Cracks showing in road Alliance

Queenstown ratepayers will pick up the bill for another $18 million budget blow out on the downtown bypass.

Councillors yesterday approved the overspend, which brings the total cost of the 'shovel-ready' project to $128m, rather than opting to leave the road partially finished.

It is only last year that councillors approved a $21m increase in the budget for the 'arterial' road, which will connect Frankton Road to Gorge Rd, via Melbourne Street and Henry St.

And there's no guarantee this will be the last time the Kā Huanui a Tāhuna (Whakatipu Transport Programme Alliance) board, overseeing the project, comes to council with its hand out.

"It's a really terrible position to be put in again," Cr Esther Whitehead said at the meeting.

"I feel that as a council we have all of the accountability and virtually none of the control, and it shouldn't be that way."

Central Government will fund $50m of the total cost, as the project was announced by Jacinda Ardern's Labour government as part of the 2020 pandemic response. QLDC was originally slated to pay $35m but has seen its costs more than double.

Several councillors said it was clear the previous council had rushed into the project.

"In hindsight, it wasn't really Shovel Ready," Cr Lyal Cocks said, "it's questionable whether the shovel had even been designed."

Cocks said the Government money was a "big carrot" but with what they know now, they should have asked for $100m, rather than $50m.

"The reports are pretty sobering ... they don't reflect well on a lot of the professionals involved, a lot of the board members, the elected members."

But not finishing the project would "dig a bigger hole" for the council and the next council, he said, and nothing would be achieved by delaying it. "We need to get on and get this darn project finished."

Councillors considered a full report from the Alliance, detailing the reasons for the overspend, including escalating costs affecting the industry, complex construction issues, and traffic management.

The construction work is only 54% complete, but Alliance Project Manager Edward Husband told councillors it's unlikely there will be another blow out, as most of the difficult below-ground work is nearing completion.

Rates

In response to a question by Cr Niki Gladding, council finance boss Stewart Burns outlined the rates impact of the $17.65m budget increase.

Burns said the council will need to borrow to fund the project, so most of the costs relate to debt-servicing over the period of the loan. Overall the impact on rates is expected to 1%, all from Wakatipu ratepayers, with 54% collected from accommodation and commercial properties.

Residential ratepayers would pay 1% more per annum for 30 years, which was between $18-31 per year for median value properties, or $25-$112 for higher value.

Median value commercial and accommodation properties would pay $168 and $256 per year respectively, while higher value commercial face a $2000 hike and higher value hotels, for example, would pay a whopping $6400.

Review 

Deputy mayor Quentin Smith said he was disappointed a review of the Alliance, ordered by council last year, hasn't been completed.

"It would have been incredibly valuable to have before this decision is made. As I said, my expectation is the board front up to council and own some of what's going on," Smith said.

"I unfortunately agree that this project just cannot go unfinished but I really can't reconcile the cost that we're responsible for with the lack of control and accountability we've had."

Smith said the lesson to learn was that partnerships and collective agreements where council doesn't have control but has financial risks, can't continue. "We can't do that anymore."

The Alliance board chairman is Fulton Hogan's national Major Projects GM Andrew Johnson. He's joined on the board by Downer GM Transport Projects Tony Pike, Beca GM Transport and Infrastructure Andrew Rickard, and WSP Major Project Director Simon Robertson.

QLDC Property and Infrastructure GM Tony Avery is the council's representative, along the QLDC consultant Ulvi Salayev, of EID Consultancy, while NZTA Regional Manager Infrastructure Delivery Sean Walsh has joined in a temporary capacity.

Gladding agreed the project should be completed but said she'd like to delay and investigate other options, rather than the Alliance.

"Given the management overhead we're carrying ... just looking at the numbers, you're looking at 60 people, say $100k a year, that's $6m just in wages," she says.

Shelving the project could allow it to go back out to a competitive tender, with a different structure.

But Cr Lisa Guy said the only way to stop costs in a project was to finish it and the NZ construction sector was too small to go back out to tender and find alternative companies and workers.

"You've got the reputational risk, a project to finish, and the workforce here," Guy said. "I definitely do not support abandoning it at this stage and leaving a gravel strip in the middle of such a significant and key piece of infrastructure."

She wanted to see the planned pedestrian bridge reinstated, through the Long Term Plan.

Cr Whitehead said with the timing, it was clear it would cost more to delay the project than finish it now.

"So, I'm signalling that I will be supporting this but the learning is for other similar projects. We have to learn from this and not apply the same methodology," Whitehead said.

"We just cannot afford to not have practical options before us. It is a real taint on governance."

No relationship

Cr Gavin Bartlett said he was surprised there was no relationship between elected members of council with the Alliance.

"We did one site visit, which was delayed from last year, but has only just happened. It surprised me that for a project that's had such a huge impact physically and financially on the community, that we had such little involvement.

"For the most part, it seems the Alliance is left to their own devices."

Bartlett, a professional engineer, said unforeseen conditions and cost escalation could go someway towards explaining the increases "but the scale of these increases, it's hard to accept".

But the time to look at reducing those, or finishing the project within budget, was last year, or even earlier.

It was clear now the project would need to be finished, even though he was yet to be convinced there'll be any real benefit to the completing of stage one, that would outweigh the costs or the inconvenience everyone had endured for the past three years.

"Experience suggests the most cost effective way to do that is to carry on with the current agreements, with the expectation the road is open before the end of the year and the project completed shortly after that."

Impact on residents and businesses

Cr Craig 'Ferg' Ferguson made three visits in the past six months to residents and accommodation providers on the affected roads who had been "behind the cage for two and a half years".

"I was appalled by the apparent lack of duty of care for residents directly affected by this project," Cr Ferguson said, in a letter read out by Mayor Glyn Lewers.

"To have managers and others nearly in tears, relaying stories of constant bad reviews, guests walking out in the middle of the night demanding refunds, diminishing bookings, the constant vibration of the buildings, lack of sleep, lack of communication, and the blocking of their access way at night by work vehicles, I found very confronting."

He said there had been "no empathy or concern for those affected". "The stress and anxiety on the business and the residents, let me tell you, has been immense."

Lewers said he felt it was important those voices to be heard before the Alliance moves on the Frankton roundabout project

"From my point of view we have to get this done, as quickly as we possibly can," Lewers said.

In the end, it was only Cr Gladding who voted against the budget increase.

The arterial first stage now risks becoming something of a white elephant, as there is no funding, or apparent public support, for stages two and three, which would connect to Man St, by potentially demolishing the Memorial Centre, and on down to Fernhill roundabout.

Project Manawa, which was destined for the Ballarat Street block between the bypass and the town centre, is also facing considerable blowback from the public, former mayors and even the Chamber of Commerce, while it remains to be seen whether the Coalition Government will back public transport improvements.

Former councillor Cath Gilmour, in the public forum before the meeting, called for full public consultation before stages two and three of the road were considered.