Western Bay of Plenty District council is heading for a 4.2 or 4.7 per cent rates increase this year, while fending off an accusation that it's the most expensive place to live in New Zealand.

A report in the Manawatu Standard says Western Bay ratepayers are paying an average of $3274 a year in rates - the highest in the country.

WBOPDC Mayor Ross Paterson says the council sits in the middle of the pack when it comes to financial performance.

The comparison is made from data collated by lobby group the Taxpayers' Union, from council reports and turned into an online tool, Ratepayers' Report, to allow residents to compare their local council with 67 territorial authorities across the country.

Fairfax Media says the figures were checked with councils.

Western Bay Mayor Ross Paterson says the information came from the residential average, not the overall average.

'They asked us for residential, I don't know why, we are only part residential and part rural,” says Ross.

'That residential figure came through at about $3200. Our average figure overall is about $2550, so there's considerable difference.

'By not putting it in as residential, it doesn't give a true picture for out average rate.

'We said you are not comparing apples with apples. We're quite happy to be considered and measured with everybody else - we sit reasonably well with that. But the fact that they have gone and put this figure out as the residential rate and they haven't done it with most of the others is not a true comparison.”

Some councils also have a separate water rate, says Ross. In the Western BOP urban properties face higher rates as they are paying fixed charges for water, wastewater and storm water, which can amount to nearly half the rates bill.

The Western Bay rates are expected to be ratified on June 26. The total take is about 4.7 per cent, but the average comes through at about 4.2 per cent, because the council has put in 0.5 per cent for growth.

'That comes from just the usage of new people coming in,” says Ross.

'It's not a rate figure that we have to draw. So it comes through about 4.2 per cent average, but it depends where people are - whether they are rural or residential, because there are some different charges that flow.”

The Western Bay also features in a report commissioned by Local Government New Zealand as one of the four councils in NZ to fall below the rating line for financial performance.

But the authors admit this is because the methodology does not take into account income from non-rating sources, or financial equity.

'The Western Bay of Plenty District Council has invested heavily in infrastructure upgrades to enhance capacity and new infrastructure to meet future population growth,” says the Grant Thornton report.

'The council has a policy of meeting the cost of infrastructure development caused by growth through financial contributions. .

'This is not reflected in the final assessment as the criteria does not take into account any income from financial or development contributions. When this income is included Western Bay sits comfortably above the line and is in a sound position financially.”

It's a ridiculous approach, says Ross.

'They (development contributions) are very much part of our income and we structure them for those that are coming in to pay for their part of infrastructure,” says Ross.

'For some unknown reason the Local Government Finance Association does not take that in as income. If you put that in then we sit up with everybody else, in the middle of the pack.”

Council is proposing a total rate increase of 4.96 percent, including growth and inflation, when it adopts the 2014/15 Annual Plan, says council finance manager Matt Potton.

The rate increase includes the return of $200,000 seal extension money to the roading budget in response to submissions from rural residents opposed to any cut in the seal extension budget.

The seal extension budget was cut from $800,000 to $600,000 in the draft annual plan. Putting it back into the budget equates to a 0.32 percent rates increase, says Matt.

This increase is slightly off-set by the decision to remove $65,000 in funding for the Katikati Heritage Museum from the budget. The Museum closed in May 2014.

'There are costs associated with Council taking responsibility for the protection, storage and cataloguing of the Museum collection, but these costs will be covered by the existing General Rates Reserve, to remove the burden from ratepayers,” says Matt.

Other significant funding includes $185,000 for the Omokoroa Sports Ground development with $115,000 allocated for two tennis courts and $50,000 for a skate park.

Omokoroa Point School receives $20,000 for resurfacing its community tennis courts and $190,000 will be budgeted for a Te Puke skate park.

The council expects to receive income of $54.78 million from rates for the financial year – compared to $53 million in the 2013/14 year. This takes into account the District Rate, Community Board Rates and Uniform Annual Charges.

The proposed 4.96 rate increase is significantly lower than the 6.0 per cent forecast in the 2012-2022 Long Term Plan and is 0.20 per cent less than last year's average rate increase of 5.16 per cent. The proposed average rate increase is 2.26 per cent above growth (0.50 per cent) and inflation (2.20 per cent).

Total costs in the 2014/15 year are expected to be $96.4 million of which $61.3 million will be spent on maintaining existing Council assets and delivering required services.