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Cr Bill Faulkner Faulkners Corner www.sunlive.co.nz |
At council last week elected members completed the first draft of the three year/Ten Year Plan that outlines this council's path forward.
The bit that will be of most interest is next financial year's potential rates revenue increase, which at first cut will be 5.1 per cent net of growth, which is estimated at one per cent on the rating base.
This plan goes out to you for submission and consultation, is then deliberated on after hearing your views, and after additions and deletions, it is confirmed in June.
It will be extremely interesting to watch this process in council following various elected members' voting patterns.
This is because council is now required by central government to have policy on ‘quantified limits on rate increase' – I've dubbed it the ‘Rodney Hide Memorial Clause'.
It started life three years ago when Rodney Hide was appointed Minister for Local Government and he said he intended curbing rampant rate increases.
Which was interesting considering it was successive governments' policy of pushing more function onto the local government without funding source; other than rates that contributed significantly to the problem.
Anyway, the Sir Humphreys in the government bureaucracy watered it down to this: in simple terms, council is required to have a rates cap.
Tauranga's elected members have plucked out of thin air: CPI plus two per cent plus growth. But it's not applicable for this year!
And provided you have a valid explanation it's okay to break it. Oh dear!
It's a Claytons rates cap – the rates cap you have when you're not having a rates cap. Rodney Hide and his ministry would have better employed their resources by addressing the rates system, which a 2007 government report stated is unsustainable.
Cap on track – other tracks… not?
So back to Tauranga's three year/Ten Year Plan and individual members' voting patterns, which of course create the rates increases.
As stated many times in this column, some elected members are reluctant to take the hard, unpalatable, and tellingly, electorally unpopular stance demanded by council's precarious financial position.
So this so-called rates cap will just introduce another impediment into the rates process as debate rages over the justification for this and that that requires council to exceed that rates cap.
For example, on another agenda item, council has voted a $5million capital injection over three years for Tauranga City Venues Ltd (TCVL) that runs Baypark and TECT Arena. Murray Guy spoke saying that TCVL didn't create the problem – they took it over from council.
Despite staff assurances in more buoyant financial times, the ongoing economic downturn means that with diminished cash flows they need capital to keep going.
Bob Clarkson sold it to council for $12million, payable in $2million instalments, which have been met by internal borrowings with interest being capitalised.
The end of the financial road has been reached as the effect of compounding interest multiplies.
The detractors howl ‘ratepayer's bailout', which is one point of view.
Another point of view is that it's still a good deal considering it provided a consented site for TECT Arena – probably worth the $5million.
Now that TCVL has total control over the site, council can rightly expect it to function in an economic fashion. That is, make money!
Tony Christiansen said he would be extremely grumpy if TCVL came back for more money.
He won't be the only one, but if they did, and it would be unbudgeted, then this would probably mean exceeding the rates cap and what real option would the council have?
See what a lot of nonsense the rates cap has the potential to be?
Hope for hotel development
On other matters, council is progressing the hotel development on land opposite Baycourt known as the TV3 site (originally TV3 were to build a studio there).
Stumbling blocks historically have been financing the building (hotel chains don't/won't own the hotels – they just operate them).
Investors aren't keen because their return is not guaranteed – they get a percentage of turnover. Council's parking requirements are a big impediment.
The taskforce is working through the myriad of issues to facilitate a successful conclusion.
Land as good as silver?
Another initiative council is considering in the three year/Ten Year Plan is property sales. Some will say it's selling the family silver in some cases.
Well that's true, but when you've been borrowing to buy more family silver and the cash flow dries up there's little option.
Refer back to the earlier comments about electorally unpopular, hard and unpalatable decisions required.
A flying example
A huge accolade to Andrew Gormlie and all those associated with last weekend's Tauranga City Airshow.
Reportedly 25,000 people attended an extremely well organised event.
And no financial assistance sought from council/ratepayers. Just like Classic Flyers Museum which exists on its own resources.
A glowing example for others to follow and it demonstrates what's possible given enthusiasm and financial management skills.
Nothing to do with council, but at the airshow I overheard some of the World War Two veterans, most around 90 years of age, discussing an invitation to travel overseas for a commemoration event this year.
Getting there is a problem given their age and there was some reluctance to travel with the air force. Their preference is commercial airlines.
Considering the sacrifice they and their generation made so that we can live in today's wondrous society, would it be too far out of line to suggest they all go first class?
This week's mindbender – from Henry David Thoreau 19th century essay:
'Goodness is the only investment that never fails.”
