Depreciation is fully funded. The Annual Decline in Service Potential is used for determination of councils general and targeted rates for the funding of future infrastructure renewal. The valuation provides fundamental information for the Long Term Plan as required by Schedule 10 of the Local Government Act 2002. It has been prepared in accordance with “New Zealand International Accounting Standard 16 - Property Plant and Equipment” and follows the guidance provided by the National Asset Management Steering Group (NAMS) in the New Zealand Infrastructure Asset Valuation and Depreciation Guidelines, Version 2 (2006). An annual report is compiled by the asset management engineer in collaboration with the engineering managers. It is peer reviewed by an independent external valuer and scrutinised by auditors from Audit NZ. No opportunities for optimisation were identified at the current time. None of the systems are over-designed or have significant redundant capacity. The Blenheim Stormwater Strategy has been adopted. As tactical details are finalised there maybe opportunities to optimise the infrastructure for future valuations. Re-Valuation Replacement Optimised Annual Decline Year Cost Depreciated in Service Replacement Potential Cost 2001 $25,876,448 $19,623,418 $267,708 2005 $31,411,844 $22,372,989 $383,787 2008 $79,300,805 $59,659,89 8 $879,616 2009 $79,300,805 $59,659,898 $879,616 2010 $83,802,882 $55,767, 953 $970,015 2011 $90,340,962 $60,134, 069 $1,060,855 2012 $95,292,666 $63,017, 286 $1,119,349 2013 $101,236,592 $65,929, 486 $1,201,717 2014 $107,029,325 $69,132, 353 $1,275,912 Table 10 Summary of Stormwater Re-valuations 2001-14 A sharp increase in the valuation occurred in 2008 when the unit rates were re-assessed. Prices had increased as a result of high global demand and an economic boom in many international markets. Since then prices have stabilised substantially although there is evidence that the current rates are again under pressure. The rates have not been increased in response to the latest data as it is not clear if the prices are a transient spike or long term trend. In recent years the re-valuation rates have been increased by the application of an index derived from the Capital Goods Price Index as published by Statistics New Zealand. The original cost curve was established by graphing the contract out-turn costs of pipe renewals undertaken within the district. This data source is maintained and updated with all new contract costs. In 2013 and 2014 an additional 4% was added to the indexed reticulation and plant rates to cover design and supervision costs. A further 4% will be added to the plant rates in 2015 in recognition of the additional design and supervision required on complex plant installations. The introduction of the design and supervision costs was phased in over 2/3 year period to avoid a sudden price shock to the funding stream. Recent tender prices have shown a sharp increase in pipe laying costs. Whilst these have been added to the data the cost curve has not been reviewed as there is some doubt as to whether this a permanent increase in prices a transient peak. In the foreseeable future depreciation will continue to be calculated on a straight-line basis. Page 56