Council plan to revalue land assets ‘questionable’

THE Auditor-General’s Office is warning Kapiti Coast District Council against plans to revalue its land assets as its borrowing nudges close to the limit.

Council debt stands at $149 million this financial year, and it faces the possibility of breaching its borrowing limit.

But, if it could raise the value of its assets, it could borrow more.

The council voted unanimously last week to revalue the land under its roads, which is expected to add about $300m to its assets.

Councillor Ross Church said the roads were last valued in 2002, and its decision was taken to comply with ‘‘best practice’’.

He emphasised that the move was not to allow more borrowing, and that its borrowing levels were already included in the proposed District Plan.

But mayoral candidate Gavin Welsh wrote to the Auditor-General’s Office, which advised him that it does not agree with the council’s action.

‘‘Although land under roads is required to be recorded as an asset, it does not need to be revalued,’’ the office replied. ‘‘There is a cost to revaluing regularly. In our view, the benefits of revalu- ing of land under roads are questionable, particularly given there is no agreed methodology for valuing such land.

‘‘We do not consider it best practice for local authorities to revalue land under roads.’’

Mr Welsh said ratepayers were being fed ‘‘a lemon’’, and called on the mayor and councillors to reverse the decision.

Council chief executive Pat Dougherty said it would seek urgent guidance from its auditors, Ernst & Young, and the Auditor-General’s Office. ‘‘Clearly there is an issue here that needs clarification. We won’t be the only local authority now requiring clarification. That correspondence carries implications for a number of local authorities, and not just us.’’

A meeting had been arranged with Ernst & Young and a representative from the Auditor-General’s Office, he said. ‘‘Depending on the outcome of that meeting, and given the letter sent to Mr Welsh, my council may well want to revisit this issue when it meets on August 29.’’

Council finance group manager Warwick Read said other councils had been revaluing land under their public roads for some time without attracting adverse comment from their auditors or the Auditor-General’s Office.