Mike O'Neill, president of the Mount Maunganui Residents, Ratepayers and Retailers Association says rates are becoming unsustainable. Photo / George Novak
Mike O'Neill, president of the Mount Maunganui Residents, Ratepayers and Retailers Association says rates are becoming unsustainable. Photo / George Novak
Average rates rises of 18 to 20 per cent next year and totalling 30 to 40 per cent over a three-year period have been forecast for Tauranga.
And that's on top of an up to 9.5 increase for the next financial year for the new kerbside rubbish and recycling service- previously approved by the council - and to reverse temporary Covid-driven savings.
One ratepayer group leader says the "extreme" rates burden could see asset rich but cash poor residents forced to move, but another says the city needs to find some way pay for infrastructure.
The early rates estimates come as the Tauranga City Council prepares to tackle what acting mayor Tina Salisbury called the "most challenging long-term plan process ever."
A mammoth council meeting is scheduled for Monday and Tuesday to begin the process of deciding what stays and what goes in the draft plan, ahead of community consultation and final decision making next year.
The elephant in the chambers will be the prospect of a Government-appointed commission replacing the council.
Local Government Minister Nanaia Mahuta raised their ability to deliver an appropriate plan and set "realistic" rates among her reasons for considering the dramatic intervention.
Some councillors have hit back, suggesting the removal of accountable, democratically elected representatives could pave the way for a big rates rise.
The working draft rates forecast for next year, produced by council staff, is split into three parts.
Just over a quarter - 6.5 per cent - is for the new citywide rates-funded kerbside service starting in July.
The council argues the annual $230 charge should be cheaper than most households pay now, but some residents don't want it or would prefer it be charged per throw.
A new rates-funded kerbside rubbish collection service will start next year. Photo / File
A 2 to 3 per cent portion reverses a temporary saving the council made in the Covid-responsive last Annual Plan by putting off recruitment and a staff remuneration review.
A final 18 to 20 per cent was mainly linked to capital infrastructure, including planning and construction as well as paying for renewals and depreciation of existing assets.
The total for the next year could approach 30 per cent.
Rises in the second and third years of the plan were expected to average 6.5 per cent.
Increases should be lower for the rest of the decade.
In the working draft, the council executive proposed a $3 billion, 10-year capital investment programme - cut back from the $4 billion estimated last month.
Major projects include infrastructure to support intensification on the Te Papa peninsula, growth in Tauriko West, roading and three waters work, as well as the civic rebuild and a new Memorial Pool.
There is also $100,000 towards a regionally-funded project to look into the feasibility of a stadium.
In a report to be presented on Monday, council staff say this scenario would cover work on the critical and highest priority projects, plus a partial implementation of the council's "approved strategic direction".
Tauranga City Council corporate services general manager Paul Davidson. Photo / File
The report says a pressured financial situation has developed over a long period and points to growth, systemic local government funding issues, cumulative revenue deficits due to lower-than-planned rates increases, and debt-funding operating expenditure as driving factors.
Tauranga is not alone, with many other councils facing similar challenges. Wellington City Council had a 23 per cent rates increase forecast.
Tauranga's council is also looking at other funding and financing avenues and different ways of spreading the burden such as differentials or targeted rates.
Corporate services general manager Paul Davidson said there was "no getting away from the fact infrastructure needs to be paid for".
The city had issues in many areas including transport, housing supply and social problems and the council would be listening to what residents wanted and how to pay for it.
Salisbury said there would be big decisions and prioritisations to make and it would be more important than ever for the council to engage with communities to determine where to invest "to create the city that we and future residents will love to live in".
Acting Tauranga mayor Tina Salisbury. Photo / File
Mike O'Neill, president of the Mount Maunganui Ratepayers, Residents and Retailers said in his view rates were going to become unsustainable for many residents in the Mount.
"A lot are asset rich and income poor. They have lived there for years and there is no way they would want to shift, and no way they should be made to shift just because their rates burden is so extreme."
He said a differential rating scheme was needed to address that burden.
While property values in the Mount - home to some of Tauranga's priciest real estate - continued to skyrocket, O'Neill said incomes had not kept up.
He believed growth costs should be paid by newcomers.
"New growth is no longer paying for new growth so the demand is coming on to people who have lived here for years."
Grace Road, Avenues and Neighbourhood Residents Association chairman Phil Green. Photo / File
Phil Green, chairman of Grace Rd and Avenues Neighbourhood Residents' Association, said he advocated putting the rates up a bit each year, but did not think residents would be very impressed with a "sudden increase."
"But we've got to find the money somewhere to get the city infrastructure sorted out ... and nothing is cheap anymore."
Growth pays for growth? Yeah, right
The council has a policy of 'growth pays for growth' but has acknowledged for some time this has not happened in reality.
It has collected $350 million in development contributions since 1994 but still had shortfalls due to developers being undercharged and no ability to retrospectively ask for more.
The council started transferring some growth debt to ratepayer-funded debt in 2011 but the backlog has grown to $40 million, mainly from stormwater and transportation projects in West Bethlehem, Pāpāmoa and Pyes Pa West.
On Tuesday, the council voted to write this balance off over 10 years, transferring $3.98m of debt a year. The impact on rates would total just under $1.4 million by 2031.
The council has been working to reduce the likelihood of future backlogs, including by getting developers to directly construct and fund key infrastructure.
Note: An earlier version of this story said the kerbside and Covid savings - totalling up to 9.5 per cent - were part of the 18 to 20 per cent forecast rise for next year. In a council meeting on Monday it was clarified the 9.5 per cent is additional. The story has been amended to reflect this.
