Rates rise an average 3.3% as debt reaches $400m

Tauranga rates will go up by an average of 3.3 per cent this year after the council signed off its budgets for the next 10 years.

The council will collect a total of $102.8 million from ratepayers this year - up $3.8 million on what it collected in the last financial year.

Debt was projected to reach $400 million by June 30 next year, an increase of $8 million on current debt levels.

The council struck its rates yesterday at a meeting which began with everyone standing for a minute's silence in memory of former chief executive Ken Paterson, who died suddenly on June 17.

Mayor Stuart Crosby said the death was a tragic loss and he was confident the council would carry on the work started by Mr Paterson.

Mr Crosby said the council still had some way to go until it would be in a sustainable financial position.

Future average rate increases for householders have been projected at 6 per cent for 2013-14 and 5.3 per cent for 2014-15.

The actual rates increase this year was 3.8 per cent but half a per cent would be soaked up by the growth in the number of rateable properties.

Councillor Larry Baldock said low interest rates rescued the council from the earlier estimates of a higher increase.

He said the council was at great risk over the next four to five years of being crushed by debt if interest rates started to track up again.

"We must pay off debt."

Cr Baldock was optimistic the council would be able bring next year's 6 per cent increase down to within the rating cap of 5.4 per cent. Next year was the first year that the rating cap would take effect.

Councillor Murray Guy said 3.8 per cent was a good result and he also urged the council to target debt reduction while interest rates were low.

The council heard that the $1.2 million sunk into the failed bid to redevelop the Mount Pools was not being funded by ratepayers this year.

Council financial controller Paul Davidson said the money would come from the rates surplus in the current financial year. Decisions on the surplus would be made next month, once the final figure was known.

He told the Bay of Plenty Times the surplus was in the range of $2 million to $3 million.

Councillor Rick Curach said there were financial pressures from the construction of the Southern Pipeline and the Eastern Arterial but the growth scenarios in the 10-year plan showed the council would get through it.

This year's uniform annual rate, which paid for community facilities such as libraries, was $720 per property and the general rate was $0.00198733c in the dollar of capital value of all rateable properties.

The council also adopted its development contributions policy.

Mayor Stuart Crosby said it had been a massive exercise to address issues which had stifled growth. "Hopefully, it will stimulate development and building."

Cr Baldock said Tauranga was the only council in the country to reduce development fees and had learned a lot by having the development community part of the process.

He wondered whether the council should not consider something a lot more simpler such as a flat regime of development contributions.

Councillor Catherine Stewart said there was no exact science. "I would like to look at simplifying it because it does cost us and ratepayers a lot of money, time and angst."