Norske Skog: Kawerau picking up $1m shortfall

Norske Skog. Photo: LDR.

Kawerau District Council ratepayers will have to pick up a rating shortfall of more than $1 million resulting from the closure and subsequent revaluation of Norske Skog mill.

Since it closed at the end of June, the rateable value of the property has dropped from more than $120 million to $66 million.

This year it paid more than $2.5 million in rates, close to a quarter of the council’s rates income.

The council released a consultation document on its proposed Annual Plan last week, asking the community to provide feedback on how that shortfall should be funded through rates and also, on a potential income creation scheme to create a secure asbestos containment site at the old rubbish dump.

The proposed plan includes an average general rate increase of 4.4 per cent, which falls within the parameters outlined in last year’s long-term plan of between 2.1 and 4.8 per cent.

Reasons given for the increase are inflation, additional depreciation and loan costs.

However, how rates would be distributed across the community would be affected by the closure of the town’s biggest industrial site.

In Kawerau, commercial and industrial properties pay 55 per cent of the general rate and residential properties pay 45 per cent.

With the significant reduction in rateable value of the Norske Skog property, the council is looking at two options for how to spread the rating shortfall.

Its preferred option is to keep to the status quo, or a second option would see the changing the share of the general rate to 50 per cent residential and 50 per cent commercial/industrial properties.

In the first option, residential rates would increase only by the average rate rise of 4.4 per cent while commercial and industrial sector rates would shoulder the shortfall from Norske Skog, resulting in a rates increase of 34.6 per cent.

In the 50/50 option, residential rates would rise by 16.1 per cent, while commercial and industrial rates would rise by 22.5 per cent.

These figures assume that there is no alteration to the level of service planned for the district.

Incorporated in these figures is a 1.8 per cent reduction in rates estimated from the development of a secure asbestos containment site at the old landfill near the Kawerau Transfer Station.

The council is also asking for feedback on this plan.

Ongoing development in the district has uncovered deposits of asbestos-contaminated material and the council thinks it is likely that additional deposits will be unearthed.

It is paying a significant amount to dispose of asbestos contaminated soil from the Central Cove building site outside of the region.

The site already has a secure asbestos cell and the proposed new containment site would be an expansion of the existing structure.

The council estimates that between 2000 and 5000 cubic metres of asbestos contaminated soil and 300 cubic metres of asbestos is collected annually in the Eastern Bay.

The first stage of the containment site proposal will have a capacity of at least 10,000 cubic metres at minimal investment outlay.

The community has until May 18 to have its say on the proposals.

Anyone wanting to be heard at a submission hearing can do so on May 31 or June 7.

Councillors will deliberate on the submissions on June 14 and adopt the annual plan on June 28.

The council is also planning a series of face-to-face meetings with the public, the details of which will be available in the next few days.

-Local Democracy Reporting is Public Interest Journalism funded through NZ On Air




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2 Comments

Shortfall?

Posted on 20-04-2022 13:22 | By morepork

The Council see the depreciation of a major asset as a "shortfall" that needs to be made up by Ratepayers. But it isn’t. If this asset increases in value will the Ratepayers get a rebate? The Council budgeting should have accounted for the risk of a major drop in Rating income and it should have been managed appropriately. It is not the fault of the Ratepayers that the devaluation occurred. It was a risk which should have been managed by the Council and wasn’t, with no provision for alternate financing being provided. Ratepayers are always the ones who get squeezed, whether it is their fault or not.

That will hurt locals

Posted on 20-04-2022 10:31 | By bigted

I question why the Kawerau District Council even exists? It may have been necessary with the mill, however things have now changed. Combine it with the Whakatane Council and make the burden easier for the Kawerau resident.

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