Local Government Minister Simeon Brown has decided to appoint a Crown observer to Wellington City Council following its decision to renew its long-term plan.

Brown said the government had written to Wellington City Council with the draft terms of reference and had given the council 10 working days to respond, as required by law.

Wellington Mayor Tori Whānau said she would “soon review” the draft terms of reference and discuss Brown’s decision with councillors. “I believe we accept that and work constructively with whoever is appointed.”

“Ultimately we all want an amendment to the Long Term Plan that delivers the best outcome for Wellingtonians,” she said.

Brown’s colleague Nicola Willis described the council as “collapsed”.

Brown’s decision to seek advice to intervene in the council’s work was prompted by the Council’s decision to reverse a decision to sell its interest in Wellington, a decision which required the council’s Long Term Plan to be renewed.

However, in his statement, Brown said there were several other issues with councils’ finances, including its decision to pay for most of its water investments through rates rather than debt, a decision that Brown said was “overcharging” Wellington City taxpayers by 700 million US dollars. the next ten years.

“I am concerned about Council’s ability to manage the Long Term Plan amendment and adoption process following its recent decision to rewrite its 2024-2034 Long Term Plan,” Brown said.

“Under Part 10 of the Local Government Act 2002 (the Act), I have powers of assistance and intervention in relation to a local authority that has a problem. Following the advice of officials, I have discovered that there is a serious problem within Wellington City Council that requires the government to appoint a Royal Observer,” he said.

“The advice provided to me by the Home Office highlights that the Council is not using its balance sheet properly to maintain critical infrastructure such as water and is failing to properly manage its insurance risks. These risks have increased due to the recent decision to amend the Long Term Plan,” Brown said.

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He said the DIA’s findings “found that the Board has demonstrated an inability to understand the mechanisms it has to manage the financial pressures it faces.”

“This includes the Council’s decision in its long-term plan to use rates revenue to pay for water infrastructure upfront, rather than make appropriate use of debt financing. Water Done Well’s local funding mechanisms provide additional debt cushion for Wellington City Council to address under-insurance issues.

“The Department’s recommendations highlight that the long-term plan 2024-2034 shows that Council net borrowing for water services will increase by just $66 million to fund this investment (6 per cent of the total), with the remaining $1.10 billion will be capital investments. it is proposed to finance it through rates (94 percent of the total),” he said.

It is unclear whether the Council could have made better use of the Local Water Done Well funding mechanisms in its long-term plan as they were developed and announced relatively recently.

Whānau said the situation should be seen as an opportunity for the council to put past differences behind it and develop a coherent plan for Wellington.

The decision not to sell our minority shares in the airport to address growing insurance exposure meant that we had some difficult decisions to make in the coming weeks and months.

“I am focused on addressing our insurance risks without raising rates,” Whanau said.

“Further, I have no intention of cutting projects that are critical to the growth and sustainability of our city.

“For me, this means protecting our social housing and continuing to fund water and key climate initiatives,” she said.

Whānau said it would continue to work with councilors to amend the Long Term Plan and provide certainty to Wellingtonians.