Draft 2020/21 Annual Plan - Consultation Document - Tauranga City Council
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Draft 2020/21 Annual Plan Consultation Document TAURANGA CITY COUNCIL | DRAFT ANNUAL PLAN 2020/21 | CONSULTATION DOCUMENT 1
Key dates
LET US
Public consultation: 3 April – 3 May 2020
KNOW
Submission hearings (if possible): 13-15 May 2020
what yo
Council deliberations: 2-4 June 2020
u
Adoption of annual plan: 30 June 2020
think
Online:
use the online submission form available at www.tauranga.govt.nz/annualplan2020
In person:
drop off your submission form at our 91 Willow Street service centre or at your local library
if New Zealand’s COVID-19 lockdown has ended
Email:
email it to submissions@tauranga.govt.nz. You can also email us directly with your feedback,
without needing to complete a submission form
Post:
place your completed form in an envelope and send it to this address (no stamp required):
Freepost Authority Number 370
Annual Plan 2020/21
Tauranga City Council
Private Bag 12022
Tauranga 3143
If you wish to speak in support of your submission, please let us know on your submission form
and indicate whether a day or evening hearing suits you best. Please note that the COVID-19
pandemic may affect the way we hear submissions.
TAURANGA CITY COUNCIL | DRAFT ANNUAL PLAN 2020/21 | CONSULTATION DOCUMENT 2Greetings
Welcome to the consultation document for the draft Annual Plan 2020/21.
We prepared this document during a time of economic
COVID-19
and social uncertainty.
Initially, our focus was on managing our debt and paying
for growth infrastructure like roads, water pipes and The pandemic is changing our world almost by
wastewater systems. For many years, our revenue has the day, and that makes planning difficult.
lagged behind our expenditure. To address that, we had
During a time of economic uncertainty, it’s
proposed a rates budget increase of 12.6%.
natural for ratepayers to be especially sensitive
COVID-19 changed all that. to rates increases. However, as a community,
we still have to fund the services the city
Our priority now is to prepare a budget and work plan needs to function and which people need to
that recognises the very challenging times we are thrive. This includes our water, wastewater
experiencing. and roads, but also our parks, walkways and
cycleways. We also need to consider what
We need to create a platform for recovery by investing in
would happen if we were unable to raise funds
our core infrastructure needs. Accordingly, we are now
and were forced to cancel or defer important
proposing a smaller rates budget rise of 7.6%. Although
infrastructure projects or cut back on services.
this figure might still seem high, it translates to $2.28 a
week for the median residential ratepayer and $12.13 a After all, most of the money we raise through
week for the median commercial ratepayer. rates is ultimately returned into our local
economy, and the infrastructure we invest in
In response to the impacts of the COVID-19 pandemic,
today will contribute to a better city tomorrow.
we are proposing to:
• Prioritise essential new infrastructure and not collect
additional rates to pay back existing debt
The pandemic and economic slowdown have coincided
• reduce the fixed rate portion that everyone pays to with a requirement for the council to raise debt to invest
help keep rates lower for people who own lower-value in infrastructure the city needs now.
properties
We pay for infrastructure by borrowing, because debt-
• increase the commercial rate differential only to the funding spreads the cost among the people benefiting
ratio decided in the Long-term Plan. from the assets provided over their lifetime. Low interest
We recognise we need flexibility in our budgets, so that rates have also encouraged that approach. However,
we can continue to review and respond to the challenges we’ve almost reached a key 250% debt-to-revenue
our city and residents face. That may mean we will need limit, which will restrict our ability to debt-fund vital
to further prioritise our expenditure over the next year. infrastructure investments we will need to help us to
recover from the economic impact of COVID-19 and keep
businesses going, as well as to accommodate growth.
TAURANGA CITY COUNCIL | DRAFT ANNUAL PLAN 2020/21 | CONSULTATION DOCUMENT 3We are therefore proposing to take the following During a challenging time like this, it would be
measures to address our revenue and debt imbalance: understandable if people felt our city’s problems
should ‘take a back seat’ for a while. However, if we all
• continue to investigate new ways to collect revenue, work together, it is well within our means to face our
while looking for opportunities to trim rates costs to challenges and continue to invest in a city we can all
address the impacts of the COVID-19 pandemic. We enjoy living in.
are also proposing some changes in the way rates
are charged, to ease the burden on people who are At the time we adopt the annual plan in June 2020, we
struggling financially will know more about the impacts of the COVID-19 on
our city, and will have a better understanding of the
• delaying or reprioritising some capital expenditure
revenue reductions it will bring for some of our activities
• collaborating with central government, regional (for example Bay Venues Limited). We will also have a
partners and other key stakeholders – particularly the better understanding of the opportunities the recently-
people of Tauranga – to find a sustainable way forward announced central government stimulus packages will
• exploring ways to borrow without the debt affecting provide for our city.
our balance sheet. Please take this chance to have your say on the Annual
This draft annual plan aims to progress the first three Plan 2020/21. Your feedback will help us navigate
measures. With regard to the third measure, we are through these difficult times, as we strive to meet the
already working very closely with central government needs of our city and people.
to explore other ways to pay for our city’s growth
infrastructure. We will be addressing other funding
options through our upcoming Long-term Plan 2021-31.
TAURANGA CITY COUNCIL | DRAFT ANNUAL PLAN 2020/21 | CONSULTATION DOCUMENT 4The challenges facing our city
Tauranga is New Zealand’s fastest-growing city, and Our growth challenges are complex, but they are
this presents opportunities and challenges that must be manageable. They are also not new. The growth issues
responded to, as we also deal with the significant issues Tauranga faces have been evolving over a long period
presented by COVID-19. of time.
Even in the last significant global downturn in 2008, The difficulties of managing growth are recognised
Tauranga continued to grow. As a council we need nationally, and central government has introduced
to balance the needs of the community through an measures to assist fast-growth councils.
economic downturn with the need to be able to respond
However, other approaches are still required.
to growth and support a recovery.
This draft annual plan for 2020/21 has been built on the
Growth is not something we can stop – our
following actions to address our short-term challenges:
environment, lifestyle, port, geographic location, access
to quality education and healthcare, and many other • prioritising capital expenditure by deciding which
attractions are a magnet for people and businesses projects need to be delivered in the coming year and
from all over the country. which can be deferred
In general, well-managed growth is good. It • increasing revenue, while recognising the effects rates
creates jobs, increases economic activity, expands increases will have on residents and businesses
opportunities, and can improve efficiency by spreading
• a commitment to maintaining a prudent debt-to-
costs among more people.
revenue ratio
Tauranga City Council has to create an environment for • engaging with the community and with regional and
new people and new businesses to flourish. This is not national partners about a shared approach to meeting
just an ethical obligation – we are required to do this our funding and financing challenges
by central government’s National Policy Statement on
Urban Development Capacity. • developing a plan for longer-term solutions
• recognising and addressing the impacts of COVID-19
However, paying for the infrastructure and operating
on our community.
needs of our burgeoning city will be an ongoing
challenge. We all see the effects of traffic congestion,
We acknowledge the positive discussions we’ve had
but less visible are the pressures on the city’s water
with central government ministers and officials, which
and wastewater infrastructure. We also face a land and
have helped us reach a common understanding of
housing shortage that is making homes more expensive.
growth issues and some potential solutions.
This is making it harder for people to buy homes and for
workers to move here, holding back our economy. There are encouraging signs that all parties understand
the need to find new ways to pay for growth
A big part of our budget is spent on new infrastructure.
infrastructure. However, much more work is required.
We also need to renew and maintain the infrastructure
we already have. 65% of our capital budget and 41% of We all have a stake in our future.
our operating budget is focused on water, wastewater,
stormwater and roads. We need to make good decisions now to manage
growth in our region and meet the current needs of
We also need to invest in projects that will improve our our community, while bearing in mind the actions that
city’s resilience to natural hazards and climate change will also need to be taken to address the impacts of
effects. COVID-19.
We borrow money to pay for infrastructure, because
this spreads the investment cost amongst the people
benefiting from it over time. However, we’ve almost
reached a key 250% debt-to-revenue limit, which will
restrict our ability to keep borrowing.
TAURANGA CITY COUNCIL | DRAFT ANNUAL PLAN 2020/21 | CONSULTATION DOCUMENT 5Funding challenges for growth councils
Tauranga is one of several councils facing challenges in • central government benefits the most from economic
building growth-related infrastructure while remaining growth, while local councils face legal restrictions in
financially sustainable. recovering their costs. 14 of every 15 tax dollars are
collected by central government
Independent analysts acknowledge that the funding
model for growth councils is not working, and that • local councils’ debt constraints add to this problem
the respective roles of local government and central and can prevent them from investing in public
government are poorly aligned for supporting growth in a infrastructure.
city like ours. For example:
In short, as stated by Infrastructure New Zealand,
• local councils in New Zealand build and maintain “Growth benefits flow to central, costs stay local”.
almost 40% of New Zealand’s infrastructure, primarily
The inability to invest in infrastructure means that there
local roads, pipes, and sewers, which is similar to
is a shortage of land available for housing, and as a
central government’s infrastructure responsibilities
result, land prices continue to increase. This creates a
• local councils have about 1/10th the amount of money huge challenge for building the homes we need in fast-
to spend on infrastructure that central government has growing areas like Tauranga.
The Infrastructure New Zealand - Building Regions report is available at www.infrastructure.org.nz/reports
The Productivity Commission’s report on local government funding and financing can be seen at
www.productivity.govt.nz/inquiries/local-government-funding-and-financing/final-report/
TAURANGA CITY COUNCIL | DRAFT ANNUAL PLAN 2020/21 | CONSULTATION DOCUMENT 6Council’s role in managing growth
Growth patterns over the last 20 and next 20 years
1997
2020
2040
Outside of Tauranga
Tauriko West
Te Tumu
Tauranga is an attractive city, and people will continue to We have been working on this problem with local
move here. and regional partners for years. This has resulted in
developing potential new growth areas at Te Tumu and
Growth creates many benefits. However, it also creates Tauriko West (see above map), while considering fresh
higher house prices, a lack of rental options, increased approaches to housing more people within our existing
congestion, and the need to invest in infrastructure, city footprint. The latter aspect is being explored through
community wellbeing and safer communities. our Te Papa Spatial Plan and City Plan projects.
National issues with growth and the ways local councils New land must be correctly zoned and serviced with
are funded and financed are causing significant infrastructure before homes can be built. Achieving
problems in Tauranga. this is difficult because of our city’s topography, land
The number of people living here has doubled in the ownership, and financial ability to fund the required
past 30 years and is expected to grow by at least 45,000 infrastructure.
more in the next 30 years. We are short of land for We are making progress, however.
housing and expect a shortfall of 600 homes within 1-3
years and 3,500 homes in 4-10 years. At Tauranga City Council, we have reshaped our senior
leadership and operational structure to better meet
If we do not plan well, we will end up with fragmented the city’s challenges. We have also invested heavily
suburbs, and even more pressure on our roads, water in those areas of our organisation which are dealing
supply, wastewater systems and community amenities. with growth challenges – particularly our land-use
Failure to deliver the infrastructure needed for growth planning, infrastructure planning, building and project
will make homes more costly. It will also hold back our management teams. The benefits of these changes are
economy, because workers and new businesses will not now starting to be seen.
be able to find affordable properties.
TAURANGA CITY COUNCIL | DRAFT ANNUAL PLAN 2020/21 | CONSULTATION DOCUMENT 7We intend to notify a City Plan change later this year that With that in mind, we have reviewed the capital
will enable more residential development on the Te Papa programme for 2020/21 to ensure that the projects
peninsula. This is aligned with the government’s proposed included for the next financial year are the most
National Policy Statement on Urban Development, important priorities.
which aims to remove restrictions on development so
See page 9 for more detail.
that locations with good access to existing services and
infrastructure can grow ‘up’ rather than ‘out’.
Further progress depends on delivering more
infrastructure, which is why the funding and financing
issue is a priority for us and our city.
Te Papa peninsula
R
HARBOUE
BRIDG
City centre
2
SH
TAURANGA
CENTRAL
SH 2 Memorial Park
1
BETHLEHEM TAURANGA SOUTH 5TH
(HOSPITAL AREA) AV
E
Anzac Park AVENUES
TAURANGA
SOUTH
GATE PA
9
SH2 A
29
SH
PARKVALE/
MERIVALE
Yatton Park
Greerton Village
GREERTON
WELCOME BAY
Barkes Corner SH 2
9A
36
SH
PYES PA
TAURANGA CITY COUNCIL | DRAFT ANNUAL PLAN 2020/21 | CONSULTATION DOCUMENT 8Building more infrastructure - capital projects
Draft Annual Plan 2020/21 Capital Expenditure $244 million
Transportation and travel choice Community wellbeing
Resilience
Business effectiveness
and maintaining assets
Environmental quality Land supply and housing
Community wellbeing Resilience Land supply and housing
• Bay Venues: $7m • Stormwater bulk fund and • Waiāri treatment plant: $68m
reactive reserve: $6m
• City centre streetscape: $5m • Western Corridor: $19m
• Tsunami evacuation: $2m
• Mount visitor info centre: $2m • Pāpāmoa East Interchange: $7m
• Harrisons Cut stabilisation: $2m
Environmental Business effectiveness and Transportation and
quality maintaining assets travel choice
• Te Maunga wastewater treatment • Digital services: $13m • Harington Street Transport Hub:
plant: $17m $10m
• Three waters upgrades and
• Kerbside collection: $9m renewals: $10m • Accessible Streets (Tauranga
Cycle Plan) and multimodal: $6m
• Eastern Corridor: $3m • Local roads, parking: $8m
• Western Corridor: $4m
TAURANGA CITY COUNCIL | DRAFT ANNUAL PLAN 2020/21 | CONSULTATION DOCUMENT 9We have identified a capital programme - worth about • Community wellbeing: providing amenity and adding
$244 million - that is to meet the future needs of our quality to the lives of communities
city. However, at the rates level we have set, we can not
• Resilience: researching and planning for natural
afford to do all of this work next year. On top of this, the
hazards and addressing risks to our city and people,
impact on our revenue from COVID19 is likely to further
including stormwater
affect what we can deliver. Therefore, before we finalise
the annual plan we will need to work through the capital • Environmental quality: maintaining the quality of the
programme to ensure we focus on delivering on priority environment and meeting environmental standards for
capital investment. Our updated annual plan proposes a our services, particularly wastewater and stormwater.
smaller rates budget rise of 7.6%.
The biggest project is the Waiāri water supply scheme
Recognising we can’t afford to do all the programme we and the second-biggest is the upgrade of the Te
budgeted next year, we’re including a “capital adjustment” Maunga wastewater treatment plant. These projects will
of $44 million to recognise the uncertain future of improve the quality of our environment, while serving a
capital projects. Between now and the adoption of the growing population.
final annual plan, we might need to make our capital
programme more affordable by deferring some projects. In the graph on page 9, these costs are included under
the land supply and housing category, but could equally
Much of the capital programme has been planned to appear under environmental quality.
meet the following priorities from the Long-term Plan
2018-28 (LTP): For a full list of capital projects and significant changes
from those proposed for the coming year in the LTP, see
• Land supply and housing: managing Tauranga’s the supporting financial information on our website at
population growth, housing availability and affordability www.tauranga.govt.nz/annualplan2020
challenges
• Transportation and travel choice: opening up new
areas, addressing congestion and safety, and enabling
alternative transport
Major growth projects (2020/21 costs only)
Waiāri Water Supply Scheme ($68 million) Pāpāmoa East Interchange ($7 million)
The Waiāri Water Supply Scheme is vital for This planned interchange will service the proposed Te
accommodating future growth. It will provide water Tumu development and the new Wairakei town centre by
for around 35,000 family homes, enabling both connecting them with the Tauranga Eastern Link.
intensification and the development of new areas.
Western Corridor (Tauriko) ($19 million)
Te Maunga wastewater treatment plant ($17 million) This involves several projects, including: ring road land
This growth-related project is a 30-year programme acquisitions and construction; further design and land
of works aimed at meeting the wastewater needs of acquisition for a ring road and interim State Highway 29
our growing city. Te Maunga already handles a flow improvements; and stage one delivery of the western
equivalent to that from a population of 75,000 people, corridor wastewater strategy.
and the Long-term plan is for all increases in wastewater
volumes to be directed to this treatment plant.
Progressive upgrades are already underway.
TAURANGA CITY COUNCIL | DRAFT ANNUAL PLAN 2020/21 | CONSULTATION DOCUMENT 10Rates
General rates are paid by all ratepayers. The amount Targeted rates are used to rate groups of properties, to
is determined by the capital value of your property. recognise a specific benefit they receive from an activity
Commercial and residential ratepayers used to pay the or service.
same general rates for properties of the same value,
Our wastewater and water charges are targeted rates.
however, council reintroduced a commercial differential
Wastewater is a fixed charge, while water supply
in 2018. See ‘commercial differential’ below.
includes both a fixed charge (paid by all ratepayers) and
The Uniform Annual General Charge (UAGC) is a fixed a user charge based on the volume of water consumed.
charge for each rateable property, regardless of property
For more information, see
values. We currently get one-fifth of our rates income
www.tauranga.govt.nz/rates-charges
from the Uniform Annual General Charge, which is more
than any other city council in New Zealand. It means that
people with lower-value properties pay proportionally
more of their rates through the Uniform Annual General
Charge than people with higher-value properties do,
which may not be desirable.
Proposed rates changes
What does this draft annual plan mean for my rates? The median commercial ratepayer (capital value
The median residential ratepayer (property capital value $1,070,000) would pay $12.13 a week more than they
of $650,000) would pay $2.28 a week more than they do do now. Overall, their proposed annual rates would be
now. Overall, their proposed annual rates bill, including $4989.
metered water, would be $2821.
The table on page 12 gives an indication of proposed
rates increases, for lower and higher value properties.
For a more accurate indication of how much you are likely to pay, see our rating calculator at
www.tauranga.govt.nz/property-search
TAURANGA CITY COUNCIL | DRAFT ANNUAL PLAN 2020/21 | CONSULTATION DOCUMENT 11Increase in
Capital 2020/2021 2019/2020 Increase in total rates
Residential
Value proposed rates total rates* $/pw (incl.
water)
Lowest 1% of residential $320,000 $2023 $2084 -2.9% -$1.16
Lower quartile $525,000 $2519 $2468 2.0% $0.97
Median $650,000 $2821 $2703 4.4% $2.28
Upper quartile $810,000 $3208 $3003 6.8% $3.94
Highest 1% of residential $2,400,000 $7052 $5985 17.8% $20.51
Average (mean) $740,000 $3038 $2871 5.8% $3.21
*Residential rates include an average of 163m3 of metered water and commercial rates exclude metered water.
Increase in
Capital 2020/2021 2019/2020 Increase in total rates
Commercial
Value proposed rates total rates $/pw (excl.
water)
Lower quartile $550,000 $3209 $2986 7.5% $4.29
Median $1,070,000 $4989 $4358 14.5% $12.13
Upper quartile $2,010,000 $8206 $6839 20.0% $26.29
Highest 1% of
$25,626,000 $89,041 $69,164 28.7% $382.25
commercial
Average (mean) $2,620,000 $10,294 $8449 21.8% $35.49
Council considered several options in deciding to Adjustments to the Uniform Annual General Charge
propose amendments to the Uniform Annual General and the commercial differential do not change the total
Charge, the commercial differential on the general rate amount of rates that Council receives, but they do
and the capital budget for 2020/21. change the rates costs for different types of properties.
These included keeping to the limits approved for year A lower Uniform Annual General Charge benefits
three of the Long-term Plan 2018-2028 (LTP), reducing owners of lower-valued properties, but means owners of
the Uniform Annual General Charge by a greater amount higher-valued properties pay more, because more of the
than year three of the LTP, increasing the commercial rates charges are based on capital value. And a lower
differential, and prioritising our capital budget with commercial differential benefits owners of commercial
options for debt management. properties but is unfavourable for owners of residential
properties.
The scenarios listed on page 13 highlight these options,
what was originally proposed, and the revised proposal The key is to find the best balance for the community as
as a result of the COVID-19 pandemic. a whole.
TAURANGA CITY COUNCIL | DRAFT ANNUAL PLAN 2020/21 | CONSULTATION DOCUMENT 12We considered several scenarios while preparing this draft annual plan and will take community feedback into account
before the plan is finalised in June.
Original resolution Amended resolution (taking COVID-19 impacts into account)
SCENARIO 1:
No specific debt management charge through rates
Total rates increase (after growth) 7.6%
Reduced capital expenditure to stay under our debt limit
Weekly rates rises for median residential and median commercial properties
Level of Uniform Annual General Charge
10% 15%
Residential Commercial Residential Commercial
Commercial 1.2:1 $2.28 $12.13 $2.92 $10.21
differential 1.3:1 $1.80 $16.04 $2.49 $13.78
SCENARIO 2:
5% specific debt management charge through rates
Total rates increase (after growth) 12.6%
Enables full capital expenditure programme
Weekly rates rises for median residential and median commercial properties
Level of Uniform Annual General Charge
10% 15%
Residential Commercial Residential Commercial
Commercial 1.2:1 $4.46 $16.15 $5.12 $14.18
differential 1.3:1 $3.95 $20.32 $4.66 $17.99
SCENARIO 3:
10% specific debt management charge through rates
Total rates increase (after growth) 17.6%
Enables full capital expenditure programme
Weekly rates rises for median residential and median commercial properties
Level of Uniform Annual General Charge
10% 15%
Residential Commercial Residential Commercial
Commercial 1.2:1 $6.62 $20.18 $7.31 $18.12
differential 1.3:1 $6.08 $24.59 $6.82 $22.17
TAURANGA CITY COUNCIL | DRAFT ANNUAL PLAN 2020/21 | CONSULTATION DOCUMENT 13Rates increase
Our Long-term Plan 2018-28 (LTP) proposed an overall We are now proposing an overall average rates budget
average rates budget increase (excluding growth and increase of 7.6%, excluding growth. Charging for
kerbside collection) of 8.2% for the coming year. kerbside rubbish collection has been delayed until
2021/22, assuming that the proposed service proceeds.
The proposed overall rates increase of 7.6% includes:
‘Business as usual’ general rate increase
This pays for continuing to provide services and maintain
3.9% the city’s assets, while funding interest and depreciation
Water and wastewater rate increase
This helps fund the increasing operating costs of the
2.1% water-related infrastructure our city needs
Growth and transport planning increase
1.5% This helps fund our planning for growth
Other operating expenditure increase
0.1%
Uniform Annual General Charge
We are proposing to reduce the Uniform Annual General This will make rates relatively more affordable for people
Charge from the 15% proposed in the LTP to 10%. owning lower-value properties. The flip-side is that
people with more expensive properties (both residential
The fixed charge will reduce from $600 (20% of this
and commercial) will pay relatively more.
year’s total rates) to $305 (10% of next year’s total rates).
The fixed charge was originally proposed to move from In 2019/20, Tauranga had the highest Uniform Annual
$600 to $475 (15% of this years total rates). General Charge of any major city.
% of general
UAGC % of
Council UAGC (incl. GST) Differential rates paid by the
rates
commercial sector
Tauranga $600 20% 1.134 16%
Hamilton $348 10% 2.569 33%
Auckland $424 12% 2.800 32%
Christchurch $130 4% 1.697 32%
Dunedin $- 0% 2.450 32%
Wellington $- 0% 3.250 44%
TAURANGA CITY COUNCIL | DRAFT ANNUAL PLAN 2020/21 | CONSULTATION DOCUMENT 14Commercial differential
A commercial differential is a proportional difference The increased differential will help us keep investing
between the rates that owners of residential properties in our future growth, which will ultimately benefit
pay compared with the owners of commercial properties. businesses – for example, through our investments in
infrastructure, transport, and land supply.
A differential of 1:1.2 for 2020/21 was introduced in 2018
through the LTP, when we also reduced the set minimum The proposed increase in the commercial differential to
charge every ratepayer pays (the Uniform Annual General 1:1.2 for 2020/21 will help to address concerns about the
Charge). This meant that commercial ratepayers would affordability of rates, in particular for owners of lower-
pay $1.20 in general rates for every $1 paid by residential value residential properties, who are likely to have lower
ratepayers for properties of the same value. household incomes.
The commercial differential aims to address or offset: The increase in the commercial differential will mean
that the commercial sector will pay 18% of the general
• affordability and equity issues rates as compared to the nation-wide average for metro
• the commercial sector benefiting more from council councils of 32%.
spending on infrastructure such as roads, water,
As part of the development of this draft annual plan, we
security and attractions
also considered moving the differential to 1:1.3 to further
• the amount commercial owners pay relative to their increase the proportion of rates paid by the commercial
share of the total capital value of the city sector (and consequently reduce the proportion of rates
• tax advantages for business owners, who are able to paid by the residential sector). The possibility of moving
claim back the GST portion of their rates. to a 1:1.3, while not directly proposed in this draft annual
plan, will continue to be considered as we move to adopt
We are now proposing to increase the commercial the final annual plan in June.
differential in line with the Long-term plan to 1:1.2.
Rating for debt management
Before the COVID-19 pandemic, we proposed an of rating for debt management. We also accept that the
increase of 5% in the overall general rates and delivery of such a large capital programme next year
volumetric water targeted rate in order to manage debt. is less likely, due to disruption to the economy. While
we still recognise all the capital investment we need to
This was intended to help us maintain our debt-to-revenue make in the city, we’ve reduced our capital expenditure
ratio at 235%, while proceeding with a large capital budget by $44m to align with the reduced rate increase,
programme. Every $1 we receive for debt management so that we maintain a prudent level of borrowing and
allows us to borrow $2.50, enabling the funding of the maintain a debt-to-revenue ratio of 235%. We have more
capital programme which supports our growth. work to do prior to final decisions on the budget in June
However, we have recognised that the impacts of to identify which projects will be budgeted for delivery
COVID-19 will affect affordability for many of our during the next year.
ratepayers, so we have proposed to defer consideration
TAURANGA CITY COUNCIL | DRAFT ANNUAL PLAN 2020/21 | CONSULTATION DOCUMENT 15Changes to the Revenue and Financing Policy
As mentioned earlier, we are proposing to reduce the We therefore also invite you to comment on these
Uniform Annual General Charge to 10% of total rating possibilities.
revenue. This will require a change to the Revenue and
For more information on making a submission, see
Financing Policy, and we invite you to provide feedback
page 22.
on this.
Council reserves the right to amend or alter existing rates
Before the COVID-19 pandemic, we considered
remission and postponement policies in response to the
changing the commercial differential to 1:1.3; reducing
COVID-19 pandemic. You can see our existing policies
debt through the general rate; and changes to the water
on our website.
rate. If council re-considers one of these options before
finalising this annual plan, then further changes to the
Revenue and Financing Policy might be required.
Find out how much you could pay with our rating calculator www.tauranga.govt.nz/property-search
TAURANGA CITY COUNCIL | DRAFT ANNUAL PLAN 2020/21 | CONSULTATION DOCUMENT 16Financials
Draft annual plan key indicators versus LTP budgets for 2020/21
Annual Plan
AP budget LTP budget
proposal
2019/2020 2020/21
2020/2021
($m) ($m)
($m)
Operational summary
Rates * 179 207 194
Other operating revenue 67 68 69
Subsidies and grants received for capital 25 31 23
Total operating revenue including grants 270 306 286
Operating expenditure 261 281 284
Surplus / (deficit) 9 26 2
Rates increase average after growth ** 3.9% 8.2% 7.6%
Debt summary
Net debt at 30 June 2020 *** 544 663 704
Debt / revenue ratio **** 186% 212% 235%
New capital investment ***** 188 239 224
Development contributions 26 28 23
* includes metered water income of $24 million
** increase is a flat average before adjusting for the commercial differential and Uniform Annual General Charge
*** approximately 65% of debt is funded through rates. The remainder is funded by development contributions or user fees.
Includes BVL consolidated revenue of $16.5million for 2020/21
**** includes capital funding for NZTA standard projects
***** total figure is on a consolidated basis, reduced by a capital delivery adjustment that acknowledges that not all capital work
budgeted is likely to be delivered, due to matters outside our control
Note consolidated revenue includes BVL revenue and is based on the revenue levels assumed for council and its CCOs prior to the
impacts of COVID-19.
TAURANGA CITY COUNCIL | DRAFT ANNUAL PLAN 2020/21 | CONSULTATION DOCUMENT 17Operational expenditure
Operational budgets and levels of service are generally Some of our standard operating costs have increased
consistent with year three of the Long-term Plan far more quickly than anticipated in the LTP, such as
2018-28 (LTP). Budget adjustments have been made electricity (+$1.5 million) and insurance (+$1.2 million).
to reflect lower depreciation and interest costs than In some cases, we have also had to increase reactive
assumed in the LTP (resulting from movements in the budgets to respond to ratepayers requesting an increase
capital programme, asset value differences arising from to service levels – for example, more frequent mowing of
revaluation, and lower-than-anticipated interest rates). stormwater reserves.
As more information on the COVID-19 response and We have worked to ensure we have the right staff in the
recovery comes to light over the next few months, we right structures ($2 million) to prudently manage our
are likely to find that levels of service in some areas will businesses and our assets ($4.3 billion), reducing our
need to be reconsidered for 2020/21, with consequential reliance on consultants.
effects on both income and expenditure.
We have upgraded our digital systems, many of which
Since the LTP was drafted, Council has invested heavily were nearing the end of their useful lives, resulting in
in city growth and planning ($5.8 million). This includes higher digital services costs (+$0.9 million).
working with our regional partners and NZTA on planning
for urban form and transport needs.
Operational expenditure by activity group $284 million
Libraries Sustainability and waste
Community facilities Transportation
and property
Stormwater
Parks and recreation Wastewater
Regulatory and compliance
Water supply
Strategy and growth
Digital services Support services
Support services represents overhead activities such as See supporting documents for a summary statement of
finance and treasury, insurance and legal, emergency comprehensive revenue and expenditure and significant
management, and people and engagement. variances from the LTP.
TAURANGA CITY COUNCIL | DRAFT ANNUAL PLAN 2020/21 | CONSULTATION DOCUMENT 18Debt
Council uses debt primarily to pay for capital expenditure This capital funding problem is not restricted to this
related to growth and improvements. annual plan, and we expect that during the period of
the next Long-term Plan, there will be a significant gap
Although development contributions are levied to fund
between the required investment and our ability to borrow.
growth expenditure, collection takes place over a long
period of time and we have to finance the expenditure Using debt to pay for all the required investment would
up front. breach our debt-to-revenue limit, and we therefore need
to think hard about what infrastructure is needed and
We consider that financing capital expenditure from debt
how we should pay for it.
in this way is fairest to our ratepayers. Most of our assets
have very long lives, and financing them from debt Some new funding mechanisms are on the horizon, such
means all the people who benefit from those assets over as the Infrastructure Funding and Financing Bill, but
time will contribute to the cost. these will not be available in the short-term.
We’ve been borrowing to finance infrastructure costs for Earlier, we proposed a 5% increase in rates to manage
our growing city for many years, but our revenue has not debt and allow infrastructure investment. However,
kept pace with our borrowings. Consequently, our debt recognising the impact of COVID-19 on our ratepayers,
has become high relative to our income and also relative this recommendation was not adopted.
to other councils. This is partly because our rates income
has been lower than anticipated. This annual plan forecasts external debt of $704 million,
consolidated operating revenue of $286 million, and a
We have reached the point where our debt-to-revenue debt-to-revenue ratio of 235%. This provides a small
ratio is getting uncomfortably close to our limit of 250%, amount of debt capacity to deal with unforeseen events.
restricting our ability to finance infrastructure for further
growth and renewals. As we learn more about the effects of the COVID-19
response and recovery plan on our city and our
You can find more information on this ratio in the organisation, it is likely that revenue, expenditure, and
supporting financial information at debt will all need to change to accommodate the new
www.tauranga.govt.nz/annualplan2020 operating environment.
You can find more information on debt and the capital
programme in the supporting financial information.
TAURANGA CITY COUNCIL | DRAFT ANNUAL PLAN 2020/21 | CONSULTATION DOCUMENT 19User fees and charges We’re proposing to make some changes to user fees and Details are available in a separate statement of proposal. charges. This is available at www.tauranga.govt.nz/annualplan2020 Most of these changes are small increases in line with We will also make it available in hard copy at our 91 inflation. However, we are proposing larger increases in Willow Street service centre or at your local library if New the following areas: Zealand’s COVID-19 lockdown has ended. • Animal Services Use the annual plan submission form to send us your • Asset protection bonds and service connection fees feedback. • Baycourt • Bay Venues Limited (BVL) • Building Services • Development Works • Laboratory fees • Parking • Parks and recreation • Planning • Regulation monitoring • Sustainability and waste • Tauranga cemetery parks and crematorium • Water supply Revenue and Financing Policy The amendment to the rating structure in the draft annual plan requires a change to our Revenue and Financing Policy. A copy of the draft Revenue and Financing Policy and a statement of proposal which outlines all of the changes is available at www.tauranga.govt.nz/annualplan2020 and will be available in hard copy at our 91 Willow Street service centre or at your local library if New Zealand’s COVID-19 lockdown has ended. Use the annual plan submission form to send us your feedback. TAURANGA CITY COUNCIL | DRAFT ANNUAL PLAN 2020/21 | CONSULTATION DOCUMENT 20
2020/21 Development Contributions Policy
A copy of the draft 2020/21 Development Contributions For more information, see the statement of proposal at
Policy is available at www.tauranga.govt.nz/annualplan2020 www.tauranga.govt.nz/annualplan2020
The most significant change to the policy compared with The new policy and fees will apply to all consents lodged
the current policy are updates to the capital expenditure from 1 July 2020.
budgets and consequentially to the fees that apply to
development. Please use the annual plan submission form to send
us any feedback on the draft 2020/21 Development
Significant proposed increases are: Contributions Policy.
• citywide development contributions: +16%
• local development contributions:
- Tauriko: +6%
- Wairakei: +10%
- West Bethlehem: +5%
Note on future Development Contributions Policy
The citywide development contributions fee (which funded by citywide development contributions (including
is paid on building consents) is likely to increase the Waiāri project) are finalised.
significantly in the 2021/22 financial year, when we start
collecting development contributions to fund the new This amount will be included in the draft 2021/22
Waiāri water supply scheme. Development Contributions Policy for consultation.
An early estimate is that this increase could be $5,000 See Section 1.4 of the draft 2020/21 policy for more
to $9,000 for each new residential dwelling. The exact information on this and how to keep updated on this topic.
amount will be known once the costs of all projects
Long-term Plan 2021-31 – future discussions
This annual plan does not provide all the solutions to the • our engagement with regional and national partners
challenges discussed earlier. on alternative funding and financing approaches to
helping the city prosper
Instead, it identifies the short-term responses that need
to be considered to address our immediate issues. Our • consideration of funding and service delivery options,
challenges will be discussed in a broader context next such as asset sales or amending service levels
year, through the preparation of the Long-term Plan • engagement with the community on the future of the
2021-31 (LTP). city and the financial and delivery tools that will be
needed
It’s likely we’ll want to discuss with you:
• the impact of COVID-19 on our community.
• continuing the budgeting actions started through this
annual plan We look forward to engaging with you about these
matters towards the end of this year.
TAURANGA CITY COUNCIL | DRAFT ANNUAL PLAN 2020/21 | CONSULTATION DOCUMENT 21We want to hear from you
Tauranga City Council annual plan submission form
Have
your sa
y
Send us your feedback on the draft Annual Plan 2020/21 proposals set out in this
consultation document and the statements of proposals on policies and user fees.
Online: Post:
use the online submission form available at place your completed form in an envelope and
www.tauranga.govt.nz/annualplan2020 send it to this address (no stamp required):
Freepost Authority Number 370
In person: Annual Plan 2020/21
Tauranga City Council
drop off your submission form at our 91 Willow
Private Bag 12022
Street service centre or at your local library if New
Tauranga 3143
Zealand’s COVID-19 lockdown has ended
Email:
email it to submissions@tauranga.govt.nz. You
can also email us directly with your feedback,
without needing to complete a submission form
Submissions close Sunday, 3 May 2020 at 5pm
Once the Annual Plan 2020/21 is adopted Written submissions may contain personal information within the meaning of the
Privacy Act 1993. By taking part in this public submission process, submitters
submitters will be sent a summary of key
agree to any personal information (including names and contact details) in their
decisions. We will not be providing individual submission being made available to the public as part of the consultation and
responses to submissions. decision-making process. All information collected will be held by Tauranga
City Council, Council Administration Building, 91 Willow Street, Tauranga.
Submitters have the right to access and correct personal information.
First name
Last name
Name of organisation (if submitting on behalf of)
Street Suburb
City Postcode
Phone (daytime) Email
Do you wish to speak to Council in support of your submission
(the COVID-19 pandemic may affect the way we hear submissions)? yes no
If so, please indicate whether you would prefer: daytime evening
We will contact you to arrange a speaking time. Each speaker is allocated 10 minutes.
TAURANGA CITY COUNCIL | DRAFT ANNUAL PLAN 2020/21 | CONSULTATION DOCUMENT 22Questions 1. Which infrastructure investments are most important to you, and why? 2. What is your view on the proposed rates increase for 2020/21? 2.1. What is your view on the 3.9% increase to overall general rates relating to business as usual activities? 2.2. What is your view on the 2.1% increase to overall general rates relating to water and wastewater infrastructure? 2.3. What is your view on the 1.5% increase to overall general rates relating to growth and transport planning? 2.4. If you consider the rates increases are too high, what projects (from the capital expenditure list in the supporting documents) or services do you recommend reducing to lessen the rates increase? TAURANGA CITY COUNCIL | DRAFT ANNUAL PLAN 2020/21 | CONSULTATION DOCUMENT 23
Questions 3. What is your view on reducing the Uniform Annual General Charge to 10%? This reduces the total rates bill for lower-value properties, but will increase the cost for higher-value properties. 4. What is your view on the commercial differential increasing to 1:1.2? 5. Is there anything else you would like to tell us about this annual plan (including Development Contributions Policy, Revenue and Finance Policy and User Fees and Charges)? Submission guidelines: Need more room? • Should you wish to speak to Council at the hearings You can attach extra pages – just make sure they’re A4 you must still provide a written submission outlining and that you include your name and contact information. your main points. • If you are hand-writing your submission, please use a dark-coloured pen and write as neatly as possible. TAURANGA CITY COUNCIL | DRAFT ANNUAL PLAN 2020/21 | CONSULTATION DOCUMENT 24
You can also read
