It comes as Rotorua Lakes Council's Strategy, Policy and Finance committee received an update on the progression of its 2021 Long-term Plan at a meeting on Thursday.
In the meeting, organisational enablement deputy chief executive Thomas Colle said as the plan was entering its second year, there were risks ahead for the organisation such as local government reform, the impact of Covid-19, supplier and logistic challenges, inflation pressures and staff retention.
"What that looks like from … a rating perspective is an uplift in year two of the Long-term Plan and providing for a 5.7 per cent rate increase.
Rotorua Lakes Council organisational enablement deputy chief executive Thomas Colle. Photo / Andrew Warner
"The increase is driven off the back of key strategic priorities, focusing on housing and planning, water sustainability. Funding to support our asset renewals has been a big component of this."
He said the increase also provided for contractual inflation and an increase for wages for council staff.
"We have allowed for a slightly higher percentage increase in wage costs to ensure we can retain our staff and attract staff.
"Finance costs as well, with regards to our increase in our borrowings as a result of investment into our capital works programme."
Colle's presentation showed the increase would apply to both general and targeted rates, with the uniformed annual general charge retained at $425.
He said compared to proposed rates increases at similar-sized councils, 5.7 per cent was on the lower side.
The business sector would have an average increase of 5.14 per cent, farming 5.98 per cent, rural residential 5.39 per cent, and urban residential 5.88 per cent.
Possible rates increases by sector. Photo / Supplied / Rotorua Lakes Council
The projected increase in the council's 2021-2031 Long-term Plan, which was approved last year, was for an average 9.2 per cent increase in 2022 and an average of 4 per cent in the following years.
Colle said the Long-term Plan, which covered a decade, now had a capital works programme costing $143m, including $44m of asset renewals, the wastewater treatment plant upgrade, the Tarawera sewerage scheme, as well as projects like the lakefront, museum and aquatic centre redevelopments.
The cost of the programme had increased by $1m because of the "timing" of projects – such as the delayed Sir Howard Morrison Performing Arts Centre and Rotorua Museum renovations.
He said there would also be an increase in the forecast debt from about $65m to $84.4m in 2023.
"It's not new debt, it's just debt that is already in a profile that's been approved in our Long-term Plan and it is just a reforecasting of that and a re-timing of it, it's reflective of our capital works programme."
Projects drawing down on debt included the wastewater treatment plant upgrade - $18m - the aquatic centre - $13m – and the museum - $7m.
"You'd say are these necessary and I would argue that these are all key, either critical infrastructure or community assets that … play an incredibly important part to our community."
He said council investments in some projects had been "amplified" more than two-fold with partnership investment with government agencies and other groups.
Colle said it was a "steep [debt] profile", particularly in years 2021 to 2024 because of the timing of capital projects, but it was within the council's debt limit.
"We do have headroom still, so we're not at our limit, even though we are forecast to get close to it. We do have a buffer to provide for the unknown."
A summary of year 2 of the Rotorua Lakes Council 2021-2031 Long-term Plan. Photo / Supplied / Rotorua Lakes Council
In the meeting, Chadwick said the council had directed Colle to increase rates to support the delivery of programmes in housing, stormwater and community safety.
"I think it is very wise to actually hold to our aspirations as elected members about investing in the right things for our community."
"We can't tamper with little bits of it and pull it back, because if you do … We will undo the aspiration of where we want to take our community."
She said there would be a community response "about affordability and ability to pay".
"But it is a nonsense to say that we can tamper and pull back on anything here.
"Nothing goes on hold, it's absolutely crucial. We keep in mind affordability but actually we do have to keep making sure we don't take our eye off the ball, off the future, and continue with the work at hand."
Councillor Raj Kumar said there were some things that needed progression but other spending needed to be reviewed.
Rotorua Lakes Community Board chairman Phill Thomass said a 5.7 per cent increase was a "great outcome" considering it was less than inflation increases.
Council district leadership and democracy deputy chief executive Oonagh Hopkins said the council would begin engagement with the community on the changes from the second week of April with the annual plan adoption set for the end of June.
