FAQs: Western Bay rates

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​Rates have been a common topic in 2017 as Council updated its Annual Plan.

For that reason, we've provided a list of answers to some common questions being asked about rate rises, value for money, and how rates are set in the Western Bay:

Why are Western Bay rates at the higher end of the national average?

It comes down to growth and geography.

The Western Bay is one of a relatively small number of NZ Councils that experienced significant population growth in recent years. To service the growth we invested in infrastructure to meet our residents' needs.

To fund this investment Council has taken on significant debt over the past 15 years. This will be repaid over time by those who benefit from the infrastructure. The good news is we have created capacity that will serve our District well into the future.

Geography plays its part due to the Western Bay being a large, mainly rural and thinly populated District. Providing infrastructure is more difficult and expensive in rural over urban areas. For example, we have five wastewater plants to Tauranga city's two. We're also maintaining a complex roading network and have a number of significant stormwater improvements planned to reduce the risk of properties flooding. 

Does this mean we have a huge debt problem?

No. Like most Councils, businesses and families, Western Bay has debt, but we also have the capacity to manage this debt and a plan to make it happen. Prudent homeowners pay down debt as quickly as they can while keeping enough funds for living expenses. Councils also do this.

From June 2014 to June 2015 Council reduced total debt by more than $9m. The 2015-2025 Long Term Plan has net debt projected to drop by a further $64m over the next 10 years.

We have set the District on a steady financial footing, demonstrated by our credit rating being upgraded from A+ to AA- by Standard and Poor's.

What is the average Western Bay rate demand?

The average rate for Western Bay District is approximately $2,734. This is calculated by dividing a $56.4 million rate take by 20,621 rateable properties.

Rates vary considerably across the District, depending on what services - such as wastewater, water or stormwater - each ratepayer can access and pays a charge for.

Some commentators use a figure in excess of $3,000 as the average Western Bay rate. This is the average urban rate – not the average District rate.

Are rates increases due mainly to spending on 'nice to haves'?

No. The vast majority of Council spending and Council debt is associated with what some people call 'core services' such as water, wastewater, parks and reserves, roading and stormwater.

Some people say amenities such as cycleways, libraries and museums are 'nice to haves'. Others tell us these things are what make our District an attractive place to live and visit and are 'must haves'. Although these types of amenities do not dominate Council spending, we are careful to progress them at the right time and in the right way to gain maximum benefit for the community. We value feedback on this process.  

Why don't we just freeze rates rises till we've dealt with our debt?

We could do this but it would have significant consequences for the District, many of which would be potentially damaging. Freezing rates would lead to reduced services to ratepayers in the short term. It would also deteriorate our assets over time and increase debt as we would no longer be able to service the interest on our loans. We believe a majority of ratepayers do not want services reduced or assets threatened in this way.  

Proposed rates increases are really high, aren't they?

Rates increases need to be put into perspective. Council's current draft Long Term Plan proposes an average rate increase of 3.1 percent from 2015 to 2025. This figure includes growth and inflation. Growth relates to more people moving into the District to help pay for rates, and inflation includes things such as price and wage increases over time. Average forecast growth for 2015 to 2025 is 1.3 percent and inflation is expected to run at 2.2 percent. When you take these things into account the true impact of the 3.1 percent proposed rates increase is less than it seems.

Why do rates vary for different ratepayers?

There are three main types of rates: a general rate based on the capital value of your property; roading rates based on land value to cover the cost of building and maintaining roads; and targeted rates for services and facilities that benefit particular groups of residents. How you are rated varies depending on where you live, what services you can access and the value of your property. Council does not determine the land valuations. They are carried out by an independent valuation company and approved by the Office of the Valuer General. Council then applies this information to set its rates.
Page reviewed: 03 Jul 2017 9:39am