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With respect to flood protection, and in particular the LWWCS, scheme assets were originally designed and built on the basis of funding from the beneficiaries, plus generous central government grants. The local share of Scheme costs was met by the landowners within the direct benefit area, based on the land protected from flooding, and served by the pump stations, floodgates and improved drainage service.

The Asset Management Plan developed by Environment Waikato in 1997 identified several issues:

• The scheme classification focused on benefit and took no account of wider contributors to scheme costs.
• The scheme provides benefits to parties not covered by the benefit classification system.
• Government funding for main channel maintenance was due to cease in 2003.
• The Tongariro Offset Works Agreement was due to cease in 2003.
• No mechanism existed for recovering the private benefit portion of the cost of managing and maintaining the Community Works assets.
• It was considered desirable that the individual rating systems for various sections of the scheme should be amalgamated so that the different classes of benefit were the same across the whole scheme.

These issues are some of the drivers in the development of Project Watershed.

Considerable work has already been undertaken by Council, particularly in the area of Soil Conservation, to develop and agree funding policies with the community.

Environment Waikato’s experience with the promotion of soil conservation indicates that financial incentives not less than a third of total cost (say 30 percent) are needed to encourage property owners to proceed with new soil conservation programmes. Accordingly a funding policy that requires landowners to fund 65 percent of new works currently exists. In addition to this, the landowner share of funding, as set out in Asset Management Plans and Land Improvement Agreements, is currently either 65 percent or 66 percent for both capital work and maintenance, except Lake Taupo which is 50 percent. Finally Transitional Agreements (which expire in about 2007) for Lake Taupo and Upper Waikato require landowners to pay 20 percent.

For existing works, a departure from existing policy in relation to asset maintenance (i.e. an increase) will create major community backlash and complicate the legal obligations under Land Improvement Agreements. For capital work, an increase in the landowner share over present policy has fewer implications, in that it would not compromise any legal agreement. However, it would create inconsistencies and be less administratively simple.

Adoption of the 65 percent level for landowner share (50 percent for Lake Taupo) has the value of being consistent with the Riparian Management Strategy (Clean Streams), thus minimising confusion at an operational level and assisting with administrative processes.

Council has an established policy that requires the landowner(s) to fund 75 percent of the capital expenditure for flood protection and river management works and 65 percent of soil conservation works that are primarily of local benefit and are not considered to be essential to provide protection or benefit to the wider community. The basis of this policy is that the construction of local flood protection schemes, river management or soil conservation works provides significant economic benefits to the landowner that will increase the capital value of the landowner’s property.

Council considered that in terms of section 122G(c) of LGAA, after modification to reflect existing soil conservation funding policies, the allocation effectively and appropriately promotes Council policy.

Council will continue its established policy that requires the landowner(s) to fund 75 percent of the capital expenditure for flood protection and river management works and 65 percent of soil conservation works.