Tauranga City Council faces funding challenge

Mayor Tenby Powell, right, and Deputy Mayor Larry Baldock at a media briefing this afternoon. Photo: Alisha Evans/SunLive.

Tauranga City is quickly out growing the council’s ability to fund its essential services and residents are facing a potential rates rise.

“If we do not make significant changes to our balance sheet, we will leave future generations with a city lacking housing, infrastructure and amenities,” says Tauranga Mayor Tenby Powell.

“I think we've got to now acknowledge and be honest about the fact that we have infrastructure problems that are ongoing and have been ongoing for some time.

Tenby and Deputy Mayor Larry Baldock raised the issues the country’s fastest growing city is facing at a media briefing this afternoon.

“Our roads are blocked, we are I think now six or seven months away from running out of green field housing development space. We are lacking housing, we have a housing crisis,” says Tenby.

“The current local government funding model simply doesn't work for local authorities like Tauranga that are experiencing rapid and sustained growth.

“Our growth challenges include traffic congestion, pressures on water and wastewater infrastructure and land supply and housing issues.

“However funding an increased capital program also requires increased debt, which in turn requires increased revenue.

“Now the challenges are complex, but they are manageable - they are also not new.

“The issues Tauranga faces have been evolving for a long period of time, but we can no longer kick the can down a road full of potholes and we cannot rate our way out of this.”

“We must also look at other financial avenues.

"Tauranga is not broke but we recognise that with the growth forecasts we've got, we need to do something different than that, which has been done before."

To address the need for increased revenue the council is looking at a range of options which include a potential rates rise, delaying or reprioritising some capital expenditure, developing a collaborative approach to financial sustainability with Government, regional partners and other key stakeholders and potential off balance sheet mechanisms.

The mayor and councillors will discuss these options as part of the next financial year’s budget at the council policy committee meeting next Wednesday.

Tenby says previous councils should have addressed the funding issue sooner and it reflects a legacy of under-investment in Tauranga’s future.

Whiles rates is only one mechanism to increase revenue Tenby says rate increases should have happened earlier.

“Rates changes should have happened some time ago and if they'd happened in a measured and managed way, we would not be in this position now.”

Larry says as member of previous councils he has been a part of discussions on rates rises.

“Having been in those debates for a few of those years, if you go back and have a look it's always been a hotly contested discussion. Council has by majority, mostly decided to keep rates down instead of addressing it.”

The Tauranga City Council has historically borrowed money to fund much of the city’s new infrastructure. However, under its borrowing covenants, the amount of debt the council could carry was capped at 2.5 times the city’s annual revenue, says Mayor Tenby Powell.

“We're saying today that we need to examine, the local government funding model, which I will say right now for high-growth councils is broken.

To give an example of how the funding model works if a home buyer had a $100,000 deposit they would only be able to buy a $250,000 home.

Councillor Steve Morris says he agrees with Tenby that they can’t use rates as the only funding mechanism.

“The challenge is going to be on March 4 when we have the committee meeting whether the councillors will try and rate their way out of it or whether they’ll have the courage to stand up to central government and say that the model is broken.”

Tenby says “Next Wednesday, we’ll need to make some key decisions to shape the draft annual plan and feed into next year’s long-term plan.”

Information on this year’s proposed budget will be detailed in the agenda for next Wednesday’s policy committee annual plan meeting.

Options for rates increases will be clearly identified and focused on the key issues facing the city, such as transport infrastructure and planning for a growing city.

The agenda will be published on the council’s website by midnight tonight.




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23 Comments

Waiting patiently

Posted on 04-03-2020 08:00 | By nerak

to hear from the terrible two that they will dig into their personal deep pockets to pay for my rate rise. Where else do they think I’m going to get it from?

Baldock

Posted on 03-03-2020 22:32 | By waiknot

Didn’t Deputy Mayor Baldock want to build a museum? Now he’s all concerned about a budget blowout.

Blah blah blah...

Posted on 03-03-2020 19:39 | By drgoon

Hammer the ratepayers again. How about some real belt tightening by TCC staff. How about the cost of removing car parking on Durham St. Hey it looks nice but who cares. Hardly anyone in the CBD now. I drove up Devonport Rd on Sunday... 23 vacant shops. Why, because nobody goes there. Why would we. One small defect on your vehicle and you get hammered with a costly ticket by the parking police. Free parking at the lakes and Bayfair. Then we have the roadside refuse collection that was going to have public consultation, what a load of bullocks. The decision had been made prior to any ’public involvement’. Ratepayers hammered again. This place sucks

You're Wrong

Posted on 01-03-2020 09:57 | By Yadick

Actually you’re right except on one point. That is, it’s not about whether you have the courage to stand up to local Government and tell them their model is broken. Rather it’s whether you’re willing to do your job with the best interest of your voters, your City if Tauranga and stand up and tell Regional Council their model is broken and stand forcefully by your decision. It’s time to draw the battle lines colonel Powell and ready your men for deployment.

Election leadership hype

Posted on 01-03-2020 09:10 | By T Farcombe

We thought we were getting some high powered businessman to lead Tauranga. All we’re being softened up for is a big rates hike. As bad as the previous council was, at least it managed on 3 or 4% increases. Under the new leadership the mayor has offered $2 million towards the bayfair underpass which should be paid by government, temporarily opened the Mount track to wheelchairs and pushchairs but at an unrevealed cost, supported huge pay rises for councillors, used rates money to subsidize buses for cruise ship tourists to dilapidated Downtown Tauranga, and employed someone else to chair a council committee because neither he or councillors had the skills. How about living within a budget like most of us do. If that means less costly infrastructure, less people coming to live here, less money for favourite sports, culture and arts then so be it.

Never Ending Story

Posted on 29-02-2020 20:56 | By Ady

I have lived in Tauranga since 2003 and throughout that time, Council has repeatedly said rates need to rise. We had years of double figure percentage rises and yet it was still not enough so more "user pays’ was introduced on areas you would expect to be covered by your rates. Every election time we get the same nonsense spouted by new and old councillors saying that they will do better and yet here we are!

No surprises there.

Posted on 29-02-2020 18:04 | By Accountable

Councillor John Robson has been warning anybody with the intelligence to understand and believe him that the Tauranga City council has been in serious financial strife for quite some time now but nobody in Council would back him. The only real support for him in the previous Council was from Steve Morris with Councillors Baldock and Clout continually ignoring Robson’s educated and experienced advice continued to spend the ratepayers money on totally unnecessary projects such as the CBD,s Our place project and the new Activate program as everyday examples. The scary bit is that Councillor Robson will now be listened to and Commercial rates are of interest to him and the businesses in the CBD will be caught up with large rate increases when they can least afford it. Be gentle on us please John!!

Some good news

Posted on 29-02-2020 17:43 | By Gnome

If we are running out of land for housing then does that not mean people will not be moving here: less increase of pressure on infrastructure, self limiting. Continuous growth is not always (okay, hardly ever) a good thing.

Its hard to believe

Posted on 29-02-2020 17:09 | By Jonny Jackson

Has the council ever published how much they have spent on leaky homes and buildings due to their poor building inspections. Keep your pay increases to what pensioners get.

Same old...Same old...

Posted on 29-02-2020 14:11 | By morepork

It’s pretty obvious they are not going to change. There should be a complete FREEZE on all TCC wages for at least 6 months AND existing wages should be CUT by the SAME percentage as they need to raise the Rates. Then see if they can’t get a better solution. If the existing rules are too constrictive then let’s see some positive action with Government to get them changed. ALL wage raises for TCC should be based on KPIs that include the level of Rates, and the levels of service provided, as judged by independent evaluators. If Council is not delivering, why should it be rewarded?

Common sense

Posted on 29-02-2020 10:12 | By Andrew64

Before looking at raising revenue by rates increases, look at expenditure and separate the ‘nice to haves’ and the ‘must haves’. Some good examples have been provided below. There are too many obvious examples around town of unnecessary wasted ratepayers money. The 30 odd percent pay rise for councillors after the last election is one. Tauranga is already one of the least affordable cities in the world to live in when compared to average incomes of residents. Prior to considering rates rises investigate other sources of revenue. Paid parking in the Mount CBD and the main beach. Red light cameras; the number of drivers running reds and not obeying stop signs is appalling. Congestion tax on heavy vehicles in and out of the Port at peak times. There are so many ways to revenue v expenditure prior to considering rates increases.

At Last

Posted on 29-02-2020 08:59 | By Yadick

At last some honesty however, I feel the Mayor/s should be regularly keeping us all updated on the progression toward a long term solution and outcome for this. Slim Shady (as usual) and others make some very relevant points in their comments. Barry a small handful the cycle lanes are hardly used, likewise the bus lanes apart from those that suffer from self entitlement and the St John Health Shuttle. Greertons main road . . . We all know the failings . . . So I guess the big question where to actively from here Mr Mayors? One thing for sure, it’s time to clear the swamp. Thank you Mayors for your honesty.

With the unbridled

Posted on 29-02-2020 08:39 | By R1Squid

Growth, TCC rate revenue has to be increasing. More population, more houses, more rates revenue surely. I put the poverty down to complete mismanagement. Too many staff to pay. Too many vehicles to run. Too many poor decisions.

Developers

Posted on 29-02-2020 08:39 | By Maryfaith

The ’fat cat’ developers should be paying TCC heaps more in infrastructure fees when making their subdivisions. Start taking from those who prey on the smaller people to fill their pockets! If the infrastructure is not in place then stop the subdivisions that are bleeding our rates. Commonsense lacking in TCC!

hang on a minute

Posted on 29-02-2020 05:31 | By old trucker

Here we go again,for crying outloud,we would have enough if they DID NOT SPEND SPEND ON RUBBISH we dont need,LIKE carpark at Mount ,roundabout on Windermere rd its a one way in and out,footpaths for cycles, NGATAI rd, nobody will use it,there is a footpath on other side,WHO DECIDES this will get done,NO names out of TCC,the mayor was GOING to wave A BIG STICK to stop this but now,one person in TCC wont let people ride their horses on cycle track for exercise,this is bull dust,they could also get RID of all the deadwood by getting rid of staff, and STOP buying BRAND NEW CARS,surely cars will last longer they dont go far around town,they wasted money on BURETA HILL,it only needed one side done (upside) and a 2metre wide strip not FULLwidth,and left the BIG DIP at intersection ,Sunlive thanks,10-4,out. phew.

TCC Funding

Posted on 28-02-2020 21:57 | By Noel Silver

Wow, Am I surprised, about this, NOT, and predictably it is all previous Mayor and Councillors fault, despite a number of Councillors still in attendance. Now there is a problem, and where is the announcement about how they are going to make cuts in staff, projects, and whatever is needed to get back to the core business of Services,Waste, Roading, and Infrastructure ONLY, and so like all NZers we live within our incomes. Not a word. Typical. Seems the best idea would be to put TCC into Administration. James

USUAL STORY !!!

Posted on 28-02-2020 21:34 | By The Caveman

TOOOOO much rate money being spent on "NICE TO HAVES" that DON’T benefit the WIDER COMMUNITY and not enough being spent on NEED TO HAVES - water, sewerage, roads, footpaths, street lights, rubbish collection - that really benefit the WHOLE COMMUNITY !!!!!

Answer is obvious!

Posted on 28-02-2020 20:53 | By Maryfaith

Clearly, the answer is as plain as the nose on your face!! CUT the wish list - stop the ridiculous millions spent on cycle tracks and stick to the basics - Infrastructure!! Ratepayers are already paying higher rates than the rest of the country. We voted you in to keep rates to an absolute minimum but you are still hell bent on spending money on unnecessary projects all around the city. Stop trying to fix things that are not broken! Money doesn’t grow on trees. STOP THE WISH LIST NOW!!

Tosh

Posted on 28-02-2020 20:35 | By Slim Shady

What rubbish. They waste millions on pointless roundabouts and pointless cycle lanes. Just look at their latest waste on Ngatai Road. Complete waste of money. Don’t build houses, then people won’t come here. Why are you hellbent on building more housing? It just encourages more migration. What a devious pair.

Instant large fines for road offences could easily cover roading

Posted on 28-02-2020 19:59 | By Omni

Daily I see many people holding cell phones and talking, sometimes even holding out the phone video calls and selfies while driving, add all the dozens of speeding and illegal driving manoveres, including dangerous tailgating, I recon a whole heap more police with the ability to write instant massive fines and a whole heap of speed cameras would not only bring out crash rate down and reduce road injury and death it would help fund our desperately old, windy, single lane roads around the Bay of Plenty. Maybe stop pinging rate payers who like us are already paying three times that of what we paid in our last suburb... and while you’re at I suggest you stop giving yourself self pay rises Councillors, and simply use the rate payers money wisely where it’s needed (rather than wanted!).

stop

Posted on 28-02-2020 18:43 | By sambro

stop taking pay rises

Woke council

Posted on 28-02-2020 18:29 | By Kancho

Oh really ! Finally the criticism of ratepayers has started to infiltrate the council. We have been behind on infrastructure for many years, failed Smartgrowth. Planning of growth has been poor and council has spent too long not focused on the basics. All the silly politicing on side issues. Wasted money on nice to haves and spending on non core projects has caused this situation. So concentrate and sort out your dead wood stop the silly stuff we all see examples of. This council needs to stop the BS arguing about things like street people and get on with the real job. Its been blatantly obvious for years infrastructure has no where near kept up with unbridled growth. Yes it will cost so make sure every dollar count

New way, No way

Posted on 28-02-2020 18:04 | By gincat

I voted Tenby in local body elections because he advocated a different way to fund projects. Guess thats not true. Relief that the begging ban rescinded, I my need to find a spot in the CBD

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