Ratepayers could end up funding half the costs to run Tauranga's Historic Village after the shock news it has run up operating losses of $1 million over the past five years.

The deficit was disclosed to councillors yesterday by financial controller Kathryn Sharplin in a report on proposed changes to council revenue and finance policy.

Her report said one of the options proposed in the review now underway on the village was for a portion of costs to be rates-funded.

But for this to happen, the council would have to change its over-arching revenue and finance policy.


The council's current policy was that the village paid its own way without ratepayer subsidies.

Read more: Tauranga historic village racks up $1m bill

Councillors agreed to change the revenue and finance policy to give the council the ability to fund up to 50 per cent of village costs from rates.

The proposal will go out for public consultation as part of the 2016-17 Annual Plan.

Chief financial officer Paul Davidson said the village had been running at a deficit for the past five years because there was not enough cash to fund depreciation.

He said there were a number of options being investigated for the village and partial funding by ratepayers was one option.

Mr Davidson said he would come back to the council if a rates rise was needed to help cover village expenditure.

Councillor John Robson said the council was carrying the deficit in its accounts. Amending the policy would help transparency.

"It makes it clearer in the long term ... you can't run a deficit forever."

Friends of the Historic Village member Murray Bourne said he had not known the extent of the village's financial woes. "But I've had a feeling for some time that something was amiss."

He found it frustrating that when the group wanted to do things to enhance the village to increase patronage, the council had been more focused on maintenance works than anything else.

Mr Bourne said he had misgivings about the council's proposal to hit up ratepayers.

"If people have got the attitude they value the village then certainly they may be prepared to pay more rates. But I think there will be quite a backlash," he said.

Catherine Steward, a city councillor and chairwoman of the Historic Village Advisory Group, defended yesterday's decision, saying almost every other community facility depended directly or indirectly on ratepayer funding to operate, with many heavily subsidised through rates.

She said it was about trying to make it fair and equitable for the village, which it hadn't been for years.

"The Historic Village currently does not get any ratepayer funding and hasn't done so for five years."

Cr Stewart said if people were concerned, they needed to think about the millions poured into Bay Venues each year to run its facilities.