A three-yearly revaluation of the council’s roading assets found the estimated increase of $14,3 million in the value of the council’s roads was out by $70.6 million.
The value of the council’s 1812km of roads, valued about $500 million, had in fact increased by $84.9 million over the three years, he said. The difference of more than $70 million had now been included in the council’s statement of comprehensive revenue and expense and could change how much the council needed to raise in cash to cover the roading network’s depreciation over time.
"We made what proved to be a very conservative estimate of the likely increase in value [of the council’s roads]," Mr Hope said last week.
"We just used an estimate of inflation which had been relatively low over the last couple of years — sort of 1.5%, 2%, or something — and when we’ve gone through we’ve said ‘No, some of the costs that are driving the costs of roads have increased a lot more than that.’
"Therefore the value of the roads has increased."
The increase over three years of $84.9 million in the value of council roads, which are roughly two-thirds of the value of all the council’s assets, would require a detailed report to the council on where the costs had changed and "all the implications".
"It’s a significant increase in the notional wealth of the council — it has positive implications and negative ones and we’ll go through all of that in the report," he said.
After Cr Hugh Perkins successfully argued last month for an investigation into how $100,000 a year could be cut from the council’s depreciation reserve funding, a review of the council’s depreciation funding was already part of the council’s 2018-28 long-term plan process. The draft plan is out for public consultation this month. At the time, council accounting manager Ian Wells said as at June 30 last year, the council had depreciation reserves of just over $33.4 million.
"In 2017, council’s total depreciation charge was $11.887 million, less unfunded depreciation of $3.797 million, and less $6.732 million used to fund capital and related expenditure, resulting in a net increase in the reserves for the year of $1.358 million."
