The future of key city projects such as the Waiari Water Supply Scheme and beleaguered Harington St Transport Hub is now in question as Tauranga City Council predicts a drastic reduction in revenue.
Modelling carried out by the council indicates ongoing effects of the Covid-19 pandemic was likely to have a "severe impact" on the city's income streams and its ability to complete vital infrastructure investment projects.
Revenue for the 2020/21 year was likely to be between $53 million and $77m lower than the council originally budgeted in its draft annual plan.
The council issued a media release on Wednesday night stating it was predicting significant reductions in all of its 2020/21 revenue streams, with the worst-case scenario involving a total revenue reduction of about 25 per cent.
This included revenue from rates being down by up to $13 million; user fee revenue down by $20m–$34m; Bay Venues Limited (which runs swimming pools and community halls) external revenue down by $10m–$16m; and development contributions and other capital contributions down by $10m–$14m.
When asked what city projects were at risk of being cut, Tauranga mayor Tenby Powell told the Bay of Plenty times that it was too early to say.
"We are now two weeks into a level 4 lockdown ... We are working with our regional partners and central government on solutions which will provide the best possible recovery pathway and provide the infrastructure needed to support the city. Any decisions on project priorities/deferrals/cancellations will be based on thorough analysis, and reported to a future meeting of council."
There were currently about 300 council projects in progress. Some of the largest projects included the Waiari Water Supply Scheme which began in 2018 and was expected to be completed in 2022. It is expected to cost at least $177m. The budget to finish the half-done Harington St carpark building to $10m to fix construction issues that forced work at the site to grind to a halt last year.
"Larger projects are typically debt-funded, but other mechanisms may apply as we move into the post-lockdown recovery phase. It's too early to provide definite information at this stage," Powell said.
It is understood Auckland, Wellington and Queenstown were facing similar issues.
In the press release, Powell said the best-case scenario was that a revenue reduction of between $53m and 77m lower than what was budgeted for would halve the city's capital works programme.
"The worst-case is that our ability to deliver any of the vitally important capital projects on our books would be virtually non-existent, affecting our ability to renew our existing infrastructure, let alone invest in much-needed growth."
Powell said the first draft of the plan was prepared prior to the level 4 alert lockdown and proposed a 12.6 per cent average rates increase, to allow the council to maintain a prudent debt-to-revenue ratio.
That was pruned back to 7.6 per cent in recognition of the likely effects of the lockdown.
"The pandemic has had an enormous effect on us, as it has on communities around Aotearoa, but there are some significant opportunities open to us too.
"With Crown investment and support, there is a path that will help lift us out of recession and create the houses and jobs we will need to keep growing through the next decade and beyond."
Powell said the city's priorities post-lockdown were focused on the eastern and western corridors and residential intensification which was expected to help unlock thousands of jobs and houses.
Tauranga Chamber of Commerce chief executive Matt Cowley said local government played an important role in economic recovery.
"It's trying to balance between using rates while people are hurting while also making sure money is moving through the economy."