Massive council loan to cover sewerage disaster will see rates jump 14%

Michael Sainsbury.

Residents of the Hawkesbury who use the council sewage system will see their rate rise 14% next financial year to cover the cost of a $35.1 million loan taken out by the council in December last year, an equivalent to about one third of the HCC annual budget.

The loan was taken to pay for a massive repair and sewerage removal bill that dates back to January 2021 when a section of the sewer known as Rising Line C was damaged. The sewerage rates rise comes at a time when people are struggling with the cost of living driven by 7% inflation and rising power bills.

The Hawkesbury Post has also learned that the council is in talks with Sydney Water to take over its sewerage plant as it is now the only metropolitan council in New South Wales that owns and runs its own sewerage service. This denies it the economies of scale of major systems such as Sydney Water. 

Following the flood in March 2021, Rising Main C ultimately failed in January 2022 and was then impacted upon by a further four floods during 2022. The rising main itself was commissioned on 23 March 2023 and is finally now in operation, despite council management telling council in January it would be fixed by Jan 23.

There are still minor works being finalised, including rectification works, which are expected to be completed before the end of financial year.

“The amount spent as at 15 May is $25.3 million and current projections are for the final cost to be $32.1 million. The loan was taken out in December 2022 for the amount of $32.5 million,” HCCC General Manager Elizabeth Richardson told the Hawkesbury Post in response to questions.

Council management has refused to divulge who has provided the loan but annual repayments are about $1.5 million over 20 years, including interest, Councillor Eddie Dogramaci told the Hawkesbury Post.

But the real bill could be as high as $42 million which is more than one third of the Hawkesbury City Council’s $117 million annual budget for 2022/2023. Dogramaci said council had been told there would be a further $9 million in bills.

Dogramaci claims the massive bill could have been avoided was largely due to council’s mismanagement of the process  – both at a management and council level – from the beginning when he warned them that what appeared to be a standard repair job would blow out. He also said he was denied access to contracts for the repair and sewerage hauling which was costing $100,000 per wee. The initial tender only attracted two bids due to its modest size but the winners have now scored a jackpot.

“Suddenly a $500,000 project became $2.7 million,” Dogramaci said “and then it kept growing and growing and growing out of control.” He claims that the council waited until he was overseas and unavailable to take on the loan.

The bill to fix the Windsor sewer could be as high as $42 million.

The lengthy sewerage repair process – and its potential mishandling –  is adding to the growing mess concerning sewerage in the Hawkesbury. Due to financial constraints, the HCC is requiring new developments to install their own sewerage systems. Other residents who cannot be connected to the system remain on regular “pump out” tanks and others with larger blocks on septic tanks, leading to an uneconomic patchwork of services.

“Council has had to fund this interim cost and with evidence now demonstrating the damage was a result of the March 2021 flood, an official letter was sent to the NSW Government on 28 February 2023, requesting funding assistance through urgent inclusion of Hawkesbury City Council into the same funding program as eight councils in the Northern Rivers Region.

Council is currently engaged in ongoing and positive conversations with the relevant government authorities in this regard,” Richardson said.

She added that the length of the loan would depend on the extent to which the project costs are funded by grants, and what the remaining cost to Council is. At present, loan repayments are based on a 20-year term, with the loan able to be refinanced in December 2024 when the outcome of any funding from the State government is known.

“The repayment of the loan will be made via increased Sewer Annual Charges. It is anticipated that the residential charge would need to increase by $134 for the 2023/2024 financial year – an increase of 14 per cent from 2022/2023 to fund the additional borrowing costs, sewer operations, and reinstate the Sewer Reserve – Council’s sewer works funding pool – to a sustainable level,”  she said.