Last Friday, in response to our post the previous day reproducing the Official Information request replies, the following e-mail was sent to elected council members and staff:
Good afternoon all
You may have seen or heard about the article posted on the Waikanae Watch blog yesterday referring to an Official Information Request response that my team have compiled for [us] recently regarding funding for Housing for Older People. https://waikanaewatch.org/
While the information provided in the letter, which has been published on the blog site, is technically correct in terms of the first two questions asked, (total income versus maintenance costs) it does not paint a fuller and more accurate picture of the funding model used for this portfolio of work.
[Our] blog asserts that the housing portfolio brings in more than it costs. This is not correct. When all of the indirect costs such as depreciation, rates, insurance, staffing costs and other internal allocations are attributed, the portfolio recovers only approximately 80% of total cost for service. This percentage of course varies year on year depending on the maintenance and refurbishment work we undertake in any given year, however is in line with our current Revenue and Finance Policy.
While our response to the LGOIMA was technically correct, in hindsight I could have avoided the slant this blog has taken by providing a fuller response than just to those questions asked.
As always, please feel free to contact me if you have any questions arising.
Kind regards
James Jefferson
Group Manager Place & Space
Te Kaihautū Takiwā, Waahi hoki
Clearly, the KCDC is anxious to dispel the idea that the units make a profit; but what does it mean by “indirect costs such as depreciation, rates, insurance, staffing costs and other internal allocations”?
What does maintenance and and refurbishment do, if not deal with depreciation? The two aren’t the same; maintenance means tradespeople fixing things like plumbing, wiring, guttering, cracked paths and the like; refurbishment is at the least replacing old fixtures and fittings with new ones, maybe redecorating. It probably won’t be comprehensive, though: unlike a retirement village, the council won’t be seeking increased unit valuations so it can charge the next tenant more.
Perhaps the council views deterioration and depreciation as two different things? Does it apply a fixed depreciation rate to all the units regardless? In standard accounting thought, with buildings this is 1% of the original cost a year, but that is an arbitrary thing and not necessarily real.
Rates? The council would be paying rates to itself — unless it has to remit the portion that goes to the Wellington Regional Council, regardless.
Insurance, yes, but what does the council insure — a basic fire and extraneous perils policy, the cheap form of insurance; or comprehensive full replacement?
Staffing costs — does this mean having someone go around making periodic inspections, plus the cost of billing and receiving payments, receiving maintenance requests and arranging for a tradie?
In any event, the council’s accounting team seem to have decided upon revenue being only 80% of costs. That is reflected in the OIA response that Cr Jackie Elliott got in May on the subject:
Jackie Elliott doesn’t think much of the standard of the units: “The market rents would be minimal for a one or two bedroom sized semi-detached unit, usually without a carport or garage. They are pretty pitiful inside and out, all need a major upgrade including double glazing and new floor coverings. And all over 30 years old.”
Your editors can’t verify the comment about them being “pitiful inside and outside” from first hand experience, but it’s apparent that they can at least be described as basic and dreary.
What the council is careful to omit is any consideration of appreciation of the land values, which would be quite significant and almost certainly well in excess of the alleged bottom line ‘deficit’ figures in response to question 2 shown in the Official Information response above.
Why is the council worried? Probably because it wants to sell them off, which we suspected was the case in a post in April last year.
Thank you for posting this information Mr Editor as this is an important issue for our community. More so the attempts for six years by David Scott, as councilor, and I, to get council to withdraw from sale, any suitable piece of council owned land to build Kapiti’s first Abbeyfield Pensioner housing facility that would house 14 of Kapiti’s pensioners who are not resourced enough (with an own home) to buy their way into a retirement village. I joined David for 3 years in AbbeyfieldKapiti and faced the same stonewalling by KCDC management. There are plenty of these pensioners in Kapiti, relying on the goodwill of private landlords, (when they can afford market rents on a pension) and as my husband and I watched and tried to help, last trieniumm, two beautiful pensioners who we both cared for, died in waiting. Mr J… died of diabetic complications and infection while trying to continue working a 40hr week as a supermarket shelf stacker, and living in a two room converted container in a motor camp. Beautiful Ms Dot,Waikanae widow of a former senior registrar general of the Reserve bank of New Zealand, was turfed out of her ‘forever rental’ after she was given permission by her landlord to do it up, and did such a good job that her landlord put it on the market to sell. She died of shock, weeks later. This is the reality for the poorest of Kapiti’s pensioners. Many are ‘poor’ through no fault of their own, remember the many New Zealand Investment companies that collapsed during the 90’s? They took so many of our lovely pensioners ENTIRE pension savings, and lost them in stock market crashes. These are some of the people we are trying desperately to care for. I will face up to any threat against our ‘low rent council owned pensioner housing’ and I will demand those in power at KCDC are publicly accountable for any loss of public ownership of our social housing. As small and modest as they are, they are secure. They are homes. And KCDC provides them for the most vulnerable and the most treasured pensioners in our community. Do not forget that ever KCDC.