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Councillors will gather on Monday to consider a pre-draft annual plan for 2016-17 that includes a possible 1.5% rates rise, well below the council's self-imposed 3% limit.
It also featured $1.34million in proposed extra spending that councillors will consider adding to the budget, which, if agreed to, could push the rates increase up to 2.84%.
The extra spending fell into areas including the city's economic development strategy, which it was suggested should receive an extra $790,000, including a $300,000 boost for city marketing.
The city's arts and culture strategy and City of Literature activities would also receive $344,000, while another $100,000 would be allocated to fresh Ocean Beach erosion work, if councillors agreed.
In addition, council staff have signalled work will begin shortly to explore greater use of shared services by councils across Otago.
That could even include considering the need for a new council-controlled organisation (CCO) to own or run parts of Otago's water infrastructure, it was confirmed yesterday.
The prospect would be considered by councillors when a report on the initiative was presented to next week's meeting.
In the meantime, Dunedin Mayor Dave Cull told the Otago Daily Times council staff had done well to trim spending again, reducing what was last year forecast to be a 4.9% rates increase for 2016-17.
The reduction gave the council room within its budget to make choices about where it might direct limited extra spending, he said.
Focus for now was on investing in economic development to bolster the population of working-age families in Dunedin, and by doing so encourage business and job creation, Mr Cull said.
That was something ratepayers, through the Residents' Opinion Survey, continued to say should be priority, he said.
‘‘That's why it's been put top of the pile ... because our community sees it as important,'' he said.
The council's investment in city marketing had been slashed, to just $50,000 a year, during the council austerity drive launched in 2011, but would be increased again to $350,000 a year under the latest proposals.
Mr Cull said the money was needed to effectively partner with other organisations, like Air New Zealand, and leverage off their efforts to promote the city.
‘‘We get more bang for our buck if we put [council's investment] alongside other people's, but we still have to have bucks - you can't rely on other people to do it for you.''
The extra spending was possible in part due to the council's success in accelerating debt repayments, which meant core debt - excluding companies - would drop to $226million in 2016-17.
That result was from a $2.8million reduction in interest costs, freeing up more cash for uses such as extra investment in economic development, Mr Cull said.
That investment would help the city make the most of a potential ‘‘tsunami of visitors'' expected to hit the South Island, particularly from China, fuelled in part by direct flights from Guangzhou to Christchurch, Mr Cull said.
That was expected to place extra demands on the city's tourism infrastructure, but by far the biggest challenge facing the city was the future of South Dunedin, Mr Cull said.
The council was proposing to spend another $100,000 in 2016-17 on fresh ‘‘detailed investigations'' to manage Ocean Beach erosion problems over the medium term.
Council staff were also beginning work on a comprehensive investigation of a work programme to tackle rising groundwater in South Dunedin, and budgetary implications.
That came after last year's $30million flood in South Dunedin and a report by the Parliamentary Environment Commissioner, which showed 2683 Dunedin homes were at risk from sea-level rise, mainly in South Dunedin.
That raised the prospect of buying homes as part of a commitment to try to ensure nobody was ‘‘seriously disadvantaged'' by ‘‘any measures taken to deal with the challenges'' in South Dunedin.
Mr Cull said while there was no exact timeframe on the latest work, he hoped the council would have ‘‘a clearer idea'' of options and costs within ‘‘three to five months''.
It would then be in a better position to consider what came next, and when, including community consultation and any potential approach to the Government in search of funding or other forms of support, he said.
‘‘We know that if we do nothing, it's going to cost us a fortune. If we do anything, it's going to cost us a fortune. There is no cheap option, so we ['d] better get it right before we start on it.
‘‘We have to sit down with the community and say, ‘What are the realities here? What are the implications? How do we handle this in a way that we don't completely bugger up and disrupt people's lives for a decade or so while we sort it out?''
But the challenge was also linked to the council's need to build the city's economic strength, he believed.
‘‘One thing's for sure - a strong economy with a more robust labour market and with more people in the ratepayer base will make is easier to finance whatever we have to do in South Dunedin.''