WIL warns of potential legal action over dam cost overruns

If the Tasman District Council introduces a targeted rate for irrigators to fund a slice of the Waimea Community Dam cost overruns, Waimea Irrigators Ltd says it will be ‘‘required to seek legal redress’’.

Waimea Irrigators Ltd (WIL) is a joint-venture partner with the council in Waimea Water Ltd, a councilcontrolled organisation responsible for managing the construction, operation and maintenance of the dam in the Lee Valley, about 36km southeast of Nelson.

After multiple budget blowouts, the latest forecast cost to complete the dam is $185 million, more than $80m higher than the $104.5m total at the time the decision to proceed with the dam was finalised in 2018.

A further increase is anticipated due to residual risks with the project.

In its draft Annual Plan 2022-23 consultation document, the council says it has the option to use a targeted rate on irrigators. ‘‘However, this could not come into effect before the 2023-24 year.’’

A targeted rate for landowners with WIL-affiliated water permits was discussed previously by the council during the development of its Long Term Plan 2021-31. WIL at the time accused the council of going ‘‘through the back door’’ with the proposal.

In a submission to the council’s draft Annual Plan, WIL chairperson Murray King says ‘‘WIL strongly opposes target rating irrigators and/or WIL shareholders for cost overruns, in any year’’.

‘‘At no time has WIL agreed that there is an ‘irrigator share’ of cost overruns not currently funded through CIIL (Crown Irrigation Investments Ltd).’’

WIL, the council, CIIL and Waimea Water agreed to a clause of the project deed to allocate the burden of any project cost overruns. ‘‘Clause 6.4 provides that any project overrun costs will be shared 50:50 for the first $3m, and those in excess of $3m are to be funded by TDC,’’ King says in the submission.

‘‘We remind the mayor and councillors that irrigators subscribed for shares on the basis that cost overruns were capped beyond the shared $3m.’’

Irrigators were also in the ‘‘zone of benefit’’ for the dam, and were therefore paying directly for a share in the dam build ‘‘and pay additional rates compared with other ratepayers’’, he said.

‘‘Given the legal status of the project deed, if any targeted rates or payment mechanisms are placed on irrigators or WIL shareholders for the dam’s cost overruns, beyond what is already agreed and settled, WIL will be required to seek legal redress.’’

King’s submission was one of 50 the council received in writing on its draft Annual Plan. Elected members on Tuesday deliberated on those submissions. A final Annual Plan is due to go before the full council on June 23 for consideration and adoption.

The deliberations come after Tasman mayor Tim King, in a report to the council for a meeting on May 19, said the response to requests for more funding for the dam project from the Government and the Nelson City Council was ‘‘lukewarm to say the least’’.

He said he had written to ministers Grant Robertson and Stuart Nash as well as CIIL and the city council ‘‘asking them to consider providing funding to help us meet the Waimea Community Dam cost overruns’’.