Rates surplus on track

Tauranga City Council's $1 million rates surplus is on track - but will not be going back to ratepayers.

The money will instead be used to pay for ‘Project Clean' - TCC's name for rehousing staff and clearing mould from its administration buildings and fixing leaks.


The $1 million rates surplus will be used to clean up the council's headquarters after an outbreak of mould. Photo: File.

So far $400,000 has been spent on costs associated with the project.

January figures for the seven months of the financial year show the council is making more money than it is spending. Operating revenue exceed operating expenditure by $4.8 million, when the expected difference was $1.9 million.

Income from building services and property lease revenue is expected to counter the $880,000 income from the watershed forestry. That will not be included in the current year.

The set back is because the council hasn't found anyone to take up the felling contract.

Full year forecasts based on trends so far are for operating revenue to exceed expenditure by $10.4 million, which is $2.9 million over budget.

It's partly because council's total expenditure for the year is $2.3 million less than budgeted for because of lower finance costs and downward revisions to depreciation charges on infrastructure assets based on updated asset figures.

A revaluation of property and buildings this year is likely to adjust depreciation upwards, but overall staff are still forecasting below-budget depreciation for the whole year.

Overall spending on the capital programme is tracking slightly below budget due to slower than expected spending on water, stormwater and sewerage.

Potential carry forwards totalling $10 million have been identified in the Southern Pipeline, Marine Precinct and Greerton Library projects. The report states the current year's projects are still expected to be completed by year end.

However, other expenses are going to be above budget because of Project Clean costs which are only partially offset by the deferred spending on the forestry harvesting in the water catchments.

In other figures the city's net debt forecast is now $320.4 million - $77.4 million less than the original expected figure of $398 million for the full year.

The big drop is because the figure now incorporates a debt reduction of about $63 million from the sale of Route K to the NZTA.

The debt revenue ratio is currently 174 per cent - 43 per cent better than the 217 per cent expected at the end of the financial year.

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13 comments

What most of us do vs what council does

Posted on 27-02-2015 11:32 | By Annalist

Most of us facing mould in our homes or offices, or from our leaky homes, get a bit of bleach and clean it up. When this happens at Council "experts" are called in and project teams established. People are evacuated and tours are conducted possibly complete with full protective suiting and gumboots?


No wonder they are in surplus

Posted on 27-02-2015 11:47 | By The Sage

The recent rate bills convey that. They just keep going up!


Annalist

Posted on 27-02-2015 14:25 | By YOGI BEAR

Yes that is it, a bit of elbow grease and good cleaner, all sort in 5, none of this over the top dramas and huge expense for no reason.


oh good.

Posted on 27-02-2015 16:19 | By sojourner

How about paying off debt?


Creative Accounting

Posted on 27-02-2015 16:32 | By The author of this comment has been removed.

We have a surplus, but we are in debt. I did accounting at high school and you were either in the red or in the black as a business. The spin doctors are at it again.


Opportunity begging

Posted on 27-02-2015 17:43 | By ronmel

Rate payers will be again watching to see whether there needs to be another clear-out of council next election. Many of the current batch may not be of the calibre or possess the business acumen to run the city's finances. A better option maybe to simply sell the council building and lease an alternative building and use the sale funds for debt reduction. Maybe some 'real business person' could turn the old building into a 5-star hotel?


Reporter must be wrong!

Posted on 27-02-2015 18:03 | By Murray.Guy

Reporter must be wrong. Mayor Crosby has assured us the Mould Rort will have NO or little impact on rates (ratepayers).


@bigted

Posted on 27-02-2015 18:21 | By Steve Morris

A surplus refers to income; receiving more income than you spend. Think of it like having a mortgage and spending less than you earn with your household budget. With a $180m annual budget a small surplus is better than a deficit. You'll note the reduction in debt over and above Route K.


@ Steve Morris

Posted on 27-02-2015 21:31 | By The author of this comment has been removed.

Thanks for clearing that up. A prudent household pays more than needed for the mortgage payments, thereby reducing the mortgage. Simply, are council doing this?


@ronmel

Posted on 27-02-2015 21:35 | By Steve Morris

Hi Ron, cost of borrowing to fund a building including land is less than the cost of funding a lease.


@bigted

Posted on 28-02-2015 13:01 | By Steve Morris

Yes that has been the focus over the last twelve months because over the next 10 years we have high cost core infrastructure that needs doing. The big projects: last section of the $100m Southern sewage pipeline so we can actually use it ($25m). A new road, Te Okuroa Drive ($15m). A new water plant ($60m). Most of these are funded by levies on developers so the rates funded portion is small. Think of it like borrowing to add on a new bathroom, bedroom and lounge for relatives coming to stay. The relatives are going to pay for most of it in instalments but the debt still sits on your balance sheet.


Steve Morris

Posted on 02-03-2015 22:22 | By YOGI BEAR

The flaw in the argument here from you Steve is that the relatives don't pay! So that just leaves the debt, and the monument to the crazies who spent it. The developers are there for the social occasions and lining up the city partners schemes, that is all about freebees and more that we know yet.


Southern sewage pipeline ?

Posted on 02-03-2015 22:25 | By YOGI BEAR

I am a bit puzzled there Steve, $25m to finish to be able to use it? You forgot the other $200m odd to expand the plant that cant cope with what its got already. What ever you thought just got worse when it comes to debt, interest and no developers except at the social functions.


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