Council Minutes 9th March 2010
40.8
Strath Hub Wastewater Infrastructure (Confidential)
File Ref:
Officer (full name):
Officers Consulted (full name):
Strategic Plan Outcome Nbr:
Budget Allocation:
Chart of Account:
ESD Impact/Benefit:* Environmental:
* Social:
* Economic:
9.24.1
GMIP&D – Neville Styan
CE – John Coombe, GMES – Simon
Grenfell, CWMS Coordinator – Craig
Ostigh
3.3.2 and 3.3.4
n/a
Budget Spent to Date:
n/a
n/a
Job Number:
n/a
Ensures wastewater is treated and reused
in an environmentally sustainable manner
Provides a service to Strath Hub property
owners consistent with other users in the
township
Provides additional annual income to
Council in the form of annual service
charges
REPORT
Background
The privately owned and operated wastewater infrastructure within the Strath
Hub Precinct was originally constructed in 2005 to service allotments in the
Residential (Strathalbyn North) Policy Area (22) including the Strath Hub and
Aberdeen Park residential developments. A sister company Strath Water Pty Ltd
was set up by the Strath Hub developers to maintain and operate the wastewater
infrastructure within the policy area.
With the commencement of stage 3 of the Aberdeen Park land division, the
existing Strath Hub wastewater treatment plant has now reached its capacity of
1250 EP (equivalent persons).
Strath Hub Wastewater Treatment Plant Upgrade
To accommodate the proposed Breamer Heights subdivision (ultimately 270
allotments) on Paris Creek Road and other smaller developments within the
Residential (Strathalbyn North) Policy Area (22), increases in treatment plant
capacity, wastewater storage and irrigation areas will be required. In a report
prepared for Strath Water Pty Ltd, Consulting Engineers URS has identified the
requirement for the following upgrades:
 Increase of treatment plant capacity from 1250 EP to 2600 EP
 Increase of storage lagoon capacity from 8ML to 12 ML
 Increase in irrigation area size (currently 5.1 Ha Lucerne hay irrigation)
…cont’d
40.8
Strath Hub Wastewater Infrastructure (Confidential)
(continued)
Council Minutes 9th March 2010
In October 2009 the Strath Hub developers held a meeting with Council, EPA,
Department Health and DWLBC representatives to discuss the proposed
upgrade of the treatment plant and to also seek comment from the relevant
agencies regarding a proposal to construct 2 additional storage lagoons with
associated irrigation infrastructure on farmland approximately 1 kilometre north
of the policy area. Whilst approval of the treatment plant and storage lagoon
upgrades are relatively straight forward, the proposal to construct the additional
wastewater lagoons and irrigation area on farmland is classed as non complying
under current permitted land uses.
Alexandrina Council Proposal
Currently the Strathalbyn CWMS Scheme produces approximately 200
megalitres (ML) of wastewater per annum primarily from residential dwellings.
Even though residential growth in Strathalbyn has been reasonably constant
over the past 4 years, the total annual volume of effluent produced from the
township has not increased. This is predominately due to residents being more
water aware and utilising grey water for the irrigation of their gardens etc.
The Strathalbyn Racing Club and Strathalbyn Polo Club utilise recycled
wastewater for the irrigation of their grounds. Under a deal brokered with local
farmers to attain land for the construction of a storage lagoon and future
treatment plant, Council has also committed to supplying the farmer with a
portion of the township’s recycled wastewater for a period of 21 years. Unless
the total annual volume of wastewater produced from the Strathalbyn Township
increases significantly over the coming years, Council will not be able to meet
the requirements of all 3 recycled water users.
Infrastructure Planning & Design staff approached the Strath Hub developers in
November 2009 to ascertain if they had considered connecting to the Council
CWMS scheme as an alternative to undertaking upgrades of the privately owned
and operated wastewater scheme. Further meetings were then held with the
Chief Executive and IP & D staff members to discuss the issues surrounding the
transfer of Strath Water assets to Alexandrina Council.
The attainment of the Strath Hub wastewater infrastructure would ultimately
generate an estimated additional annual volume of 80 ML per year. This
additional wastewater would directly supplement the recycled water supplied to
the 3 existing parties To facilitate the connection of the Strath Hub wastewater
scheme to Alexandrina Council’s CWMS scheme, a 1.8 kilometre pumping main
is required from the wastewater pumping station on Braemer Drive to Council’s
pump station situated on Fairfield Drive. An upgrade of the Fairfield Drive pump
station would be required to accommodate the anticipated additional 220,000
litre per day inflows from the Strath Hub scheme. It is proposed that the Strath
Hub wastewater treatment plant be decommissioned and remain under the
ownership of Strath Water. Council will also require that the existing storage
lagoon be filled in with the surrounding area returned to a natural state.
…cont’d
Council Minutes 9th March 2010
40.8
Strath Hub Wastewater Infrastructure (Confidential)
(continued)
The transfer of assets would be defined under a legally binding agreement
between the Alexandrina Council and Strath Water Pty Ltd. It is proposed that
Council purchase the Strath Hub wastewater infrastructure for $0 and repay
Strath Water the equivalent of Council’s current headworks fee for each
additional allotment that connects to wastewater infrastructure contained with the
Residential (Strathalbyn North) Policy Area (22). Payment to Strath Water Pty
Ltd would be issued at the time of Section 51 clearance for each approved land
division.
Council Officers have created a set of draft conditions relating the transfer of
Strath Water assets to Council. The draft conditions include:
 Strath Water to construct a 1.8 kilometre pumping main of suitable capacity
from the Braemer Drive pump station to Council’s Fairfield Drive pump
station.
 Strath Water to pay $150,000 cash contribution towards the upgrade of the
Fairfield Drive pump station.
 Strath Water to ensure the master pump station on Braemer Drive is
adequately sized to pump the ultimate catchment to the Fairfield Drive pump
station.
 Strath water to transfer all assets free of charge to Alexandrina Council.
 Strath Water to transfer all land parcels containing pump stations to
Alexandrina Council.
 Strath Water to transfer all drainage easements to Alexandrina Council and
undertake certificate of title amendments.
 All annual sewer charges to be transferred to Alexandrina Council.
 Strath Water to transfer ETSA services to Alexandrina Council.
 Strath Water to provide water service to each pump station and transfer to
Alexandrina Council.
 Strath Water to undertake modifications to pump station telemetry systems to
ensure consistency with Council telemetry system.
 Strath Water to decommission wastewater treatment plant and associated
infrastructure.
 Strath Water to fill in existing 8ML wastewater storage lagoon and return site
to a natural state.
 Strath Water to ensure vehicular access to each pump station.
 Alexandrina Council to undertake audit of Strath Hub infrastructure prior to
transfer of assets.
 Alexandrina Council to formulate legal transfer agreement.
 Any future use of treated wastewater within the Residential (Strathalbyn
North) Policy Area (22) to be negotiated with Council.
 Alexandrina Council to pay Strath Water Pty Ltd the equivalent of Alexandrina
Council’s current headworks fee at the time of issuing Section 51 clearance
for each approved land division.
…cont’d
Council Minutes 9th March 2010
40.8
Strath Hub Wastewater Infrastructure (Confidential)
(continued)
It is estimated that an additional 500 allotments will be created over the next 10
years which could connect the Strath Hub precinct wastewater scheme.
Approximately 390 of the additional allotments are external to the Strath Hub
developers and would therefore require the payment of headworks fees to Strath
Water.
Any existing and future income derived from annual service charges would be
paid directly to Council. It is estimated that ultimately $280,000 per annum would
be paid to Council from the residents in the form of annual service charges.
Identified Assets and Valuations
Under the Local Government Act, Councils are required to quantify, value and
depreciate their assets. Based on plans supplied by Engineering Consultants
HDS Australia, Strath Water currently owns the following assets:
Asset Type
Gravity Drain
Pumping Main
Pump Chamber
Asset Type
Pumps
Electrical Cabinets
Electrical PLC
Vent pipes
Manholes
Allotment Connections
TOTAL
Length/
Number
6891.78
1012.63
3
Length/
Number
6
3
3
3
118
242
Unit Rate
$120/m
$118/m
$13,989 ea
Unit Rate
$4,045 ea
$6,545 ea
$9,829 ea
$9,381 ea
$2,837 ea
$553,ea
Total Value
$830,184
$119,116
$41,968
Total Value
$24,269
$19,636
$29,487
$28,143
$334,755
$133,807
$1,561,364
Design Life
70 yrs
70 yrs
35 yrs
Design Life
15 yrs
35 yrs
35 yrs
30 yrs
50 yrs
70 yrs
Annual
Depreciation
$11,860
$1,702
$1,199
Annual
Depreciation
$1,618
$561
$842
$938
$6,695
$1,912
$27,327
Alexandrina Council brownfield asset unit rates were applied to Strath water
assets to determine annual depreciation amounts to ensure consistency with
Council’s current asset valuation methodologies.
Impact to Residents – Annual Fees and Charges
Currently 242 allotments pay annual charges to the Strath Water Company.
Strath Water charges on a sliding scale based on the property valuations issued
by the Valuer General. It is proposed that Strath Water customers would be
transferred to Councils flat rate model of $359 per connected property and $269
per unconnected property (09/10 adopted annual charges).
Examples of the impacts expected due to a change in charging models are
outlined below:
Strath Water Annual
Alexandrina Council
Property Valuation
Charge
Annual Charge
$100,000 (vacant land)
$298 minimum charge
$269
$350,000 (house + land)
$647.16
$359
$450,000 (house + land)
$729.93
$359
…cont’d
40.8
Strath Hub Wastewater Infrastructure (Confidential)
(continued)
Council Minutes 9th March 2010
Financial Modelling
The following table calculates the expected income derived from annual charges
(Alexandrina charging model) assuming growth rates experienced during 20062008. The table also factors in operating costs, maintenance costs and annual
depreciation amounts to determine the financial viability of the scheme.
After a 10 year period it is expected that a total of 542 allotments will be
connected to the Strath Hub wastewater scheme and paying annual charges.
Over the 10 year period Alexandrina Council is expected to make a net gain of
over $1M from operating the scheme.
Year
20092010
20102011
20112012
20122013
20132014
20142015
20152016
20162017
20172018
20182019
20192020
TOTAL
Operating
Costs eg
electricity
etc
Maintenance
Costs
$73,288
$12,000
$20,000
$282
$87,788
$12,600
$21,000
$28,693
$25,495
$396
$297
$103,556
$13,230
$22,050
$30,128
$38,148
25
$416
$311
$120,680
$13,892
$23,153
$31,634
$52,002
30
25
$436
$327
$139,258
$14,586
$24,310
$33,216
$67,146
216
30
25
$458
$343
$159,392
$15,315
$25,526
$34,877
$83,674
181
241
30
25
$481
$360
$181,192
$16,081
$26,802
$36,621
$101,688
186
266
30
25
$505
$379
$204,773
$16,885
$28,142
$38,452
$121,293
191
291
30
25
$530
$397
$230,258
$17,729
$29,549
$40,374
$142,605
196
316
30
25
$557
$417
$257,781
$18,616
$31,027
$42,393
$165,745
201
341
30
25
$585
$438
$287,480
$1,845,447
$19,547
$170,481
$32,578
$284,136
$44,513
$388,229
$190,843
$1,002,601
Number
Vacant
Lots
Number
Dev
lots
Additional
lots
created
Additional
houses
built
Conn
Annual
Charge
Unconn
Annual
Charge
151
91
30
25
$359
$269
156
116
30
25
$377
161
141
30
25
166
166
30
171
191
176
Income
Annual
Charges
Depreciation
costs
$27,327
Conclusion
From financial modelling it can be shown that the scheme is financially viable
using Alexandrina Council’s charging model. Council would also gain an
immediate benefit from the capital contribution of $150,000 towards the upgrade
of the Fairfield Drive pump station. In addition the ultimate development of 720
allotments within the Strath Hub precinct would generate an additional 216,000
litres of effluent per day which can be treated and utilised on high-value sites
including the Strathalbyn Racecourse, Ness farmland and the Strathalbyn Polo
Club.
…cont’d
40.8
Strath Hub Wastewater Infrastructure (Confidential)
(continued)
Net Gain
$13,961
Council Minutes 9th March 2010
ACF10137
Moved Cr Alan Oliver Seconded Cr Judith Woolford:
1) That Council endorse the actions of the Chief Executive and General
Manager Infrastructure, Planning and Design regarding the proposal for
the transfer of Strath Water assets to the Alexandrina Council.
2) That Council approve continuing negotiations with Strath Water Pty Ltd
regarding the transfer of wastewater assets and the creation of legally
binding transfer documentation.
3) That Council authorise the Mayor and Chief Executive to sign and seal
all documentation associated with the transfer of Strath Water assets to
the Alexandrina Council.
4) That the report remain confidential for a period of twelve (12) months
under Section 90 (3) (d) (i) of the Local Government Act 1999.
5) That the minute remain confidential for a period of twelve (12) months
under Section 90 (3) (d) (i) of the Local Government Act 1999.
6) That Neville Styan be the responsible officer to review this item at the
end of the confidential period.
CARRIED