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Long-Term Plan rates implications

Opinion Piece

What’s on in council this week

by Larry Foster

Larry Foster

The council Long Term Plan (LTP) community consultation continues this week with a Chamber of Commerce business after-5 event at Awarua Council Chambers on Wednesday from 5pm to 7pm. The LTP consultation then travels up the coast to Tokomaru Bay for a community hui on Thursday at the Haven from 6pm to 7.30pm. The Gisborne city event is on Saturday, April 10 at the Rose Garden by the Lawson Field Theatre from 9am to 2pm. These events have been well patronised so far, so make sure you get to one which is close to you to listen and have your say.

We have set a 6.5 percent maximum cap rates increase for the next three years of our LTP to help play catch-up on previously very low rate increases, and to help fund our big proposed infrastructure projects, like our wastewater treatment plant upgrade to name just one.

For residential city ratepayers this will be an average of a 2.2 percent rates increase. Most individual household rates will reduce, due to changes in how wastewater and stormwater are now rated. Rates for properties with multiple households or flats will increase. As an example, a single dwelling property with a 2020 valuation of $408,000 now pays $2636 annually. The proposed rate for 2021/22 will be $2694, an increase of $1.10 per week.

For rural residential properties there will be an average increase of 5.9 percent due to higher charges for the district for activities and for waste disposal at transfer stations. As an example, a property with a 2020 valuation of $192,000 is now paying $1302 in rates annually which will increase to $1378 for the 2021/22 year, an increase of $1.50 per week.

Industrial properties have the biggest average rate increase of 15.9 percent due to the higher-than-average property valuations. For example, on a property with a 2020 valuation of $995,000 the current rate is $4550 which will increase to $5238, an increase of $13.20 per week.

Pastoral land will have an average rate increase of 6.8 percent, with bigger rises for those farms with forestry blocks of 20 hectares or more, as the high cost of fixing and maintaining our roads will now be part-apportioned to farm-foresters. For example, pastoral land with a 2020 valuation of $3,815,000 now pays $6737 in rates which will increase to $7192, an increase of $8.75 per week.

Horticulture blocks have an average 13.8 percent rate increase due to licences for certain crops like kiwifruit being worth more. This is reflected in the revaluation and means an increase in rates for horticultural properties. For example, a horticulture property with a 2020 valuation of $2,740,000 now pays $5026 which will increase to $5718, an increase of $13.30 per week.

Forestry blocks have an average rate increase of 13.2 percent due to the high costs to fix and maintain our roads. This sector is charged 12 times more for roading rates than standard residential property owners. For example, a forestry block with a 2020 valuation of $41,105,000 now pays $6,226 in rates which will increase to $7049, an increase of $15.80 per week.

Our debt is also going to increase as borrowing will allow us to keep rates at an affordable level. We plan to increase borrowing to 130 percent of our income from the current 100 percent. We can borrow up to 175 percent but we want to leave some headroom in case of emergency or a major event. Our 130 percent debt level is still low compared to the average debt level for unitary councils. We expect to reduce our debt level back to 100 percent in 10 years. Debt also spreads the cost of projects over many generations and beneficiaries.