A $2.2 million rates surplus could offer a lifeline to Tauranga City councillors staring down the barrel of a rates increase totalling about 6.2 per cent next year.
In a tough year for the council, the surplus in the rating account at June 30 was one of the few bits of good news as it wrestled with heavy debt and low growth.
The potential for the money to reduce the impact on ratepayers next year was suggested yesterday during a meeting that dealt with issues around growth funding in Tauranga.
It included the consequences of shifting $20 million of development debt on to ratepayers. Most of this "historic" debt stemmed from miscalculating development impact fees and failing to sheet home the impacts of previous growth-related decisions.
The council agreed to go out for public consultation on a 38-year loan repayment programme for ratepayers to repay debt relating to roading and stormwater in Papamoa and Bethlehem.
Debt would be progressively transferred to ratepayers over the next 38 years, starting with nearly $500,000 funded from rates next year, $650,000 in 2013 and reaching a peak of $1.36 million in 2019.<inline type="recurring-inline" id="1003" align="outside" enforce-sites="no" />
The additional $500,000 next year bumped up the rates increase to 6.2 per cent. A final decision on what to do with the rates surplus will be made in the final wash-up this month of the council's draft 10-year plan.
The rates surplus was $2.7 million but council rules dictated that $500,000 had to go into repaying debt.
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Cr Bill Faulkner said they all had an inkling that things were not so well but the $20 million had been dropped on the council at a time of financial constraint.
Council strategic planner Andrew Mead said they now had the systems to monitor potential shortfalls in growth funding: "The Southern Pipeline is an emerging issue of a potentially big shortfall."
Fairer system
In a separate decision yesterday, the council agreed to introduce a fairer system into the way the cost of capital was calculated on development fees for large long-term projects.
It will be designed to ensure full cost recovery for all the subdivision impact fees payable on the planned 9000-population township of Wairakei at Papamoa, the Southern Pipeline's subdivision impact fee and all building impact fees.
The changes represented the partial introduction of intergenerational equity into the fees in a way that was legal. It meant that instead of fees remaining constant at Wairakei for the life of the development, fees paid in the later stages of the development would be scaled up to reflect the drop in the value of the dollar as the years went by.
The new regime will reduce development fees paid per hectare in Wairakei, starting next year by between $16,400 and $46,000 per hectare.
All development fees with a Southern Pipeline component will reduce by nearly $1900.
Mr Mead said the impact of the changes were manageable provided growth projections of between 1 per cent and 2 per cent were accurate.
Fees deferralsIn another decision to remove some of the financial obstacles to getting more houses built, the council agreed that builders could defer the payment of building impact fees for a maximum of six months from the date the building consent was issued.
However the builder must become an approved developer, it would only apply to the development contributions component of the fee and to fixed-price building contracts. Interest would be charged as a result of the council going banker for up to six months.
The council's chief executive, Ken Paterson, will look at the issue of downtown parking impact fees after pressure from some major potential developers to relax the rules.