5.34% Otago rates rise if irrigation scheme included

Otago regional ratepayers will face a 5.34% increase in general rates if the Otago Regional Council votes to go ahead with investing in Tarras Water Ltd's irrigation scheme.

While the council will not make its decision on the irrigation scheme until March 27, it has put the investment in its draft annual plan to be considered by the council's finance and corporate committee tomorrow. Chairman Stephen Woodhead said yesterday the inclusion of the Tarras investment did not prejudge the outcome of the decision or that of water plan 6A, which was also included, although a recommendation was yet to be made on that also.

The Tarras investment - $3.5 million in dry shares and ongoing fixed costs - had been included because the council had agreed to amend its long-term plan to allow the investment last month.

Putting out two plans, one with the investment in and one with it out, as the council had done for other projects in the past, was a ''headache for staff and auditors'', he said.

If the council decided not to go ahead with the Tarras investment, then when the plan was adopted in June it would exclude the proposal and cut its rates increase.

Without Tarras, the proposed general rate increase would be 2.97%, although that could change as a result of public consultation.

If the council went ahead with its Tarras investment, the 5.34% increase translated into anywhere from an 18c increase for a $250,000 house in the Waitaki to a $2.68 increase for a $500,000 house in Dunedin.

Usually, investment income was used to offset general rates but, because there would be no return until the Tarras shares were sold, the amount of the offset would be reduced - for 2013-14 it would be about $113,000, the draft plan said.

The draft plan also included provision for implementing plan change 6A (water), although the hearing panel was yet to make its recommendation to the council.

It was expected to be presented at the March 27 meeting as well and the council did not know what the recommendation would be, Mr Woodhead said.

''Whatever form 6A takes, some ongoing work will need funding.''

Another uncertain aspect included was provision for some Dunedin bus contracts. The council rated for targeted activities such as flood and drainage schemes, public transport and improving air quality and overall the rate intake for those was decreasing 2.6%.

While 10 targeted rates remained unchanged, seven had increased and two had decreased. The major drop was the transition to commercial services for the Wakatipu bus service, which meant the Queenstown targeted rate dropped by about $500,000.

The budget also included $8.6 million for work on flood and drainage schemes, including $5.9 million on the Water of Leith.

If the draft plan was approved by the committee it would go out for public consultation, and submissions would be able to be made until May 3.

rebecca.fox@odt.co.nz