Hastings facing one of highest rates rises in country - council could hit $700 million debt

Name: Focus: Cyclone Gabrielle one year on
Uploaded: 2024-02-13T06:00:00+13:00
Description: Communities across the country look back on the biggest storm to hit New Zealand this century. Video / Corey Fleming / Zoe McIntosh / Getty Images

By Gary Hamilton-Irvine

Multimedia journalist·Hawkes Bay Today·

18 Apr, 2024 06:00 AM3 mins to read

NOW PLAYING • Focus: Cyclone Gabrielle one year on

Communities across the country look back on the biggest storm to hit New Zealand this century. Video / Corey Fleming / Zoe McIntosh / Getty Images ...

Hastings District Council is proposing a huge - but unsurprising - 25 per cent rates increase from July as the council looks to fund “unprecedented” recovery costs from Cyclone Gabrielle.

Council is nearing $400 million in debt and anticipates it will reach $700m in debt by 2030, according to the council’s new draft Long Term Plan (LTP).

The draft LTP released for public feedback on Thursday includes a 25 per cent rates increase for the 2024/25 council year.

The council is also proposing potentially closing Frimley Pool to help save money.

“The cost of recovery from Cyclone Gabrielle has had to be incorporated in council budgets and, despite receiving some funding from central Government, the net cost to Hastings district ratepayers is unprecedented,” council papers stated.

Hastings district was the hardest hit of any region in Hawke’s Bay during Cyclone Gabrielle last February in terms of damage.

The LTP includes proposals for a new cyclone recovery targeted rate, which would be included in ratepayers’ annual rates bill.

“The cyclone recovery programme is forecast to cost an average of $17 million per year over 16 years,” the LTP stated.

“If we spread this over all properties, the average cost would be $620 per property a year.”

Hastings District Council chief executive Nigel Bickle said it had been a difficult process.

“This has been the most challenging Long Term Plan we have probably ever had to deal with.”

Hastings District Council chief executive Nigel Bickle says it has been a challenging LTP to put together. Photo / RNZ

For an average homeowner, who pays about $3000 in Hastings rates per year, they are now facing a rates bill of $3750 during the next council year (July 2024 to June 2025).

If the 25 per cent rates rise is adopted in the coming months it will be among the highest in the country.

How other councils are faring

Other councils around the country with high proposed rates rises include West Coast Regional Council (27 per cent rise), Environment Canterbury (24.2 per cent rise), and Napier City Council (23.7 per cent rise).

According to data collected by Local Government NZ, the average rates rise across the country is about 15 per cent, for the up-coming 2024/25 council year.

Other Hawke’s Bay councils to unveil their proposed rates increases include Central Hawke’s Bay District Council (20 percent rise) and Hawke’s Bay Regional Council (19.6 percent rise).

Hastings district was the hardest hit of any council area in Hawke's Bay by the cyclone. Pictured is a road near Puketapu in the aftermath. Photo / Mark Mitchell

Some councils around the country, such as Wairoa, are yet to release their proposed rates rises.

On top of ongoing cyclone recovery costs - including Category 3 house buyouts - Hastings District Council is juggling higher debt repayments, inflation and higher insurance costs.

The council does have caps on how much it can borrow from the Local Government Funding Agency, in terms of debt, to stop it from getting into financial trouble.

The council is within its borrowing limits despite nearing $400 million of debt.

Councillor Simon Nixon said the debt had grown significantly in recent years and he was “starting to worry” council would not have enough borrowing headroom if another big event were to happen.

Proposed rates increases across Hawke’s Bay (for 2024/25, starting July 1):

Hastings District Council: 25 per cent rise

Napier City Council: 23.7 per cent rise

Central Hawke’s Bay District Council: 20 per cent rise

Hawke’s Bay Regional Council: 19.6 per cent rise*

Wairoa District Council: Yet to be released

*Hawke’s Bay Regional Council has changed its rating system which means many homeowners will see more than a 19.6 per cent rise.

Gary Hamilton-Irvine is a Hawke’s Bay-based reporter who covers a range of news topics including business, councils, breaking news and cyclone recovery. He formerly worked at News Corp Australia.