2019/20 Annual Plan Consultation Document - Tauranga City Council
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2019/20 Annual Plan Consultation Document TAURANGA CITY COUNCIL | ANNUAL PLAN 2019/20 | CONSULTATION DOCUMENT 1
Greetings
Welcome to the second year of Council’s Long Term Plan 2018-2028:
the draft Annual Plan 2019/20.
Tauranga continues to grow quickly as the attraction of draft Annual Plan was completed. Accordingly, budget
our city becomes more widely known and people move adjustments have reduced the proposed average
here from other regions. residential rates increase to 3.9%, which is almost half
the original increase proposed in the LTP of 7.5%.
Generally speaking, well-managed growth is good.
It creates jobs, increases economic activity and can This 3.9% figure is equivalent to CPI inflation of 1.9%
improve efficiency. However, it also increases the cost plus 2% (and is after we have taken into account the
of providing roads, water, parks, libraries and most of growth in the estimated number of rateable properties
the other services and infrastructure that a modern city in the city of 1,505 since last year). An additional rates
requires to run efficiently. increase (of about 0.4% for the average residential
property) is also proposed for funding the kerbside glass
To help meet such challenges, Council’s most recent collection, which reflects the costs of the service running
10 year Long Term Plan (LTP) proposed an overall rates for the full 12 months from 2019/20.
increase of 7.5% for the 2019/20 year. This was needed
to ensure that long-term revenue met projected costs The budget adjustments have been made in areas that
including the costs of increasing debt levels. do not affect our service delivery levels or our ability to
deliver our capital programme that supports growth.
When the LTP was adopted, Council signalled a desire
to review this proposed rates increase before this year’s
However, we recognise that reducing this year’s rates We are looking at options to mitigate our debt levels
increase has budget implications beyond this year. to remain within the agreed limit. For instance, we
are planning to review our operational and capital
To ensure accurate budget information, Council programme during the next LTP process.
reviewed the costs of delivering key capital projects
identified in future years of the LTP. Pricing increases Central Government and high-growth councils
and more detailed design for some projects mean (including Tauranga, but also Auckland, Hamilton and
that the estimated cost of the capital programme has Queenstown) are also looking at different options for
increased by more than $100m over the next nine years. funding and financing.
This increase in costs, coupled with the reduction in
Because of the complexity of the issues involved,
proposed revenue, means that we would exceed our
unfortunately none of these options will be in place to
ability to keep our borrowing within limits agreed in
have an effect within 2019/20.
our Financial Strategy by 2022/23 if we were to deliver
everything proposed in the LTP.
TAURANGA CITY COUNCIL | ANNUAL PLAN 2019/20 | CONSULTATION DOCUMENT 2Summary of operational budget adjustments
Rates
(reduction)
Change Comment
/ increase
($’000s)
Includes (a) timing changes for projects including new administration
Budget adjustments, building, library and land purchases for parks, (b) reduction in budgets
savings and cost (2,560) for corporate activities (c) corporate savings across training, travel,
freezes legal and general expenses, and (d) no inflation adjustment of various
administrative and operating expense codes.
Net interest (1,600) Interest rate changes to align to revised economic forecasts.
Depreciation (1,000) Reduce rate funding to stormwater depreciation reserve1
Rate funding of Reduce the amount of rate funding to be introduced to marine facilities
(620)
activities ($350k), The Historic Village ($270k) - phasing this in over four years.
Continue funding of Tourism Bay of Plenty destination management
Tourism BOP (620)
through Airport activity.
Staff positions (400) Reducing new staff positions and reprioritising existing vacant positions.
Reprioritisation (across Urban Form and Transport Initiative,
Areas of increases
1,540 intensification, growth, resilience, and city centre response), insurance,
and reprioritisation
risk reserve and new investigations
Total (5,260)
1
The stormwater depreciation reserve has interest rate funding of $0.6m in 2019/20 on a balance of $16m. The annual interest receipt
increases steadily through the next few decades as the reserve grows significantly from annual funded depreciation and compounding
interest ($1.8m of interest is budgeted to be paid to the reserve in 2028). A reduction of $1m in the amount of depreciation expense that
is rates funded would prevent the stormwater reserve from becoming too large. This amount of non-funding would still allow Council to
meet all its renewal and debt repayment requirements over the life of the assets covered by the reserve.
TAURANGA CITY COUNCIL | ANNUAL PLAN 2019/20 | CONSULTATION DOCUMENT 3Four key priorities
In the meantime, we consider the capital programme proposed for 2019/20 to be achievable within our financial limits.
The projects proposed to start in 2019/20 are related to the four key priority areas identified in our LTP.
These priorities are:
1
Land supply and urban form
Making new land available for housing and enabling more
housing on existing land.
2
Connectivity
How we keep our city connected and moving, ensuring
efficient travel through roads, cycle ways, footpaths and
parking improvements.
3
Resilience to environmental changes
and natural disasters
Recognising the risks to our properties and infrastructure from
changes in groundwater levels, flooding frequency and sea
level rise.
4 Increased environmental standards
Aiming for improved water quality in our streams, rivers and oceans.
TAURANGA CITY COUNCIL | ANNUAL PLAN 2019/20 | CONSULTATION DOCUMENT 4Key issue
The key issue in this draft Annual Plan is therefore not However, because we would then have less revenue
about this year, but about how we position ourselves for we will have to reconsider our future debt and revenue
future years. levels to avoid breaching limits that were set in the LTP
Financial Strategy. Council will have to consider options
Our best-available information has highlighted potential that might include:
financial issues in a few years’ time. The question is
to what extent we should start to address this now in • Higher rates increases in future years (our current LTP
the form of increasing rates revenue, acknowledging budgets for an 8.2% rates increase in 2020-21).
that more substantive funding options will need to be • Reducing our capital expenditure on projects
considered in future years. proposed in the LTP.
We seek your feedback on this issue. • Other funding and financing models being developed
with Central Government to deliver new city
The approach we have taken in this draft Annual Plan is
infrastructure while keeping Council’s rates and debt
to lower the average rates increase to 3.9% instead of
levels sustainable.
the 7.5% increase proposed in the LTP.
Alternative approaches
One alternative approach for 2019/20 would be to retain Other options for an average rates increase between
the higher average rates increase of 7.5% as set out in 3.9% and 7.5% could also be considered. Each would
the LTP, with the additional rates used to repay debt. enable some additional revenue to be applied to debt
reduction in 2019/20.
Under this approach, Council will still have to consider
the mid-term options listed above but would do so with
a stronger revenue base. This improves our important
Note: an average rates increase of 7.5% as proposed in the LTP
debt-to-revenue ratio in two ways: by reducing debt and based on the budget adjusted expenditure levels of the Annual
at the same time increasing revenue. Plan allows for an additional repayment of debt of $5.6m (or 1%
of net debt).
However, it does mean a higher average rates increase
this year.
The average rates increase of 3.9% proposed in the draft
Annual Plan means an average residential rates increase
of $102; under the alternative approach of retaining the
7.5% increase in the LTP this increase is $185. Similarly,
the median commercial rate under the draft Annual Plan
decreases by $20 compared with the $118 increase
proposed under the LTP.
We seek your feedback on this We are also seeking your feedback on
issue and the approach we should some proposed changes to user fees and
take in the 2019/20 Annual Plan. charges, and to the draft Development
Contributions Policy 2019/20.
TAURANGA CITY COUNCIL | ANNUAL PLAN 2019/20 | CONSULTATION DOCUMENT 5Key dates
Public consultation: 23 March until 23 April 2019
Submission hearings: 7-9 May 2019
LET US
KNOW
what yo
Council deliberations: 21-23 May 2019
u
Adoption of final Annual Plan: 18 June 2019
think
Online:
use the online submission form available at
www.tauranga.govt.nz/annualplan2019
In person:
drop off your submission form at Council
offices on Willow Street or at your local library
Email:
scan your completed submission form and If you wish to speak in support
email it to submissions@tauranga.govt.nz of your submission please let us
know on your submission form if
day or evening suits you best
Post:
place your completed form in an envelope and
send it to this address (no stamp required):
Freepost Authority Number 370
Annual Plan 2019/20
Tauranga City Council
Private Bag 12022
Tauranga 3143
Looking ahead – Long Term Plan 2021-2031
Over the next 18 months, we will be working with community organisations, clubs and other local organisations to
understand what projects they want to deliver for the community and how we may be able to assist. This will inform our
own planning as we build towards the 2021-2031 LTP.
TAURANGA CITY COUNCIL | ANNUAL PLAN 2019/20 | CONSULTATION DOCUMENT 6New infrastructure requirements
and the effect on Council’s debt and
financial options
Tauranga’s population growth has been above the With higher debt comes risk, as it affects our ability to
national average for more than 20 years. This has respond to unforeseen events.
required greenfield development for housing while also
In order for Council to remain within our set financial
encouraging residential intensification.
limits, we must maintain the right balance between our
Council must provide infrastructure including roads, income (mainly from rates and charges) and our debt.
stormwater, water and wastewater networks for
The LTP identified the need to increase rates income to
these areas, as well as parks and other amenities
cover the operational costs of new infrastructure and the
for communities to enjoy. Council delivers the
increasing costs of our debt. At the time of adopting the
infrastructure at the start of developments, and it takes
LTP, we expressed a desire to review the future increase
time to recover these costs from rates and charges. We
in costs to ratepayers. However, we are also aware that
have therefore taken on debt which is increasing over
we will need to increase our income as our debt grows to
the period of this LTP.
deliver new infrastructure.
Our main options are to reduce debt or increase revenue A second option is increasing rates to help directly
or some combination of both. manage our debt. This would reduce the increase
in our future debt levels and help keep us within our
The proposal for a lower rates increase than proposed
set financial limits, while still delivering the full capital
in the LTP will mean less revenue for Council. When
programme identified in the LTP. Such management
combined with the higher costs of delivering our capital
of our debt levels could also provide more capacity to
programme, this will require a future reduction or
borrow to meet any unforeseen events in future.
slow-down in our works programme and/or a need for
increased revenue. A third and longer-term option is to look at alternative
revenue sources to cover our costs, rather than rely on
In discussions with central government agencies, we and
general rates. Options include targeted fees or rates
other high-growth councils are looking at ways to move
and specific project funding. These options will be
the increasing debt burden and its ongoing costs away
considered in the development of our next LTP.
from Council. The costs of new infrastructure would still
need to be paid by developers and new home owners, More information on the financials can be found in the
but the debt and the payments could be moved to Annual Plan supporting documentation at
parties other than Council. The Productivity Commission www.tauranga.govt.nz/annualplan2019
is also conducting an inquiry into Local Government
funding and financing which will look at this issue. They
are due to report by November 2019.
TAURANGA CITY COUNCIL | ANNUAL PLAN 2019/20 | CONSULTATION DOCUMENT 7Financials
Draft Annual Plan key indicators versus LTP budgets for 2019/20
LTP budget Annual Plan proposal
2019/2020 2019/2020
($m) ($m)
Operational Summary
Rates * 183 178
Other operating revenue 70 69
Subsidies and grants received for capital 36 37
Total operating revenue including grants 290 284
Operating expenditure 258 255
Surplus / (deficit) 31 28
Rates increase average after growth ** 7.5% 3.9%
Debt Summary
Net debt at 30 June 2020 *** 529 527
Debt / revenue ratio **** 179% 188%
New capital investment ***** 248 238
Development contributions 31 31
* includes water rates of $23m
** increase is for the average residential ratepayer
*** approximately 63% of debt is funded through rates. The remaining is funded by development contributions or user fees
**** includes capital funding for NZTA standard projects
***** includes vested assets, land sales. Total figure is reduced by a capital delivery adjustment that acknowledges that not all
capital work budgeted is able to be delivered in a year due to matters outside our control.
TAURANGA CITY COUNCIL | ANNUAL PLAN 2019/20 | CONSULTATION DOCUMENT 8Capital expenditure
The capital expenditure budget for 2019/20 allows us to deliver new assets like infrastructure (for example, roads, water
and wastewater pipes and treatment plants, and parks), and renew or improve our existing assets.
How our capital budget is allocated for 2019/20
$0.9m People and engagement
$1.8m Corporate services
City centre public spaces $6.1m
Parks, facilities and
other community $39.5m
services $64.8m Water supply
Sustainability
and waste $3.0m
Wastewater $15.8m
Stormwater $18.2m
$33.8m Transportation
*Excludes vested assets and land sales
The total capital programme has reduced by $9m when The most significant projects which have seen changes
compared to the LTP. This decrease is mostly a result compared to year two of the LTP are the following:
of timing adjustments across a range of projects. There
have been minor cost adjustments in 2019/20, with the • Delays to the delivery of the new central library and
more significant cost increases in growth projects in later civic administration building
years of the LTP. • Delay to the sale of the elder housing portfolio
You can find more detail about changes to our capital
expenditure programme, when compared with the LTP, at
www.tauranga.govt.nz/annualplan2019
TAURANGA CITY COUNCIL | ANNUAL PLAN 2019/20 | CONSULTATION DOCUMENT 9Operational spending
The operational budgets and level of service are consistent with year two of the LTP.
Budget adjustments were made to reflect lower funding of depreciation and lower interest costs than assumed in the
LTP, as well as reductions across a range of lower-priority budgets. None of the budget reductions has affected existing
levels of service.
You can find more detail on the changes to budgets and revised financial information at
www.tauranga.govt.nz/annualplan2019
2019/20 operational expenditure
Corporate services $41.7m $40.0m Transportation
People and
engagement $14.0m
$33.8m Wastewater
Regulatory and
$24.3m
compliance
$24.2m Water supply
$21.3m Stormwater
Parks, facilities and other
$68.8m
community services
$8.2m Sustainability and waste
Strategy and growth $18.7m $6.3m Infrastructure delivery
TAURANGA CITY COUNCIL | ANNUAL PLAN 2019/20 | CONSULTATION DOCUMENT 10Impact on debt
We are continuing to see significant increases in the cost These factors have increased the cost of our capital
of infrastructure and new projects. programme by over $100m over the remaining nine years
of the LTP.
Our debt level is increasing faster than we projected in
the LTP because we have revised upwards the cost of As part of the next LTP, we will need to review and
delivering the capital programme. Since the adoption potentially reduce the capital programme that is
of the LTP in June last year, the cost of the works delivered directly by Council to ensure that we remain
programme has increased for reasons which include: within financial limits. If no changes were made to the
capital programme as proposed in the 2018-2028 LTP,
• The capacity of the market to deliver the projects and, we would breach financial limits on debt to revenue
therefore, the competitiveness of the tender prices ratio (a 250% limit) by 2023. Maintaining the average
Council receives. This is occurring in many New residential rates increase at 7.5% in the 2019/20 annual
Zealand cities. plan would defer this breach until 2025.
• Ensuring that the things we build are resilient to natural
disasters, and this comes at a cost.
Setting rates
The Financial Strategy for the LTP 2018-2028 set the To reduce debt, Council would likely have to spend less
average residential rates increase for the 2019/20 financial on new infrastructure, both ‘hard’ infrastructure such as
year at 7.5% after growth. At the time of adopting the LTP, roads and pipes, and ‘community’ infrastructure such as
Council signalled a desire to review future years of the sports fields and community facilities. We will also need
plan and confirm the strategic direction for the city. This to revisit our strategic priorities, as these will guide a
included reviewing the level of rates increases proposed. review of operational expenditure in the medium term.
In the 2019/20 Annual Plan, we propose a lower average You can find more details on our financials, including the
residential rates increase than in the LTP. The average expenditure by activity as shown in the funding impact
residential rates increase proposed is CPI inflation plus statements, in the supporting information section at
2% (being a total of 3.9%). An additional increase is www.tauranga.govt.nz/annualplan2019
proposed for kerbside glass recycling. This reflects the
service being run for a full year during 2019/20, after
A quick
being available for only part of the current year, and the
additional cost.
To achieve the lower rates increase, we approved certain remind
adjustments to our budget. We now expect to gather
More ho
er
$178m in rates, which is $5m less than budgeted in the uses do
esn’t au
mean m tomatic
LTP for 2019/20. ore rate ally
Council s reven
. Instea ue for
have a d it mea
Although these budget adjustments mean that rates will be larger n ns that
u mber of we
lower in 2019/20, they also mean that in later years we will divide th houses
e total ra to
need to increase our revenue or reduce our debt or both. te requir
betwee e m e n t
n.
To view the supporting information mentioned in this document, go to www.tauranga.govt.nz/annualplan2019
To view the LTP, go to www.tauranga.govt.nz and search for ‘Long Term Plan’.
Unless noted otherwise, the information in the LTP remains correct.
TAURANGA CITY COUNCIL | ANNUAL PLAN 2019/20 | CONSULTATION DOCUMENT 11User fees and charges We’re proposing to make some changes to user fees and charges. Most of these changes are small increases in line with inflation. However, we are proposing larger increases in the following areas: • sustainability and waste • planning • building services • water supply • road reserve occupation • parks and recreation • parking • marine facilities. Details are available in a separate statement of proposal. This is available at www.tauranga.govt.nz/annualplan2019 and in hard copy at Council’s service centre and libraries. Use the Annual Plan submission form to send us your feedback. Development Contributions Policy We are also adopting a new Development Contributions Policy. The policy has not changed significantly compared to the current policy (2018/19) other than the new fees and charges schedule. A copy of the draft 2019/20 Development Contributions Policy and a statement of proposal which outlines all of the changes is available at www.tauranga.govt.nz/annualplan2019 and in hard copy at Council’s service centre and libraries. Use the Annual Plan submission form to send us your feedback. TAURANGA CITY COUNCIL | ANNUAL PLAN 2019/20 | CONSULTATION DOCUMENT 12
We want to hear from you
Tauranga City Council Annual Plan Submission Form
Have
your sa
y
Send us your feedback on the draft Annual Plan 2019/20 proposals set out in the
Consultation Document and the statements of proposals on policies and user fees.
Online: Post:
use the online submission form available at place your completed form in an envelope and
www.tauranga.govt.nz/annualplan2019 send it to this address (no stamp required):
Freepost Authority Number 370
In person: Annual Plan 2019/20
drop off your submission form at Council Tauranga City Council
offices on Willow Street or at your local library Private Bag 12022
Tauranga 3143
Email:
scan your completed submission form and
email it to submissions@tauranga.govt.nz
Submissions close on Tuesday, 23 April 2019 at 5pm
Once the Annual Plan 2019/20 is adopted, Written submissions may contain personal information within the meaning of the
Privacy Act 1993. By taking part in this public submission process, submitters
submitters will be sent a summary of key
agree to any personal information (including names and contact details) in their
decisions. Council will not be providing submission being made available to the public as part of the consultation and
individual responses to submissions. decision-making process. All information collected will be held by Tauranga
City Council, Council Administration Building, 91 Willow Street, Tauranga.
Submitters have the right to access and correct personal information.
First name
Last name
Name of organisation (if submitting on behalf of)
Street Suburb
City Postcode
Phone (daytime) Email
Do you wish to speak to Council in support of your submission? yes no
If so, please indicate whether you would prefer: daytime evening
We will contact you to arrange a speaking time. Each speaker is allocated 10 minutes.
Topics
Please let us know which topic(s) you are submitting on:
Council’s long-term financial position Draft User Fees and Charges
Draft Development Contributions Policy Other feedback or suggestions
TAURANGA CITY COUNCIL | ANNUAL PLAN 2019/20 | CONSULTATION DOCUMENT 13Provide your feedback below: Submission guidelines: Need more room? • Should you wish to speak to Council at the hearings, You can attach extra pages – just make sure they’re A4 you must still provide a written submission outlining and that you include your name and contact information. your main points. • Please use a dark-coloured pen if you are handwriting your submission and write as legibly as possible. TAURANGA CITY COUNCIL | ANNUAL PLAN 2019/20 | CONSULTATION DOCUMENT 14
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