2 days ago
- Business
- Otago Daily Times
‘Scary' 30% rates rise on cards
Councillors hear an update on Local Water Done Well proposals at a workshop this week. PHOTOS: ANDREW ASHTON
Ratepayers could face a "scary" 30% rates rise in just two years if the Waitaki District Council's plans for an in-house water services unit are accepted.
That was the stark reality laid out for councillors at a workshop this week to plan how to move forward from a decision two weeks ago to opt out of a joint water entity with three other Otago councils.
Mayor Gary Kircher said he and the rest of the council were committed to making the best of that decision, which now involved sending a draft plan to the government by the end of July, before a full water services delivery plan (WSDP) was presented to the Department of Internal Affairs in September as required by the government's Local Water Done Well legislation.
"We have to make sure that we do set up our in-house option as best as possible and I won't tolerate anyone undermining that."
However, the size and cost of that was put into perspective by two Department of Internal Affairs (DIA) representatives at the workshop.
They reiterated their points from a previous meeting that the in-house model would have to meet the government's financial stability rules for a period of 10 years, even if the plan involved a joint venture with other authorities before then.
The in-house model would have to stand on its own merits for a 10-year period for assessment purposes.
If those rules were not quite met, a facilitator could be appointed to work alongside the council to help the plan meet the targets.
Department of Internal Affairs representatives Marlon Bridge (left) and Warren Ulusele at the workshop.
The other, "more intrusive" option was to send in "the specialist", DIA representative Warren Ulusele said.
"That person is appointed in the council, they make decisions on behalf of the council. They can look up across the council finances, potentially look to redirect funding from other purposes and redirect it back into Three Waters investment.
"They can look at the revenue streams and determine that they need to go up. So I point that out, not in a threatening way, but just to be absolutely clear about this conversation around control and that's concern, again, not just this council, consultation across the country and it's understandable.
"That person is appointed by the minister with one objective and that is to develop a financially sustainable plan. They will look to do that as quickly as possible and their focus is meeting growth. So they're not looking across the range of responsibilities you have, the range of considerations you have."
WDC chief financial officer Amanda Nicholls then laid out the council's finances saying they would look "scary" at this stage of the process, pointing out external debt per rateable property would significantly exceed the benchmark of $4000, while debt continued to grow over the years.
However, it would require a rate rise of about 25.61 % in the 2028 LTP year to fund the in-house unit, and then rate rises of about 4% for each of the following years.
All those rises and the 2028 rise could also increase by a further 5% if the council, as was likely, was required to fund depreciation of water assets.
When it came to council debt, the workshop heard the WDC would breach its debt cap in 2035 and every year thereafter, potentially requiring further rate rises to lower it.
Two weeks ago, Waitaki district councillors voted to exit the Southern Water Done Well partnership with Clutha, Central Otago and Gore in favour of an in-house water services delivery unit.
The joint arrangement was previously the council's preferred option before it was put to public consultation.
Public consultation across the four councils drew in over 1000 submission with the in-house business unit model the preferred option in Waitaki (54%) and Clutha, while only 26.7% supported the joint entity, most popular in Gore and Central Otago.
Prior to that the Department of Internal Affairs said joining a four-way, multi-district water company was the "only viable option" for the district.
The DIA representatives this week said they had heard nothing to allay their "concerns" over the council's chosen path, saying they could not see a pathway for the council to develop a plan that was credible.
"Hopefully, it'll come to light as you uncover more of what information discloses as you put more of the facts into the equation."
The council intends to hold weekly public workshops, videos of which will be posted on its website, every Tuesday this month to keep people up to date with progress.
A recording of this week's meeting, with chapter points for each section, the presentation given by the council's finance team, and the letter from the DIA are all available on the council website.
"Council encourages the community to watch the videos, read the presentation and the letter from the DIA to be fully informed about the development of the WSDP," a council statement said.
