In a 7-4 split vote led by Mayor Revell and Deputy Mayor Grant, four Thames-based Councillors, and Cr Freer (Whangamata), TCDC decided to enter the Government’s Head Start amalgamation process. We did not have to do that. The Government’s own policy calls Head Start voluntary and says councils that do not opt-in will face no mandatory change until after the 2028 local elections.
Remaining a territorial authority is lawful, not defiant. It preserves TCDC’s ability to compare stand-alone, Eastern Waikato and Northern Bay of Plenty options.
The Waihou-Piako-Hauraki-Coromandel Head Start proposal that Mayor Revell and Deputy Grant champion, asks ratepayers to accept the direction first and price it later. It is the cart in front of the horse. It is all backwards.
Its financial section carries warnings that should stop any triumphalism. The preliminary figures exclude water services, do not constitute an opening balance sheet and do not establish a quantified net saving.
1. Debt
One table estimates net debt of $108.9m at June 30, 2027; the independent model elsewhere starts FY(for year ending) 28 at $216m and projects $348m by FY34. Those figures use different assumptions and inclusions – the very reason a binding baseline matters.
The same model reports an indicative net present cost of $450 for each ratepayer (rating unit) through FY34, an indicative benefit of about $700 only through FY28-40, and break-even in FY37. It assumes operating efficiencies of 4-6% and integration costs equal to 30% of “amenable” operating expenditure.
A forecast benefit more than a decade away is not proof that a Thames, Whitianga or Whangamatā ratepayer will pay less, receive more, or avoid cross-subsidy.
1.1. Transaction Costs
Meanwhile, the MoU says each council meets its own costs, with shared consultants, legal and financial reviews and consultation potentially divided one-third each. TCDC ratepayers are therefore funding the work needed to discover the bargain’s material terms after TCDC has already surrendered any leverage and accepted exclusivity.
1.2. Hauraki DC Partnership or Bail-Out
A partnership with Hauraki brings real infrastructure and financing pressures. Hauraki’s Water Services Delivery Plan records $58m of water-service borrowing at June 30, 2024, and forecasts $122.8m of water-related debt at transfer to Waikato Waters on July 1, 2027.
HDC’s status quo modelling forecasts water net debt of $92.7m, $126.3m and $127.1m over 2024/25-2026/27, with shortfalls against a 280% debt-to-revenue limit of $46.6m, $72.9m and $60.7m respectively. HDC says the Paeroa wastewater-treatment upgrade drives the rise. It has publicly acknowledged road-renewal costs are higher than previously accounted for – lifting roading depreciation from $5.3m to $9.7m, and that parts of its 117-kilometre footpath network are deteriorating.
HDC carries almost half of the three councils’ gross debt (49.6%) while only representing 21.6% of combined residents and 21.8% of rateable units. In debt servicing alone (essentially paying interest), Hauraki spends more than 2.5 times as much as us per rateable unit (HDC 2026/27 finance cost $5.7m = $457/rateable unit, v TCDC $182/rateable unit).
Based on the Government’s just-announced 2-4% rate-capping policy, HDC may indeed be a candidate for one of the few rate-cap model exceptions: “Financial Difficulty”, allowing Councils at risk of financial distress to increase rates above the target range.
Above is not an allegation of insolvency. It is a due-diligence fact pattern from which TCDC ratepayers need protection. Most HDC drinking water and wastewater debt is intended to be transferred under separate Waikato Waters agreements. Precisely because it is separate, TCDC needs the terms before tying its structural future to two existing shareholders.
“HDC may indeed be a candidate for one of the few rate-cap model exceptions: “Financial Difficulty”, allowing Councils at risk of financial distress to increase rates above the target range.”
2. Water
The filed proposal says Hauraki and Matamata-Piako are Waikato Waters shareholders. TCDC is not a shareholder at establishment. It leaves future ownership, funding and accountability to be confirmed.
The executed MoU contains no water clause. It does not settle TCDC asset valuation, transferred debt, share allocation, guarantees, pricing path, service standards, capital prioritisation, stranded assets, stormwater or the approvals of existing shareholders and lenders. Waikato Waters already has seven shareholder councils and operates under its constitution, shareholders’ agreement and council transfer agreements. “Equal terms” is not a transaction document.
3. Diluted Coromandel Voice
The democratic risk is equally concrete. This proposal will replace existing territorial and regional arrangements with one mayor, 12-15 councillors and only four to six local boards across 5,232 KM2 and 93,500 people. It does not promise that Coromandel will retain its current five local (community) boards. Ward boundaries, membership, delegations, funding and even Māori representation that we overwhelmingly voted to remove only 10 months ago all remain undecided.
That matters because the authority-wide body will decide the matters that shape household exposure over decades: financial strategy, debt capacity, major infrastructure sequencing, regulatory policy and ownership of council-controlled organisations. A local board can be highly visible yet fiscally subordinate. Accessibility is not control. Consultation is not a vote on the balance sheet.
More strikingly, the proposal admits its principal risk: local boards may have formal representation without enough authority, funding or organisational support. Any promise that boards may set local targeted rates and make meaningful decisions depends on bespoke legislation not yet written. Under the Government’s policy, that legislation is the mechanism that would create the new unitary authority. Until its powers and funding formula are fixed, “strong local voice” is branding, not a legal right.
4. A Flawed, Backwards Process
Mayor Revell and Deputy Mayor Grant chose a process was chosen that settles direction now and substance later.
In my opinion, that is not commercial courage; it is option-value destruction. TCDC contributes a geographically dispersed rating base twice the size of Hauraki and a third larger than Matamata-Piako, major visitor demand and costly coastal infrastructure. We should negotiate from that strength, not donate it.
No further commitment should occur without an audited opening balance sheet, asset-condition and renewal-gap registers, property-level rates modelling, enforceable legacy-debt rules, completed Waikato Waters terms, statutory local-board powers and formula funding, and a unilateral withdrawal gate before legislation becomes irreversible.
Until then, staying a territorial authority is not doing nothing. It is refusing to make ratepayers underwrite a merger whose price, protections and local voice remain unfinished.
What do you think?
◾️This is my private opinion. It is NOT written in my capacity as an elected Mercury Bay Ward District Councilor. Flemming is a laywer and businessman living in Mercury Bay.
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