Average rates rise of 5.7% slashed from 20%

Central Otago ratepayers are facing an average 5.7% rates increase for the coming year but that had been reduced from a potential 20%.

The Central Otago District Council produces a long-term plan every three years and the previous plan, done in 2009, had forecasted a 20% increase for ratepayers this year but council corporate services manager Susan Finlay said councillors and community board members had done a lot of work to pare that right back.

She said they had looked at all activities, realised affordability was a key issue, and reprioritised spending to focus on core services.

"We need to make sure our decisions about affordability now do not compromise the affordability of rates in the future and our services are sustained for future generations."

She received a standing ovation from councillor John Lane and applause from other councillors at their meeting this week for the amount of time she had spent working with the numbers.

Previously, Mrs Finlay said the factors driving the increase were general inflation, calculated at 4%, electricity prices which had risen 7%, and insurance premiums, which had risen by 25%.

The need to upgrade drinking water supplies and get assessments for potentially earthquake-vulnerable buildings were also factors.

She said the 5.7% was just an average. Rates in different wards or for different categories of ratepayer could vary slightly.

She said the ward component of the rates which community boards had previously set and submitted to council were irrelevant now that the district component had been added.

For Cromwell that was 10.5%, for Vincent 6.9%, for Maniototo 8.6% and for Roxburgh 7.6%.

"Once we put the district component in there, it brings the average rates increase down significantly."

That was because there were more ratepayers district-wide over which to spread the cost.

Financial strategy in the long-term plan proposes setting rates rises at no more than 6% a year, for the next 10 years. The only exception is in year four (2015-16) when a 6.7% increase is proposed when the Vincent water upgrade is scheduled.

All capital works, such as water supply upgrades, are to be funded through external loans with a repayment period of 25 years and at an interest rate of 7%.

For the coming year, that accounts for 1.09% of the rates increase which is well within the industry standard of 10%, Mrs Finlay said.

The public has a chance to have their say on the rates rise, among other things, when the long-term plan goes out for public consultation later this month.

Last year, rates rose by 4.77%, the year before by 7.15% and the year before, by 8.96%.

- sarah.marquet@odt.co.nz

 

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