads doesn t last as long especially if water gets under it. A road being reconstructed in Turua We ve now found that our residents satisfaction with our roads has been lower than we were aiming for. The most common reasons for this drop in satisfaction were that the roads have been uneven and too many potholes have developed. While short term savings were made by delaying reseal work (to prolong the life of our road seals), the road surfaces have deteriorated and are not meeting the standard we want or that you ve told us you expect. We re finding that we have more surface issues that need to be fixed and we have some catching up to do with the resealing of our roads. We re working to identify the size of these catch up works. To protect the roads, we have, we believe we need to reseal at least 15-20 kilometres more each year than we currently are. This won t fully complete the backlog of resealing work, but it will reduce it. As previously noted, in the past we had reduced the rebuilding of our roads to 2 kilometres per year. We now have a number of our roads at the end of their lives, and they need to be rebuilt. The overall maintenance demand is now higher than it was historically, and because of their age, the cost of resealing these roads to maintain their current condition is no longer cost effective. To ensure we are keeping up with rebuilding our ageing roads, we need to increase rebuild work from 2 kilometres per year to between 3 and 5 kilometres per year. In short, we aren t able to deliver the level of service we ve intended to. Without extra investment we won t be able to keep our roads at the standard that you ve told us you re satisfied with. We also won t be able to catch up on the previously deferred work if we don t increase our spending now, and the resealing and rebuilding we need to catch up on will continue to grow. We estimate that we need to find $7.89 million over 10 years to fund the shortfall if we are to get back up to standard and get closer to where we need to be. Land transport 4c-3
We ve considered our options going forward, and would like your feedback on how you want to experience our roads in the future. Our options 1 Don t increase the budget and reduce the level of service we provide This option would mean we would continue with our same level of spending to reseal and rebuild our roads, but our maintenance costs would probably keep going up as we go out and fix road issues after they come up. In the short term, the roads would be bumpier and less pleasant to drive on. In the longer term we would expect some of our rural roads to be turned back to gravel. There wouldn t be enough funding to keep roads sealed. Cost No additional cost. Maintenance costs would escalate. Impact on rates No additional impact Impact on debt No additional impact 2 Increase investment to get back on track This option would involve spending more: We d reseal roads more often - about 10% of our roads (that s 53 km) each year for the next three years to start to catch up on the work needed, and then to 8.8% (that s about 45 km) after that. We d also increase the length of road that we rebuild each year by 1-2 km. We wouldn t need to deal with (and pay for) as many maintenance issues since they are less likely to arise. This option would require $40.5 million in capital spend over ten years. 3 Increase investment even more We could increase the rate at which we reseal and rebuild our roads even more. This would result in a smooth network with good riding experience and catch us up completely. This would come at an extra estimated cost of between $0.5 million and $0.6 million per annum. This option would require $46 million in capital spend over 10 years. Our operating budget for reseals and rebuilds would increase by $625,000 every year. Our operating budget for reseals and rebuilds would increase by $1,175,000 every year. This would be an average rate (nonwater) increase of 1.4% in 2018/19. That s an increase of $33 a year for every rateable unit across the district from 2018/19. This would be an average rate (nonwater) increase of 2.7% in 2018/19. That s an increase of $61 a year for every rateable unit across the district from 2018/19. We would need to borrow an extra $6.25 million. We would need to borrow an extra $11.75 million. Our preferred option We prefer option 2. This would start to get our roads up to the standard we want. We think this is the prudent approach given the other financial challenges we have ahead. We re seeking feedback through our consultation document, We need to talk. For more information on how to provide feedback, see our website, https://weneedtotalk.hauraki-dc.govt.nz 4c-4 Our services
Other plans Looking ahead we have a number of plans on the cards to ensure we are resilient to future natural events and weather events. We ll be having a look at what the forecasted effects of climate change will mean for our land transport services so that we can look at what we might need to do. Some of our roads are low lying and susceptible to rising sea levels and coastal erosion. Clearing roads after weather related events can be a big part of our land transport activity. We think it s sensible to budget an amount each year for emergency road works that are required after natural events. Future storm event forecasts are predicting that it will rain a lot more which will damage our roads. Taking this into account as well as looking at the amount we ve had to spend to date, we ve increased our annual emergency budget by $30,000 to $150,000 per annum and we ve removed a cap we had of $450,000. With our greater focus on helping our residents get around, we will be identifying key non-road transport corridors such as footpaths that will be used by a lot of people on mobility scooters or school kids. We will then prepare a programme for widening these routes. You can expect this to be included in our next long term plan (in 2021). We have a number of bridges that are ageing and may need to be replaced soon. We ll be investigating the condition of these bridges. We ve added new funding of $150,000 per year to financially support new road extensions. This will be distributed on a case by case basis. In future we may contribute to a Karangahake Corridor project with the Department of Conservation and the New Zealand Transport Agency, but this initiative is still being scoped. We are keeping an eye on the many technology changes happening that affect the way people travel, such as driverless car technology and electrical charging points. Planned projects Here s an overview of the major projects we ve planned for the next ten years for land transport. Project When How much Road resealing (resurfacing) Ongoing $11.8 million over 10 years (capital - renewals) Rebuilding roads (reconstruction/rehabilitation) Ongoing $9.5 million over 10 years (capital renewals) New and replaced footpaths Ongoing $1.4 million over 10 years (capital level of service) Access and mobility initiatives Ongoing $0.7 million over 10 years (capital level of service) New kerb and channelling for stormwater control in Paeroa, Waihi and the Plains Ongoing $1.1 million over 10 years (capital level of service) Road protection plan for the Kaiaua coastal roading Over the ten year life of this $0.2 million (operating) corridor plan Other road renewals Ongoing $6.6 million (capital renewals) Land transport 4c-5
What you can expect from us We ve included some measures on the following table to show you what you can expect from us and the services we provide. We ll report on our progress to meeting these annually in our Annual Report. How we will measure our performance Baseline Targets You can expect: a safe transport network provided for users and the community. The change from the previous financial year in the number of fatalities and serious injury crashes on the local road network, expressed as a number.* 2016/17: 1 fatal / 3 serious Reduce fatalities and serious injury crashes to 0. You can expect: footpath assets to be fit for purpose. Percentage of residents satisfied with the quality of footpaths, as measured by the annual customer satisfaction survey. New measure 75% The percentage of footpaths within the district that fall within the level of service or service standard for the condition of footpaths that is set out in the Council s relevant documents (e.g. the annual plan, asset management plan, annual works program or long term plan).* Unable to measure in 2016/17. 95% footpaths with defect rating >5 are isolated for safety and remedied within 7 days; You can expect: a roading network that addresses safety and amenity issues. Damaged, missing or leaning signs are remedied on District roads within specified timeframes. All reported potholes are repaired on District roads within specified timeframes. 95% (2016/17) 100% regulatory/ permanent/ warning signs within 7 days, safety connected signs within 2 days, all other signs within 6 weeks 93% (2016/17) 85% within 5 days for >100 vehicle per day (vpd) roads and within 14 days for <100 vpd roads You can expect: the preservation of the pavement life of sealed roads. The average quality of ride on a sealed local road network, measured by smooth travel exposure.* 97% (2016/17) 2018-21:96% 2021-28: >96% The percentage of the sealed local road network that is resurfaced.* 7% of network (36km completed) (2016/17) Percentage of the local road network resealed per year (as determined by the asset management plan): 2018/19: 8% resealed 2019/20: 8% resealed 2020/21: 8% resealed 2021-28: 8% resealed 4c-6 Our services
2017/18 (Current) 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 How we will measure our performance Baseline Targets Percentage of customers satisfied with the quality of roads in the District (excluding State Highways) as measured by the annual customer satisfaction survey. 64% (2016/17) 2018/19: 70% 2019/20: 73% 2020/21: 75% 2021-28: 75% You can expect: customer service requests to be dealt with promptly and appropriately. The percentage of customer service requests relating to roads and footpaths to which Council responds within the time frame specified in the long term plan.* 98% (2016/17) 100% of service requests are responded to within 10 working days Issues reported to the Council regarding State Highways are forwarded to the New Zealand Transport Agency.* 85% (2016/17) 2018-21: 95% of all reported issues are forwarded within one working day 2021-28: 100% of all reported issues are forwarded within one working day You can expect: access to be provided to the network of local roads. Time for road access to be restored to communities following a 1 in 10 year climatic event. 100% arterial and collector, not achieved for other roads. 100% of Arterial and Collector roads open within 24 hours, all other roads within 72 hours. * Mandatory performance measure under section 261B of the Local Government Act 2002. How much it costs $12,000,000 Total projected expenditure $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $- capital - improve the level of service capital - replace the asset operating Land transport 4c-7
Where the (operating) money will come from subsidies 39% rates 61% We currently charge a differential on the rates charged for maintaining our road carriageways. A differential is a way of recognising that different types of users (such as road users) have different levels of use of our services or different impacts on our assets in this case, wear and tear on our roads. Applying a differential to rates means that the rates shared across our users will differ, even if their value were the same. Our current policy is to apply a differential of 274.5 on mining and 10.9 on quarrying properties. This means that the rate they pay is 275.4 times and 10.9 times the capital value rate respectively. We don t think this matches the current impact that each sector has on our road network. For example, dairy farming has a much bigger impact than residential and lifestyle properties due to the heavy vehicles regularly using the road. However, defining what the current impact is with accuracy complex and costly. We think its fairer to remove the differential and have proposed this in our revenue and financing policy. That means all properties roading carriageway rates would be based only on their capital value. Land transport cost of service Budget Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 EXPENDITURE Pavement Maintenance 1,248 1,248 1,275 1,304 1,333 1,366 1,398 1,433 1,470 1,510 1,552 Amenity Maintenance 436 450 460 470 481 492 504 517 530 545 560 Professional Services 640 670 669 757 700 716 812 752 771 876 814 Other Subsidised 1,340 1,498 1,539 1,581 1,608 1,650 1,690 1,732 1,777 1,824 1,875 Administration 459 470 477 486 495 504 514 524 535 546 558 Non-Subsidised Works 424 384 392 401 409 419 429 439 450 461 474 Public Transport 20 20 20 21 21 22 22 23 24 24 25 Depreciation/Assets written off 2,973 3,033 3,129 3,221 3,318 3,421 3,527 3,638 3,756 3,880 4,012 Interest 612 590 639 675 697 700 691 669 627 566 492 8,152 8,363 8,600 8,916 9,062 9,290 9,587 9,727 9,940 10,232 10,362 REVENUE Fees, Charges and Other Income - - - - - - - - - - - External Subsidies 3,511 3,689 3,806 3,981 4,022 4,120 4,268 4,325 4,438 4,610 4,685 Targeted Rates 4,306 4,675 5,087 5,566 5,932 6,330 6,772 7,222 7,701 8,234 8,785 General Rates - - - - - - - - - - - 7,817 8,364 8,893 9,547 9,954 10,450 11,040 11,547 12,139 12,844 13,470 OPERATING SURPLUS/(DEFICIT) (335) 1 293 631 892 1,160 1,453 1,820 2,199 2,612 3,108 4c-8 Our services
Land transport funding impact statement 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 ($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000) SOURCES OF OPERATING FUNDING General rates, uniform annual general charges, rates penalties - - - - - - - - - - - Targeted rates 4,306 4,675 5,087 5,566 5,932 6,330 6,772 7,222 7,701 8,234 8,785 Subsidies and grants for operating purposes 2,115 2,293 2,379 2,523 2,530 2,592 2,703 2,721 2,792 2,920 2,948 Fees and charges - - - - - - - - - - - Internal charges and overheads recovered - - - - - - - - - - - Local Authorities fuel tax, fines, infringement fees, and other receipts - - - - - - - - - - - Total Operating Funding (A) 6,421 6,968 7,466 8,089 8,462 8,922 9,475 9,943 10,493 11,154 11,733 APPLICATIONS OF OPERATING FUNDING Payments to staff and suppliers 4,043 4,208 4,293 4,470 4,487 4,599 4,789 4,827 4,952 5,170 5,227 Finance Costs 612 473 441 394 318 292 249 187 23 (87) (234) Internal charges and overheads applied 524 648 738 830 939 978 1,023 1,075 1,209 1,271 1,357 Other operating funding applications - - - - - - - - - - - Total Applications of Operating Funding (B) 5,179 5,329 5,472 5,694 5,744 5,869 6,061 6,089 6,184 6,354 6,350 SURPLUS (DEFICIT) OF OPERATING FUNDING (A - B) 1,242 1,639 1,994 2,395 2,718 3,053 3,414 3,854 4,309 4,800 5,383 SOURCES OF CAPITAL FUNDING Subsidies and grants for capital expenditure 1,396 1,396 1,427 1,459 1,492 1,528 1,565 1,604 1,645 1,690 1,737 Development and financial contributions - - - - - - - - - - - Increase (decrease) in debt - 985 708 444 62 (186) (444) (827) (1,222) (1,484) (1,844) Lump sum contributions - - - - - - - - - - - Other dedicated capital funding - - - - - - - - - - - Total Sources of Capital Funding (C) 1,396 2,381 2,135 1,903 1,554 1,342 1,121 777 423 206 (107) APPLICATIONS OF CAPITAL FUNDING Capital Expenditure - to meet additional demand - 150 153 157 160 164 168 172 177 182 187 - to improve the level of service 943 728 804 841 848 887 913 936 960 986 1,013 - to replace existing assets 1,763 2,829 2,889 2,992 2,958 3,031 3,106 3,160 3,219 3,427 3,647 Increase (decrease) in reserves (68) 313 283 308 306 313 348 363 376 411 429 Increase (decrease) of investments - - - - - - - - - - - Total Applications of Capital Funding (D) 2,638 4,020 4,129 4,298 4,272 4,395 4,535 4,631 4,732 5,006 5,276 SURPLUS (DEFICIT) OF CAPITAL FUNDING (C - D) (1,242) (1,639) (1,994) (2,395) (2,718) (3,053) (3,414) (3,854) (4,309) (4,800) (5,383) FUNDING BALANCE ((A - B) + (C - D)) - - - - - - - - - - - Land transport 4c-9