Archive | Kaipara

Ratepayers get small court victory in scrap over Mangawhai sewer scheme levies

High Court judge Ailsa Duffy has brought to an end an episode in the scrap over the secretively funded & heavily over cost Mangawhai Ecocare sewerage scheme.

The Mangawhai Ratepayers’ & Residents’ Association & its chair, Bruce Rogan, fought the imposition of rates to pay for the sewerage system after its cost blowout was exposed – the district council secretly borrowed $58 million for its capital cost – resulting in a Validation Act being passed as the association was heading to court for a judicial review.

In 2014, Justice Paul Heath found the Validation Act passed to make those rates lawful did just that – made them lawful.

Some ratepayers, led by Mr Rogan, refused to pay Kaipara District Council rates, and refused to pay Northland Regional Council rates when they discovered the regional council had no authority to hire the district council to collect them.

Justice Duffy found in an interim judgment that these regional council rates were unlawful. In a second judgment on that case yesterday, she quashed the regional council’s rates for the rating years 2011-12 to 2015-16 and also set aside the penalties imposed for non-payment.

However, she said the ratepayers’ association & Mr Rogan hadn’t sought reimbursement in their claim and she made no order directing the regional council to refund the relevant rates & penalties.

Attribution: Judgment.

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Winder to stay on at Kaipara council as Crown manager

Peter Winder.

Peter Winder.

One of the 3 commissioners who’ve been in charge of the Kaipara District Council since 2012, Peter Winder, will stay on as Crown manager after the local body elections on 8 October.

The Government appointed 4 commissioners to replace the elected council in August 2012 – John Robertson (chair), Richard Booth, Colin Dale & Peter Winder. Mr Dale, former chief executive of the Manukau City Council, left his Kaipara role in February 2014 to become acting chief executive of the Far North District Council.

The primary cause of the decision to appoint commissioners was the blowout in cost of the new Mangawhai sewage scheme.

Associate Local Government Minister Louise Upston said yesterday Mr Winder would bring with him his extensive experience & in-depth knowledge: “Mr Winder will support council members by taking responsibility for legal actions relating to past issues on their behalf. This will allow council members to focus on the district’s future.”

The Crown manager role is for 3 years.

Mr Winder was chief executive of the Auckland Regional Council for the 5 years until it became part of the new Auckland Council, and set up a private firm, McGredy Winder & Co Ltd, in 2010 to work on advice & strategies for public organisations.

He was previously the regional council’s transport director for a year, chief executive of Local Government NZ for 2 years and spent 5 years at Tourism NZ as industry strategy general manager. He’s chaired the Manukau Institute of Technology since December 2013.

Earlier stories:
6 June 2016: Kaipara to get elected council in October
26 April 2015: Kaipara commissioners reappointed until 2016
30 August 2012: 
Minister names 4 commissioners to run Kaipara council

Attribution: Ministerial release.

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Kaipara to get elected council in October

The Kaipara District will return to having a fully elected council at this year’s local body elections, supported by a Crown manager & a Crown observer. The previous elected council resigned in 2012 and was replaced by commissioners.

Associate Local Government Minister Louise Upston said last week: “The Kaipara commissioners have made significant progress in getting the council into a stable financial position. It is time the council returns to a fully elected council. I have called an election of the council to coincide with the local body elections in October.”

Ms Upston said she would also appoint a Crown manager and a Crown observer to support the newly elected council as it settles in: “I will appoint a Crown manager to take responsibility for certain outstanding legal actions on behalf of the newly elected council. Newly elected council members will then be able to focus on providing effective governance and on the district’s future, rather than being distracted by past issues.

“It is important that newly elected council members have the right support to be successful in their demanding & complex role. With this in mind, I will also appoint a Crown observer to help ensure newly elected council members are well supported. The Crown observer will not be involved in decision-making and will only offer advice or guidance.

“It is crucial that the Kaipara District is able to look to the future. The return to a fully elected council, together with a Crown Manager and Crown Observer supporting the Council, will provide the District with a fresh start.”

Crown Manager and Crown Observer appointees will be announced in the coming months.

Earlier stories:
27 April 2016: Kaipara commissioners seek input on annual plan
26 April 2015: Kaipara commissioners reappointed until 2016
30 August 2012: Minister names 4 commissioners to run Kaipara council

Attribution: Ministerial release.

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Kaipara commissioners seek input on annual plan

Kaipara District Council, still run by commissioners, is seeking feedback on its annual plan, which includes a $10.1 million reduction in debt.

Commissioner John Robertson, who chairs the council, said yesterday there were no significant changes from the long-term plan but the commissioners wanted feedback because the council had a number of projects actively involving members of the community.

“One project which is of great interest in Dargaville is the library redesign. The concept plans for this will be on display for comment. In Mangawhai, the early work on the town plan is also progressing, as are the ‘placemaking’ concepts for Kaiwaka & Dargaville.”

Mr Robertson said the round-table consultation sessions would also provide opportunities to discuss roading, water & wastewater – the last of these, in the form of the blowout in debt on the former council’s Mangawhai Ecocare scheme, resulted in the replacement of councillors & mayor by commissioners in 2012.

The commissioners will conduct “Let’s Connect” sessions from 2-10 May in Maungaturoto, Dargaville, Mangawhai, Kaiwaka & Paparoa.

The Government reappointed the commissioners in April last year until the local body elections this October.

Link:
Kaipara District Council

Earlier story:
26 April 2015: Kaipara commissioners reappointed until 2016

Attribution: Council release.

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Kaipara commissioners reappointed until 2016

Kaipara District Council’s 3 Government-appointed commissioners have been reappointed until October 2016. Meanwhile court action continues between the council and the Mangawhai Ratepayers & Residents Association, which argued there was nothing to stop elections being held this year.

The Government appointed 4 commissioners to replace the elected council in August 2012 – John Robertson (chairman), Richard Booth, Colin Dale & Peter Winder. Mr Dale, former chief executive of the Manukau City Council, left his Kaipara role in February last year to become acting chief executive of the Far North District Council.

A return to an elected council was expected this year, but Associate Local Government Minister Louise Upston announced on Friday the first election would be at the same time as all other local body elections around the country, in 2016.

She said: “The commissioners have made significant progress in addressing the council’s issues and improving its performance. When I visited the Kaipara district in February, it was clear to me there is widespread support for the commissioners in the district, and they have made substantial progress in rebuilding the relationship between the council & the communities of Kaipara.

“When an election is held, it is important that stable governance is achieved in Kaipara and the mistakes of the past do not happen again. I don’t consider that current circumstances lend themselves to achieving this if an election is held in October 2015. The reappointment of the commissioners until October 2016 gives the district the best chance of getting the stable governance it deserves.”

Ms Upston didn’t say what circumstances were militating against stability, but did say developing an exit plan to facilitate a successful transition to elected governance in 2016 would be a key part of the commissioners’ remaining work.

The primary cause of the decision to appoint commissioners – the blowout in cost of the new Mangawhai sewage scheme – resulted in a High Court application by the Mangawhai Ratepayers & Residents Association for judicial review of the rating scheme proposed to pay for the blowout. That case is now headed to the Court of Appeal for hearing on 25 August.

Meanwhile, the council is seeking court orders to collect outstanding rates from a number of Mangawhai ratepayers. Association president Bruce Rogan said in a weekend newsletter the first of these cases was scheduled for hearing in the Whangarei District Court on 30 June.

Earlier stories:
28 July 2014: Judge tells Mangawhai ratepayers to pay up, also awards them indemnity costs in more elaborate decision
30 May 2014: Commissioner says Mangawhai rates liability now “crystal clear”
28 May 2014: Judge to issue hamstrung Mangawhai ratepayer group indemnity costs, accepts new validation law, wants more debt options considered
6 October 2013: Commissioners reject “unfair” Mangawhai ratepayer proposal, seek sewage options, adopt annual plan
25 September 2013: Kaipara commissioners seek help to fight ratepayers over illegal rate collection
20 September 2013: Kaipara commissioners try to sweet-talk ratepayer group as they appeal judicial review decision
30 August 2012: Minister names 4 commissioners to run Kaipara council

Attribution: Ministerial release, association newsletter.

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Kaipara council to sue ex-ceo & Audit NZ, looking at ex-mayors, councillors & consultants

Kaipara District Council’s commissioners resolved yesterday to take legal action against Government watchdog Audit NZ and against the council’s former chief executive, Jack McKerchar, over the Mangawhai community wastewater scheme.

Mr McKerchar resigned in 2011 with a financial settlement agreed by councillors, a year before the Government replaced them with the commissioners, headed by John Robertson.

The Mangawhai Ratepayers & Residents Association has appealed against the High Court decision of Justice Paul Heath in its claim against the council over the scheme. That case reached the courtroom in February, 2 months after Parliament had passed a local bill validating illegal action, which greatly reduced the association’s prospects of winning.

Mr Robertson said after a council meeting yesterday the council had decided not to pursue the former mayor & councillors because of the limited chances of success, but had asked the Auditor-general, Lyn Provost (appointed since the Mangawhai events began to unfold), to reconsider her decision not to hold any elected members to account.

The commissioners accepted a staff recommendation that there were sufficient grounds to mount a legal case against Audit NZ for negligence in the 3 years from 2006-09.

Mr Robertson said in a release: “In December 2013, the current Auditor-General, Lyn Provost, admitted that work undertaken for Kaipara prior to 2010 did not meet professional audit standards or the standards she herself expected. At community meetings, she apologised unreservedly to the people of Kaipara.”

Mr Robertson said the council had accepted her apology, but that was not enough: “The fact is, Kaipara District Council engaged Audit NZ to carry out a professional service for which Audit NZ was paid. The service the council received was extremely poor and there have been far-reaching consequences for this district.

“As a result of Audit NZ’s negligence, huge costs have been imposed on the Kaipara District Council & its ratepayers.

“The simple fact is that Audit NZ did not identify the Mangawhai community wastewater scheme project as a key audit risk, or even an area of focus. It should have done so, and that was made very clear in the report released by the current auditor-general last year.”

Mr Robertson said the council would initiate legal proceedings by the end of October.

The former chief executive, Mr McKerchar, left the council in October 2011 after reaching a financial settlement with the council. Mr Robertson said: “Since then, there have been repeated calls from Kaipara ratepayers to hold Mr McKerchar accountable for his role in the botched Mangawhai scheme.”

The commissioners noted yesterday that the statute of limitations meant the council could only try to hold Mr McKerchar to account for his actions during the last 6 years. Legal advice also suggested the settlement agreement Mr McKerchar signed with the former council mighty impact on the success of any legal action.

“Notwithstanding those issues, there is an important principle here. Some members of the community have noted that the council might not get much back from Mr McKerchar in monetary terms, but they still believe it is important that he is held to account, and we agree.

“Elected members & the Kaipara community should have been able to rely on the chief executive’s advice, but in a number of areas it was very poor.”

Mr Robertson said the report released by the auditor-general in December last year clearly identified a number of failings during the time Mr McKerchar led the council.

“In the timeframe we can focus on, the council failed to assess & set rates legally, it failed to ensure a number of statutory requirements were met and it failed to manage its finances prudently. Mr McKerchar should be held to account for his role in those failings.”

Mr Robertson said the council’s legal advisors would be instructed to begin action immediately.

The commissioners also accepted strong legal advice that there was no legal basis upon which the council could bring damages claims on behalf of the Kaipara community against former councillors. On that basis, Mr Robertson said the council would not be taking legal action against the former mayors & elected members involved with the Mangawhai scheme.

Mr Robertson said he accepted some people would be bitterly disappointed, as there had also been strong calls for those people to be held to account: “I accept their disappointment, but we have taken considerable legal advice and have weighed that advice up against the likelihood of the council being successful in any legal action. It seems highly unlikely that we would.

“We are not prepared to launch expensive legal proceedings without a reasonable chance of success.”

However, he said the commissioners would formally invite the auditor-general to reconsider her decision not to hold any elected members to account, particularly given the recent High Court decision which confirmed that the council failed to meet its statutory requirements in approving the Mangawhai scheme.

“There is now a formal declaration from the High Court confirming a number of previous council failings which didn’t exist when the auditor-general made her previous decision. The auditor-general has the best chance to initiate recovery action from former Kaipara elected members, and we will be asking her to review her earlier decision. Whether or not she does so is entirely up to her.”

The council will decide next month on whether or not it will take legal action against consultancies involved in the project, including the Beca consortium.

$58 million of the Kaipara District Council’s $80 million of projected 2015 debt is attributable to the Mangawhai EcoCare wastewater scheme & debt loaded against installing it.

Earlier stories:
28 July 2014: Judge tells Mangawhai ratepayers to pay up, also awards them indemnity costs in more elaborate decision
23 June 2014, 2-part story: Kaipara commissioners get debt report, obliged to adopt annual plan, and Mangawhai group says it will appeal case
2 questions for Kaipara: How to cut debt, and how to allocate it
30 May 2014: Commissioner says Mangawhai rates liability now “crystal clear”
28 May 2014: Judge to issue hamstrung Mangawhai ratepayer group indemnity costs, accepts new validation law, wants more debt options considered
30 April 2014: Mangawhai wastewater court decision scheduled for May
4 December 2013: Auditor-general releases Mangawhai report – and audience as disbelieving as ever
18 November 2013: Minister cites Kaipara debacle in move to new council finance rules
6 October 2013: Commissioners reject “unfair” Mangawhai ratepayer proposal, seek sewage options, adopt annual plan
25 September 2013: Kaipara commissioners seek help to fight ratepayers over illegal rate collection
20 September 2013: Kaipara commissioners try to sweet-talk ratepayer group as they appeal judicial review decision
30 August 2013: Kaipara commissioners fail to stop court challenge to Mangawhai debacle costs
19 August 2013: Judge to make quick decision on attempt to strike out Mangawhai ratepayers’ quest for judicial review
30 August 2012: Minister names 4 commissioners to run Kaipara council

Attribution: Council releases.

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Propbd on Q T26Aug14 – Kaipara council sues ex-ceo & Audit NZ

2.30pm:
Kaipara commissioners go to court against ex-ceo & Audit NZ

Kaipara District Council’s commissioners resolved today to take legal action against Government watchdog Audit NZ and against the council’s former chief executive, Jack McKerchar, over the Mangawhai community wastewater scheme.

Mr McKerchar resigned in 2011 with a financial settlement agreed by councillors, who hadn’t at that stage been replaced.

The Mangawhai Ratepayers & Residents Association has appealed against the High Court decision of Justice Paul Heath in its claim against the council over the scheme. That case reached the courtroom only after Parliament had passed a local bill validating illegal action, which greatly reduced the association’s prospects of winning.

Chairman of the commissioners, John Robertson, said the council had decided not to pursue the former mayor & councillors because of the limited chances of success, but had asked the Auditor-general, Lyn Provost (appointed since the Mangawhai events began to unfold), to reconsider her decision not to hold any elected members to account.

Last story, 28 July 2014: Judge tells Mangawhai ratepayers to pay up, also awards them indemnity costs in more elaborate decision

Attribution: Council releases.

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Propbd on Q F18July14 – Ruru leaves Kaipara, M&C restructure done

Kaipara council chief executive heading south
Millennium & Copthorne restructure done, First Sponsor shares distributed

3.25pm:
Kaipara council chief executive heading south

Kaipara District Council chief executive Steve Ruru has resigned, effective 17 October. He’s been appointed chief executive at the Southland District Council.
More details: On the move, July 2014 – Ruru resigns from Kaipara council

Millennium & Copthorne restructure done, First Sponsor shares distributed

Millennium & Copthorne Hotels NZ Ltd’s capital reduction scheme of arrangement became effective at 6pm last night.

Under the scheme, 244 million ordinary shares & 121.9 million preference shares were cancelled, reducing the numbers on issue to 105,578,290 ordinaries & 52,739,543 preference shares.

For every 1000 shares – ordinary shares or preference – shareholders had 698 cancelled and received 327 shares in First Sponsor Group Ltd, a related company which is developing property in China and is scheduled to list on the Singapore Exchange next Tuesday, 22 July. Its initial public offering closed yesterday.

Attribution: Council & company releases.

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Auditor-general releases Mangawhai report – and audience as disbelieving as ever

Auditor-general Lyn Provost released her report, Inquiry into the Mangawhai community wastewater scheme, to a respectful but disbelieving audience of about 250 locals yesterday.

Disbelieving, because she found no criminal behaviour and, although there was auditing incompetence from an early stage in the wastewater project – back as long ago as 2002 – on top of the Kaipara District Council’s own incompetence, she was firm in stating that liability rested with the council & its ratepayers.

Mrs Provost spoke briefly about the 420-page report as it was tabled in Parliament, and answered questions for an hour.

It took the Auditor-general’s Office 20 months to complete its report, a job she said was made harder by the same lack of records ratepayers faced.

For the auditors, she said: “It’s really hard to audit what nobody knows about.”

And from the council perspective, on trying to have a public-private partnership off-balance sheet: “You can’t contract out responsibility.”

She said if she had found any evidence of criminality, “my first call would have been to the police and this report would not be here today”.

Among her conclusions in the report, she wrote: “Overall, we saw little evidence during our work on this inquiry to suggest that Kaipara District Council paid adequate attention to its obligations as a public entity to explain & account for its actions. In simple terms, we were left with the impression that too much of the council’s work was carried out through informal discussions, meetings & agreements between the main people involved, rather than by presenting formal papers to formal meetings with formal minutes. This type of approach is dangerous.”

The report looks at how Kaipara District Council managed the wastewater scheme between 1996-2012, as well as the role played by other agencies. The Auditor-General described it as “a woeful saga”.

The report covers:

  • how the wastewater project began and the difficulties getting it under way
  • building & implementing the wastewater scheme
  • the role played by external agencies, including Audit NZ, the Office of the Auditor-General and the Office of the Ombudsman, and
  • lessons to be learned.

It also includes an independent review of the audit work carried out, by Audit NZ, of Kaipara District Council in the years 2003-12.

In her summary of what her office found, Mrs Provost wrote that there 2 important practical conclusions:

“In part 2, we concluded that Kaipara District Council was correct when it decided that Mangawhai needed a reticulated sewerage system and that its process for assessing the need and making that decision were sound.

“In part 19, we concluded that the sewerage system that has been built is functioning well and has appropriate capacity for growth. It is too soon to assess whether the scheme is achieving the environmental goals and improving water quality in the harbour.

“The parts between those 2 tell a story of poor governance, poor decision-making & inadequate management of both the organisation & the project.

“We have identified deficiencies in the way the council managed the overall project, contracted with the various parties, financed the construction of the scheme, took ownership of the assets, and much more. Parliament & the High Court are considering the extent of Kaipara District Council’s legal failings – for example, in the way it set & collected rates to fund the scheme….

“Was there corruption or theft? During the inquiry, many people raised with us their concern that the cost increases could result in part from corruption in the contracting process or misappropriation of council funds. Throughout our work, we have actively considered whether there was evidence of possible criminal activity.

“If we come across such evidence, our practice is to refer the information to the relevant law enforcement agencies for investigation. In the 21 months of our work on this inquiry, we have not found any evidence suggesting criminal activity or warranting such a referral. Instead, we have found a great deal of information that explains how the costs increased through a series of poor decisions & inadequate management.

“It is extremely difficult to ‘prove a negative’ conclusively, so we cannot definitively state that there was no wrongdoing of this kind. However, we are satisfied that the cost increases resulted from the combination of failures that we have described in this report.”

Links: Summary report
Full report

Attribution: Auditor-general’s office release, report, presentation at Mangawhai, media briefing.

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Minister cites Kaipara debacle in move to new council finance rules

Local Government Minister Chris Tremain announced new financial prudence regulations last week, which he said would tighten financial reporting, lift transparency and encourage excellence in local government.

“The regulations will provide a standardised way of financial reporting which will encourage council efficiency and improve accountability to ratepayers. We need to learn from issues that have had an impact on ratepayers & residents in Kaipara.

“From next year, councils will have to report against a set of benchmarks around 3 key elements of financial prudence – affordability, sustainability & predictability.

“Affordability will be measured through rates & debt information, sustainability through a balanced budget, expenditure on essential services, and debt servicing & predictability through cashflow from operations & debt control information.

“Performance results will be collated in a way that recognises each individual local authority’s situation. I want to see councils measured & benchmarked against each other to help lift performance and focus on excellence.

“The regulations are part of the Better Local Government reform programme and are part of the commitment to delivering better services within tight financial restraints. I am proposing the new benchmarks will be used by local authorities in their annual reports for 2013-14, which are due to be published by 31 October 2014.”

The Government installed commissioners at the Kaipara District Council last year after the council’s debt blew out, primarily because of a wastewater project at Mangawhai, and numerous irregularities were found in its processes.

The Mangawhai Ratepayers’ & Residents’ Association has taken the council to court, arguing that ratepayers shouldn’t be made liable for irregularities arising from secret decision-making, and Northland MP Mike Sabin has a bill before Parliament to validate the irregularities.

Parliament’s local government & environment committee has reported back a month early on the Kaipara District Council (Validation of Rates & Other Matters) Bill, but the ratepayers’ association said the key point of law it had asked the High Court to review wouldn’t be impacted by the bill as now drafted. The association’s case is due back in court in Whangarei in February.

The association told its members at the weekend: “It has been reported back early because the people behind it are in a deep state of panic about what is going to happen if this is not shut down and dusted before Parliament rises for the summer recess.

“They have seen that their attempts to kill off the Mangawhai Ratepayers’ & Residents’ Association and turn it into a lapdog (spectacularly) backfire on them, and they are clever enough to see that concern about their behaviour is starting to alarm people far beyond Mangawhai….

“‘Interested & affected’ parties have put pressure on Parliament to get it enacted before the House rises for the year. This is because neither National nor Labour nor the Greens want the spectre of a local body crisis messing up their 2014 election strategies & plans.

“Our challenge now is to get every person who votes in this country to understand that if Parliament lets Kaipara District Council get away with 20 years of treating the law as a plaything, the next parliamentary term will be largely taken up with bent & incompetent local bodies from Cape Reinga to Bluff queuing up to have their sins expiated. Now, with Parliament saluting widespread corruption & criminality, it will be game on.”

Links: Better Local Government
Local government financial prudence regulations
Kaipara District Council (Validation of Rates & Other Matters) Bill

Attribution: Ministerial release, ratepayers’ association newsletters.

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