A change in methodology led to the assets being valued at $2.4 billion, but this was revised down to $1.6 billion during the auditing process.
Much of the difference seemed to rest on how challenging the city’s terrain should be considered to be for the city’s network.
The council essentially ended up accepting the loading applied to terrain was a bit steep.
The value of Three Waters assets has assumed heightened importance amid government reforms that would result in councils losing direct control of such assets.
The reforms prompted the Dunedin City Council to re-examine how the assets were valued and it brought in an external valuer.
In the previous financial year, the council decided the methodology should be based on current replacement costs, rather than historical replacement costs.
Audit New Zealand then required the valuation to be peer-reviewed.
Audit and risk committee independent chairman Warren Allen commented at a council meeting last week it was a "very subjective area".
It also took considerable time and other councils were in the same boat.
Thrashing out the value of Three Waters assets was one of two key reasons for approval of the council’s 2022 annual report being late this time.
The other was showing compliance with drinking water standards.
As Cr Cherry Lucas observed, the annual report is supposed to be signed off before Christmas.
"Santa obviously passed on the parcel to Easter Bunny to deliver," she said.
Cr Lucas noted the delay was no reflection on council staff.
One upshot of the valuation revision is the depreciation expense will not be as high as had been signalled in February.
The change in valuation methodology had pushed up the assets’ value by about $1.3 billion, resulting in a depreciation expense that could not be realistically absorbed and so the council was headed for an unbalanced budget for 2023-24.
It still is, but the deficit should be less than forecast.
"Depreciation for Three Waters assets in 2023-24 will be lower than signalled in February, but we will continue to run a deficit for the current year and still expect an unbalanced budget in 2023-24," a council spokesman said.
