Infrastructure Management - Napier, New Zealand · Infrastructure Management, Rationale and Dr Theuns Henning. ... benchmarking of service levels against peer New Zealand cities to

Infrastructure Management

Napier City Council

Asset Management

Lifecycle Review Final Report

February 2014

Title Here

Title Here

Waugh Infrastructure Management Ltd Level 2 18 Woollcombe St PO Box 827 Timaru Phone 0800 4 WAUGH 03 686 6994 Fax 03 688 9138

E-mail [email protected] www.waughinfrastructure.co.nz

Quality Record Sheet

Napier City Council

Asset Management Lifecycle Review Final Report

February 2014

Issue Information

Issue Purpose Final Report for Release

Issue Date 27 February 2014

Version Number 1.2

Authorisation

Napier City Council Bill McWatt

Prepared By Ross Waugh

Rationale

Dr Theuns Henning

Reviewed By Ross Waugh

Date February 2014

Report Number 64-041-1020

mailto:[email protected]

Asset Management Lifecycle Review

February 2014 Final Page 5 of 78

TABLE OF CONTENTS

1.0 EXECUTIVE SUMMARY 9 1.1 Introduction 9 1.2 Report Methodology 9 1.3 Key Assumptions 9 1.4 Findings 9 1.5 Conclusion 10

2.0 INTRODUCTION 13

3.0 NAPIER CITY COUNCIL ASSET BACKGROUND AND CONTEXT 15 3.1 Population and Growth 15 3.2 Provision and Maintenance of Infrastructure 15 3.3 Local Government Reorganisation Proposals 15 3.4 Napier City Council Financial Position 15

4.0 ANALYSIS OF RENEWAL AND DEPRECIATION FORECASTS 19 4.1 Review of Depreciation and Renewal Forecasts 19 4.2 Theoretical Renewals Programme 23 4.3 Comparison of Forecasts to Theoretical Programme 26

5.0 ANALYSIS OF ASSET CONDITION AND RENEWAL RESPONSES 33 5.1 Wastewater 33 5.2 Stormwater 41 5.3 Water 48 5.4 Roading 57

6.0 INVESTMENT ANALYSIS 65 6.1 Renewal Forecasts for 30 year Future Investment Period 65 6.2 Renewal Programme Comparison with Financial Provisioning 66 6.3 Investment Analysis Conclusions 67

7.0 FINDINGS AND CONCLUSION 69 7.1 Findings 69 7.2 Conclusion 71

8.0 REFERENCES 73

9.0 APPENDIX 75 9.1 Assumptions and Review Limitations 75 9.2 Roading Peer Group Comparisons 75 9.3 Information Provided by Napier City Council 78


Page 6 of 78 Final February 2014

TABLE OF TABLES Table 3.1: 2012 Local Government League Table – Selected Data .................................................... 16 Table 4.1: 2013 Comparison of Actual Renewal Reserve and Theoretical Depreciation Reserve ...... 22 Table 5.1: Wastewater Pipe Material Length ....................................................................................... 34 Table 5.2: Wastewater Projected 5 Year Renewal Groups .................................................................. 36 Table 5.3: Stormwater Pipe Material Length ........................................................................................ 41 Table 5.4: Stormwater Projected 5 Year Renewal Groups .................................................................. 43 Table 5.5: Water Pipe Material Length .................................................................................................. 48 Table 5.6: Water Projected 5 Year Renewal Groups ........................................................................... 50 Table 5.7: Water Projected 5 Year Group Renewal costs ................................................................... 53 Table 5.8: Napier Road Network Length (Opus, 2013a) ...................................................................... 57 Table 5.9: Traffic Classes per Network Length (Opus, 2013a) ............................................................ 57 Table 5.10: 2013 Valuation Results for Road Assets ........................................................................... 58

TABLE OF FIGURES Figure 4.1: Wastewater Assets - Actual vs. Forecast Depreciation and Renewal Expenditure ........... 20 Figure 4.2: Stormwater Assets - Actual vs. Forecast Depreciation and Renewal Expenditure ........... 20 Figure 4.3: Water Supply Assets - Actual vs. Forecast Depreciation and Renewal Expenditure ........ 21 Figure 4.4: Roading Assets - Actual vs. Forecast Depreciation and Renewal Expenditure ................ 21 Figure 4.5: Wastewater Theoretical Renewals Programme ................................................................. 24 Figure 4.6: Stormwater Theoretical Renewals Programme ................................................................. 24 Figure 4.7: Water Supply Theoretical Renewals Programme (original data) ....................................... 25 Figure 4.8: Water Supply Theoretical Renewals Programme (CI pipe lives adjusted) ........................ 25 Figure 4.9: Roading Theoretical Renewals Programme ...................................................................... 26 Figure 4.10: Wastewater Comparison of Forecast and Theoretical Renewals (2011 Valuation base) 28 Figure 4.11: Stormwater Comparison of Forecast and Theoretical Renewals (2011 Valuation base) 29 Figure 4.12: Water Supply Comparison of Actual, Forecast & Theoretical (2011 Valuation base) ..... 30 Figure 4.13: Water Supply Comparison of Actual, Forecast & Theoretical (CI pipe lives adjusted) .... 30 Figure 4.14: Roading Comparison of Actual, Forecast & Theoretical (2013 Valuation base) ............. 32 Figure 5.1: Wastewater Pipe Material - % of Total Length ................................................................... 33 Figure 5.2: Wastewater Pipe Diameter and Material Distribution ........................................................ 34 Figure 5.3: Wastewater Pipe Material Installation Year ....................................................................... 35 Figure 5.4: Wastewater Pipe Remaining Useful Lives ......................................................................... 35 Figure 5.5: WW Pump Station 5 Year Renewal Groups ...................................................................... 36 Figure 5.6: Wastewater Main Replacement Costs ............................................................................... 37 Figure 5.7: Wastewater Projected 100 Year Renewal Requirements .................................................. 38 Figure 5.8: Wastewater Annual Maintenance Results ......................................................................... 39 Figure 5.9: Stormwater Pipe Material - % of Total Length ................................................................... 41 Figure 5.10: Stormwater Pipe Diameter and Material Distribution ....................................................... 42 Figure 5.11: Stormwater Pipe Material Installation Year ...................................................................... 42 Figure 5.12: Stormwater Main Remaining Useful Lives ....................................................................... 43 Figure 5.13: SW Pump Station 5 Year Renewal Groups ..................................................................... 44 Figure 5.14: Stormwater Main Replacement Costs ............................................................................. 45 Figure 5.15: Projected Stormwater 100 Year Renewal Requirements ................................................ 46 Figure 5.16: Stormwater Annual Maintenance Results ........................................................................ 46 Figure 5.17: Water Pipe Material - % of Total Length .......................................................................... 48 Figure 5.18: Water Pipe Diameter and Material Distribution ................................................................ 49 Figure 5.19: Water Pipe Material Installation Year ............................................................................... 49 Figure 5.20: Water Main Remaining Useful Lives ................................................................................ 50 Figure 5.21: Water Main Remaining Useful Lives - Adjusted ............................................................... 52 Figure 5.22: Water Main Replacement Costs ...................................................................................... 52 Figure 5.23: Water Projected 100 Year Renewal Requirements ......................................................... 53 Figure 5.24: Water Projected 100 year Renewal Requirements -adjusted ........................................... 54 Figure 5.25: Water Annual Maintenance Results ................................................................................. 55 Figure 5.26: Distribution of Surface Type on the Network (Opus, 2013b) ........................................... 58 Figure 5.27: Roughness Distribution of the Napier Network (Opus, 2013b) ........................................ 59



Figure 5.28: Distribution of Surface Age on the Napier Network (Opus, 2013b) ................................. 60 Figure 5.29: Current and Forecasted Surface Condition Index (Opus, 2013b) ................................... 60 Figure 5.30: Percentage of the Network Above Roughness Threshold Levels ................................... 61 Figure 5.31: Smooth Travel Exposure Levels of the Napier Network .................................................. 61 Figure 5.32: Full Roughness Distribution of the Napier Network ......................................................... 62 Figure 5.33: Road Maintenance Efficiency Plots (Henning et al, 2013) ............................................... 63

TABLE OF APPENDIX FIGURES Appendix Figure 1: Smooth Travel Exposure – Peer Group B ............................................................ 76 Appendix Figure 2: Pavement Integrity Index – Peer Group B ............................................................ 76 Appendix Figure 3: Condition Index – Peer Group B ........................................................................... 77





1.0 EXECUTIVE SUMMARY

1.1 Introduction

In the Napier City Council (NCC) Pre-Election Report from the Chief Executive, July 2013 it was noted on page 5 ‘Recently, some uninformed comment suggested that Napier is underfunding infrastructure renewals, delaying asset replacement and failing to plan and prepare for future growth as a means to lower rate levels and ensure debt remains low. This is an incorrect conclusion’. This report addresses this issue by providing an independent review and analysis of Napier City Councils major network assets (Wastewater, Stormwater, Water Systems and Roading Network) and reports on findings. The work has been completed by independent infrastructure asset management specialists Waugh Infrastructure Management, Rationale and Dr Theuns Henning.

1.2 Report Methodology

The analysis methodology developed the report in two analysis lines:

Analysis of Renewal and Depreciation Forecasts

Analysis of Condition, Fault Records and Renewal Responses

1.3 Key Assumptions

Asset renewal forecasts are based on the assumption that NCC is managing assets to deliver current levels of service in a steady state into the future. The assumption is that assets will be replaced to continue to provide current service levels

Future renewals required based on projected forward new capital works programmes have not been included in the analysis as they will fall outside the 30 year investment period being considered

NCC current service levels are long established and represent a community agreed and accepted long term sustainable service level. This assumption was tested with roading peer group comparisons using available national data sets (see Appendix 9.22). Formal benchmarking of service levels against peer New Zealand cities to determine comparative adequacy of service levels has not been undertaken in this report. The key assumption is that current NCC service levels are acceptable

1.4 Findings

The report findings are detailed in Section 7.1. The findings are: Finding 1: No observable backlog of renewals Finding 2: Assets can provide current service levels Finding 3: NCC has adequate funding provision for current renewal needs

Finding 4: Wastewater System theoretical renewals, expenditure increases substantially beginning in 2030 which will require a corresponding increase in funding

Finding 5: Stormwater System theoretical renewals, expenditure increases substantially beginning in 2050 which will require a corresponding increase in funding



Finding 6: Water System theoretical renewals, expenditure increases substantially beginning in 2040 which will require a corresponding increase in funding

Finding 7: NCC Roading management is currently meeting service levels, national requirements, and has been evaluated as efficient and cost effective when compared to peer group Finding 8: NCC Roading provides ‘value for money’ through using the appropriate technology for the given traffic volume. Napier has slightly rougher roads than other urban networks mostly because of the high roughness from the Hill.

1.5 Conclusion

This report has provided a thorough examination of Napier City Council Wastewater, Stormwater, Water System and Roading Network assets, within the limitations of the assumptions and information available. An audit approach has been taken to the information provided by Napier City Council. Initial information was requested and provided from NCC reports, audited financial statements, and information systems. Where questions/issues were raised in the analysis these were provided to NCC and either resolved or have remained in the report. The authors are satisfied with this approach and the completeness of the information provided and analysed. The report has examined past asset renewals, projected future renewals, current depreciation funding provision, and future projected depreciation provision. Minor issues and questions have been discovered in the analysis. These have been noted in the report, and have been raised with Napier City Council management. In many cases NCC already has programmes underway to address the issues, however sufficient data was not available for the report. The authors expect NCC will address remaining issues in their on-going asset management programmes. This report addresses the uninformed comment that has suggested ‘that Napier is underfunding infrastructure renewals, delaying asset replacement and failing to plan and prepare for future growth as a means to lower rate levels and ensure debt remains low’. Following the analysis developed and presented, the authors of this report categorically disagree with this uninformed comment. The findings of the report outline that Napier:

Has very low debt levels and higher than average equity per ratepayer, and as a result is in a highly enviable position compared to most city councils in New Zealand

Is sufficiently funding current asset renewals

Has no observable backlog of renewals

Has assets that can provide current service levels

May require funding adjustments for Wastewater Systems in 2030, Water Systems in 2040 and Stormwater Systems in 2050 (possibly raising a concern about intergenerational equity)

May have wastewater earthenware pipe renewals to complete in the next 5 years. If required these renewals can be achieved within current budgets and programmes. Further investigation and engineering analysis will be required to verify these potential renewal requirements

Has a roading network that is managed in a cost effective and efficient manner when compared with peer group councils

Has a roading network that is sustainably managed to provide current service levels, no major additional investment needs are foreseen for the future



Has well developed growth plans that are in accordance with the regional Heretaunga Plans Urban Development Strategy. The Napier City Essential Services Plans that support this growth planning are the equivalent of New Zealand best practice for a city this size

The picture the authors have built up during the analysis completed in this report is that Napier City assets are professionally managed in accordance with appropriate practice, and that Napier is very well positioned to meet any future infrastructure related growth or renewal challenges.





2.0 INTRODUCTION

In the Napier City Council (NCC) Pre-Election Report from the Chief Executive, July 2013 it was noted on page 5 ‘Recently, some uninformed comment suggested that Napier is underfunding infrastructure renewals, delaying asset replacement and failing to plan and prepare for future growth as a means to lower rate levels and ensure debt remains low. This is an incorrect conclusion’. This report addresses this issue by providing an independent review and analysis of Napier City Councils major network assets (Wastewater, Stormwater, Water Systems and Roading Network) and reports on findings. The work has been completed by independent infrastructure asset management specialists Waugh Infrastructure Management, Rationale and Dr Theuns Henning. The analysis methodology adapts work previously completed for other clients of the reviewers and has developed the report in two analysis lines: Analysis of Renewal and Depreciation Forecasts

Review depreciation and renewal forecasts, including looking back 10 years at previous forecasts versus actual expenditure

Develop theoretical renewals programmes based on valuation information

Compare forecasts versus the developed theoretical renewals

Analysis of Condition, Fault Records and Renewal Responses

Analysis of asset condition and fault records, and NCC renewal responses

Determination of any renewal backlog or delayed asset replacement

Higher level forward projections of renewal requirements based on model analysis conditioned by risk, proposed capacity changes, asset condition and asset performance (from maintenance history)

Development of renewal programmes based on this analysis

Comparison with theoretical forecasts developed in the Analysis of Renewal and Depreciation Forecasts

Investment Analysis

Results have been projected forward for a 30 year period to assist with the 30 year Infrastructure Strategy reporting requirements

Renewal Programme analysis results (including any backlog identified) have been compared with any actual NCC financial provisioning

Key Assumptions

Asset renewal forecasts are based on the assumption that NCC is managing assets to deliver current levels of service in a steady state into the future. The assumption is that assets will be replaced to continue to provide current service levels

Future renewals required based on projected forward new capital works programmes have not been included in the analysis as they will fall outside the 30 year investment period being considered

NCC current service levels are long established and represent a community agreed and accepted long term sustainable service level. This assumption was tested with roading peer group comparisons using available national data sets (see Appendix 9.22). Formal benchmarking of service levels against peer New Zealand cities to determine comparative adequacy of service levels has not been undertaken in this report. The key assumption is that current NCC service levels are acceptable



Findings and conclusions from this analysis have been included in this report. The results of this project provide an independent review of the issue addressed above. The results also provide analysis for inclusion in updated Asset Management Plans and the 30 Year Infrastructure Strategy that support Councils Long Term Plan. Note Regarding Different Graph Styles The graphs presented in this report have been drawn from a range of sources and analysis tools, including NZTA, Opus, dTIMS, Rationale analysis tools, Waugh Infrastructure analysis tools. This has resulted in a range of graph styles, which the reader will notice. Given the range of sources, it would be almost impossible to reconcile and consolidate the graph styles. As a result this has not been attempted.



3.0 NAPIER CITY COUNCIL ASSET BACKGROUND AND CONTEXT

3.1 Population and Growth

Napier City has a population of 58,000 and is situated on the east coast of New Zealand in the Hawkes Bay Region. The city population has been growing slowly in line with New Zealand wide provincial growth trends. Growth planning is completed in accordance with the regional Heretaunga Plans Urban Development Strategy (HPUDS), and is well developed. The impacts of urban growth and urban intensification on infrastructure are well understood, and have been thoroughly developed in Napier City Councils well regarded Essential Services plans.

3.2 Provision and Maintenance of Infrastructure

The provision and maintenance of infrastructure is a critical deliverable of all local Councils and this requirement is laid out in the amended purposes of Local Government in the Local Government Act 2012. The citizens of Napier City have invested $1.25 billion in infrastructure over successive generations. Significant components of this investment are: Roading Network $576m Wastewater Management Systems $130m Stormwater Management Systems $105m Water Supply Systems $66m Sportsgrounds/Reserves $144m Pools $11m This report considers the Roading Network, Wastewater Management, Stormwater Management and Water Supply Systems.

3.3 Local Government Reorganisation Proposals

This report has been prepared during the period where local government reorganisation is being considered for the Hawkes Bay Region. The Local Government Commission is currently receiving public submissions (until 7th March 2014) on the Draft Proposal for Reorganisation of Local Government in Hawke’s Bay http://www.lgc.govt.nz/lgcwebsite.nsf/wpg_URL/Reorganisation-Local-Councils-Reorganisation-Applications-Draft-Proposal-for-Reorganisation-of-Local-Government-in-Hawkes-Bay!OpenDocument The Draft Proposal for Reorganisation of Local Government in Hawke’s Bay proposes on unitary regional and local council for Hawke’s Bay – the Hawke’s Bay Council. The authors of this report are aware and acknowledge that this report will become part of the body of knowledge for the Napier City Council and Hawke’s Bay communities in the discussions, submissions and debates around the reorganisation proposal.

3.4 Napier City Council Financial Position

In 2013 the Local Government League Table was produced by Larry N Mitchell, and independent Finance and Policy Analysis working in the local government sector. The League Table analysis is drawn from council Long Term Plan and Annual Report data and provides very good independent comparative analysis of the New Zealand Local Government sector. With Larry Mitchell’s permission some key information has been included below, to assist in the understanding of Napier City Council’s relative financial and infrastructure position.

http://www.lgc.govt.nz/lgcwebsite.nsf/wpg_URL/Reorganisation-Local-Councils-Reorganisation-Applications-Draft-Proposal-for-Reorganisation-of-Local-Government-in-Hawkes-Bay!OpenDocument

http://www.lgc.govt.nz/lgcwebsite.nsf/wpg_URL/Reorganisation-Local-Councils-Reorganisation-Applications-Draft-Proposal-for-Reorganisation-of-Local-Government-in-Hawkes-Bay!OpenDocument



The League Table also provides ‘mean’ analysis data for each group. The ‘mean’ trends are identical to the average. It should be noted that comparative financial data between individual Councils and peer groups paints a big picture, but takes little account of the relative stages of city infrastructure or social development. Dunedin City Council, as one example has just completed a decade of very large civic construction projects – Town Hall, Museum, Stadium which has left high levels of debt, but these are one in 50 year plus projects, and this level of capital expenditure will not be repeated for many decades, while during that period debt is paid down. The groups for analysis are: Super City: Auckland City – not included in table below Metro Group: Christchurch City, Dunedin City, Hamilton City, Hutt City, Wellington City City Group: Invercargill City, Napier City, New Plymouth District, Palmerston North City, Rotorua City, Tauranga City, Upper Hutt City, Whangarei District

Table 3.1: 2012 Local Government League Table – Selected Data

Item (2012 Data) Napier CC City Group Average Metro Group Average

Debt per Ratepayer $899 $5,173 $9,273

Total Debt $22,231,000 $175,650,000 $777,805,000

Debt Servicing to Rates Revenue

0.6% 11.1% 13.0%

Capital Expenditure $27,197,000 $32,059,000 $155,825,000

Depreciation $20,228,000 $26,083,000 $23,830,000

Equity per Ratepayer $54,700 $44,996 $52,902

What can be seen from this selected comparison of Napier City Council 2012 financial data and analysis is that:

Napier City Council has very low debt when compared with peer Councils. This shows in the total debt and debt per ratepayer, and flows into the very low debt servicing charges

Napier City Council in fact has the lowest debt per ratepayer, lowest total debt, and lowest debt servicing to rates revenue of all the Super City, Metro Group and City Group Councils

Napier City Capital and Depreciation Expenditure are broadly in the average area for the City Group comparison i.e. at first glance Napier City expenditure is about average, and there is no sign of dramatic under-expenditure

Napier City Equity per Ratepayer is above average for both city and metro group. This indicates a sustained long term investment in assets

Napier City has higher than average equity and very low debt

The reasonable conclusion to draw from this financial analysis is that Napier City Council is a prudent and well run Council, with very low debt, about average capital and depreciation expenditure, and higher than average equity per ratepayer when compared with peer councils. This is a highly enviable position, and provides Napier City a large amount of future scope to raise debt, if required, to fund infrastructure or other community agreed projects. As noted by Councils CEO in the July 2013 Pre-Election Report, ‘Recently, some uninformed comment suggested that Napier is underfunding infrastructure renewals, delaying asset replacement and failing to plan and prepare for future growth as a means to lower rate levels and ensure debt remains low. This is an incorrect conclusion’



The independent summary comparative financial analysis presented above supports the CEO’s contention that the uniformed comment is incorrect. The reminder of this report will provide detailed analysis of infrastructure management data to further test this issue.





4.0 ANALYSIS OF RENEWAL AND DEPRECIATION FORECASTS

Napier City Council provides a wide range of services to the community, which are underpinned by an extensive network of infrastructure assets. Prudent management of these assets is a core Council function and critical to maximising the quality of life in the community, now and into the future. Importantly, the delivery of services to the community must be maintained in perpetuity. This requires the refurbishment of assets over time as their performance degrades to a point at which they no longer render service within an acceptable risk profile. Therefore, it is essential that Napier City Council makes provision to fund their asset renewal liabilities as they come due. Failure to do so would lead to a future deficit in renewal funding and may ultimately lead to lower service levels in the future at the expense of lower rates today. Depreciation funding is one way to make provision for future renewal requirements, although other methods are also available (e.g. rates funding as renewals arise, debt funding, a mixture of depreciation and debt funding, or otherwise). This section of the analysis examines the prudence with which Napier City Council has been planning for, and funding, the renewal of roading, water supply, wastewater and stormwater assets. The investigation includes three parts:

1. Review of depreciation and renewal forecasts 2. Development of a theoretical renewals programme 3. Comparison of forecast to the theoretical programme

4.1 Review of Depreciation and Renewal Forecasts

Depreciation is an accounting concept that allocates the consumption of economic benefits of an asset over its useful life. Depreciation is therefore a method of reporting on past investments, and is frequently conducted using a ‘straight-line’ method of apportionment. Planning for the renewal of assets, on the other hand, is a forward looking exercise that estimates future expenditure requirements as the condition and performance of an asset deteriorates to an unacceptable level. However, over the long term, one can expect depreciation expense to be roughly similar to future renewal expenditure requirements. Comparing the past and future provisioning for depreciation to actual and projected renewal expenditure can therefore be used as one proxy for evaluating the asset and financial management practices of Napier City Council. These variables are plotted below for wastewater, stormwater, water supply and roading assets:



Figure 4.1: Wastewater Assets - Actual vs. Forecast Depreciation and Renewal Expenditure

Source: NCC Annual Plans and LTPs (forecast data), NCC Annual Reports (actual data), 2002 valuation (theoretical renewals)

Figure 4.2: Stormwater Assets - Actual vs. Forecast Depreciation and Renewal Expenditure




Figure 4.3: Water Supply Assets - Actual vs. Forecast Depreciation and Renewal Expenditure


Figure 4.4: Roading Assets - Actual vs. Forecast Depreciation and Renewal Expenditure

Source: NCC Annual Plans and LTPs (forecast data), NCC Annual Reports (actual data). Note: The 2002 roading valuation data is not available in a format that enables the development of a meaningful theoretical renewals programme.

The graphs above uniformly show depreciation expense well in excess of renewal expenditure for all activities. This phenomenon is to be expected given the relatively young age of Napier’s assets. Section



4.2 below provides a longer term perspective and shows a spike in asset renewal estimated around 2050 when a large number of assets built in the mid-20th century reach the end of their useful lives.

4.1.1 A review of Napier City Council’s renewal funding methodology

Fully funding the depreciation of assets on a straight line basis normally results in the build-up of a substantial financial asset in anticipation of the future replacement of physical assets. This is sometimes considered to be an implied requirement of the ‘balanced budget’ provision of the Local Government Act 2002. However, the legislation contains some flexibility to deviate from full funding of depreciation as long as the adopted strategy is considered to be financially prudent. One example of this is when the construction of new assets is funded through loans. In this case, full funding of depreciation from the start can create an inequity for early users of the infrastructure in that they must pay for both depreciation of the asset and interest on the loan. Accordingly, some councils choose to only partly fund depreciation during the early years of an asset’s life. Rather than explicitly funding depreciation, Napier City Council uses rates to fund asset replacements based on renewal projections in their asset management plans. Because the estimates contain some uncertainty, any funds collected for renewals that are not expended in a given year accumulate into a renewals reserve. Funds in the reserve are invested and any interest earned on the investment is added to the fund to protect against inflation. This ‘pay as you go’ approach ensures that NCC is not underfunding renewals (contradicting the statement quoted in the Pre-Election Report). However, NCC’s approach does raise the question of intergenerational equity. The theoretical renewals programme developed in Section 4.2 of this analysis shows a substantial increase in renewal requirements around 2040 or 2050 (depending on the asset class). Under NCC’s current renewal funding methodology, rates will need to increase substantially in the future to meet the renewal needs. An alternate approach would be to use debt funding to meet the future renewal requirements. The 2012/22 LTP does not address how this issue may be considered in the future. In either case, it is possible that the cost of replacing existing assets will fall disproportionately on future ratepayers rather than today’s ratepayers. To illustrate this concept, the table below shows the difference between a theoretical approach of funding depreciation and NCC’s approach of funding estimated renewals. Based on data provided by Napier City Council, a comparison between the current renewal reserve and the theoretical depreciation reserve from 2003 to 2013 is shown below:

Table 4.1: 2013 Comparison of Actual Renewal Reserve and Theoretical Depreciation Reserve

Activity Current Renewal Reserve

(30 June 2013)

Theoretical Depreciation Reserve (2003 to 2013)

Wastewater $6,699,072 $20,123,973

Stormwater $2,747,809 $9,915,821

Water Supply $1,773,460 $6,789,057

Roading Not Provided $24,682,496

Source: NCC IAR Fund Balance spreadsheet & LTPs, annual plans and annual reports; all figures reported in nominal dollars

The theoretical depreciation reserve is calculated using the difference between accumulated straight-line depreciation and cumulative (actual) renewal expenditure from 2003 to 2013. This is the reserve that would exist if NCC had a policy to fully fund depreciation. The current renewal reserves, on the other hand, are significantly less than the theoretical depreciation reserve over the past 10 years. The gap between the two represents a burden that may fall upon future ratepayers to fund. However, we acknowledge that theoretical straight line depreciation assumes that the useful lives of assets are known with certainty. In reality, the life of an infrastructure asset is uncertain and can change over time. Accordingly, it is possible for the theoretical depreciation figure to be overestimated in the



early years if actual asset lives end up being much longer than initially assumed and the remaining useful lives are not updated during periodic revaluations.

4.1.2 A review of Napier City Council’s historical renewal expenditure

Turning back to renewal expenditure, NCC’s actual expenditure has been slightly lower than their forecasts over the past 10 years – hence the accumulation of a renewal reserve. This could be for a number of reasons (e.g. insufficient human resources to deliver the capital program, insufficiently advanced planning and design of projects, uncertainty in the forecasts, or otherwise). Nonetheless, actual renewal expenditure for three waters assets tends to exceed the historical theoretical requirement based on our analysis of the 2002 valuation data. Again, the reason for this is not known. Possible explanations include (but are not limited to) the following:

The assets may have been in worse condition than recorded in the 2002 valuation

The assets may have been replaced before the end of their useful life

A number of older assets due for replacement were ‘found’ after the 2002 valuation

No further investigation has been conducted to determine the reason for this difference between the actual renewal expenditure and the theoretical renewal expenditure in the period from 2003 to 20131. However, based on the data available, there is no evidence to suggest that NCC has actively delayed asset replacement in the past. Finally, the mean asset age, expressed in terms of the depreciated replacement cost divided by the gross replacement cost, exhibits a gradually declining trend for all activities. This is to be expected as the assets age over time before they need to be replaced. On average, Napier’s assets are currently in the middle of their useful life.

4.2 Theoretical Renewals Programme

A theoretical renewals programme has been developed based on the replacement of assets on a like-for-like basis at the end of their remaining useful life. Assets are assumed to be replaced in perpetuity with a new asset of the same capacity and the same useful life. The theoretical renewals programme is based on valuation data from 2011 for the three waters assets and valuation data from 2013 for roading assets. As such, the theoretical renewal programme does not include an allowance for renewal of new assets built after this period. In other words, the theoretical programme is based on the renewal of assets currently owned by Napier City Council. Further, with the exception of the base course, the theoretical renewals programme for roading is generally based on valuation data at the asset category level (e.g. railings, minor structures) rather than individual assets. Therefore, the renewal projections have a lumpy profile in which large groups of assets are replaced in a single year. As a result, the year-to-year projections are unlikely to be accurate. Instead, the long term, cumulative picture should be used for assessment purposes. The theoretical renewal programmes developed for each activity are shown in the graphs below:

1 Note: the forward looking theoretical renewals programme is discussed in detail in Section 4.2 below.



Figure 4.5: Wastewater Theoretical Renewals Programme

Source: NCC Valuation 2011 and Rationale analysis

Figure 4.6: Stormwater Theoretical Renewals Programme




Figure 4.7: Water Supply Theoretical Renewals Programme (original data)


Figure 4.8: Water Supply Theoretical Renewals Programme (CI pipe lives adjusted)

Source: NCC Valuation 2011, Waugh analysis, Rationale analysis



Figure 4.9: Roading Theoretical Renewals Programme

Source: NCC Valuation 2013 and Rationale analysis Three key observations can be drawn from the theoretical renewals programme:

For the water supply, wastewater and stormwater activities, there is a spike in renewal expenditure between 2040 and 2060 as a large number of assets originally built in the mid-20th century reach the end of their useful lives

The 2011 valuation for water supply, wastewater and stormwater assets shows a substantial number of pipes with only 3 years of remaining useful life. After additional analysis by Waugh Infrastructure and discussion with Napier City Council, it was agreed that the CI water pipes in this category in fact have a substantial amount of remaining useful life. A second renewal theoretical renewal programme was generated for water supply with these CI pipe lives extended by 100 years

As a result, the theoretical renewals programme shows an immediate requirement (in 2014) to replace the wastewater and stormwater assets. The expenditure requirement is in the order of $21M (for wastewater) and $12M (for stormwater) – which is not currently reflected in Napier City Council’s Long Term Plan2

4.3 Comparison of Forecasts to Theoretical Programme

The comparison of actual and forecast renewal expenditure with the theoretical renewals programme takes a long term view to assess whether Napier City Council is appropriately planning for and funding its infrastructure renewal programme. In the graphs below, actual depreciation data is taken from annual reports. The forecast depreciation is based on LTP projections through 2022, although the figures are adjusted to remain in real values ($2012/13). As with the theoretical renewals programme, the depreciation forecast does not include an allowance for depreciation from new or upgraded assets built after 2022.

2 The water supply renewal backlog is approximately $9M if the CI pipe lives remain unadjusted.



As with depreciation, actual renewal expenditure data is taken from annual reports. The forecast renewal expenditure is based on LTP projections through 2022. For each activity, the planned and forecast depreciation and expenditure is compared with the theoretical renewals programme developed from the 2011 valuation (3 waters assets) and 2013 valuation (roading assets).



4.3.1 Wastewater Infrastructure

An evaluation of actual, forecast and theoretical wastewater asset renewal funding and depreciation provisioning is shown below.

Figure 4.10: Wastewater Comparison of Forecast and Theoretical Renewals (2011 Valuation base)

Source: NCC 2012/22 LTP, NCC 2011 Valuation and Rationale analysis. Depreciation after 2022 is based on 3% annual inflation. New and upgraded assets built after 2022 are not incorporated in depreciation or renewal forecasts. The following observations can be drawn for wastewater assets:

The level of renewal expenditure is projected to substantially increase between approximately 2030 and 2060. This increase in renewal investment will require a corresponding increase in funding (i.e. rates, unless other funding methods such as debt are used)

As noted in Section 4.2 above, the theoretical renewals programme shows an immediate requirement (in 2014) for $21M of renewal expenditure. This is primarily attributable to a substantial cohort of pipes recorded in the 2011 valuation as having a remaining useful life of three years. As a result, the cumulative renewal expenditure planned in the 2012/22 LTP is slightly less than the theoretical cumulative renewal expenditure

Apart from the pipe assets noted above (which merit further investigation), there is little evidence to suggest that Napier City Council has been underfunding the renewal of its wastewater assets



4.3.2 Stormwater Infrastructure

An evaluation of actual, forecast and theoretical stormwater asset renewal funding and depreciation provisioning is shown below.

Figure 4.11: Stormwater Comparison of Forecast and Theoretical Renewals (2011 Valuation base)

Source: NCC 2012/22 LTP, NCC 2011 Valuation and Rationale analysis. Depreciation after 2022 is based on 3% annual inflation. New and upgraded assets built after 2022 are not incorporated in depreciation or renewal forecasts. The following observations can be drawn for stormwater assets:


As noted in Section 4.2 above, the theoretical renewals programme shows an immediate requirement (in 2014) for approximately $12M of renewal expenditure. This is primarily attributable to a substantial cohort of pipes recorded in the 2011 valuation as having a remaining useful life of three years. The 2012/22 LTP does not plan for a corresponding level of renewal expenditure in 2014. However, the cumulative renewal expenditure planned over the duration of the LTP is approximately equal to the theoretical requirement

Apart from the pipe assets noted above (which merit further investigation), there is little evidence to suggest that Napier City Council has been underfunding the renewal of its stormwater assets



4.3.3 Water Supply Infrastructure

An evaluation of actual, forecast and theoretical water supply asset renewal funding and depreciation provisioning is shown below

Figure 4.12: Water Supply Comparison of Actual, Forecast & Theoretical (2011 Valuation base)

Source: NCC 2012/22 LTP, NCC 2011 Valuation and Rationale analysis. Depreciation after 2022 is based on 3% annual inflation. New and upgraded assets built after 2022 are not incorporated in depreciation or renewal forecasts.

Figure 4.13: Water Supply Comparison of Actual, Forecast & Theoretical (CI pipe lives adjusted)



Source: NCC 2012/22 LTP, NCC 2011 Valuation and Rationale analysis. Depreciation after 2022 is based on 3% annual inflation. New and upgraded assets built after 2022 are not incorporated in depreciation or renewal forecasts. The following observations can be drawn for water supply assets:


As noted in Section 4.2 above, the theoretical renewals programme shows an immediate requirement (in 2014) for approximately $9M of renewal expenditure. This is primarily attributable to a substantial cohort of pipes recorded in the 2011 valuation as having a remaining useful life of three years. After discussion with NCC, it was agreed that the remaining useful life for these pipes could be extended by 100 years. A second analysis was completed on this basis. For the unadjusted (original) data, the cumulative renewal expenditure planned in the 2012/22 LTP is approximately $5M less than the theoretical cumulative renewal expenditure. However when the CI pipe lives are adjusted, the planned renewal expenditure during the LTP is in excess of the theoretical requirement

There is little evidence to suggest that Napier City Council has been underfunding the renewal of its water supply assets



4.3.4 Roading Infrastructure

An evaluation of actual, forecast and theoretical roading asset renewal funding and depreciation provisioning is shown below.

Figure 4.14: Roading Comparison of Actual, Forecast & Theoretical (2013 Valuation base)

Source: NCC 2012/22 LTP, NCC 2013 Valuation and Rationale analysis. Depreciation after 2022 is based on 3% annual inflation. New and upgraded assets built after 2022 are not incorporated in depreciation or renewal forecasts. The following observations can be drawn for roading assets:

The theoretical renewals programme shows a large renewal investment required in 2018, which exceeds the planned renewal expenditure in the LTP by a substantial amount. However, the theoretical renewals programme for roading assets is a coarse approximation that results in a ‘lumpy’ expenditure profile (as discussed in Section 4.2). As such, the year-to-year projections are unlikely to be accurate. Instead, the long term, cumulative picture is a more useful means of assessment. In this regard, Napier City Council appears to be well positioned and the rates funding requirement is estimated to be relatively steady

Therefore, there is little evidence to suggest that Napier City Council has been underfunding the renewal of its roading assets or any significant future investment needs



5.0 ANALYSIS OF ASSET CONDITION AND RENEWAL RESPONSES

The framework for a renewal plan can be described in seven questions:

What do we have?

What is it worth?

What is its condition?

What needs to be done?

When do we need to do it?

What will it cost?

How will we pay for it?

This section of the report undertakes a more detailed engineering analysis of the available asset data to establish an understanding of the assets, asset condition and performance, and how this might translate into probable asset renewals. The analysis in this section is designed to complement and serve as a check to the depreciation and financial analysis in Section 4.0.

5.1 Wastewater

5.1.1 What do we have?

Data obtained from the 2012 Asset Valuation show that the majority of sewer mains consist of RC (44%), PVC (21%), EW (19%), AC (11%), PE (4%) and other minor portions of CC, ductile iron, ABS and Steel. This is graphically represented below and the lengths of different pipe materials are listed in Table 5.1: Wastewater Pipe Material Length.

Figure 5.1: Wastewater Pipe Material - % of Total Length

ABS 0%

AC 11%

CC 1%

CI 0%

DI 0%

EW 19%

PE 4% PVC 21%

RC 44%

ST 0%



Table 5.1: Wastewater Pipe Material Length

Material Total

ABS 1.08

AC 39,921.3

CC 1,741.21

CI 1,473.12

DI 49.3

EW 70,969.17

PE 16,247.7

PVC 79,635.31

RC 164,444.17

ST 342.0

Grand Total 374,824.36

The graph below shows there is only a small portion of mains within the 51-100mm range and that the majority of pipes 101-150mm diameters are mainly RC, EW, PVC and AC. Mains greater than 150mm make up 42% of the total sewer collection network and this is dominated by RC.

Figure 5.2: Wastewater Pipe Diameter and Material Distribution

The above also shows that the pipe diameter range 51-100mm make up 2% of the total water reticulation network, the 101 to 150mm diameter range make up 55%, the 151 to 200mm diameter range make up 3%, the 201 to 250mm diameter range make up 21%, and the greater than 250mm diameter makes up the remaining 19%. The 2012 AMP states that the larger pipe sizes (≥300mm diameter) tend to be deep and expensive to repair or replace.

50

100

150

200

250

05

1-1

00

10

1-1

50

15

1-2

00

20

1-2

50

25

1-3

00

30

1-4

00

40

1-

(bla

nk)

Len

gth

(km

)

Diameter Range (mm)

ST

RC

PVC

PE

EW

DI

CI

CC

AC

ABS

51-100mm dia. – 9,032m 101-150mmdia. - 205,123m 151-200mmdia. - 11,320m 201-250mmdia. 77,904m >250mmdia. 71,443m



Figure 5.3: Wastewater Pipe Material Installation Year

The graph above shows that between 1891 and 1940 EW was the most common pipe material installed and from 1941 to 1980 RC was the material of choice. Since 1981 the preferred material have been PVC and to a limited extent PE. As a result the remaining useful lives based on expected asset lives are as shown in the graph below.

Figure 5.4: Wastewater Pipe Remaining Useful Lives

The graph above shows that there are no sewer main assets past their expected lives. However, the significant length of mains within the 2012-16 window indicate that the expected lives of these mains have been adjusted over time, presumably during asset valuations. This is mainly EW main (46km). It then drops to 2.3km (EW & RC) during 2017-21, then it ramps up to 52km during 2042-46. This is mainly RC pipes and AC pipes reaching the end of the expected lives. The total lengths in 5 year groups are tabled below.

0%

5%

10%

15%

20%

25%

30%

18

91

- 1

90

0

19

01

- 1

91

0

19

11

- 1

92

0

19

21

- 1

93

0

19

31

- 1

94

0

19

41

- 1

95

0

19

51

- 1

96

0

19

61

- 1

97

0

19

71

- 1

98

0

19

81

- 1

99

0

19

91

- 2

00

0

20

01

- 2

01

0

20

11

- 2

02

0

(bla

nk)

% o

f P

ipe

Le

ngt

h

Install Year

ST

RC

PVC

PE

EW

DI

CI

CC

AC

ABS

10

20

30

40

50

60

20

12

- 2

01

6

20

17

- 2

02

1

20

22

- 2

02

6

20

27

- 2

03

1

20

32

- 2

03

6

20

37

- 2

04

1

20

42

- 2

04

6

20

47

- 2

05

1

20

52

- 2

05

6

20

57

- 2

06

1

20

62

- 2

06

6

20

67

- 2

07

1

20

72

- 2

07

6

20

77

- 2

08

1

20

82

- 2

08

6

20

87

- 2

09

1

20

92

- 2

09

6

21

02

- 2

10

6

21

07

- 2

11

1

Len

gth

(km

)

Years - (Remaining Useful Life)

ST

RC

PVC

PE

EW

DI

CI

CC

AC

ABS



Table 5.2: Wastewater Projected 5 Year Renewal Groups

Renewal5YearValGp Grand Total (m)

2012 - 2016 46,894.68

2017 - 2021 2,351.65

2022 - 2026 6,980.43

2027 - 2031 26,392.88

2032 - 2036 23,999.03

2037 - 2041 36,900.32

2042 - 2046 52,198.11

2047 - 2051 37,556.34

2052 - 2056 30,580.5

2057 - 2061 2,267.48

2062 - 2066 18,883.89

2067 - 2071 5,060.35

2072 - 2076 15,758.66

2077 - 2081 20,703.57

2082 - 2086 26,979.81

2087 - 2091 19,831.91

2092 - 2096 61.27

2102 - 2106 53.75

2107 - 2111 1,369.73


Non Pipe Assets The Non Pipe Assets consists of the Milliscreen, Pump Stations and the Outfall and has a total replacement value of $45,046,200.00. The total replacement value (2012 Asset Valuation) of the Milliscreen is $11,109,000.00 and assets with a total value of $385,100.00 have reached the end of their expected lives. This is 3.5% of the total value and consists of pumps, pneumatic valves and presses.

Figure 5.5: WW Pump Station 5 Year Renewal Groups

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

Pumpstations - Odour Filter Bark Pumpstations - Odour Filter Air Pumpstations - U/G Structure Pumpstations - Starters/VSD Pumpstations - Pumps

Pumpstations - Pipework Pumpstations - Generators Pumpstations - Control Gear Pumpstations - Building



The pump station assets (45 pump stations) total $16,237,200.00 and there are assets with a total value of $960,800.00, which has reached the end of its expected useful lives. This is a combination of buildings, control equipment, generators, pumps, starters/vfds, underground structures and odour filters at Awatoto, Boys High, Greenmeadows, Latham Street, Sale Street and other pump stations. The 2012-26 period show that a further $2,303,400.00 worth of assets will reach the end of their expected lives during this five year period. The value of assets past their expected useful lives or nearing their expected useful lives make up 20% of the total wastewater pump stations asset value. The Outfall will reach the end of its expected useful life during 2027-31. The Non Pipe assets past their expected useful lives appear to be mainly low criticality assets where an approach of “run to failure” is best appropriate practice.

5.1.2 What is it worth?

The total sewer main asset value (replacement cost) as recorded in the 2012 Asset Valuation totals $193,687,274.20. The replacement costs associated with the mains reaching the end of their expected lives are graphically represented below.

Figure 5.6: Wastewater Main Replacement Costs

The graphic above shows the 46km of EW main that has reached the end of its expected life. This is purely based on the expected lives and does not include any condition based assessments, which may indicate that the expected asset life may be extended. Further analysis of EW pipe condition and renewal is included below.

5,000

10,000

15,000

20,000

25,000

30,000

20

12

- 2

01

6

20

17

- 2

02

1

20

22

- 2

02

6

20

27

- 2

03

1

20

32

- 2

03

6

20

37

- 2

04

1

20

42

- 2

04

6

20

47

- 2

05

1

20

52

- 2

05

6

20

57

- 2

06

1

20

62

- 2

06

6

20

67

- 2

07

1

20

72

- 2

07

6

20

77

- 2

08

1

20

82

- 2

08

6

20

87

- 2

09

1

20

92

- 2

09

6

21

02

- 2

10

6

21

07

- 2

11

1

Re

pla

cem

en

t C

ost

($

00

0)

Years (5 yr groups)

ST

RC

PVC

PE

EW

DI

CI

CC

AC

ABS



The total replacement costs in 5 year groups are tabled below.

Renewal5YearValGp Grand Total ($)

2012 - 2016 21,041,155.10

2017 - 2021 1,253,188.34

2022 - 2026 3,778,216.66

2027 - 2031 12,317,195.78

2032 - 2036 12,996,835.73

2037 - 2041 18,487,461.02

2042 - 2046 27,478,094.07

2047 - 2051 25,840,291.43

2052 - 2056 15,152,511.36

2057 - 2061 1,039,758.50

2062 - 2066 12,109,098.23

2067 - 2071 2,873,958.74

2072 - 2076 8,406,670.87

2077 - 2081 13,502,948.06

2082 - 2086 12,667,860.19

2087 - 2091 4,556,798.47

2092 - 2096 11,640.94

2102 - 2106 31,177.03

2107 - 2111 142,413.68

Grand Total 193,687,274.20

The projected renewal requirements are presented in Figure 5.7: Wastewater Projected 100 Year Renewal Requirements. This shows the projected renewal requirements for the next 100 years.

Figure 5.7: Wastewater Projected 100 Year Renewal Requirements

Over the next 100 years the projected renewal requirements (based purely on expected asset lives) for the piped sewer assets will total $193,687,274.20 this results in a projected annual renewal requirement

$0.00

$200.00

$400.00

$600.00

$800.00

$1,000.00

$1,200.00

$1,400.00

$1,600.00

$1,800.00

$2,000.00

1 4 7

10

13

16

19

22

25

28

31

34

37

40

43

46

49

52

55

58

61

64

67

70

73

76

79

82

Re

ne

wal

Re

qu

ire

me

nts

x 1

00

00

Year

Annual Total

100 Year average



of $1,936,872.74. During the past five years, the investment has been approximately $1,000,000 per year.

5.1.3 What is its condition?

There is limited information available on the condition of sewer piped assets.

Figure 5.8: Wastewater Annual Maintenance Results

The annual maintenance figures (graphically represented above) show:

Clear pipe blockages reduced from 199 (2007/08) to 167 (2012/13)

Clear sewer pump blockages reduced from 747 (2007/08) to 640 (2012/13)

Wetwell cleaning and removal of debris reduced from 22 (2007/08) to 11 (2012/13)

The annual maintenance data is limited and does not provide adequate information to link maintenance with asset attributes (material, size, etc.) in order to do trending and compare whether specific asset materials are showing an increase/decrease/static trend of maintenance activities. Analysis of Earthenware (EW) Pipe CCTV Records To better understand the condition of the 46km of EW pipe that showed potential ‘aged based’ renewals within the 2012-2016 window closed circuit television (CCTV) condition records for this pipe was examined. That data provided by NCC showed that only 4.9km (10.6%) of the 46km within the 2012-2016 window had CCTV records. The analysis results from this CCTV record showed:

0.5 km (10%) with Very Good to Average structural condition score

1.6 km (33%) with No Result

2.8 km (57%) with Poor to Very Poor structural condition score

Further analysis of the Poor to Very Poor scores using a CCTV analysis tool to remove scores that had no impact on asset life or service level reduced the Poor to Very Poor structural condition score to 1.5 km (30%)

Summarising this CCTV analysis – based on a 10% condition sample (7% if the no-result records are excluded) of the 46km of EW pipe that shows aged based replacement in the 2012-2016 period 30% of pipes had a Poor to Very Poor structural condition score, that is may be requiring renewal.

0

100

200

300

400

500

600

700

800

900

Clear pipe blockages Clear sewer pump blockages Wet well cleaning and removal ofdebris

2007/08

2008/09

2009/10

2010/11

2011/12

2012/13



To express this analysis result in kilometres – the condition records available predict that 14-15km of earthenware pipe may need renewal in the next 5 year period. To keep this analysis result in perspective this represents 4% of the total pipe network and approximately $6-7 million of expenditure, or about $1-1.5 million per year. NCC has been spending an average of $1 million per year on wastewater pipe renewal over the past 10 years, so this potential earthenware pipe renewal does not represent a financial or practical challenge, or a backlog of renewals. It is expected that NCC will incorporate the EW pipe renewals into its normal on-going wastewater pipe renewal programme. The pipe blockage records above do not indicate any major problem with the current wastewater system reducing from 0.53 blockages/km/year to 0.45 blockages/km/year over the past 6 years. Based on the blockage records the immediate requirement to renew earthenware pipe remains theoretical, and will need to be demonstrated by actual condition records and analysis, coupled with service failure. NCC requires more information to better understand earthenware pipe renewal requirements and develop renewal programmes. This data capture is already programmed over the next few years.

5.1.4 What needs to be done?

All infrastructure assets will deteriorate with age and use. Careful operation and maintenance will control the deterioration rate and monitor the performance of assets over time. A good asset management program will anticipate future renewal/repair needs over analysis periods that are consistent with the lives of the infrastructure assets. For equipment and facilities, schedules can be established that set forth periodic repair/refurbishment activities over the life of an asset, and replacement at the end of its life cycle. Analysis of the information indicates that the NCC piped and non-piped assets are in relative good condition. There is 12.5% of the total piped assets which are at the end of its expected life within the 2012 -16 window. It is important to note that this is only based on “expected lives” and maintenance information is limited and not adequate to link this to condition of mains e.g. breaks/material and or breaks/km/year, etc. The next steps needs to include but not limited to:

Increased & improved analysis of maintenance records

A ‘true’ understanding of the replacement profile (i.e.) not on age alone;

Condition assessments

Performance

o compliance with NCC Standards

o size (capacity)

o material (I/I)

o cover/depth

o maintenance

Criticality

A run to failure strategy can be applied to most of the low criticality assets as the consequence of failure is not major and the costs of ongoing condition monitoring may outweigh the costs of failure. This strategy should be applied to all low criticality assets. A risk and condition based strategy should be applied where there is a significant implication due to failure, such as a major health and safety risk, significant reliability of supply consequence or significant expense in repair (high criticality assets).



5.1.5 Wastewater System Summary

14-15km of earthenware pipe renewals (4% of total network) may be required in the next 5 year period. This level of renewals can be incorporated into existing programme levels, and budgets, and does not represent a backlog. Further information will be required to verify the requirement for these renewals

NCC is predicted to have a wastewater pipe renewal peak during the period 2030-2060. This is absolutely typical of New Zealand cities and represents the end of asset life of the post WW2 development of New Zealand cities

There is no indication of a wastewater system renewal backlog

Operational service history provides no indication of any major service delivery issues with the Napier City wastewater network

5.2 Stormwater

5.2.1 What do we have?

Data obtained from the 2012 Asset Valuation show that the majority of stormwater mains consist of RC (88%), PVC (5%), EW (2.5%), BR (1.8%), AC (1.2%) and other minor portions of CC, PE, ST and ABS. This is graphically represented below and the lengths of different pipe materials are listed in Table 5.5: Water Pipe Material Length.

Figure 5.9: Stormwater Pipe Material - % of Total Length

Table 5.3: Stormwater Pipe Material Length

Material Total (m)

RC 194,645.04

PVC Plastic 11,769.0

EW 5,555.66

BR 4,026.55

AC 2,600.43

CC 1,684.11

PE 405.6

ST 115.7

ABS 78.18


ABS 0%AC 1%BR 2%CC 1%

EW 3%

PE 0%

PVC 5%

RC 88%

ST 0%



The graph below shows that the majority of stormwater mains are greater than 400mm diameter and these pipes are mainly RC pipe.

Figure 5.10: Stormwater Pipe Diameter and Material Distribution

The above also shows that the pipe diameter range 51-200mm make up 3% of the total stormwater collection network, the 201-250mm diameter range make up 14%, the 251-300mm diameter range make up 20%, the 301-400mm make up 13% and the pipes greater than 400mm diameter make up 50%.

Figure 5.11: Stormwater Pipe Material Installation Year

The graph above shows that the RC has been the material of choice since 1891. Occasionally other materials have been used such as AC, BR and lately PVC.

20

40

60

80

100

120

05

1-1

00

10

1-1

50

15

1-2

00

20

1-2

50

25

1-3

00

30

1-4

00

40

1-

(bla

nk)

Len

gth

(km

)

Diameter Range (mm)

ST

RC

PVC

PE

EW

CC

BR

AC

ABS

0%

5%

10%

15%

20%

25%

30%

18

91

- 1

90

0

19

11

- 1

92

0

19

31

- 1

94

0

19

41

- 1

95

0

19

51

- 1

96

0

19

61

- 1

97

0

19

71

- 1

98

0

19

81

- 1

99

0

19

91

- 2

00

0

20

01

- 2

01

0

20

11

- 2

02

0

% o

f P

ipe

Le

ngt

h

Install Year

ST

RC

PVC

PE

EW

CC

BR

AC

ABS

51-200mm dia. – 8,051m 201-250mm dia. - 29,822m 251-300mm dia. - 43,996m 301-400mm dia. 29,152m >400mm dia. 109,857m



As a result the remaining useful lives based on expected asset lives are as shown in the graph below.

Figure 5.12: Stormwater Main Remaining Useful Lives

The graph above shows that there are no stormwater pipe assets past their expected lives. However, the significant length of mains within the 2012-16 window indicate that the expected lives of these mains have been adjusted over time, presumably during asset valuations. This is a mix of RC, AC, BR, EW and PVC. The PVC raises questions about the data confidence as PVC has not been available long enough to reach its expected life. Projected renewals mainly start ramping up from 2047 to 2066. The total lengths in 5 year groups are tabled below.

Table 5.4: Stormwater Projected 5 Year Renewal Groups

Renewal 5Year Val Gp Grand Total (m)

2012 - 2016 15,916.74

2017 - 2021

2022 - 2026

2027 - 2031 1,953.1

2032 - 2036 325.91

2037 - 2041 5,838.53

2042 - 2046 1,458.6

2047 - 2051 8,405.8

2052 - 2056 17,940.82

2057 - 2061 26,190.26

2062 - 2066 34,304.73

2067 - 2071 21,077.55

2072 - 2076 7,873.76

2077 - 2081 1,912.71

2082 - 2086 9,228.53

2087 - 2091 3,799.81

2092 - 2096 14,507.5

2097 - 2101 1,6828.2

2102 - 2106 22,275.25

5

10

15

20

25

30

35

40

20

12

- 2

01

6

20

17

- 2

02

1

20

22

- 2

02

6

20

27

- 2

03

1

20

32

- 2

03

6

20

37

- 2

04

1

20

42

- 2

04

6

20

47

- 2

05

1

20

52

- 2

05

6

20

57

- 2

06

1

20

62

- 2

06

6

20

67

- 2

07

1

20

72

- 2

07

6

20

77

- 2

08

1

20

82

- 2

08

6

20

87

- 2

09

1

20

92

- 2

09

6

20

97

- 2

10

1

21

02

- 2

10

6

21

07

- 2

11

1

Len

gth

(km

)


ST

RC

PVC

PE

EW

CC

BR

AC

ABS



Renewal 5Year Val Gp Grand Total (m)

2107 - 2111 11,042.52


Non Pipe Assets The Non Pipe Assets consists of stormwater pump stations (10) and has a total replacement value of $20,267,300.00.

Figure 5.13: SW Pump Station 5 Year Renewal Groups

There are assets with a total value of $1,780,000.00, which has reached the end of its expected useful lives. This is a combination of pipework, pumps, starters/vfds, control equipment and structures. The 2012-26 period show that a further $1,996,200.00 worth of assets will reach the end of their expected lives during this five year period. The value of assets past their expected useful lives or nearing their expected useful lives make up 19% of the total stormwater pump stations asset value. The Non Pipe assets past their expected useful lives appear to be mainly low criticality assets where an approach of “run to failure” is best appropriate practice.

5.2.2 What is it worth?

The total stormwater pipe asset value (replacement cost) as recorded in the 2012 Asset Valuation totals $132,862,164.00. The replacement costs associated with the mains reaching the end of their expected lives are graphically represented below.

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

Pumpstations - Structure Pumpstations - Starters/VSD Pumpstations - Pumps Pumpstations - Pipework Pumpstations - Outfall

Pumpstations - Generators Pumpstations - Culverts Pumpstations - ControlGear Pumpstations - Building



Figure 5.14: Stormwater Main Replacement Costs

The graphic above shows the 15.9 km main that has reached the end of its expected life. This is purely based on the expected lives and does not include any condition based assessments, which may indicate that the expected asset life may be extended. Enquiries to NCC regarding this 15.9km of pipe showed there was no supporting data regarding condition of the pipe. The reviewers opinion, based on discussion and operational record review is that this pipe represents a data cleansing issue rather than a renewal issue. This will need to be checked and verified in time by NCC. The total costs in 5 year groups are tabled below.

Renewal 5Year Val Gp Grand Total ($)

2012 - 2016 10,279,048.54

2017 - 2021

2022 - 2026

2027 - 2031 853,397.8

2032 - 2036 143,844.61

2037 - 2041 3,726,177.85

2042 - 2046 649,866.66

2047 - 2051 4,536,523.34

2052 - 2056 11,150,362.38

2057 - 2061 15,646,269.76

2062 - 2066 21,107,007.83

2067 - 2071 12,627,234.83

2072 - 2076 4,399,480.24

2077 - 2081 868,757.39

2082 - 2086 4,992,319.45

2087 - 2091 1,950,558.71

2092 - 2096 8,230,285.4

2097 - 2101 12,075,396.76

2102 - 2106 14,442,370.21

2107 - 2111 5,183,262.28

Grand Total 132,862,164.00

5,000

10,000

15,000

20,000

25,000

20

12

- 2

01

6

20

17

- 2

02

1

20

22

- 2

02

6

20

27

- 2

03

1

20

32

- 2

03

6

20

37

- 2

04

1

20

42

- 2

04

6

20

47

- 2

05

1

20

52

- 2

05

6

20

57

- 2

06

1

20

62

- 2

06

6

20

67

- 2

07

1

20

72

- 2

07

6

20

77

- 2

08

1

20

82

- 2

08

6

20

87

- 2

09

1

20

92

- 2

09

6

20

97

- 2

10

1

21

02

- 2

10

6

21

07

- 2

11

1

Re

pla

cem

en

t C

ost

($

00

0)

Years (5 yr groups)

ST

RC

PVC

PE

EW

CC

BR

AC

ABS



The projected renewal requirements are presented in Figure 5.15: Projected Stormwater 100 Year Renewal Requirements. This shows the projected renewal requirements for the next 100 years.

Figure 5.15: Projected Stormwater 100 Year Renewal Requirements

Over the next 100 years the projected renewal requirements (based purely on expected asset lives) for the piped stormwater assets will total $132,862,164.04 this results in a projected annual renewal requirement of $1,328,621.64. Historically over the past 5 years, the renewal investment on the stormwater network has been approximately $400,000 per year. As outlined above it is the reviewer’s opinion that the spike showing in the next 5 year block is a data cleansing issue. This will need to be verified in time by NCC.

5.2.3 What is its condition?

There is limited information available on the condition of stormwater piped assets.

Figure 5.16: Stormwater Annual Maintenance Results

$0.00

$200.00

$400.00

$600.00

$800.00

$1,000.00

$1,200.00

1 4 7

10

13

16

19

22

25

28

31

34

37

40

43

46

49

52

55

58

61

64

67

70

73

76

79

82

85

88

91

94

97

10

0

Re

ne

wal

Re

qu

ire

me

nt

x 1

00

00

Year

Annual Total

100 Year Average

0

50

100

150

200

250

300

Clear pipe and conduitblockages (including

connections)

Clear beach outfalls Redcliff 1 PS Days Unavaliable Redcliff 2 PS Days Unavaliable

2007/08

2008/09

2009/10

2010/11

2011/12

2012/13




Clear pipe and conduit blockages reduced from 40 (2007/08) to 25 (2012/13)

Clear beach outfalls reduced from 82 (2008/09) to 45 (2012/13)

The annual maintenance data is limited and does not provide adequate information to link maintenance with asset attributes (material, size, etc.) in order to do trending and compare whether specific asset materials are showing an increase/decrease/static trend of maintenance activities.


All infrastructure assets will deteriorate with age and use. Careful operation and maintenance will control the deterioration rate and monitor the performance of assets over time. A good asset management program will anticipate future renewal/repair needs over analysis periods that are consistent with the lives of the infrastructure assets. For equipment and facilities, schedules can be established that set forth periodic repair/refurbishment activities over the life of an asset, and replacement at the end of its life cycle. Analysis of the information indicates that the NCC piped and non-piped assets are in relative good condition. There is 7.2% of the total piped assets which are at the end of its expected life within the 2012 -16 window. It is important to note that this is only based on “expected lives” and maintenance information is limited and not adequate to link this to condition of mains e.g. breaks/material and or breaks/km/year, etc. Furthermore the fact that PVC pipes, which should be nearing the end of its expected lives much later, appear within this window suggests that asset data may need cleansing. The next steps needs to include but not limited to:

increased & improved analysis of maintenance records

a ‘true’ understanding of the replacement profile (i.e.) not on age alone to include considerations such as condition and risk profiles;

condition assessments

performance


o size (capacity)

o material (I/I)

o cover/depth

o maintenance

A criticality analysis of the network.

Stormwater assets are only required to perform during times of rainfall. Therefore, although the stormwater asset may technically reach the end of its expected life it may well be performing well. Deterioration levels for gravity stormwater assets are different to the deterioration levels for gravity sewer assets and pressurised water assets. Therefore renewal should be triggered by a failure of rapid decline in service performance. The 2012 AMP states “Assets are renewed when they can no longer provide the required level of service at an acceptable level of risk. To determine future renewal requirements, condition based renewal profiles have been established for various asset categories and then adjusted to allow for performance based renewals.”

5.2.5 Stormwater System Summary

Data cleansing and further analysis is required on the assets included in the first 5 year analysis block. It is expected that this will result in these assets being distributed across the life, age spectrum, but there is currently no information to support this expectation.

NCC is predicted to have a stormwater pipe renewal peak during the period 2050-2070. This is outside the 30 year Infrastructure Strategy analysis window.



Stormwater non-pipe assets with a total value of $1,780,000 have reached the end of their expected useful life. These appear to be low criticality assets where the current ‘run to failure’ strategy is best appropriate practice. The replacement of these assets is like to be required in the next 20 years, and together with a further $2 million of asset showing replacement in the 2012-2016 period represents approximately $4 million of non-pipe asset replacement

There is no indication of a stormwater system renewal backlog

The limited operational service history provides no indication of any major service delivery issues with the Napier City stormwater network

5.3 Water

5.3.1 What do we have

Data obtained from the 2012 Asset Valuation show that the majority of water mains consist of AC (39%), PVC (33%), CI (17%), PE (4.6%), ST (3.6%) and other minor portions of ductile iron, ABS and unknown pipe material. This is graphically represented below and the lengths of different pipe materials are listed in Table 5.5: Water Pipe Material Length.

Figure 5.17: Water Pipe Material - % of Total Length

Table 5.5: Water Pipe Material Length

Material Total (m)

ABS 2,523.16

AC 184,563.48

CI 78,841.66

CU 2.52

DI 7,660.62

GI 2,821.93

PE 21,416.09

PVC 154,838.65

ST 16,891.89

UNKN 60.51


The graph below shows that the majority of pipes 50mm diameter and smaller are mainly PVC and PE, while the pipe ranges 51mm to 200mm is dominated by AC, PVC and CI. Mains greater than 200mm make up only 8% of the total water reticulation network.

ABS 0%

AC 39%

CI 17%CU 0%

DI 2%GI 1%

PE 4%

PVC 33%

ST 4%UNKN 0%



Figure 5.18: Water Pipe Diameter and Material Distribution

The above also shows that the pipe diameter range 0 to 50mm make up 21% of the total water reticulation network, the 51 to 100mm diameter range make up 33%, the 101 to 150mm diameter range make up 30% and the 151 to 200mm diameter range make up 8%.

Figure 5.19: Water Pipe Material Installation Year

The graph above shows that between 1861 and 1950 CI was the most common pipe material installed and from 1951 to 1980 AC was the material of choice. Since 1981 the preferred materials have been PVC and to a limited extent PE. As a result the remaining useful lives based on expected asset lives are as shown in the graph below.

20

40

60

80

100

120

140

160

180

0-50 051-100 101-150 151-200 201-250 251-300 301-400 401-

Len

gth

(km

)

Diameter Range (mm)

UNKN

ST

PVC

PE

GI

DI

CU

CI

AC

ABS

0%

5%

10%

15%

20%

25%

30%

18

61

- 1

87

0

18

71

- 1

88

0

18

81

- 1

89

0

18

91

- 1

90

0

19

01

- 1

91

0

19

11

- 1

92

0

19

21

- 1

93

0

19

31

- 1

94

0

19

41

- 1

95

0

19

51

- 1

96

0

19

61

- 1

97

0

19

71

- 1

98

0

19

81

- 1

99

0

19

91

- 2

00

0

20

01

- 2

01

0

20

11

- 2

02

0

% o

f P

ipe

Le

ngt

h

Install Year

UNKN

ST

PVC

PE

GI

DI

CU

CI

AC

ABS

0-50mm dia. – 98,260m 51-100mmdia. - 153,689m 101-150mmdia. - 139,139m 151-200mmdia. 39,009m



Figure 5.20: Water Main Remaining Useful Lives

The graph above shows that there are no water main assets past their expected lives. However, the significant length of mains within the 2012-16 window indicate that the expected lives of these mains may have been adjusted over time, presumably during asset valuations. There is a significant portion of CI main (35.8km) that will reach the end of its expected life during 2012-16. It then drops to 3.2km during 2017-21, then it ramps up to 70.4km during 2047-51. This is mainly AC pipes and CI pipes reaching the end of the expected lives. The total lengths in 5 year groups are tabled below.

Table 5.6: Water Projected 5 Year Renewal Groups

Renewal 5 Year Group Grand Total (m)

1987 - 1991 12.85

2012 - 2016 39,953.5

2017 - 2021 3,258.01

2022 - 2026 6,791.58

2027 - 2031 11,545.03

2032 - 2036 21,984.01

2037 - 2041 39,883.84

2042 - 2046 32,195.38

2047 - 2051 70,415.48

2052 - 2056 34,445.26

2057 - 2061 10,896.03

2062 - 2066 1,579.36

2067 - 2071 3,256.91

2072 - 2076 32,228.13

2077 - 2081 9,606.27

2082 - 2086 10,969.96

2087 - 2091 23,979.45

2092 - 2096 22,810.03

2097 - 2101 36,279.21

2102 - 2106 25,738.76

2107 - 2111 25,230.88

10

20

30

40

50

60

70

80 1

98

7 -

19

91

20

12

- 2

01

6

20

17

- 2

02

1

20

22

- 2

02

6

20

27

- 2

03

1

20

32

- 2

03

6

20

37

- 2

04

1

20

42

- 2

04

6

20

47

- 2

05

1

20

52

- 2

05

6

20

57

- 2

06

1

20

62

- 2

06

6

20

67

- 2

07

1

20

72

- 2

07

6

20

77

- 2

08

1

20

82

- 2

08

6

20

87

- 2

09

1

20

92

- 2

09

6

20

97

- 2

10

1

21

02

- 2

10

6

21

07

- 2

11

1

21

12

- 2

11

6

21

17

- 2

12

1

Len

gth

(km

)


UNKN

ST

PVC

PE

GI

DI

CU

CI

AC

ABS



Renewal 5 Year Group Grand Total (m)

2112 - 2116 6,465.6

2117 - 2121 94.98


Non Pipe Assets The Non Pipe Assets consists of pump stations, meters, monitoring equipment, air release and control valves, buildings and structures and has a total replacement value of $5,115,700.00. The pump station assets show that there are assets with a total value of $287,900.00, which has reached the end of its expected useful lives. This is a combination of small booster pumps, electrical componentry and telemetry assets at Chaucer, Halliwell, Otara Thompson and Tannery pump stations. The 2012-26 period show that a further $1,592,300 worth of assets will reach the end of their expected lives during this five year period. This includes some large pumps and componentry. The value of assets past their expected useful lives or nearing their expected useful lives make up 37% of the total water pump stations asset value. There are $481,600.00 worth of meters (excluding bulk meters) of the total value of $783,600.00 that have reached their expected useful lives, with 410 meters ($167,700.00) not having an installation date or showing installation date as 1900. This shows there is a need for data cleansing within the asset database. There are three bulk meters and none has reached its expected useful lives. Within the monitoring equipment there are 12 sets of level sensors with a total value of $66,600.00 that have reached the end of its expected useful lives. There are no air release and control valves or reservoirs that have reached the end of its expected useful lives. The telemetry shows that the telemetry componentry at Taradale Reservoir and Severn Street have reached the end of its expected useful lives. These have a total replacement value of $112,000.00 The Non Pipe assets past their expected useful lives appear to be mainly low criticality assets where an approach of “run to failure” is best appropriate practice. Cast Iron Pipes Numerous condition assessments have been performed on the water main assets and as result Council engineers deem the Cast Iron (CI) mains to be in very good condition. Council engineers estimate that the CI mains have an estimated expected life of 100 more years. As a result the CI mains have been adjusted and this adjustment is shown in the graph below.



Figure 5.21: Water Main Remaining Useful Lives - Adjusted

This shows the CI mains in the 2012-16 window moving to the 2112-2116 window.

5.3.2 What is it Worth?

The total water main asset value (replacement cost) as recorded in the 2012 Asset Valuation totals $101,886,717.50. The replacement costs associated with the mains reaching the end of their expected lives are graphically represented below.

Figure 5.22: Water Main Replacement Costs

The total costs in 5 year groups are tabled below.

10

20

30

40

50

60

70

80 1

98

7 -

19

91

20

12

- 2

01

6

20

17

- 2

02

1

20

22

- 2

02

6

20

27

- 2

03

1

20

32

- 2

03

6

20

37

- 2

04

1

20

42

- 2

04

6

20

47

- 2

05

1

20

52

- 2

05

6

20

57

- 2

06

1

20

62

- 2

06

6

20

67

- 2

07

1

20

72

- 2

07

6

20

77

- 2

08

1

20

82

- 2

08

6

20

87

- 2

09

1

20

92

- 2

09

6

20

97

- 2

10

1

21

02

- 2

10

6

21

07

- 2

11

1

21

12

- 2

11

6

21

17

- 2

12

1

Len

gth

(km

)


UNKN

ST

PVC

PE

GI

DI

CU

CI

AC

ABS

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

20

12

- 2

01

6

20

17

- 2

02

1

20

22

- 2

02

6

20

27

- 2

03

1

20

32

- 2

03

6

20

37

- 2

04

1

20

42

- 2

04

6

20

47

- 2

05

1

20

52

- 2

05

6

20

57

- 2

06

1

20

62

- 2

06

6

20

67

- 2

07

1

20

72

- 2

07

6

20

77

- 2

08

1

20

82

- 2

08

6

20

87

- 2

09

1

20

92

- 2

09

6

20

97

- 2

10

1

21

02

- 2

10

6

21

07

- 2

11

1

21

12

- 2

11

6

21

17

- 2

12

1

Re

pla

cem

en

t C

ost

($

00

0)

Years (5 yr groups)

ABS

AC

CI

CU

DI

GI

PE

PVC

ST

UNKN



Table 5.7: Water Projected 5 Year Group Renewal costs

The projected renewal requirements are presented in Figure 5.23: Water Projected 100 Year Renewal Requirements. This shows the projected renewal requirements for the next 100 years.

Figure 5.23: Water Projected 100 Year Renewal Requirements

Over the next 100 years the projected renewal requirements (purely based on asset expected lives) for the piped water assets will total $100,927,310.70, this results in a projected annual renewal requirement of $1,009,273.31. This compares to a historical investment of $700,000 during the past 5 years.

$0.00

$100.00

$200.00

$300.00

$400.00

$500.00

$600.00

$700.00

$800.00

$900.00

1 4 7

10

13

16

19

22

25

28

31

34

37

40

43

46

49

52

55

58

61

64

67

70

73

76

Re

ne

wal

Re

qu

ire

me

nt

x 1

00

00

Year

Annual Total

100 Year Average

Renewal 5 Year Group Grand Total ($)

2012 - 2016 655,771.87

2017 - 2021 535,822.95

2022 - 2026 1,368,406.09

2027 - 2031 2,838,526.54

2032 - 2036 4,289,933.95

2037 - 2041 8,742,939.51

2042 - 2046 6,696,876.77

2047 - 2051 17,364,019.99

2052 - 2056 8,874,921.29

2057 - 2061 2,431,983.66

2062 - 2066 309,075.28

2067 - 2071 1,184,253.33

2072 - 2076 5,220,325.97

2077 - 2081 963,688.93

2082 - 2086 1,723,695.23

2087 - 2091 4,775,272.96

2092 - 2096 5,031,236.15

2097 - 2101 9,729,707.72

2102 - 2106 5,058,166.91

2107 - 2111 5,031,145.88

2112 - 2116 9,007,885.27

2117 - 2121 53,061.28

Grand Total 101,886,717.50



Moving the CI mains from the 2012-16 window to the 2112 to 2116 window takes it outside the projected 100 year renewal requirements as shown in the figure below.

Figure 5.24: Water Projected 100 year Renewal Requirements -adjusted

5.3.3 What is its Condition?

The NCC Condition Based Renewal Analysis, June 2000, Report (Beca Asset Management Services) states - the Industrial Research Ltd report suggests that the strength of the Asbestos Cement pipes is equal to that of an 'unused pipe' and that wall thickness has decreased by only 18% for pipes that are 45 to 50 years old. Experience has shown that problems occur when wall thickness is reduced by 50%. We can conclude that the condition of these representative samples is actually much better than originally thought which suggests that the base life for AC could be closer to 80 or 90 years. There has been recent concern by other Local Authorities that Asbestos Cement materials have only 30 years base life. Furthermore, when analysing the maintenance records, it was evident that there have only been a small number of call-outs relating to Cast Iron (CI) materials over the past 5-years. Therefore, based on these maintenance reports and the condition reports (Industrial Research) the proportion of CI pipes that were assessed to be in Condition Grade 3 were redistributed to 20% Grade 2, 75% Grade 3, 4% grade 4 and 1% grade 5. During 2008 Council conducted a condition assessment on a population of mains water and service connector pipes sampled from the water reticulation system. The materials of construction of the mains supply pipes included asbestos cement ('fibrolite'), cast iron, galvanised steel and mild steel. Cement-based lining was also included within a number of the mild steel specimens. The service connectors were manufactured from either copper or mild steel. The report “Napier City Council Condition Assessment of Metallic and Asbestos-Cement-Based Water Pipes” (Quest) states - The results of the metallic analyses demonstrate that pitting and graphitic corrosion of the mains pipe cast iron was widespread and significant on both the external and the internal surfaces. The greatest quantity of metallic degradation was noted to have originated from external contact with the soils. A quantity of the mains pipe mild steel specimens also exhibited pitting corrosion and, in a single instance, a pipe displayed multiple perforations. The galvanised steel mains conduits samples performed relatively well, although deep pitting corrosion was noted on one of the three samples analysed. And Quest Reliability consider that the general condition of the ferrous (iron)-based mains pipe work, i.e., cast iron, mild steel and galvanised mild steel, in place in Napier is not favourable or sustainable for the

$0.00

$100.00

$200.00

$300.00

$400.00

$500.00

$600.00

$700.00

$800.00

$900.00

1 4 7

10

13

16

19

22

25

28

31

34

37

40

43

46

49

52

55

58

61

64

67

70

73

76

Re

ne

wal

Re

qu

ire

me

nt

x 1

00

00

Year

Annual Total

100 Year Average



long-term, i.e. >20 years. The mild steel service connectors are likely to be viable only in the short to medium term (10 years). Perforations and significant wall thinning were noted for the ferrous specimens, even within the small population and short lengths of pipe that were examined. These observations should be assumed to be representative of the condition of the Napier reticulation system currently in-situ. In contrast, however, the condition of the copper service connector pipes is relatively good and low rates of failure are predicted. The overall results are in accord with the maintenance history showing a significant continuing number of failures requiring repair. The variable age and minor variation in local soil conditions give a reason for the continuing perforation at a relatively constant rate. However, due to the extreme range of ages of the mains cast iron (installed over dates ranging from 1880 to 1951 and mains mild steel (1910 to 1954) it is clear that rates of ferrous corrosion are generally of a low order in Napier soils. These analyses were based on the assumption that local environmental conditions have not changed appreciably in recent years and that the water characteristics are also unchanged. And If the reticulation system is run under the same pressure/flow conditions in the future as it was in the past, it was noted that pipes of the same general condition as the uncoated samples (AC) should perform as well for another 5 years. It was noted that such pipes should begin to suffer increased frequency of breakage within 5 and 25 years' time. They will become permeable in about 100 years' time and, all conditions remaining unchanged, 150 millimetre pipes should last longer than 100 millimetre pipes. The coated sample would have been expected to have had a have a 'practically indefinite' life if not sampled for analysis.

Figure 5.25: Water Annual Maintenance Results


Field inspection cards reduced from 344 (2007/08) to 297 (2012/13)

Repair rider main reduced from 346 (2007/08) to 19 (2012/13)

Repair water main (75-150mm) remained static from 10 (2007/08) to 10 (2012/13)

Repair water main (>150mm) static over the last 5 years

Replace service connection static over the last 5 years

Replace toby has increased from 36 (2007/08) to 116 (2012/13)

Repair service connection has reduced from 279 (2007/08) to 256 (2012/13)

Planned and unplanned shutdowns increased

0

50

100

150

200

250

300

350

400

2007/08

2008/09

2009/10

2010/11

2011/12

2012/13



The annual maintenance data is limited and does not provide adequate information to link maintenance with asset attributes (material, size, etc.) in order to do trending and compare whether specific asset material are showing an increase/decrease/static trend of maintenance activities.


All infrastructure assets will deteriorate with age and use. Careful operation and maintenance will control the deterioration rate and monitor the performance of assets over time. A good asset management program will anticipate future renewal/repair needs over analysis periods that are consistent with the lives of the infrastructure assets. For equipment and facilities, schedules can be established that set forth periodic repair/refurbishment activities over the life of an asset, and replacement at the end of its life cycle. Analysis of the information indicates that the NCC piped and non-piped assets are in relative good condition. There is 8.5% (based on length) of the total piped assets which are at the end of its expected life within the 2012 -16 window. It is important to note that this is only based on “expected lives” and maintenance information is limited and not adequate to link this to condition of mains e.g. breaks/material and or breaks/km/year, etc. The next steps needs to include but not limited to:

increased & improved analysis of maintenance records

a ‘true’ understanding of the replacement profile also considering condition and the risk profile;

Targeted condition assessments

Performance in relation to:


o size (capacity)

o material (quality)

o cover/depth

o maintenance

A criticality analysis

A run to failure strategy can be applied to most of the low criticality assets as the consequence of failure is not major and the costs of ongoing condition monitoring may outweigh the costs of failure. This strategy should be applied to all low criticality assets. A risk and condition based strategy should be applied where there is a significant implication due to failure, such as a major health and safety risk, significant reliability of supply consequence or significant expense in repair (high criticality assets).

5.3.5 Water System Summary

NCC cast iron pipe showing age related replacement in the first 5 year block had remaining life adjusted to 100 years for this analysis. This adjustment was made following discussion with NCC staff, examination of records, and examination of representative pipe samples. The results of this adjustment are shown in the analysis graphs as ‘adjusted’ results

NCC is predicted to have a water pipe renewal peak during the period 2040-2060. This is absolutely typical of New Zealand cities and represents the end of asset life of the post WW2 development of New Zealand cities

There is no indication of a water system renewal backlog

The operational service history provides no indication of any major service delivery issues with the Napier City water network



5.4 Roading

The Napier road network predominantly consist of urban roads with some rural road on the fringes of the city boundary. Most of the roads would be low volume roads on a relatively flat topography except for roads on Scinde Hill, Poriate and Otatara Heights. Most of the roads could be classified as low volume roads due to relatively low traffic numbers and loading. As a result the deterioration of the network would be slower compared to most other networks, with most of the investment needs focused around the preservation of the surface conditions. However, a targeted rehabilitation programme has been successful in improving on the general roughness of the network.

5.4.1 The Make-up of the Napier Road Network

The Napier road network consist of approximately 384km roads. Table 5.8 summarise the breakdown of the network classified between urban and rural roads for sealed, concrete and unsealed roads. The majority of roads are sealed roads in the urban environment.

Table 5.8: Napier Road Network Length (Opus, 2013a)

Table 5.9 summarises the traffic distribution across the network. More than 2/3 of the network carries less than 2,000 vehicles per day thus classifying the network as predominantly low volume roads.

Table 5.9: Traffic Classes per Network Length (Opus, 2013a)

Figure 5.26 illustrates the distribution of surface types for the Napier road network. Chip seals make up 80% of the network, which is expected given the traffic distribution. It should be noted that most of New Zealand city councils use asphalt surfaces on too many of their roads thus increasing their maintenance costs. Napier City’s uses the appropriate surface technology for their traffic distribution, thus resulting in more efficient maintenance cost expenditure on their road network. This aspect is further discussed in Section 5.4.4.



Figure 5.26: Distribution of Surface Type on the Network (Opus, 2013b)

5.4.2 Assessed Value of the Napier Network

The Napier Roading assets are valued at a total of approximately $323 million replacement and $151 million depreciated replacement costs respectively. Table 5.10 summarises the outcome from the 2013 valuation of the road assets. From this it is noted that the roads (formation plus pavements plus surfaces) would be, by far, the most valuable asset of this group, naturally also requiring the highest maintenance costs.

Table 5.10: 2013 Valuation Results for Road Assets

Replacement Cost Depreciated

Replacement Cost

Berm $ 4,362,000.00 $ 4,362,000.00

Road Formation $ 23,013,000.00 $ 23,013,000.00

Pavement Surface $ 40,332,000.00 $17,856,000.00

Road Pavement $ 114,865,000.00 $ 41,693,000.00

Drainage $ 24,036,000.00 $ 8,917,000.00

Surface Water Channel $ 32,292,000.00 $ 17,198,000.00

Footpath $ 40,638,000.00 $ 19,613,000.00

Signs $ 1,599,000.00 $ 800,000.00

Foot Bridges $ 1,019,000.00 $ 860,000.00

Street Lights $ 20,562,000.00 $ 11,417,000.00

Minor Structures $ 534,000.00 $ 361,000.00

Traffic Signals $ 1,506,000.00 $ 361,000.00

Railings $ 1,179,000.00 $ 590,000.00

Traffic Facility $ 16,000.00 $ 8,000.00

Islands $ 1,569,000.00 $ 784,000.00

Bridges $ 14,980,000.00 $ 3,146,000.00

Features $ 313,000.00 $ 157,000.00

$ 322,815,000.00 $ 151,136,000.00



It should be noted that Napier has spent a considerable effort improving the data for the valuation of their assists. Conclusions from this section could therefore be made with confidence.

5.4.3 Condition of the Napier Road Network

The road network condition has been assessed on the basis of the pavement condition (roughness) and surface (age and surface integrity). Road roughness is one of the indicators of over-all pavement performance. It should however be realised that many networks such as the Napier City network also have a significant built-in roughness. Factors that contribute towards a higher expected roughness of the network are:

Topography – Not only is the roughness on hilly terrain higher due to the geometry, but it is also well known that roughness measurements in winding conditions tends to be biased/higher due to the technical functioning of measurement equipment

The pavement types (thin flexible chip seals) in Napier also tend to have higher roughness values compare to say asphalt surfaced roads

In some areas geological conditions may cause elevated roughness on roads. The geological make-up of the Napier network is not known for this phenomenon

It is therefore expected that the roughness of the Napier network would be higher compared to other cities, yet it is also noted that the roughness is relatively stable over time with only minor deterioration observed. Figure 5.27 illustrates the roughness for the respective traffic classes. Observations from this figure confirm a reduction of roughness for increased traffic volumes – i.e. busier roads are smoother. It is also observed that the rural network is smoother for most traffic classes compared to the urban network. The subsequent section will confirm a significant reduction in roughness on the network for the past couple of years. This reduction resulted from a targeted maintenance programme that addressed specific locations with high roughness on the network. As a result there has also been an over-all roughness reduction on the network.

Figure 5.27: Roughness Distribution of the Napier Network (Opus, 2013b)

Figure 5.28 shows the distribution of surface age on the Napier network. For the surface types and traffic loading on this network one would typically expected a median surface life in the order of 8 to 12 years. The figure indicates the Napier network to have a much younger surface lives than that. Given the size of the Napier network care must be taken in interpretation of the surface age profile as this often could follow a cyclic pattern. For example, the network may have received relatively high resurfacing rates during the past say 5 years and will have a relatively younger surface age distribution at this stage. Naturally, one would expect a lower resurfacing rate for the next few years that would be followed by an increasing age of the surfaces.



Figure 5.29 supports this cyclic pattern of surface condition of the network. This figure shows the current and forecasted surface integrity index (SII), a composite index giving the over-all condition of the network surface condition (Fawcett and Henning, 2001). This figure shows a noticeable reduction in the SII over the next three to five years that may well be followed by a slight increase in SII that would be associated with a lower resurfacing rate in the medium to short-term. Over-all though, the Napier network has a relatively good and improving surface condition, thus suggesting sufficient and effective levels of maintenance investment. The sustainability aspects of the Napier roading investment are discussed in the subsequent section.

Figure 5.28: Distribution of Surface Age on the Napier Network (Opus, 2013b)

Figure 5.29: Current and Forecasted Surface Condition Index (Opus, 2013b)

5.4.4 Sustainability of Road Forwards Works Programme

This section answers two questions from a condition performance perspective:

1. Is the maintenance investment levels on the road network at a sufficient level to ensure a steady sate performance of the network, i.e. that the network does not deteriorate beyond sustainable condition levels; and,



2. Is the network maintained according to appropriate Level of Service (LoS) that would typically be acceptable for a network of this make-up?

The information presented in this report confidently supports a positive response to the first question. It has been established that the deterioration of the Napier network is low due to the traffic loading. At the same time, both the over-all surface and pavement condition have been improving and is still improving. There is therefore no doubt that the maintenance investment into the network has been sufficient. For the second question, only the roughness would be considered as it has already been indicated that the surface condition of the Napier network is in a very good state. As indicated earlier, the Napier network does have a higher built-in roughness. Figure 5.30 and Figure 5.31 both indicate that the current roughness levels are well below the national statement of intent. Figure 5.30 show the percentage of the network above roughness threshold levels, while Figure 5.31 show the smooth travel exposure, which is a function of roughness levels and the traffic volume subjected to the given roughness.

Figure 5.30: Percentage of the Network Above Roughness Threshold Levels

Figure 5.31: Smooth Travel Exposure Levels of the Napier Network

Although the roughness above threshold (Figure 5.30) shows roughness levels below the national statement of intent, it is also observed that in the past these levels were exceeded. The isolated high roughness on a network is important because while motorist may not feel an average higher roughness value, but isolated high roughness areas are significantly noticeable to the driver. This is a specific Napier issue that can be explained by considering the full distribution of the roughness - Refer to Figure 5.32. This figure shows the roughness distribution for the respective road classes. Where the bulk of the Napier network has a relatively low roughness, there is a long “tail” to the roughness distribution



indicating some roads having significantly isolated roughness. However, this issue has already been addressed using a targeted maintenance programme that proved to be effective. Council is encouraged to continue along this strategy.

Figure 5.32: Full Roughness Distribution of the Napier Network

Henning et al (2013) has considered expressing road maintenance investment efficiency by considering the condition outcomes in relation to the over-all maintenance investment per traffic volume. Figure 5.33 shows the resulting plots for the NZTA Peer Group B, which Napier is part of. In these plots the outcome measures considered are over-all pavement condition, smooth travel exposure and accidents. Most efficient councils would be in the top left corner of the efficiency plots i.e. best possible outcomes for the lowest investment levels. It is observed from the plots that the Napier network achieved excellent efficiencies compared to the other councils in this peer group. This is a significant finding that suggests lower investment levels for better or similar condition outcomes compared to other networks. There is no single factor that results in this outcome but it would normally be a combination of the following factors:

The network may be cheaper to maintain as it deteriorates slower than other networks. The slow deterioration would be a function of traffic volume, climatic condition and in-situ soil conditions. This factor is true for the Napier network

Effective and efficient maintenance practices result in efficient maintenance expenditure. As Napier applies state-of-the-art asset management processes for the planning of road maintenance, the evidence of resulting condition outcomes is clear. For example Napier has been using dTIMS to assist with maintenance planning for the past 14 years

Appropriate design and construction standards for prevailing conditions. Napier has maintained the appropriate standards for the traffic volume of this network. Refer to Section 5.4.1

All the evidence from this section therefore signals that the maintenance investment level on the pavement and surfaces for the network is at an appropriate level.



Figure 5.33: Road Maintenance Efficiency Plots (Henning et al, 2013)

90

92

94

96

98

100

102

0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000

All sealed road expenditure (2009/10)/vkt

Pavement Integrity Index (PI) 2009/10Peer Group B

Invercargill City

Napier City

Nelson City

Palmerston North City

Papakura District

0.8

0.82

0.84

0.86

0.88

0.9

0.92

0.94

0.96

0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000

All sealed road expenditure (2009/10)/vkt

Smooth Travel Exposure (STE) 2009/10Peer Group B

Invercargill City

Napier City

Nelson City


Papakura District

0.068

0.088

0.108

0.128

0.148

0.168

0.188

0.208

0.228

0.248

0 10,000 20,000 30,000 40,000 50,000 60,000

All Road Related Expenditure (2009/10)/vkt

Crash Cost ($M) per 100M vkt 2009/10Peer Group B

Invercargill City

Napier City

Nelson City


Papakura District



5.4.5 Sustainability of Roading Related Assets

Other related roading assets such as road signs and other furniture are replaced and maintain on the basis of operational needs. The forecasting of the maintenance investment for these assets are therefore undertaken using valuation assessments. Based on the findings from Section 4.0, the investment into other roading assets are appropriate.



6.0 INVESTMENT ANALYSIS

The analysis in Section 4.3 provided a comparison of forecasts to the theoretical programme. Section 5.0 examined forecasts based on asset condition, operations and renewal analysis. These different analysis methodologies developed tow views of the same base asset data, with depreciation and expenditure forecasts added in Section 4.0. The combination of the analysis provides a view of Napier CC past and future infrastructure investment, and predicts the issues likely to develop over the next 30 year period.

6.1 Renewal Forecasts for 30 year Future Investment Period

It was noted in Section 3.4 in a selected comparison of Napier City Council 2012 financial data and analysis that:

Napier City Council has very low debt when compared with peer Councils. This shows in the total debt and debt per ratepayer, and flows into the very low debt servicing charges

Napier City Equity per Ratepayer is above average for both city and metro group. This indicates a sustained long term investment in assets

This is a highly enviable position, and provides Napier City a large amount of future scope to raise debt, if required, to fund infrastructure or other community agreed projects. Napier City has a wide range of future options to fund asset renewals as required. From the analysis Renewal Forecasts for the next 30 years can be made.

6.1.1 Wastewater

14-15km of earthenware pipe renewals (4% of total network) may be required in the next 5 year period. This level of renewals can be incorporated into existing programme levels, and budgets, and does not represent a backlog. Further information will be required to verify the requirement for these renewals

NCC is predicted to have a wastewater pipe renewal peak during the period 2030-2060. This is absolutely typical of New Zealand cities and represents the end of asset life of the post WW2 development of New Zealand cities

There is no indication of a wastewater system renewal backlog

Operational service history provides no indication of any major service delivery issues with the Napier City wastewater network

6.1.2 Stormwater

Data cleansing and further analysis is required on the assets included in the first 5 year analysis block. It is expected that this will result in these assets being distributed across the life, age spectrum, but there is currently no information to support this expectation.

NCC is predicted to have a stormwater pipe renewal peak during the period 2050-2070. This is outside the 30 year Infrastructure Strategy analysis window.

$4 million of non-pipe asset replacement is predicted in the next 20 year period

There is no indication of a stormwater system renewal backlog

The limited operational service history provides no indication of any major service delivery issues with the Napier City stormwater network



6.1.3 Water

NCC cast iron pipe showing age related replacement in the first 5 year block had remaining life adjusted to 100 years for this analysis. This adjustment was made following discussion with NCC staff, examination of records, and examination of representative pipe samples. The results of this adjustment are shown in the analysis graphs as ‘adjusted’ results

NCC is predicted to have a water pipe renewal peak during the period 2040-2060. This is absolutely typical of New Zealand cities and represents the end of asset life of the post WW2 development of New Zealand cities

There is no indication of a water system renewal backlog

The operational service history provides no indication of any major service delivery issues with the Napier City water network

6.1.4 Roading

It is observed that the Napier network achieved excellent efficiencies compared to the other councils in this peer group. This is a significant finding that suggests lower investment levels for better or similar condition outcomes compared to other networks. All the evidence from Section 5.4 therefore signals that the maintenance investment level on the pavement and surfaces for the network is at an appropriate level.

6.2 Renewal Programme Comparison with Financial Provisioning

6.2.1 Wastewater

With renewal expenditure projected to peak between 2030 and 2060, there will be a corresponding need to increase rates during this period. This is based on NCC’s current methodology of funding renewals as they are projected to occur rather than funding depreciation in advance

This ‘pay as you go’ approach should ensure that future renewals are funded (assuming rate increases are affordable, or spikes in renewals can be funded by debt). However, it may disadvantage future ratepayers at the benefit of today’s ratepayers.

6.2.2 Stormwater



6.2.3 Water

As noted in Section 4.2 above, the theoretical renewals programme shows an immediate requirement (in 2014) for approximately $9M of renewal expenditure. This is primarily attributable to a substantial cohort of pipes recorded in the 2011 valuation as having a remaining useful life of three years. After discussion with NCC, it was agreed that the remaining useful life for these pipes could be extended by 100 years. A second analysis was completed on this basis. For the unadjusted (original) data, the cumulative renewal expenditure planned in the 2012-2022 LTP is approximately $5M less than the theoretical cumulative renewal expenditure. However when the CI pipe lives are adjusted, the planned renewal expenditure during the LTP is in excess of the theoretical requirement




This ‘pay as you go’ approach should ensure that future renewals are funded (assuming rate increases are affordable, or spikes in renewals can be funded by debt). However, it may disadvantage future ratepayers at the benefit of today’s ratepayers

6.2.4 Roading

Assuming an appropriate renewal reserve is built up as per NCC’s current methodology, sufficient funding should be available to invest in the renewal of roading assets well into the future (i.e. over the life cycle of NCC’s roading asset base)

Considering the long term, cumulative picture, Napier City Council appears to be well positioned

6.3 Investment Analysis Conclusions

6.3.1 Wastewater

Apart from the earthenware pipe assets noted above (which merit further investigation), there is little evidence to suggest that Napier City Council has been underfunding the renewal of its wastewater assets. Likewise, the planned funding of renewals over the 2012-2022 LTP is approximately in line with projected renewal requirements over this period

The analysis suggests a potential future renewal funding gap beginning in 2040 which will need to be funded by the community in an efficient and equitable manner

6.3.2 Stormwater

Apart from the pipe assets noted above (suggested data cleansing required, which merits further investigation), there is little evidence to suggest that Napier City Council has been underfunding the renewal of its stormwater assets

6.3.3 Water

There is little evidence to suggest that Napier City Council has been underfunding the renewal of its water supply assets. Likewise, the planned funding of renewals over the 2012-2022 LTP is approximately in line with projected renewal requirements over this period

The analysis suggests a potential future renewal funding gap beginning around 2045 which will need to be funded by the community in an efficient and equitable manner

6.3.4 Roading

There is little evidence to suggest that Napier City Council has been underfunding the renewal of its roading assets





7.0 FINDINGS AND CONCLUSION

7.1 Findings

Finding 1: No backlog of renewals There is no apparent backlog of asset renewals. The possible exception to this statement is the old earthenware wastewater pipe showing in the first 5 years of the analysis which may require renewal in this period. Further information will be required to confirm the status of this pipe. Finding 2: Assets can provide current service levels All available information taken together in the analysis suggests that NCC assets are in sufficient condition and sufficiently maintained to provide currently specified service levels over the next 10- year LTP period. Finding 3: NCC has adequate funding provision for current renewal needs.

Finding 4: Wastewater System theoretical renewals, expenditure increases substantially beginning in 2030 which will require a corresponding increase in funding

With renewal expenditure projected to peak between 2030 and 2060, there will be a corresponding need to increase rates during this period. This is based on NCC’s current methodology of funding renewals as they are projected to occur rather than funding depreciation in advance.


Finding 5: Stormwater System theoretical renewals, expenditure increases substantially beginning in 2050 which will require a corresponding increase in funding



Finding 6: Water System theoretical renewals, expenditure increases substantially beginning in 2040 which will require a corresponding increase in funding


This ‘pay as you go’ approach should ensure that future renewals are funded (assuming rate increases are affordable, or spikes in renewals can be funded by debt). However, it may disadvantage future ratepayers at the benefit of today’s ratepayers. Finding 7: NCC Roading management is currently meeting service levels, national requirements, and has been evaluated as efficient and cost effective when compared to peer group. Finding 8: NCC Roading provides ‘value for money’ through slightly rougher roads than other urban networks



NCC has a predominantly low volume chip sealed road network, which is appropriate, but does result in slightly rougher roads (at less cost) than some other New Zealand urban networks. This is a deliberate ‘value for money’ service level delivery strategy by NCC, a strategy that provides agreed service levels.



7.2 Conclusion

This report has provided a thorough examination of Napier City Council Wastewater, Stormwater, Water System and Roading Network assets, within the limitations of the assumptions and information available. An audit approach has been taken to the information provided by Napier City Council. Initial information was requested and provided from NCC reports, audited financial statements, and information systems. Where questions/issues were raised in the analysis these were provided to NCC and either resolved or have remained in the report. The authors are satisfied with this approach and the completeness of the information provided and analysed. The report has examined past asset renewals, projected future renewals, current depreciation funding provision, and future projected depreciation provision. Minor issues and questions have been discovered in the analysis. These have been noted in the report, and have been raised with Napier City Council management. In many cases NCC already has programmes underway to address the issues, however sufficient data was not available for the report. The authors expect NCC will address remaining issues in their on-going asset management programmes. This report addresses the uninformed comment that has suggested ‘that Napier is underfunding infrastructure renewals, delaying asset replacement and failing to plan and prepare for future growth as a means to lower rate levels and ensure debt remains low’. Following the analysis developed and presented, the authors of this report categorically disagree with this uniformed comment. The findings of the report outline that Napier:

Has very low debt levels and higher than average equity per ratepayer, and as a result is in a highly enviable position compared to most city councils in New Zealand

Is sufficiently funding current asset renewals

Has no observable backlog of renewals

Has assets that can provide current service levels

May require funding adjustments for Wastewater Systems in 2030, Water Systems in 2040 and Stormwater Systems in 2050 (possibly raising a concern about intergenerational equity)

May have wastewater earthenware pipe renewals to complete in the next 5 years. If required these renewals can be achieved within current budgets and programmes. Further investigation and engineering analysis will be required to verify these potential renewal requirements

Has a roading network that is managed in a cost effective and efficient manner when compared with peer group Councils

Has a roading network that is sustainably managed to provide current service levels

Has well developed growth plans that are in accordance with the regional Heretaunga Plans Urban Development Strategy. The Napier City Essential Services Plans that support this growth planning are the equivalent of New Zealand best practice for a city this size

The picture the authors have built up during the analysis completed in this report is that Napier City assets are professionally managed in accordance with appropriate practice, and that Napier is very well positioned to meet any future infrastructure related growth or renewal challenges.

Ross Waugh Director Waugh Infrastructure Management Limited

Tom Lucas Director Rationale Limited

Dr Theuns Henning Consultant





8.0 REFERENCES

Fawcett, G., Henning, T.F.P. Pradhan, N .P. and Riley, M. (2001). The Use of Composite Indices as Resurfacing Triggers. Fifth International Conference on Managing Pavements. Seattle, USA. Henning, T. F., Costello, S. B., & Tapper, M. (2013). Performance indicator analysis and applying levels of service: NZ Transport Agency research report (529). Wellington: NZTA. Retrieved from http://www.nzta.govt.nz/resources/research/reports/529/index.html Opus. (2013a). 2013 Re-Valuation of Roading Assets. Napier City Council. Opus. (2013b). dTIMS Pavement Deterioration. Napier City Council. Mitchell, L.N. (2013). 2013 Local Government League Table.





9.0 APPENDIX

9.1 Assumptions and Review Limitations

9.1.1 Assumptions

Key assumptions are listed in Section 2.0. The report had to answer two questions to resolve the issue.

1. Is the current investment at sustainable levels?

The authors had sufficient information to answer this questions.

2. Does NCC maintain acceptable service levels compared with other NZ cities of this size.

The authors had sufficient information to answer this question in Roading, as there are nationally available datasets that provide the comparative information. This information is not sufficiently available for Wastewater, Stormwater and Water, and the assumption had to be made that the long standing service levels were acceptable and comparable. This was noted in the Key Assumptions.

9.1.2 Review Limitations

An audit approach has been taken to the information provided by Napier City Council. Initial information was requested and provided from NCC reports, audited financial statements, and information systems. Where questions/issues were raised in the analysis these were provided to NCC and either resolved or have remained in the report. The authors are satisfied with this approach and the completeness of the information provided and analysed. A limitation of this approach is that it is a desktop exercise and generally physical assets were not checked. Exception checks were completed on the water system cast iron pipe samples, which were sighted, and the wastewater earthenware pipe CCTV records, which were analysed. NCC engineering staff were also interviewed and questioned where necessary for additional information to resolve issues that were being examined. The review team included very experienced asset managers with extensive local government experience. The team were satisfied the information provided for review was consistent, and represented the best information available to NCC.

9.2 Roading Peer Group Comparisons

Checks were made from nationally available roading data sets in Napier City Council performance data against peer councils. These checks have been used to validate the NCC provided condition information, and to determine (within the limitations of the comparison data sets) that NCC assets are performing at accepted levels compared with their peers.



The Roading Indicators included below show roading performance is relatively steady and not out of step with comparable authorities.

Appendix Figure 1: Smooth Travel Exposure – Peer Group B

http://ipond.nzta.govt.nz/reporting/performance/workspace/ihtml/OpenDoc?DocInstanceID=2&DocUUID=0000013eca4bba33-0000-0dd5-0a120385&DocVersion=1&isSmartcut=true Data extracted 9/1/2014

Appendix Figure 2: Pavement Integrity Index – Peer Group B


http://ipond.nzta.govt.nz/reporting/performance/workspace/ihtml/OpenDoc?DocInstanceID=2&DocUUID=0000013eca4bba33-0000-0dd5-0a120385&DocVersion=1&isSmartcut=true






Appendix Figure 3: Condition Index – Peer Group B






9.3 Information Provided by Napier City Council

9.3.1 Information Requests by Review Team

This following information will be required from Napier CC to allow completion of this analysis:

Historical valuations (for up to 10 years if available), in detail, electronic form

Current valuations, in detail, electronic format

Valuation forward projections if available, in detail, electronic format

Extract of current asset registers (access to RAMM) for analysis in detail. Inclusion of critical asset analysis where held

Extract of fault history for analysis in detail

Extract of asset condition history for analysis in detail

Permission to access RAMM and dTIMS records and models

Summary of utilities capacity models and projections of growth related expenditure projections as available

Summary of actual financial provisioning for infrastructure renewals, depreciation and capital funding. This will allow analysis and comment on modelled requirements verses actual provisioning

Summary of renewals and capital expenditure over the past 10 years

Examination of representative Cast Iron water pipe samples

Analysis of CCTV records for earthenware pipe in the ‘age based’ renewal for the next 10 years

9.3.2 Limitations on Information Provided

The review team has not audited or checked the base information:

No checks have been made on actual asset condition in the field

Checks have not been made on NCC databases for the accuracy of asset information

Condition data provided for utilities is not linked to specific pipes, but is network wide

Documents

Infrastructure Management - Napier, New Zealand · Infrastructure Management, Rationale and Dr Theuns Henning. ... benchmarking of service levels against peer New Zealand cities to