Daily Archives: April 20, 2016

DCC Politics : Release of Infrastructure Report #SouthDunedinFlood

Election Year : The following post is offered in the public interest. -Eds

Flooding South Dunedin June 2015 photo by Paul Allen [listener.co.nz]Photo: Paul Allen

New Report [excerpt]—
DCC Flood Report 2 (2016) excerpt

Next meeting of the Infrastructure Services Committee will be held on Tuesday, 26 April 2016 at 1:30 pm or at the conclusion of the Planning and Regulatory Committee meeting (whichever is later) – Edinburgh Room, Municipal Chambers

PUBLIC AGENDA
1 Public Forum (page 4)
2 Apologies (4)
3 Confirmation of Agenda (4)
4 Declaration of Interest (5)
PART A REPORTS (Committee has power to decide these matters)
●● 5 South Dunedin Public Infrastructure Performance during June 2015 Flood Event Follow up (6-27)
6 Recycling Markets and Bin Contamination (28)
7 Northern Wastewater Schemes’ Options (34)
PART B REPORTS (Committee has power to recommend only on these items
8 Resolution to Stop a Portion of Peel Street, Allanton (44)
9 Road Name – Three Hills Subdivision (54)
PART A REPORTS (Committee has power to decide these matters)
10 Notification of Agenda Items for Consideration by the Chair

Agenda – ISC – 26/04/2016 (PDF, 6.3 MB)
The agenda and reports are located together in this file.

Dunedin City Council – Media Release
Report on South Dunedin infrastructure performance during June 2015 flood released

This item was published on 20 Apr 2016

The report on the South Dunedin infrastructure performance during the June 2015 flood event was released today as part of the agenda for the Infrastructure and Services Committee meeting next week.

The report concludes that while a number of factors contributed, the main factor was the highest 24-hour rainfall total in Musselburgh since 1923.

General Manager Infrastructure and Networks Ruth Stokes says the report outlines the known challenges with managing the South Dunedin catchment and highlights concerns about the performance of mudtanks and the Portobello Road pumping station during the event.

“Changes in the South Dunedin catchment since the stormwater network was designed, combined with operational challenges and high ground water levels, all contributed to the effects of the extreme rainfall event that occurred in June 2015.”

Mrs Stokes says the report shows that mudtanks weren’t maintained as required. As a result, a number of steps, including a full review and retendering of road maintenance contracts have been adopted. Other measures include accurately capturing data on the status of the mudtanks, a redesign of the Portobello Pumping station screen and the development of a communications plan to inform the community of the local infrastructure challenges and how to best plan for future events.

“However, given the volume of rainfall and the system at capacity during the June event, the water would have been unable to enter the network even if all mudtanks were clear.”

She says the DCC must now look at what measures can be taken to mitigate such events in future.

The DCC will soon be engaging with the community about these issues and what the long term responses might be.

Contact Ruth Stokes, General Manager Infrastructure and Networks on 477 4000.

DCC Link

Otago Daily Times Published on Jun 4, 2015
Raw aerial video of Dunedin Flooding
Video courtesy One News.

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Posted by Elizabeth Kerr

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Delta #EpicFail : Strategic Reasons & Outrageous Logic

Election Year : The following opinion is offered in the public interest. -Eds

Delta - AuthorUphillBattle - The Books [blog.smashwords.com]

Received from Christchurch Driver [CD]
Tue, 19 Apr 2016 at 10:48 p.m.

Readers, tonight’s exposition is to examine the Dunedin City Council (DCC) worldview that does not contemplate a sale of Delta at less than $45M. Your correspondent says that will never happen on any rational economic basis, so the next best thing is to pretend that it would not be in the ratepayers’ best interests to sell at all, seemingly at any price.

However, annoyingly, logic and reasons must intrude at some point, and in the recent report on DCHL asset values, the DCC have a crack at pushing the Delta water uphill.

Agenda – Council – 11/04/2016 (PDF, 1.6 MB)
Item 22 Dunedin City Council Investments and Returns (pp 109 – 123)

Tonight, readers, we shall dwell on and allow the TWO big “strategic reasons”, the DCC propose to retain Delta, to stand in splendid isolation, while readers allow the cool chill of logic to bring these clouds of hot air back to reality.

We shall also overlay some markers over Delta’s financial figures that give support to your correspondent’s contention that Delta is at risk. (careful words needed here, readers !)

Safely camouflaged at para 55 (page 117), deep in the DCC report, the following statements appear : “If Delta were to be sold by the DCC, one likely outcome…. [it could be] purchased by a competing company in the same field. One consideration…. is the potential ‘head office’ job loss to Dunedin if Delta were to be sold to an existing company which is not locally owned.”

Stop right there, readers. The DCC say the first, most important consideration in retaining Delta is to retain the Delta ‘head office jobs’ in Dunedin. At one level we can take this to mean that the DCC are very fearful that the current occupiers of the Delta head office jobs in question would not find similar work in Dunedin. Your correspondent thinks that is a very well-founded fear. But the DCC head of economic development tells us the city is growing and it is hard to attract executive staff to the city…. it is a taxing puzzle why the authors of the report ignore their own staff…. At the next level, your correspondent is vexed at the concern shown by the DCC for the six figure inhabitants of the Delta Head Office suite. (Note, there are 70 people earning in excess of $100,000 at Delta, your correspondent guesses that the Head Office inhabitants occupy the highest echelons of those salaries). This brings a whole new meaning to the (draft) Statement of Intent requirement to be a “socially responsible …. corporate citizen”. At a higher level again, the DCC appear to say that the welfare and future of the head office positions rank ahead of the core task of providing returns to the ratepayers.

Readers, remember that DCC provide these reasons as reasons not to sell Delta even if someone paid the massive premium of 300-400% over the $15.804M shareholders equity (which is about to suffer a severe Noble induced virus).

Your correspondent is very sure these revolutionary themes of Soviet Style central planning and corporate welfarism were not intended in the Delta ‘Statement of Intent’ which is meant regulate how the company is run.

Next up as the DCC apologia for retaining Delta is the statement, “the loss of Delta from the local contracting market, particularly if through acquisition from an existing contractor, would remove an element of competition from an already limited local market”.

This is illogical. Let us count the ways:

1. If competition is “limited” then margins will be high, and demand for skilled staff intense, so any logical purchaser would leave the Delta structure alone to continue its high margin work…. but of course, if there is limited competition and Delta are not making good profits, then there is a problem…. and Delta should be sold to an entity that can generate good profits in a limited market.

2. It can be safely assumed that Delta’s local competitors Fulton Hogan, Downer, SouthRoads, Whitestone, Asplundh, Waste Management, and any of the local power contracting companies are not stupid and they would have no interest in paying the DCC $45-60M for $15.804M of equity (on a good day). If Delta expired, the limited competition just got less, and paydays all round for all left standing. Your correspondent says then that any purchaser is likely to be someone who does not have a presence in the market, and sees potential for profit in this market, allegedly with limited competition. If that were true they would leave Delta as it was, maybe even with some of its precious head office jobs, to continue their (merry and profitable ?) way. (For the time being at least).

3. The bottom line is your correspondent posits that Delta will never be sold in its current form, because its competitors know, even if DCC Treasury does not, that Banks have certain standards for lending money to companies, and an important one is the debt to equity ratio. Delta has $26.9M of debt and $15.804M of equity. That is a debt : equity ratio of 183 % which this correspondent says is far too high for a contracting company. A debt : equity of 100 % or less is usual in this sector. Another is the Liquidity (Quick) Ratio which is Current Assets / Current Liabilities. Contractors should have a minimum of 1.35 and many accountants would say 2. (What would Mr McLauchlan say ….?). Delta has $17.5M of current liabilities and just $220,000 of cash in the bank. This is one seriously undercapitalised contracting company.

Delta will no doubt say their quick ratio is fine because the accounts show $25.244M in receivables, but this includes the very non-current and very illiquid Noble debt of $13.2M. They do have $2.84M of Work In Progress (WIP) which is included under inventories. They then have proper current assets of $0.22M cash, $2.84M WIP, and $12.2M Receivables, ($25.24-13.2M) for a total of $15.08M and a quick ratio of 0.88. The bottom line is : even putting aside the elephantine $26.9M in debt, Delta have serious cash flow issues with a quick ratio of less than 1, and if they have a further problem contract, or even just a delay of a month or two getting paid on a larger contract, they are not just on a cashflow knife edge, but in serious trouble. Delta has basically no cash reserves as at June 2015. Of course, Mr Cameron did not dwell on that factoid in his report….

Readers, the quality of the excuses made in support of retaining Delta are of the same quality as the prediction of its value at $45-60M.

[ends]

█ For more, enter the term *delta* in the search box at right.

Posted by Elizabeth Kerr

1. factoid

*Image: blog.smashwords.com – AuthorUphillBattle, tweaked by whatifdunedin

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