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Minimal rate increase proposed for Gisborne city residents

17 Dec 2010

Minimal rate increase proposed for Gisborne city residents

A 3.5% increase in total rates collected is likely to be proposed by Gisborne District Council to fund it’s 2011/2012 Annual Plan. This is significantly less than the 8.1% increase forecast in Council’s Ten Year Plan. Gisborne city residential properties will have the smallest increase. An average city property valued at $280,000 will go up by less than 1%; well under inflation.

“I hope this will be a relief for the majority of our ratepayers who live in Gisborne city. They have faced some of the highest increases in the district over the last five years especially with the building of the new wastewater treatment plant,” says chief executive Lindsay McKenzie. “We are very aware that the affordability of rates in this district is a major issue for many because of low incomes. We have worked hard to keep costs to a minimum while absorbing increased Kiwisaver and ACC costs.”

Significant savings have been made in the provision of water and dealing with stormwater. The projected costs from the new wastewater treatment plant are $1 million less than estimated. This is due to reductions in depreciation, interest and lower operating costs than earlier predicted.

The rate increase for different properties varies significantly. “A residential property in Ruatoria we looked at will get a rate decrease of 2.57% due to the reduced cost of rubbish collection. This is balanced by a slightly above average increase for a property we looked at in the Te Karaka township.”

 In many cases the greatest impact will be felt by high value properties. Original estimates showed the cost of landfill, transfer stations and some corporate expenses would be funded as part of the Uniform Annual General Charge (UAGC) portion of the rates. This would have taken fixed charges to 32% of total rates revenue. By law this must not exceed 30%. Costs of $1.4 million have therefore been transferred to general rates which are spread over the whole district and are based on the capital value of a property. 

Many properties that have enjoyed lower rate increases over the last 5 years will be harder hit next year says chief financial officer Mike Drummond. “We looked at some examples of higher priced properties. The Wainui beach home, rural forest and a city retail property all had less than a 5% increase in total over the last five years. Next year the proposed increases for these areas are likely to be above 6%.”

“Owners of commercial buildings in the central business district face one of the largest increases. This comes on the back of negligible increases in rates over the last five years. In the example we looked at there had been no increases at all for that property over the last five years. It would face a 10% increase next year. This is mainly due to the fact that these properties now pay the full costs (7% of the increase) of the much appreciated City Watch Team. Previously 67% of this service was funded by a Work and Income NZ Grant.”

Rural properties are also affected by targeted rates for rural fires and increased roading and pest control costs.

How rates are spread across the district is a result of Council’s revenue and financing policies. These will be reviewed next year and the public will be asked to get involved in this process.

The rating estimates are based on what it will cost to deliver the Council’s 2011/2012 Annual Plan. This plan is year three of a ten year plan and does not include any new major works. Council will be seeking feedback on its plan in March next year with a series of Community Update meetings throughout the district.

The rates comparison tool will be updated in early March so that people can compare the rates they are paying now with the proposed rates for their property. Once all consultation has been considered the amended plan will be adopted. New rating levels will take affect from July 2011.