Notice is hereby given that an Ordinary Meeting of Southland District Council will be held on:

 

Date:                            

Time:

Meeting Room:

Venue:

 

Thursday, 23 November 2017

1pm

Council Chambers

15 Forth Street, Invercargill

 

Council Agenda

OPEN

 

 

MEMBERSHIP

 

Mayor

Mayor Gary Tong

 

Deputy Mayor

Paul Duffy

 

Councillors

Stuart Baird

 

 

Brian Dillon

 

 

John Douglas

 

 

Bruce Ford

 

 

Darren Frazer

 

 

George Harpur

 

 

Julie Keast

 

 

Ebel Kremer

 

 

Gavin Macpherson

 

 

Neil Paterson

 

 

Nick Perham

 

 

IN ATTENDANCE

 

Chief Executive

Steve Ruru

 

Committee Advisor

Alyson Hamilton

 

 

 

Contact Telephone: 0800 732 732

Postal Address: PO Box 903, Invercargill 9840

Email: emailsdc@southlanddc.govt.nz

Website: www.southlanddc.govt.nz

 

Full agendas are available on Council’s Website

www.southlanddc.govt.nz

 

 

 


 


Council

23 November 2017

 

TABLE OF CONTENTS

ITEM                                                                                                                                                                                  PAGE

Procedural

1             Apologies                                                                                                                                                                7

2             Leave of absence                                                                                                                                                7

3             Conflict of Interest                                                                                                                                             7

4             Public Forum                                                                                                                                                         7

5             Extraordinary/Urgent Items                                                                                                                        7

6             Confirmation of Council Minutes                                                                                                             7

Reports - Policy and Strategy

7.1         Freedom Camping Bylaw for Lumsden                                                                                                 9

7.2         Revenue and Financing Policy Review                                                                                                25

7.3         Proposed Fees and Charges for 2018-2028 Long Term Plan                                               169

Reports - Operational Matters

8.1         Options for Funding the Around the Mountains Cycle Trail                                              213

8.2         Proposed Rate Increase for 2018-28 Long Term Plan                                                              223

8.3         Audit NZ Engagement Letter for the 2018-2028 Long Term Plan                                    299

8.4         Confirmation of road stopping at Rocky Point near Mossburn                                       339

8.5         Road Naming of Jameson Lane - a newly created Private Road                                        343

8.6         Colac Bay Foreshore Road Erosion - Level of Service                                                              347

Reports - Governance

9.1         Unbudgeted expenditure - Te Anau Community Board - support for the 2018 GODZone event                                                                                                                                                                     431   

Public Excluded

Procedural motion to exclude the public                                                                                                       435

C10.1    Abandoned Land                                                                                                                                           435

C10.2    Unbudgeted Expenditure - Kotui Library Management System                                      435

C10.3    Te Anau Wastewater Project - Business Case for the Kepler Disposal Option         435  

 


Council

23 November 2017

 

1             Apologies

 

At the close of the agenda no apologies had been received.

 

2             Leave of absence

 

At the close of the agenda no requests for leave of absence had been received.

 

3             Conflict of Interest

 

Councillors are reminded of the need to be vigilant to stand aside from decision-making when a conflict arises between their role as a councillor and any private or other external interest they might have.

 

4             Public Forum

 

Notification to speak is required by 5pm at least two days before the meeting. Further information is available on www.southlanddc.govt.nz or phoning 0800 732 732.

 

5             Extraordinary/Urgent Items

To consider, and if thought fit, to pass a resolution to permit the Council to consider any further items which do not appear on the Agenda of this meeting and/or the meeting to be held with the public excluded.

Such resolution is required to be made pursuant to Section 46A(7) of the Local Government Official Information and Meetings Act 1987, and the Chairperson must advise:

(i)        The reason why the item was not on the Agenda, and

(ii)       The reason why the discussion of this item cannot be delayed until a subsequent meeting.

Section 46A(7A) of the Local Government Official Information and Meetings Act 1987 (as amended) states:

“Where an item is not on the agenda for a meeting,-

(a)       that item may be discussed at that meeting if-

(i)         that item is a minor matter relating to the general business of the local authority; and

(ii)       the presiding member explains at the beginning of the meeting, at a time when it is open to the public, that the item will be discussed at the meeting; but

(b)       no resolution, decision or recommendation may be made in respect of that item except to refer that item to a subsequent meeting of the local authority for further discussion.”

 

6             Confirmation of Council Minutes

6.1             Meeting minutes of Council, 18 October 2017


Council

23 November 2017

 

Freedom Camping Bylaw for Lumsden

Record No:             R/17/11/26654

Author:                      Robyn Rout, Policy Analyst

Approved by:         Bruce Halligan, Group Manager Environmental Services

 

  Decision                                        Recommendation                                  Information

 

 

Purpose

1        The purpose of this report is to obtain a decision from Council on how it would like to proceed regarding the Freedom Camping Bylaw 2015 (the Bylaw) for Lumsden.

Executive Summary

2        In June 2017, a statement of proposal to amend the Bylaw for Lumsden was endorsed and put out for consultation (see Attachment A). In September 2017, Councillors received copies of the written submissions, and heard the submitters who wished to speak. In October, Council deliberated on the proposed amendment, and identified a preferred option on how to proceed.

3        The preferred option was that Council would only allow self-contained freedom camping in the Lumsden Township for up to three nights in a 30 day period. Council outlined that it would like to have specific areas where camping would be prohibited around the railway station precinct, and that the prohibited area for the playground, would be expanded (see Attachment B). Council also decided it would like to get advice on the legality of proceeding with this preferred option, before making a final decision.

4        Council staff have obtained legal advice that states that there would be an appreciable risk if Council’s next steps were to proceed and adopt the preferred option. This risk is primarily due to the fact that the Council did not specifically consult the community on an option more restrictive that the current Bylaw provisions.

5        On this basis, staff are presenting two options to Council on how it could proceed, and staff are recommending the Council proceed with one of the options. The options are:

·    progress with putting the new proposal out for consultation; or

·    continue with the current Bylaw and review the Bylaw at a later date.

6        Due to the legal risks associated with progressing any other option, staff are recommending that Council does not deviate from either of these two options.

 

Recommendation

That the Council:

a)            Receives the report titled “Freedom Camping Bylaw for Lumsden” dated 17 November 2017.

 

b)           Determines that this matter or decision be recognised as not significant in terms of Section 76 of the Local Government Act 2002.

 

c)            Determines that it has complied with the decision-making provisions of the Local Government Act 2002 to the extent necessary in relation to this decision; and in accordance with Section 79 of the Act determines that it does not require further information, further assessment of options or further analysis of costs and benefits or advantages and disadvantages prior to making a decision on this matter.

 

d)           Decides to proceed with one of the following two options, either:

 

Option 1 - Not proceed with the statement of proposal, and instruct staff to begin preparing a new draft bylaw and statement of proposal (based on Council’s preferred option); or

 

Option 2 - Not proceed with the statement of proposal, continue with the current Freedom Camping Bylaw, and review the Bylaw for Lumsden at a later date individually or as part of a larger overall review of the Freedom Camping Bylaw 2015.

 


 

Background

The current Bylaw

7        In Lumsden, the current Bylaw allows self-contained camping anywhere within the town boundary (on Council controlled land), for a maximum of 3 days in any 30 day period. In the Bylaw, a vehicle is classified as being ‘self-contained’ if it has the capability of meeting the ablutionary and sanitary needs of its occupants. The current Bylaw also allows both self-contained and non-self-contained camping in two designated areas around the railway station precinct for 7 nights in any 30 day period. There is currently no differentiation between vehicles and tents. A map with the current Bylaw for Lumsden is in Attachment A.

 

The statement of proposal

 

8        On 29 June 2017, staff presented an amendment to the Bylaw to the Regulatory and Consents Committee, which was endorsed and released for consultation using the special consultative procedure (see Attachment A).

9        The proposal was to:

·    allow self-contained camping in the pink shaded areas on the map in the statement of proposal (excluding the prohibited areas, and only on Council controlled land), for a maximum of 3 days in any 30 day period. 

·    create a new defined area for tents (for up to 7 nights) to the east of the railway station precinct, and prohibit tents from other designated freedom camping areas.

·    allow self-contained and non-self-contained freedom camping vehicles in the areas marked in green around the railway station precinct for up to 7 nights.

·    designate the playground and particular car parks near the main street, as camping ‘prohibited’.

 

10      Councillors received the written submissions and heard the submitters who wanted to speak in September this year. In the submissions, there was not a consensus on the approach that should be taken with freedom camping in Lumsden. As has been outlined in previous reports, generally submitters are quite divided on whether or not they support having a designated tent site, and whether or not to have more areas where self-contained and non-self-contained vehicles would be permitted to stay for up to 7 nights around the railway station. There is more of a consensus from submitters regarding the proposed prohibited areas.  Submitters are generally supportive of the prohibited areas that were outlined in the statement of proposal.

11      Council deliberated on the proposed amendment to the Bylaw for Lumsden at a Council meeting held on 18 October. At that meeting Council had a lengthy discussion, and then indicated that it supported a more restrictive approach to freedom camping in Lumsden. Council resolved that, subject to obtaining legal advice, that it supported a new preferred option. Council also decided that further management and enforcement may be required at the site, and Council requested that staff report back (with input from the Lumsden Community Development Area Subcommittee (the CDA) on how enforcement at the site might be best achieved and funded.

 

 

The preferred option

12      The preferred option is to only allow self-contained freedom camping in the Lumsden Township for up to three nights in a 30 day period. In relation to the statement of proposal, Council decided it would like to have one additional area where camping would be prohibited, which would essentially expand the prohibited area around the playground (see Attachment B).

Issues

13      The issue before Council is what the next steps should be regarding the Bylaw for Lumsden.

14      Council staff requested legal advice on whether Council could proceed to adopt its preferred option. Legal advice has indicated that there would be an appreciable risk if Council’s next steps were to proceed and adopt the preferred option without further consultation.  Council did not indicate in the statement of proposal that a more restrictive bylaw could be the outcome of the consultation process, and Council has not directly sought community views on the new preferred option.

15      On this basis, in this report staff are presenting two options to Council on how it can proceed - both are risk-adverse. Staff are recommending that Council proceed by selecting one of the following two options.

Option 1 – Progress with putting the new preferred option out for consultation

16      As Council have identified a preferred new option regarding freedom camping in Lumsden, Council could decide to progress an amendment to the Bylaw now, and instruct staff to prepare a new draft bylaw and statement of proposal based on Council’s preferred option. This could then be presented to Council to be endorsed and put out for consultation.

17      This would allow Council to progress its preferred option, and it would eliminate the risks associated with now taking a more restrictive position than what was outlined in the original statement of proposal.

18      As Council now has a good understanding of community views on the matter, Council would be in a well-informed position to proceed.

Option 2 – Continue with the current Bylaw and review the Bylaw at a later date

19      Council could also decide to not proceed with the statement of proposal, to continue with the current Bylaw, and to consider reviewing the Bylaw at a later date. This review could be undertaken to try and have an amended Bylaw in place by the next summer season.

20      There is merit to this option as any amendment to the Bylaw is now not going to be completed in time to manage the campers that will be coming to Lumsden this summer. As a result, the existing Bylaw would continue to apply.

21      There is currently quite a lot of work being undertaken, which could result in additional amendments being proposed to the Bylaw. Waiting for the outcomes of these pieces of work may prevent the Bylaw having to be reviewed on two occasions. 

22      The Council has recently arranged for the preparation of an Open Spaces Strategy via an external consultant, and is also intending to develop more of a strategic Council position on freedom camping in 2018. Work in this area is intended to be progressed in 2018 and appropriate consultation will occur when matters progress to that stage.  It is possible this work stream may result in changes being proposed to the Bylaw.

23      On the 7th of November, staff have also received a Sector Brief from Local Government New Zealand (LGNZ), outlining that it has recently convened a small group of people to consider how to best progress the issue of improving regulations governing freedom camping in New Zealand. The group is made up of elected members, local government representatives, and representatives from the New Zealand Motor Caravan Association. This group aims to progress work relating to freedom camping by:

·    developing a legally robust model bylaw which would promote consistency across New Zealand

·    developing best practice process to educate campers and improve enforcement levels

·    commence preparation for a review of the statute as signalled by ministers prior to the election.

24      LGNZ has identified that freedom camping is a major issue for many Councils, and they are also looking at holding a symposium on freedom camping and possible solutions, in the first quarter of 2018.

25      Staff believe there may be spin-offs from the work being undertaken by LGNZ, such as the development of a model bylaw, which may result in Council wanting to amend its Bylaw to be consistent with other districts.

26      There were also statements made prior to the parliamentary elections, that there might be legislative changes relating to freedom camping, in the future. With the change in government, it is unclear what these changes might be, and when they might be made.

Enforcement

27      Council staff have held discussions with the Lumsden CDA, since this matter was last considered by Council, on enforcement options for the 2017/18 tourist season.

28      It is unclear at this stage as to the extent to which the liaison officer who undertook these duties in the 2016/17 season (and received considerable positive social media feedback in doing so) is available for the 2017/18 season.

29      Staff consider it would be desirable from a health and safety and continuity perspective, that there be more than one person who is warranted to provide freedom camping enforcement in this locality. CDA members have also expressed some concerns that they have been undertaking de facto enforcement of a Council Bylaw, and staff agree with this concern. The Bylaw is a Council Bylaw and it is up to the Council to have appropriate enforcement mechanisms in place, and not rely on CDA members to enforce elements of it.

30      Options are generally:

·    Engaging an external contractor to undertake enforcement, similar to what Council currently does with after-hours noise. The problem with this could be that there are currently no known locally based suitable contractors, and that if the only contractors available were based in either Invercargill or Gore, it could be expensive and also involve delayed response times; or

·    Warrant the current liaison officer and/or other locals (preferably 2) to undertake this enforcement work, following suitable training.

31      Either of these options will involve additional costs over and above the 2016/17 season, as enforcement/education was largely undertaken on a voluntary basis in 2016/17.

32      Indicative costs may be in the order of:

·    2 patrols x 2 hours per day x $20 per hour x 180 days = $14,400 plus $3000 training and equipment costs = $17,400.

33      Some component of this cost may be recoverable from infringement notices issued for breaches of the Bylaw, although that is not possible to quantify accurately.

34      If the warranting of locals option was favoured, advertising could occur for expressions of interest from suitable parties; although obviously this would need to occur promptly with the tourist season well underway.

35      There is no current budget for this, so some consideration would need to be given to how to fund this. By way of example, the Te Anau freedom camping warden is co-funded between the Te Anau Community Board, at a District Level, and via DOC.

36      Noting the timing of this matter, Council staff have sought to be proactive pending the Council decision by organising additional ‘No Camping’ signage for areas outside of the current Bylaw area, where non-self-contained camping is prohibited. This should be ready in approximately 10 days. There have been some further concerns expressed about camping in this area, which is clearly not authorised by the current Bylaw.

Factors to Consider

Legal and Statutory Requirements

37      Council should be mindful of the legal advice that has been received, that proceeding to adopt an amendment to the Bylaw in accordance with the preferred option, without undertaking direct consultation on that option, would increase the risk of there being a successful legal challenge to Council’s decision making. The freedom camping issue has come under considerable scrutiny both locally and nationally and has been the subject of litigation elsewhere, and staff hence consider that this risk is real and not fanciful.

38      Council should also be mindful that staff are recommending Council proceed only with one of the two options identified, due to the risks associated with other options.

Community Views

39      Through undertaking a thorough consultation process on the statement of proposal, Council has collected information on the wide range of community views that are held on freedom camping in Lumsden. These views were outlined in the report that went to Council on 27 September 2017.

40      In relation to the decision staff are asking Council to make in this report, the community is likely to support being consulted on any new approach Council is proposing.  Council is aware that Lumsden residents are very interested in this issue, and some submitters have indicated they would have liked to have had more input when the current Bylaw was developed.

41      As the Lumsden community has just been through a thorough consultation process on this issue, and as the Christmas period is not a particularly suitable time to seek feedback from the community, the upcoming months may not be a suitable time to try and obtain community views from local residents.

42      Local residents are also more likely to engage with Council on this issue, and to retain confidence in Council as a decision maker, if there is only one further round of community consultation on the Bylaw in the near future. So if further changes to the Bylaw are likely (as a consequence of the Open Spaces work, national best-practice etc), in relation to achieving good community engagement and the public maintaining confidence in Council, it may be better to delay revising the Bylaw. It should be anticipated,  however, that if the current Bylaw remains in place, then the costs and resources required to achieve compliance with this and to ensure in particular that camping does not occur outside designated areas, are likely to need to increase.

Costs and Funding

43      As both of the options are likely to involve revising the Bylaw, there would be costs associated with staff time and advertising. There may also be associated legal costs.

Policy Implications

44      The implications of both options would be that Council would not proceed with the statement of proposal that was released for consultation, and the current Bylaw would be in force in Lumsden, until any amendment was adopted.

45      The implications of proceeding to adopt the preferred option would be that it would prevent non-self-contained freedom campers from camping around the railway precinct, and it would mean that in certain areas around the railway station precinct, self-contained vehicles would only be able to stay for three nights, not for seven. There would also be four new prohibited areas, where freedom camping would not be allowed, in additional to the playground area (which has always been a prohibited area). The prohibited area for the playground would also be expanded.

46      As has been outlined previously, there is a relationship between the Bylaw and the work being undertaken by staff on the Open Spaces Strategy. The work that LGNZ has initiated may also have implications regarding the Bylaw. 

Analysis

Options Considered

47      The following options have been considered regarding how Council could proceed:

·    Option 1 – Progress with putting the new preferred option out for consultation – this involves not proceeding with the statement of proposal, and progressing an amendment to the Bylaw now by instructing staff to prepare a new draft bylaw and statement of proposal, based on Council’s preferred option.

·    Option 2 - Continue with the current Bylaw and review it at a later date – this involves not proceeding with the statement of proposal, continuing to have the current bylaw in force and revisiting amending the Freedom Camping Bylaw for Lumsden at a future date.

Analysis of Options

Option 1 – Progress with putting a new proposal out for consultation

Advantages

Disadvantages

·        This option is more risk adverse than other potential options.

·        Members of the public are very interested in this issue and are likely to want to have input.

·        Council has signalled it would like to review the Bylaw, so would be a consistent approach, to continue progressing through an amendment.

·        There are costs associated with undertaking another round of consultation.

·        The next few months are probably not the best time to re-engage with the community on this issue.

·        The Bylaw may need to be reviewed again in the future (as a consequence of the Open Spaces work, and work being completed by LGNZ), so if Council reviews the Bylaw now it may need to review it again in 2018 or 2019.

·        If Council proceeds with this option and adopts an amendment to the Bylaw, community confidence in Council may be negatively impacted if Council then has to re-consult.

·        If Council proceeds with this option and adopts an amendment to the Bylaw, the community may be reluctant to engage again if Council has to amend the Bylaw again.

 

Option 2 – Continue with the current Bylaw and review it at a later date

Advantages

Disadvantages

·        This approach is more risk adverse than other potential options.

·        May help prevent having to undertake more than one proposed amendment to the Bylaw in the next couple of years (by waiting to see if any other changes to the Bylaw emerge in 2018).

·        Would avoid consulting with the community at a less than optimal time (over the summer holiday period).

·        The community might be more receptive to another round of consultation if one has not just been undertaken.

 

·        Delays making a decision on this matter (there has been feedback that freedom camping in Lumsden needs to be better controlled/managed, so this will delay the contribution an amendment to the Bylaw can make to that).

·        Community members, particularly those opposed to freedom camping, may be frustrated that no progress has been made.

·        Additional resources and costs to effectively enforce current Bylaw provisions.

 

 

 

Assessment of Significance

48      In regards to Council’s Significance and Engagement Policy, the decision being made by Council has been assessed by staff as not being significant.

49      Council has already made a decision on its preferred option (on how it would like to amend the Bylaw for Lumsden), and this report is seeking a decision from Council about how it would like to go about progressing that option. The likely impact on and consequences for both the wellbeing of the district, and people who are interested in or affected by this decision, are relatively low.

Recommended Option

50      Staff are not recommending a specific option, and are seeking a decision from Council as to the best way forward.

Next Steps

51      The next steps will depend on what option in this report Council endorses. If Council endorses Option 1, Council will prepare a draft bylaw and corresponding statement of proposal, and present them to Council for endorsement.

52      If Council endorses Option 2, staff will keep Council informed on the Open Spaces work, and any relevant legislative changes and any work completed by LGNZ, that relate to freedom camping. Under Option 2, staff would also seek guidance from Council next year, about whether it felt the time was right to propose an amendment to the Bylaw for the 2018/19 summer season.

 

Attachments

a             Statement of Proposal endorsed in June 2017 - Proposed amendment to the Freedom Camping Bylaw for Lumsden

b             Freedom Camping Bylaw - preferred option for Lumsden, identified on 18 October 2017    

 


Council

23 November 2017

 


 


 


 


 


Council

23 November 2017

 

 

 



Council

23 November 2017

 

Revenue and Financing Policy Review

Record No:             R/17/10/25526

Author:                      Sheree Marrah, Finance Manager

Approved by:         Anne Robson, Chief Financial Officer

 

  Decision                                        Recommendation                                  Information

 

 

Executive Summary

1        The 2018 Revenue and Financing Policy will form part of Council’s Long Term Plan (LTP) 2018-2028, which will be subject to public consultation before adopting a final version.

2        Council is required by legislation to adopt and include a Revenue and Financing Policy in its LTP 2018-2028, to provide predictability and certainty about sources and levels of funding of Council’s activities.

3        The Revenue and Financing Policy sets the framework for the Funding Impact Statement and in turn the Rates Resolution; the three cascading down to provide legal compliance for setting and assessing the rates each year.

4        The Activity Funding Needs Analysis is a separate internal document which supports the Revenue and Financing Policy and addresses Council’s consideration of the section 101(3) requirements of the Local Government Act (LGA) 2002.

5        In preparation for the LTP 2018-2028, and the associated revenue and financing policy review, staff presented a number of key matters to Council for consideration at workshops held on 26 September and 19 October.  These matters are included in this report along with recommendations reflecting the issues discussed at these workshops. 

6        Staff are comfortable with the current format and the majority of the content of the policy and the Activity Funding Needs Analysis, and thus the proposed documents have not substantially changed from the previous LTP.  However, these documents have been amended for the various recommendations of this report and any changes requested by activity managers.

7        The draft Revenue and Financing Policy and draft Activity Funding Needs Analysis are attached to this report for your consideration. 

8        Appendix 2 includes a list of abbreviations frequently used in throughout this report for your reference.

 

 

Recommendation

That the Council:

a)        Receives the report titled “Revenue and Financing Policy Review” dated 17 November 2017.

b)        Determines that this matter or decision be recognised as significant in terms of Section 76 of the Local Government Act 2002.

c)         Determines that it has complied with the decision-making provisions of the Local Government Act 2002 to the extent necessary in relation to this decision; and in accordance with Section 79 of the Act determines that it does not require further information, further assessment of options or further analysis of costs and benefits or advantages and disadvantages prior to making a decision on this matter.

d)       Resolves to include the following proposals in the draft revenue and financing policy and supporting documentation as part of the 2018-2028 Long Term Plan process:

i)             Revise the current Separately Used or Inhabited Part (SUIP) definition to include all property types and assess the Stewart Island Waste Management Rate as a service rate.

 

ii)            Accept proposed boundary changes for Athol Hall, Browns Hall, Waianiwa Hall, Edendale-Wyndham Hall, Tokanui-Quarry Hills Hall and Te Anau Community Board Rating boundaries as per Attachment D, remove Edendale Pool rate and further investigate funding approach for halls and pools for the 2021-2031 Long Term Plan.

 

iii)          Set and assess all Community Board/Community Development Area
Subcommittee rates as a Uniform Targeted Rate, with differentials as required, noting that Mossburn Community Development Area sub-committee do not support this approach.

 

iv)          Continue to set and assess the General Rate on Capital Value.

 

v)            Do not establish an Economic Development Rate, and continue to rate for economic and community development activity as a component of the Uniform Annual General Charge.

 

vi)          Confirm that no differential be applied to the General Rate.

 

vii)         Continue to set and assess the Uniform Annual General Charge per rating unit.

 

viii)        Fund 100% of all library services across the district from the Uniform Annual General Charge.

 

ix)          Continue to rate for wastewater using the current approach, being:

a)            A full charge per Separately Used or Inhabited Part for any residence that is connected or able to be connected but not connected,

 

b)           A half charge for any non-contiguous vacant land within the boundary which are able to be connected but are not connected, and

c)            A full charge per pan/urinal for all other property that is connected or able to be connected but not connected.

 

x)            Continue to rate for water structure activities from the relevant local rates (Community Board/Community Development Area/Ward).

 

xi)          Increase the Resource Management hourly fee to $150.00 (GST exclusive) per hour to reduce rates funding of the Resource Consent Processing activity.

 

xii)          Increase rates funding for Health Licensing activity to 10% of total costs.

 

xiii)        That the Uniform Annual General Charge include the repayment of the loan for the funding of the Around the Mountains Cycle Trail as resolved by Council separately on the 23 November 2017.

 

xiv)        Clarify eligibility for metered water supply in the Funding Impact Statement (Rates) and increase fees from 1 July 2018 to $170.43 (GST exclusive) for the fixed water meter charge and $0.96 (GST exclusive) for the cubic metre water rate.

 

xv)          Confirm that no differential be applied to the general rate for Meridian Energy.

 

xvi)        Accept the proposed Roading Rate Model, where the uniform targeted rate is fixed at $80.00 (GST exclusive) per rating unit, heavy use rate is $1.05 (GST exclusive) per tonne, minimum tonnage applied to each relevant sector is 230,000 tonnes and other use factors are 1.15 (dairy), 1.2 (forestry) and 1.15 (farming non-dairy).

 

xvii)     Confirm the activities to which the General rate and Uniform Annual General Charge are applied as per the table below:   

 


Activities

General Rate

UAGC

Building Control

100%

 

Civil Defence & Emergency Management

100%

 

Community Housing

85%

15%

Council Facilities

85%

15%

District Development

25%

75%

District Support

85%

15%

Animal Control

 

100%

Environmental Health

 

100%

Grants & Donations

 

100%

Library Services

 

100%

Parks & Reserves

85%

15%

Public Toilets

 

100%

Representation & Advocacy

25%

75%

Resource Management

90%

10%

Strategy & Communications

90%

10%

Work Schemes

 

100%

Roads & Footpaths (Around The Mountains Cycle Trail loan repayments only)

 

100%

 

xviii)    Delegate authority to the Chief Executive to approve any necessary changes to the draft revenue and financing policy, draft activity funding needs assessment and draft budgets in relation to this report.    

 

Background

9        As part of the Long Term Plan (LTP) for 2018-2028 Council has to review its Revenue and Financing Policy.

10      The statutory provisions relating to the review of a Revenue and Financing Policy are detailed in Part 6 of the Local Government Act (LGA) 2002. The Act requires local authorities to follow a three step process in developing a Revenue and Financing Policy:

(a)      Identification of activities;

(b)      Application of considerations relevant to each activity, refer Section 101(3)(a), leading to a proposed selection of funding mechanisms and quantum to be funded from each tool for each activity; and

(c)      Consideration of the overall impact of the proposed selection of funding mechanisms for all activities on the social, economic, environmental and cultural well-being of the community, and, if necessary, modification.

11     The following diagram demonstrates these three steps:

Identify

Activities

Funding sources

for each

Activity

Funding system

for Council

Activities identified and grouped.

 

Consideration of:

·       community outcomes

·       distribution of benefits

·       period of benefits

·       exacerbator principles

·       costs/benefits of separate funding.

Aggregation of funding for each activity and modification to take account of community well‑being.

12      Council is required to give equal weight to each of the five factors identified in section 101(3). An assessment of each activity relative to each of the above factors is included in the “Activity Funding Needs Analysis” document, which will be retained for this LTP.

13      It is important to recognise that the analysis must apply to the funding of both operating and capital expenditure.

14      In addition, Section 101(3)b requires that consideration also be given to “the overall impact of any allocation of liability for revenue needs on the community”. This includes considering the overall affordability on different sections of the community.

15      In the issues section of this report staff have included the various matters discussed at the LTP 2018-2028 Council workshops on 26 September and 19 October 2017 to inform the Revenue and Financing Policy and associated documents.  Each matter includes options for consideration and a recommendation based on the guidance provided by Council at the workshops.

16      In addition, management have indicated a preference to rename the Community Development activity to Community Futures to better reflect the range of services and functions being undertaken.  This activity has traditionally included economic development, destination marketing and community development, and will now also include the Community and Futures General Manager and the Community Partnership functions (BU10111).  This change shifts the costs and funding of this function from the Corporate Support activity to the renamed Community Futures activity, and will impact the general rate allocation between UAGC and rate in the dollar.  The draft Activity Funding Needs Analysis and draft Revenue and Financing Policy have been amended to incorporate this change, however the various matters covered in this report have not been updated to reflect this change.  This will be discussed further at the meeting.

17      The draft Revenue and Financing Policy and draft Activity Funding Needs Analysis are attached to this report for your consideration and include the necessary amendments as a result of the recommendations of this report. 

Issues

Definition of Separately Used or Inhabited Part (SUIP)

18      Currently, the SUIP definition is based on only properties with a “residence” getting charged.  This compares to the definition pre 2014/2015 when all buildings that were inhabited (residences, commercial, industrial) were charged.

19      The current definition is:

SUIP - this means any part of a rating unit used or inhabited for residential purposes by the owner or any other person who has the right to use or inhabit that part for residential purposes by virtue of a tenancy, lease, licence or other agreement. Examples of a SUIP are any building or part of it which is separately used or inhabited for residential purposes. For the purposes of this definition, vacant land which is not used or inhabited for residential purposes is not a SUIP. The following are additional examples of rating units with more than one separately used or inhabited part:

•        Single dwelling with flat attached

•        Two or more houses, flats or apartments on one Certificate of Title (rating unit)

•        Business premise with flat above

•        Farm property with more than one dwelling.

For the purposes of the discussion below the number of properties this would apply to are referred to as “Residential Only”.

20      The previous definition was:

SUIP - this includes any part of a rating unit separately occupied by the owner or any other person who has the right to occupy that part by virtue of a tenancy, lease, licence or other agreement. Examples of a SUIP are any residential building or part thereof, which is separately inhabited, parts of a rating unit used for different reasons including, but not limited to, commercial premises, industrial premises, a concession granted by the Department of Conservation for private or commercial purposes which has a footprint on the land.

For the purposes of the discussion below, the number of properties this would apply to is referred to as “Original SUIP”.

21      As part of a legal review undertaken by Simpson Grierson of the 2014/2015 Annual Plan, the following wording was suggested:

SUIP - “A separately used or inhabited part of a rating unit includes any portion inhabited or used by [the owner/a person other than the owner], and who has the right to use or inhabit that portion by virtue of a tenancy, lease, licence, or other agreement”.

(Optional) For the purpose of this definition, vacant land and vacant premises offered or intended for use or habitation by a person other than the owner and usually used as such are defined as 'used'.

22      This definition includes separately used parts, whether or not actually occupied at any particular time, which are provided by the owner for rental (or other form of occupation) on an occasional or long term basis by someone other than the owner.

23      For the avoidance of doubt, a rating unit that has a single use or occupation is treated as having one separately used or inhabited part.

24      In summary, Council’s original SUIP definition was applied to any assessment that had a building (ie, shop, hotel, shed), the current definition only charges buildings that are used for residential purposes (ie dwellings, crib, batch, flat, cottage and studios).

25      As Council can only have a single SUIP definition, it is appropriate that Council considers each of the rates currently collected by way of SUIP and ensure that the rating approach is appropriate giving consideration to the section 101(3) requirements noted earlier in this report.

26      Below is a discussion on each rate currently collected by SUIP and the implication of the applying the various definitions.

27     Hall and Pool Rates: Council rates for seven pools and 58 halls, which are all defined by their own rating boundary. Council needs to consider the section 101(3) requirements, specifically who causes the need and who benefits from the facilities, in contemplating the two SUIP definitions.  If the residential only definition was applied it is implying that domestic residences are the only ones who cause the need or benefit from having such facilities in their community.  However, consideration should be given to other categories such as commercial, industrial etc and if they add to the need or benefit from such facilities.

28     Current Pool rates and the implications of change in SUIP definition are outline below.  Please note hall rate impacts will be similar.

Rate

Original

SUIPS

18/19 Rate

(Incl GST)

18/19 Rates

Required

Residential

Only

Revised Rate (Incl GST)

Fiordland

2,093

$17.22

$36,041

2,023

$17.81

Otautau

587

$23.33

$13,683

571

$23.96

Riverton

1,605

$23.62

$37,898

1,572

$24.10

Takitimu

589

$24.13

$14,200

574

$24.74

Tuatapere

749

$15.56

$11,654

724

$16.09

Winton

1,335

$13.50

$18,029

1,331

$13.54

29     Regional Heritage Rate:  Is a joint rate with Invercargill City Council (ICC) and Gore District Council (GDC).   GDC collect this rate via SUIP but their definition is not limited to residential dwellings.  ICC collect this rate via rating unit.

30     Current rate and the implications of change in SUIP definition are as follows:

Rate

Original

SUIPS

18/19 Rate

(Incl GST)

 18/19 Rates

Required

Residential

Only

Revised Rate

(Incl GST)

Regional Heritage

15,506

$41.28

$640,077

14,456

$44.28

 

31      Property categories the Regional Heritage Rate is currently being applied to:

Valuation Description

Residential

SUIPS only

Valuation Description

Non Residential

SUIPS

Dwelling

13,610

Hotel/Motel

63

Bach

75

Shop

139

Crib

374

Building (Commercial/Industrial)

640

Town House

37

Other (Halls/Church

91

Flat

331

Farming/Forestry

118

Units/Studio

14

 

 

Single Quarter

3

 

 

Cottage

11

 

 

Total

14,455

Total

1,051

32     Water and Sewerage Rates: For sewerage and water rates, the SUIP only applies to residential properties so the definition has minimal implications to these rates.

33      Stewart Island Waste Management Rate: This rate is only charged on Stewart Island and it allows ratepayers to get a token each year to redeem for 52 rubbish bags for the year. As this rate is very similar to the wheelie bin rate, staff believe that rating based on SUIP is not appropriate, and therefore are recommending it be based on a unit of service as opposed to a SUIP. In doing so, all rating units currently receiving the service would be charged one unit of service, and if desired could opt to receive additional units of service.

34     It is also important to note that this rate is currently included in Council’s 30% cap on rates collected by targeted rates.  If Council coverts this to a service rate it will be removed from this calculation, therefore lowering the percentage by approximately 0.3% to approximately 25.32% (based on 2017/18 rates).

Analysis of Options

Option 1 - Revise the current SUIP definition to include all property types and assess the Stewart Island Waste Management Rate as a service rate (recommended)

Advantages

Disadvantages

·        Consistency with other councils regarding the SUIP definition.

·        A broader rate base to apply rates to.

 

·        Stewart Island Waste Management Rate applied consistent with receiving a physical service.

·        Rates database will be subject to a thorough review to ensure the application of the SUIP definition is consistent.

·        Potential increase in rates for non-residential properties as a result of change in SUIP definition

Option 2 - Revise the current SUIP definition to include all property types and continue to assess the Stewart Island Waste Management Rate per SUIP

Advantages

Disadvantages

·        Consistency with other councils regarding the SUIP definition.

·        A broader rate base to apply rates to.

·        Rates database will be subject to a thorough review to ensure the application of the SUIP definition is consistent.

·      Stewart Island Waste Management rate is not being collected consistent with remainder of the district for property waste services.

Option 3 – Retain the current SUIP definition and continue to assess the Stewart Island Waste Management Rate per SUIP

Advantages

Disadvantages

·        No change required to definition.

·        Rates database needs a thorough review to ensure the application of a SUIP definition is appropriate.

·        Stewart Island Waste Management rate is not being collected consistent with remainder of the district for property waste services.

Review of Rating Boundaries

35     Council currently set 58 hall/community centre rates and 7 pool rates.  Of these 27 halls/ community centres are non-Council owned as well as all 7 pools.

36     Every year Council receives communications from various halls and pool committees in relation to rates funding, often requesting changes, however typically Council only makes rating boundary changes as part of an LTP. 

37     It is important to note that our current rating approach for halls and pools is inconsistent across the district and also to recognise that the future of community facilities in our small communities is uncertain, as rising costs and diminishing populations result in increased rates.  As part of the community centres’ asset management plan, a review will be undertaken of community centres and facilities surrounding these in 2018-2019.

38     Te Anau Community Board: The Council received a request from the Milford Community Trust to review the Board’s rating boundary. The Trust believes that the concession Milford ratepayers pay to the Trust and Milford Sound Tourism Limited (MSTL) are for similar services to those paid to the Te Anau Community board (CB).  As such they believe they are paying twice. A report went to the Te Anau CB on the 11 October and the CB supports the removal of the Milford area from their rating boundary. Below is a summary of the financial impact, which was presented to the CB.


 

Actual

2017/2018 (Including GST)

Current

Units

Total Rates Collected 2017/2018 (Including GST)

Proposed Units to Remove

Revised

2017/2018

(Including GST)

Te Anau CB Rate – Commercial

$671.49

181

$121,540

4

$686.66

Te Anau CB Rate - Residential

$335.75

1,772

$595,116

8

$337.28

Te Anau CB Rate - Rural

$83.94

527

$442,235

2

$84.26

39     Halls:  2017/18 hall rates range from $10.49/SUIP to $135.00/SUIP across the 58 halls.  These rates are driven by the costs of operating the hall and the number of SUIPs within the boundary.
A detailed listing of the hall rates for 2018/2019 year and a map showing location is in Attachment A and B.

40     Currently, if a hall closes, staff recommend it merge boundaries with a neighbouring facility, but this is not enforced. As such there are some ratepayers within the district that do not contribute to a hall rate.

41     Over the past three years since the 2015-25 LTP was adopted, Council has received a number of letters in relation to rating of halls/community centres.  A summary of these matters are as follows:

42     Garston Hall Committee requested in 2014/2015 that their rates go on hold.  Recently, staff have made contact with the Athol and Garston CDA subcommittees and they have agreed that both rates should be ‘put on hold’.

43     Hokonui Hall Committee advised their hall is closing and that they no longer want to rate.  They also requested that their boundary be amalgamated with the Browns Hall.

44     Edendale-Wyndham Community Board have recommended to merge the Edendale and Wyndham hall boundaries.

45     Spar Bush Hall closed down three years ago and remaining reserves where gifted to the Waianiwa hall, in exchange for three years rates relief prior to their boundaries being amalgamated.  Council has received notification from the Waianiwa hall committee to start rating in 2018/2019.

46     Tokanui-Quarry Hills Hall – After the September workshop, Councillors requested that the Tokanui-Quarry Hills Hall boundary be extended to include the Haldane area, this was presented at the Tokanui CDA meeting and supported.

47     Makarewa Hall has closed down.  The ratepayers paying this rate have not been amalgamated into any other hall boundaries.

48     In addition, Council are also aware that Mataura Island, Menzies Ferry Halls and Dunearn/Avondale are closed / closing. Staff are currently working with the committees on how they wish proceed.

49     Pools:  The only issue staff have with community pools for the 2018-2028 LTP is the inconsistency of approach to rating for them and is there an opportunity to rectify this. Currently Council has 32 pools in the district, of which nine are currently rated for with separate pool boundaries, and two are rated for within their local CDA rate.

50     Gorge Road CDA give a grant to their pool every year from their local rate.  Manapouri rate for their pool as a business unit within their local CDA rate. The remaining pool rates are set based on Separately Used or Inhabited Parts (SUIPS).  Remember CDA/CB rates are based on Land Value (LV) or Uniform Targeted Rates (UTR).

51     For this LTP, Edendale-Wyndham are proposing to fund the pools in their boundary via a grant from their local CB rate, which will result in the Edendale Pool rate no longer being assessed.

52     This leaves Fiordland, Riverton, Otautau, Tuatapere, Winton and Takitimu as separate pool rates.

53     Council could consider removing the 6 remaining pool rates and applying a consistent rating approach by paying grants to the pools as part of the local rates.  This would potentially be a simple transition with minimal financial impact to individual ratepayers.  We do however note that the Takitimu pool rate boundary is consistent with the hall boundary and as a result, there would be an increase of approximately $30 per assessment to the Ohai and Nightcaps CDA rates.

54     To address this issue, alternatively Council could consider ward rating for pools.  However, at this stage only 11 pools in the community are rated out of 32.  For Waiau/Aparima, 6 of the 9 pools in their area are rated including the Takitimu Pool. A map is attached for more details in Attachment C.

The future direction

55     As noted above, Council has a significant number of targeted rates specifically for halls (58) and pools (7). Community facilities are important for our district, however there are a significant number in Southland and consideration needs to be given to how they are funded and if it is practical to fund them all. Venture Southland are currently undertaking a review of the utilisation of facilities in our district and staff believe a policy/guidance needs to be developed on the long term operation and rating of such facilities.

56     We set rates for 27 non-Council owned halls.  Council owned facilities are required to comply with the legislation that governs local government including preparing financial forecasts and Asset Management Plans (AMP’s) to assist with the rates setting process.  However, non-Council owned facilities have no formal accountability to Council for their future costs and asset management or the associated impact on rates.

57     With growing concerns regarding rates affordability both from the public and Council, it is an appropriate time for Council to start considering the facilities Council rates for and how we rate for them.

58     A summary of 2018/2019 rates collected for halls across the wards in our district is as follows:

Ward

Budgeted Rates 18/19 (GST Excl)

Hall SUIP 18/19

Halls rated in Ward

Reserves at
30 June 2017

Mararoa Waimea

$175,853

4,249

12

$100,353

Waiau Aparima

$77,073

1,547

13

$108,438

Waihopai Toetoes

$63,279

1,937

16

$196,093

Winton Wallacetown

$96,865

3,078

15

$68,030

Stewart Island/Rakiura

$23,399

376

1

-

District Total

$436,469

11,187

57

$472,913

59     A summary of 2018/2019 rates collected for pools across the district is as follows:

Pool

Budgeted Rates 18/19 (GST Excl)

Pool SUIP 18/19

Rate for 17/18 (GST excl)

Fiordland

$36,041

2,093

$17.81

Otautau

$13,683

587

$23.96

Riverton

$37,898

1,605

$24.10

Takitimu

$14,200

589

$24.74

Tuatapere

$11,654

749

$16.09

Winton

$18,029

1,335

$13.54

Total

$131,505

6,958

 

 

Analysis of Options

Option 1 - Accept proposed boundary changes for Athol Hall, Browns Hall, Waianiwa Hall, Edendale-Wyndham Hall, Tokanui-Quarry Hills Hall and Te Anau Community Board Rating boundaries as per Attachment D, remove Edendale Pool rate and further investigate funding approach for halls and pools for the 2021-2031 LTP (Recommended)

Advantages

Disadvantages

·        Community Board/Community Development Area sub-committee are in support of boundary changes.

·        Greater rating base sharing costs.

·        Combining communities of interests.

·        Consistency to everyone paying a hall rate.

·        Increase in rates for those not currently contributing to a hall/pool.

Option 2 - Reject/Adjust proposed boundary changes as required

Advantages

Disadvantages

·        Status quo.

·        Greater burden on current ratepayers paying for facilities that require increased maintenance, which in some instances are being used by neighbouring ratepayers.

Review of Local rating approach

60     Local rating can be undertaken by way of targeted rates that are set either as a uniform or differential rate on property value and/or a Uniform Targeted Rate (UTR) per rating unit or Separately Used or Inhabited Part (SUIP).

61     Currently, Council applies a rate in the dollar (RID) on land value for some local rates and others are set as a UTR as a fixed amount per rating unit.  In some instances there are also differentials applied, whereby the rate is applied differently depending on land use (ie residential, commercial or rural).

62     Under Section 101(3) of the LGA 2002, funding needs must be met from those sources that Council determines to be appropriate, following consideration of who benefits, who contributes to the need for the activity/service as well as the overall impact of the rates allocation on the community (affordability).

63     Council reviewed its local rates in 2013 when a report was provided to all CB’s and CDA Subcommittees to review their local rates. 

64     During this review, of the 19 CDA Subcommittees 17 opted to stay/change to a UTR basis leaving 2 remaining on land value.

65     Of the eight CB’s five opted to stay/change to a UTR and three remained on RID calculated on land value.

66     The current local rating approach as per the 2018/2019 Annual Plan is summarised in the table below.

Community

Rate in the Dollar

Targeted rate per rating unit

18/19 total targeted local rate (GST excl)

Community Board

 

 

 

Edendale-Wyndham

 

Y

$125,661

Otautau

Y (with differential)

 

$152,959

Riverton/Aparima

Y (with differential)

 

$390,900

Stewart Island/Rakiura

Y

 

$79,518

Te Anau

 

Y (with differential)

$573,549

Tuatapere

 

Y (with differential)

$73,948

Wallacetown

 

Y

$57,072

Winton

 

Y

$316,325

 

Community Development Area

 

 

 

Athol

 

Y

$4,818

Balfour

 

Y

$18,092

Browns

 

Y

$4,938

Colac Bay

 

Y

$10,084

Dipton

 

Y

$15,682

Garston

 

Y

$1,913

Gorge Road

 

Y

$6,193

Limehills

 

Y

$9,974

Lumsden

 

Y

$92,616

Manapouri

 

Y

$67,923

Mossburn

Y

 

$40,547

Nightcaps

 

Y

$29,899

Ohai

 

Y

$37,696

Orepuki

 

Y

$8,196

Riversdale

 

Y

$35,372

Thornbury

 

Y

$4,084

Tokanui

 

Y

$11,470

Waikaia

Y

 

$24,604

Woodlands

 

Y

$12,227

Drummond Village

 

Y

$2,408

67     As shown in the table above, currently there is no consistent approach to local rating. Each CB/CDA provide similar activities/services in their community that the local rate is funding, however their approach to rating is different raising questions about whether there is an inconsistency between Council’s revenue and financing policy and its rating tools.

68     UTR vs RID:  Where a UTR is applied, it implies that the residents are all equally contributing to the need and also benefiting from the activity/service, and thus they all pay equally.

69     Where a RID on land value is applied, it implies that the benefits delivered have a higher level of ‘public good’ and therefore should be paid for via a tax rather than an equal charge.  This results in higher valued properties paying more in the local rate, however they may not necessarily be contributing or benefiting from the activity/service more than other residents, however they typically do have a better ability to pay the higher rate.

70     We note that RID on land value is difficult to quantify the impact of rating changes to an individual property, unlike a UTR, where the impact on every property is the same (unless there is a differential applied).

71     An additional factor that must be considered is if more local rates move to rating by UTR, this will increase Council percentage of revenue allowed to be collected by targeted rates, which is capped by legislation at 30%.

72     Proposed for 18/19 rates, Council plans to collect $12,353,303 million by way of uniform targeted rates, which represents 27.04% of the total rates.  If all the five local rates mentioned above changed to UTR, this would increase the total by $688,528 to 28.35%.

73     Application of Differentials:  Of Council’s larger communities governed by Community Boards, four currently use differentials when collecting their local rate.  A summary of these differentials are outlined in the table below in the shaded boxes.

74     This table also outlines the number of assessments included in each of these differential categories.

75     It is important to note that the commercial category includes all property that is used for commercial or industrial purposes.  The rural category includes all property that is used for dairy, farming, forestry, lifestyle, mining, and all other categories.  These classifications are included in the Funding Impact Statement (Rates) and are based on the Quotable Value land use.

Community

17/18 total targeted local rate (GST excl)

Residential

Commercial

Rural

Diff

Assess

Diff

Assess

Diff

Assess

CB’s with differential

 

 

 

Otautau

$152,959

1

396

2

60

0.0001

242

Riverton/ Aparima

$390,900

1

1,334

 

-

0.10

167

Te Anau

$573,549

1

1,800

2

182

0.25

552

Tuatapere

$73,948

1

355

 

-

0.20

432

CB’s with no differentials

 

 

 

Edendale-Wyndham

$125,661

 

500

 

61

 

533

Stewart Island/ Rakiura

$79,518

 

423

 

35

 

74

Wallacetown

$57,072

 

276

 

14

 

128

Winton

$316,325

 

1,128

 

116

 

411

76     Additionally, it is also important to note that the boundary for the rate also significantly impacts on the differential.  This is evident in the likes of Otautau where the boundary is very broad and includes predominantly rural properties with a significant land value (as they are currently set as a RID), which has resulted in a very low rural differential.

77     For consistency in application, it would be ideal to set differentials for all the CB rates on a consistent approach across the district (ie 2.0 x for commercial and 0.25 x for rural), however staff recognise that many of these towns are small and that the commercial operations are not causing significant impact or receiving significant benefit from the services/activities being provided.  By including a standard differential of say 2.0 x for commercial in all communities, it may also discourage commercial operation from establishing businesses in these towns.

78     This is a significant issue which needs further discussion and consideration in relation to the impact on the individual communities, and we are not in a position to finalise such analysis in time for the CB 2018-28 LTP budget confirmation meetings.

79     However, staff would like to address Riverton/Aparima and Tuatapere as currently they have two of the three categories and it is unclear if you are a commercial land type which rate you pay.  Staff are proposing that a Commercial category is added and the discussion will be about which differential to use.

80     Staff have presented a report on these proposed changes at the various CB/CDA meetings during October.  Riverton, Stewart Island, Otautau and Waikaia have resolved to move to a UTR.  Tuatapere resolved to move to a UTR however opted to retain a differential of 1.0 for residential/commercial and 0.2 for rural. Mossburn CDA resolved to retain the current RID approach for their local rate, on the basis that they felt it was unfair and also that they needed more information and an opportunity to consult with the community before making the decision.

Analysis of Options

Option 1 - Set and assess all Community Board/Community Development Area sub-committee rates as a Uniform Targeted Rates, with differentials as required, noting that Mossburn Community Development Area sub-committee do not support this approach (Recommended)

Advantages

Disadvantages

·        Everyone within each community pays the same amount.

·        Rating methodology across the district for local rates is consistent.

·        The impact on individual ratepayers of changes is easier to calculate and explain.

·        Minimises risk to Council in setting and assessing rates.

·        Simpler to administer.

·        Changes to the amount most ratepayers in these five communities will pay for their local rate in 2018/19.

·        Council will over-rule recommendation from Mossburn CDA in setting their local rate for 2018/19 and beyond.

Option 2 - Retain current approach to individual

Advantages

Disadvantages

·        No substantial changes in the local rates set on properties.

·        No changes to the rates database are required.

·        Properties with lower values pay less rates.

·        Rating units paying much more/less than others for no greater benefits in their community.

·        Properties with higher value pay more rates.

Value-based General Rates by Land or Capital Value

81      Value-based general rates are currently set based on capital value. Alternative methods are to set them based on land or annual value. It is suggested that Council not consider annual value as the Southland rental market is small and this value is currently not recorded in Council’s rating valuation database. Both neighbouring councils, ICC and GDC, set general rates based on capital value.

82      It is important to recognise that rates have both a service use and taxation component to them. As noted above it is appropriate to use the general rate where there are public good benefits to the district as a whole. As such they are more in the nature of a tax and hence will have some relationship to ability to pay. In the case of rates, this is linked to property values. 

83      The advantages and disadvantages in summary are:

·                      Land value has the advantage of consistency of rates across similar types of land and is well understood, but has the disadvantage of not taking into account the use of services or the ability to pay. Land values also tend to fluctuate more and do not take full account of the ratepayer base by excluding improvements.

·                      Capital value is easier to calculate given market sales information, is well understood, reflects the total investment in the property and is considered a better proxy for ability to pay but may not take into account the use of services. 

·                      Annual value is closely aligned with capital value but is not well understood. It can only work well where there is an active rental market. The public are also less familiar with the annual value system.

 

84      The graph below compares the % share by property category for current land value and capital value based general rates.

85      The following pie graphs show the spread of rates with each valuation method by property category.

Analysis of Options

Option 1 - Continue to set and assess the General Rate on Capital Value (Recommended).

Advantages

Disadvantages

·        Status quo.

·        Ratepayers understand capital value and it fairly charges those with large operations on land.

·        None.

Option 2 - Change the General Rate to be set and assessed on Land Value.

Advantages

Disadvantages

·        None.

 

·        Explaining the change to ratepayers as rates would shift significantly.

Economic Development Rate

86      Council contribute approximately $1.8 million each year to Venture Southland to fund tourism, economic growth and community development. The four Southland councils have been consulting on options to create a new council controlled organisation to lead regional development activity in the future.  There is an argument to suggest that the primary recipients of district development activities are the commercial, industrial and rural sectors of our district.

87      In reviewing how other councils across New Zealand rate for similar services across the district, many have an Economic Development rate charged to different land uses, which often excludes residential on the basis that they don’t cause or benefit directly from these activities.

88      Currently, Council plans to rate $1,800,000 for 2018/19 for district development activities as part of the UAGC, which equates to approximately $115.00 per rating unit.

89      The following table outlines the potential changes if Council were to establish an Economic Development rate, which was charged to all sectors other than residential:


 

Rates

18/19 Budget (GST excl)

18 /19 Units

18/19 Proposed

Rate (GST excl)

Current UAGC

$6,325,332

15,652

$404.12

Revised UAGC

$4,525,332

15,652

$289.12

Economic Development

$1,800,000

5,046

$356.72

90     This would create a rate decrease to all residential rating units of $115.00 (GST exclusive) and an increase to all other rating units of $242.72 (GST exclusive). This would have no impact on 30% cap on rates collected from targeted rates as it is still collecting the same value of rates, however from different ratepayers.

91      Alternatively, Council could shift the economic development costs (or a portion of these costs) to the general rate (rather than the UAGC) and look to impose a differential (see further discussion in the section below).

92      In addition, staff note that over the past few years Council has, from time to time, discussed  potential options of  funding activities Council provide (ie AMCT, Catlins seal extension project, public toilets etc) via a charge or rate on the visitor industry. The Stewart Island Visitor Levy is an example of such an approach. 

93      Other than the Stewart Island Visitor Levy, Council currently has no other mechanism for charging visitors to use such facilities, other than to impose fees and charges. It is often uneconomic to impose such fees given the costs associated with monitoring and collection of such income.

94      Consideration could be given to whether it would be appropriate for some or all of these costs to be incorporated into an Economic Development rate.

Analysis of Options

Option 1 – Do not establish an Economic Development Rate, and continue to rate for Venture Southland as a component of the Uniform Annual General Charge (Recommended).

Advantages

Disadvantages

·        Status Quo.

·        No changes required.

·        Some sectors are benefiting significantly more from the rate than others, however they are all paying the same.

Option 2 – Establish a rate for Economic Development.

Advantages

Disadvantages

·        Decrease to residential rates.

·        Land use sectors that benefit from Economic Development would pay.

·        Due to a low commercial/industrial base it would have to go over all other land use categories (including dairy and pastoral farming).

Differential on the General Rate

95      A differential is a factor which can be applied to a rate based on the provision or availability of services.  Where Council’s propose to assess rates on a differential basis they are limited to the list of matters specified in Schedule Two of the Local Government (Rating) Act (LGRA) 2002. Council is required to state which matters will be used for what purpose, and the category or categories of any differentials. The predominant differential used across NZ is Land Use.

96      Council currently do not have a differential on the general rate, and all land uses pay the same rate.  In reviewing other councils across the district, some councils apply a differential to their general rate.

97      Staff consider that there is no need to introduce a differential on Council’s current rating approach, however as noted above, if it is proposed to move Economic Development/Tourism costs from the UAGC to the General Rate, in addressing the cause and benefit of the services, it may be appropriate to consider applying a differential as one way of funding these services.

98      The following table outlines the potential changes if Council were to establish a differential on the general rate to fund Economic Development and tourism activities:

Rates

Differential

18/19 Budget

18/19 Capital Value

18/19

Proposed Rate (GST Excl)

General Rate

 

$9,487,999

20,236,554,924

$0.00046885

The General Rate with Economic Development costs included

Residential

100%

$1,077,666

2,765,946,450

$0.00038962

Other

150%

$10,210,332

17,470,608,475

$0.00058443

99     Applying a differential to the general rate will result in an increase for those non-residential properties with a higher value.

100    It is also important to note that moving economic development and tourism costs to be funded from the General rate rather than the UAGC, would cause a significant decrease in Council’s total targeted rates (which are legislatively capped at 30%) of approximately 3.9%. 

Analysis of Options

Option 1 – Confirm that no differential be applied to the General Rate (Recommended).

Advantages

Disadvantages

·        Status Quo.

·        No changes required.

·        None.

Option 2 - Establish a differential on the General Rate.

Advantages

Disadvantages

·        Target more costs on to non-residential sectors

 

·        Another layer of complexity for ratepayers.

·        Assumes non-residential sectors have a better ability to pay.

UAGC set by Rating Unit or SUIP

101    Council’s UAGC is currently charged per rating unit. A rating unit is normally equivalent to a property or valuation assessment. An alternative method is to charge per Separately Used or Inhabited Part of a Rating Unit (SUIP). GDC currently sets their UAGC on SUIP and ICC set their UAGC on a rating unit, which is consistent with Council’s current approach.

102    Council currently defines a SUIP as follows (Annual Plan 2017/2018):

SUIP - this means any part of a rating unit used or inhabited for residential purposes by the owner or any other person who has the right to use or inhabit that part for residential purposes by virtue of a tenancy, lease, licence or other agreement. Examples of a SUIP are any building or part of it which is separately used or inhabited for residential purposes. For the purposes of this definition, vacant land which is not used or inhabited for residential purposes is not a SUIP.
The following are additional examples of rating units with more than one separately used or inhabited part:

•        Single dwelling with flat attached

•        Two or more houses, flats or apartments on one Certificate of Title (rating unit)

•        Business premise with flat above

•        Farm property with more than one dwelling.

103   The objective of using SUIP’s is to charge rates to each separate residential building, regardless of the legal title structure.

104   Staff note that further to the Council workshop on 26 September 2017 and the recommendation earlier in this report, staff are proposing to amend the SUIP definition for the 2018-2028 LTP to exclude all references to residential purposes.

105    The advantages and disadvantages of setting the UAGC based on rating unit or SUIP in summary are:

•        Using rating units to charge for the UAGC equates to one charge per ratepayer and contiguous properties would not be liable.

•        Using SUIP’s to charge for UAGC’s equates to one charge per household/separately used part.  With a significant rural sector in Southland setting rates on SUIP will impose additional costs on this sector where it is not uncommon for there to be multiple dwellings on a rating unit.

•        In totality, there is very little difference in the district in the number of rating units (15,633) compared to SUIPs (15,485).

Analysis of Options

Option 1 - Continue to set and assess the UAGC per rating unit (Recommended).

Advantages

Disadvantages

·        Status Quo

·        No changes required to the rating database.

·        Simple to apply and maintain.

·        None

Option 2 – Assess the UAGC per SUIP.

Advantages

Disadvantages

·        None

·        Number of units the rate is set on is similar in either approach, however a share of the burden if charged on a SUIP, is moved from residential/lifestyle to dairy sector. 

·        No significant benefit for Council or the ratepayer from the change.

District Library Funding

106    At the Council workshop on 27 April 2017, a paper was discussed around moving funding of all library activities to being district funded by way of the UAGC. 

107    In summary, this paper proposed to fund all library activities across the district from the district general rate (UAGC).  Council indicated at this time that they were comfortable with this approach, however they wanted further information provided on the rating impacts.

108    Currently, libraries are funded by a mix of district and local rates. The district portion is currently funded entirely from the General Rate (specifically the Uniform Annual General Charge (UAGC)), which means everyone paying the rate pays the same amount, opposed to being collected by rate in the dollar on capital value.

109    Based on the 2018/19 budgets this approach will result in an additional $302,083 being added to the UAGC.  Allocated across 15,652 assessments, this will result in an approximate increase of $19.30 per assessment.  Lumsden, Otautau, Riverton, Te Anau, Winton and Wyndham local rates will all reduce by the associated value noted below.  The estimated impact on individual properties within each of the communities is also indicated below.

110    This proposed approach will result in every assessment across the district paying approximately $86.81 (GST excl) towards the district library service, up from $67.51 which they are currently paying. 

Library

District Funded

Local Funded

District Funded

Local Funded

Local # assessments

Indicative decrease in local rate per assessment (GST excl)

Lumsden

40%

60%

$9,593

$14,389

341

$42.20

Otautau

60%

40%

$17,552

$11,702

685

$17.08

Riverton

33%

67%

$19,422

$39,433

1,457

$27.06

Stewart Island

100%

-

$16,877

-

 

-

Te Anau

18%

82%

$29,897

$137,173

2,265

$60.56

Winton

33%

67%

$36,327

$73,756

1,632

$45.19

Wyndham

38%

62%

$15,709

$25,630

1,070

$23.95

Total

32%

68%

$145,377

$302,083

 

 

111   Consideration must also be given to the fact that this proposed approach result will increase Council’s percentage of revenue collected by targeted rates, which is restricted under legislation to 30% of total rates income.  The proposed approach will result in an additional $127,007 ($51,135 CB/CDA rates plus $75,872 ward rates) being collected from a targeted rate.

Analysis of Options

Option 1 – Fund 100% of all library services across the district from the UAGC (Recommended).

Advantages

Disadvantages

·        Consistent approach to library funding across the district.

·        Library services are changing and how we use them are, rating adjusting to usage.

·        Reduction in some local rates where there is a currently a contribution to the local library.

·        Increase in the UAGC applicable to all ratepayers.

·        Additional rates to be collected from targeted rates, and thus subject to the 30% cap.

Option 2 – No change to current rating approach for libraries.

Advantages

Disadvantages

·        No changes required.

·        Inconsistency in library funding and rating across the district.

·        Similar benefit received across the district but some pay more than others.

District Wastewater

112    Council staff recognise that wastewater is an area that is funded differently across the country, and thus considered it timely that Council revisit the way it funds district wastewater activities in preparation for the 2018-28 LTP.

113    Council’s current funding approach for wastewater is as follows:

·              A full charge per SUIP for any residence that is connected or able to be connected but not connected,

·              A half charge for any non-contiguous vacant land within the boundary which are able to be connected but are not connected, and

·              A full charge per pan/urinal for all other property that is connected or able to be connected but not connected.

114    In considering the options for residences, a fixed charge per SUIP or rating unit is common practice across NZ.  The important point to note in relation to Council’s current rating of residences is that given we have a wide rural base, a number of our rating units have multiple dwellings on them and thus it is more appropriate that we are rating based on SUIP as each of these residences put additional demand on the wastewater assets/services and therefore receive additional benefit.

115    In considering the options for non-contiguous vacant land, the majority of Council’s across the country charge 50% of the full rate, however some charge as much as 75%. The higher availability charge can be appropriate where there are significant capital investment/fixed costs, such as those which arise where there has been a significant upgrade of a wastewater system, involved with delivery of the service. 

116    In considering the options for all other property, there are multiple approaches to wastewater rating, as the majority of the properties in this category are commercial operations and typically have multiple pans. Commercial and industrial properties can also create additional load which impacts on the costs of treating wastewater generated by these properties. Hence, there is both a load and volume aspect to the treatment of wastewater from commercial and industrial properties.

117    In reviewing 24 other Council’s mechanism’s for rating wastewater (see attachment E) we note that many are currently rating on a per pan/urinal basis for other property which is an approach legally allowed in accordance with section 16 of the LGRA 2002.  However, it is noted that a number of Council’s rate for wastewater by charging a minimum number of full charges and then apply a % of the full rate for each pan/urinal thereafter. 

118    In considering the cause and benefit aspects of this activity and the users, consideration should be given to both the volume and load aspects as these have an impact on the assets/services and also the benefit received and hence what is paid.  Council staff suggest if Council was to consider amending how it collects wastewater rates for other property that it consider the option of applying 1 full charge for the first 2 pans/urinals and a 50% charge per pan/urinal thereafter.

119    Council’s current approach is summarised as follows:

 

18/19 Units Charged

Differential

18 /19 Proposed Rate

18/19 Proposed  Rates

(GST Incl)

Full Charge

9,222

1.00

$452.12

$4,169,338

Half Charge

939

0.50

$226.06

$212,270

Totals

10,099

 

 

$4,405,106

120   The impact of the above proposed option is summarised as follows:

 

 18/19 Units Charged

Differential

18/19 Proposed Rate

18/19 Proposed Rates (GST Incl)

Full Charge (residences*)

6,473

1.00

$512.58

$3,317,925

Half Charge (Vacant Land)

939

0.50

$256.29

$240,656

For all other units^:

 

 

 

Fixed amount per rating unit

825

1.00

$512.58

$422,878

Charge per pan after the second pan

1,653

0.50

$256.29

$423,647

Totals

9,890

 

 

$4,405,106

*Residential includes land use categories of residence, lifestyle, dairy and farming

^Other includes commercial, industrial and other.

121    The impact of the proposed change in rating approach, would shift a proportion of the liability from commercial, industrial and other ratepayers to the residential and vacant land owners, equivalent to an additional $60.46 per SUIP and $30.23 per vacant section.

Analysis of Options

Option 1 - Continue to rate for wastewater using the current approach, being:

i)     A full charge per Separately Used or Inhabited Part for any residence that is connected or able to be connected but not connected,

 

ii)    A half charge for any non-contiguous vacant land within the boundary which are able to be connected but are not connected, and

 

iii)  A full charge per pan/urinal for all other property that is connected or able to be connected but not connected (Recommended).

 

 

Advantages

Disadvantages

·        No changes to current rating approach or database required.

 

·        Easy to understand/administer, one unit = one charge.

·        Recognises that commercial/industrial properties can also create additional load which increases wastewater treatment costs.

 

·        Commercial/industrial/other do not generate consistent load/volume of wastewater. Approach may not recognise properties that do not generate a significant load and volume that is inconsistent with a pan measurement approach.

·        May discourage commercial/industrial/other development in the district.

Option 2 – Amend the current approach to rating other property (commercial/industrial/other) category for wastewater, to set 1 full charge for the first 2 pans/urinals and a 50% charge per pan/urinal thereafter. No change from current approach to wastewater rating for residences and non-contiguous vacant land.

 

Advantages

Disadvantages

·        Reduction in rates to commercial/industrial/other sectors.

·        Differential applied to 3rd and additional pans recognises that these pans/urinals are typically not utilised to full capacity.

·        Rates increase to residential and vacant land owners.

·        Increased risk associated with more complex rating approach.

·        Significant changes required to the rating database.

Water Structures

122    Council has a number of water structure assets located including harbours, jetties, boat ramps, retaining walls, Riverton Focal point etc.  Currently, these are all funded from the local rate in which they are situated (ie via CB, CDA Subcommittee or ward rates).  In some instances they also receive other funding by way of rental income, fees and grants.  This additional income is used to fund both operational and capital expenditure where appropriate. 

123    Based on the discussion held with Council at the AMP meeting on 10 August 2017, the intention for the 2018-2028 LTP is that the funding of these activities continues on the same basis, primarily being from local rating (CB/CDA/Ward) and local reserves where available.  An alternative approach is that these assets be funded district wide. 

Analysis of Options

Option 1 – Continue to rate for water structure activities from the relevant local rates (CB/CDA/Ward) (Recommended).

Advantages

Disadvantages

·        No changes required.

·        Local users pay for local assets.

·        Increasing costs are burdening communities.

Option 2 – Rate for water structures activities from the UAGC.

Advantages

Disadvantages

·        Costs spread over a bigger rating base, therefore reducing the impact on individuals within the impacted communities.

·        Ratepayers paying for assets specific areas which they may never use or benefit from.

·        Will further increase the costs collected from targeted rates, and may result in a breach of the 30% cap.

Rates funding of Resource Management activity

124    Council’s resource management activity ensures our environments are managed in a way that ensures land use is appropriate and there is sound planning around development.  This is done through the provisions outlined in the District Plan and resource consent processing.

125    Within Council there are three separate BU’s that contribute to this activity, of which the level of rates funding is high as outlined in the table below.

 

Proposed Income 18/19

Proposed Rates 18/19

Rates % of Total Income

10275 Resource consent processing

$918,423

$614,600

67%

10280 Resource Planning/Policy

$292,376

$292,376

100%

11943 Allocations- Resource Planning

$267,862

$267,862

100%

TOTAL

$1,478,661

$1,174,838

79%

126   Resource Consent Processing

·              the resource consent processing activity primarily is providing a service to those in the community who are undertaking development in the district and in the end it is the developers who are causing the need for this service to be provided and who are also benefiting from this service. 

·              there is a public good aspect to having a consent processing activity, however the benefit to the wider community is less than to those who directly use the service.  It is therefore important that the customers pay an appropriate share of the costs for provision of this service by way of fees and charges. 

·              additionally, staff in the team provide advice and support to a number of agencies and working groups across the District which adds to the wider public benefit as well as undertaking a significant amount of work which is not recoverable on an hourly rate (such as LIMs, customer enquiries, building consents etc).

·                      cost Recovery in the Resource Consent Processing area is a challenging matter  for a number of reasons:

o    staff have no control over the number of resource consent applications received and their nature. Larger scale development activity in the District has been subdued in recent times, and it is these larger scale developments which generate significant departmental income.

o    recent changes to the Resource Management Act and the Southland District Plan have reduced the complexity of the resource consent process, and the number of times when applications need to be publicly notified. While this is good for the customer and the ease of doing business, it impacts on the ability of the Department to recover revenue.

o    the main costs in this department are staff costs. Council’s Section 17A Service Delivery Review identified the staffing levels in this department as relatively high in comparison to some other councils. Essentially, the only way to significantly reduce costs in the department would be to reduce staffing numbers. This would create challenges with ensuring that Council can maintain an appropriate level of capability within the team.

o    under the RMA, and most of the other regulatory statutes which Council administers, there are rights of appeal. A party exercising their democratic and statutory right to appeal can expose Council to significant additional legal and consultant costs- typically $30,000 minimum in the case of an Environment Court appeal which proceeds to a hearing and often six figures. Even if Council is successful in defending an appeal and successfully seeks costs, cost awards are typically only 0-40% of the costs sought by councils across NZ in such situations. It is extremely rare to see decisions where councils recover the full costs of the process from appellants.

·              reducing the rates funding of this activity to 50% would require an additional $153,017 to be collected from fees and charges.  In calculating this based on all staff being 75% chargeable for 44 weeks of the year, it would require an increase in the hourly rate of approximately $25.  However, this is not an achievable target on the basis that current consent information and economic conditions indicate that Council only processes around 300 consents per annum, which on average take 6 hours per consent. 

·              a more realistic short term target would be to fund this activity 60% by rates and 40% from other revenue sources.  In order to achieve this, hourly charge out rates would need to increase by $30 per hour.  This is on the basis of 300 consents per annum at 6 hours per consent.  This would increase an average consent cost from $720 ($120/hour) to $900 ($150/hour).  Staff note that the currently hourly charge of $120 has been in existence since 1 July 2012 and therefore it is overdue for review.

·              please note, the budgets for this activity need to be further reviewed and amended to reduce the rates funding to approximately 60%.

·                      staff recognise that this is an area where it would be desirable to achieve more user fees, but recognise in order for this to occur they need to further consider and undertake analysis of costs and revenue streams.  Staff consider it would be beneficial to undertake this work in preparation for the 2021-2031 LTP.

 

127    Resource Planning/Policy

·                      The resource planning/policy activity is where the costs are captured surrounding the development of the District Plan.  As this is a legislative requirement to have such policy and the benefit is received by the district as a whole, it is appropriate that this BU is 100% funded from rates.

 

 

 

128    Allocations

·                      The allocations for resource planning are the internal costs from within Council that support this function (such as customer support, finance, IT) who are primarily providing a service to those in the community.

 

Analysis of Options

Option 1 - increase the Resource Management hourly fee to $150.00 (GST excl) per hour to reduce rates funding of the Resource Consent Processing activity (Recommended).

Advantages

Disadvantages

·        Those causing the need for the services and directly benefiting, pay for such services.

·        Increase in costs, may deter development.

Option 2 - Retain the current level of rates and user fees for Resource Management activity.

Advantages

Disadvantages

·        No changes required.

·        Ratepayers pay a high share for an activity that predominantly benefits specific ratepayers.

Environmental Health Rates Funding

129    Council’s environmental health activity manages issues that may affect human health including alcohol licensing, food safety, noise control, regulation of hazardous substances etc. 

130    Within Council there are three separate BU’s that contribute to this activity, of which the level of rates funding is high as outlined in the table below:

 

Total Income 18/19

Rates 18/19

Rates % of Total Income

10267 Environmental Health

$155,273

$103,177

66%

10268 Alcohol Licensing

$234,771

$23,927

10%

10269 Health Licencing

$162,790

$16,416

10%

TOTAL

$552,834

$143,520

26%

131   When the Section 17A review was recently undertaken for the Environmental Health group of activities, the recommendations included consideration of a level of funding towards the public good aspect of health licensing

132    It is also noted that the extent of cost recovery required will impact significantly on the customers paying for licensing services. For example, Councillors may recall that when significant increases in alcohol licensing fees were proposed to reflect the Sale and Supply of Alcohol Act provisions and default fees structure under the associated regulations, the Council heard strong submissions from the hospitality sector that these fees would be unaffordable and unsustainable for their businesses,. This resulted in the Council recalibrating these fees based on a 70% private, 30% rates funded ratio.

133    In considering the section 101(3) requirements Council must consider each of these business units individually. 

Environmental Health

·                      The environmental health activity is where costs are captured surrounding noise complaints, littering, nuisance complaints, freedom camping etc.  Council receives a contribution to this activity from DOC in relation to the costs associated with freedom camping and some additional revenue is received in relation to assistance provided with consents.  The only associated fee revenue with this activity is if infringement notices are issued where this is provided for by the relevant statutes, however this is not currently a significant revenue stream.  Overall the people who create the need for this activity are often not ratepayers and often not identifiable.  In addition these services provide a benefit to the wider community in ensuring Southland is clean, healthy, and hazard-free place.  It is therefore appropriate that this activity be funded from rates to the extent that external funding is not available.  Currently, this equates to approximately 66%.

·                      Additional revenue could potentially be generated in this business unit if the Council took a harder regulatory approach in some areas, with Freedom Camping being an obvious example. Southland District has opted to take a largely educational / “please move along” approach to freedom camping enforcement to date, whereas in contrast some councils are issuing several hundred thousand dollars per year of infringement notices. While a firmer approach may generate additional revenue, it could also generate negative backlash from customers/ recipients of such actions.

Alcohol Licensing

·                      The alcohol licensing activity is where the costs are captured surrounding the sale and supply of alcohol in the community.  Although it is the licenced premises selling the alcohol that cause the need for this activity and also benefit from it, there is a public good benefit from ensuring it is done in a responsible manner and is appropriately monitored.

Health Licensing

·                      The health licensing activity is where the costs are captured surrounding the licences and monitoring/inspections for hairdressing, Food Act 2014 compliance, camping grounds etc in the community.  Although it is the businesses providing goods and services in these industries that cause the need for this activity and also benefit from it, there is a public good benefit from ensuring it is done in a responsible manner and is appropriately monitored.  Staff therefore consider that it is appropriate that Council consider funding the public good aspect of this activity from rates, and propose 10%.  This equates to approximately $16,279 additional rates per annum.  

 

Analysis of Options

Option 1 – Increase rates funding for Health Licensing to 10% of total costs (Recommended).

Advantages

Disadvantages

·        Fees and charges can remain the same, no increase required.

·        Ratepayers contributing to the public good share of this activity.

·        Minor increase in rates

 

 

Option 2 – Retain 0% rates funding for Health Licensing.

Advantages

Disadvantages

·        Direct users pay for 100% of the costs of this activity.

·        Increase in Fees and charges for health licensing.

·        No contribution from the ratepayer for the public good aspect of this activity.

AMCT Funding

134    At the Finance and Audit Committee meeting on 6 September 2017, the Committee discussed options for funding the cost of the project to date.  Currently the costs have all been accumulated in a negative reserve.

135    At this meeting the Finance and Audit Committee recommended to Council the following:

(d)        Recommends to Council that the decision on how to fund the net cost to date of $4.6 million incurred to develop the Around the Mountains Cycle Trail be made as part of the 2018-2028 Long Term Plan.

(e)         Recommends to Council that options to be consulted on for funding include:

i)        The preferred option is funding by way of loan over 30 years, with loan repayments collected by way of the Uniform Annual General Charge.

ii)       Funded by the Strategic Asset Reserve, with no repayments of the reserve.

iii)      Funded 50% by way of a loan over 30 years, with repayments collected by way of the Uniform Annual General Charge and 50% funded by the Strategic Assets reserve, with no repayments of the reserve.

(f)       Recommends to Council that the decision on how to fund the $4.6million of the Around the Mountains Cycle Trail costs be included as a separate issue in the 2018/2028 Long Term Plan consultation document as prescribed in terms of Section 93C of the Local Government Act 2002.

(g)       Recommends to Council that it amends the Revenue and Financing Policy to include funding of the loan repayments for the Around the Mountains Cycle Trail from the Uniform Annual General Rate.

 

136    It is important to note that these are recommendations only and the funding of the project costs to date is still to be discussed by the AMCT Subcommittee and the final decision is at the discretion of Council.  Council is considering this matter at its meeting on 23 November 2017.

137    At 30 June 2017, the balance of costs for this project was $4.6 million.  Annual repayments on a loan over 30 years at an interest rate of 4.65% per annum (current rate per 18/19), equates to $285,214 per annum.  This amount spread over the units eligible for the General Rate UAGC (15,652) equates to $18.22 (GST excl) per rating unit.  Currently, the UAGC is $400.80 (GST exclusive), so this would increase it by 4.5% to $419.02 (GST exclusive) per rating unit.

Analysis of Options

Option 1 - That the Uniform Annual General Charge include the repayment of the loan for the funding of the Around the Mountains Cycle Trail as resolved by Council separately on the 23 November 2017 (Recommended).

Advantages

Disadvantages

·        Spreads the burden of the capital costs across the life of the asset.

·        Shares the cost across a wide rating base, therefore reducing the impact on individual ratepayers.

·        Rates increase to all ratepayers across the district.

·        Increases the rates collected by targeted rate and therefore may result in a breach of the 30% cap.

Option 2 - Fund the Around the Mountains Costs via Strategic Asset Reserve with no repayments to the reserve

Advantages

Disadvantages

·        No direct impact on rates

·        Reserve funds are diminished and no longer available for future projects.

·        Interest on reserve is no longer available to offset rates.

Option 3 – Fund 50% of costs to date by way of a 30 loan with repayments via UAGC and 50% via Strategic asset reserve with no repayments to the reserve.

Advantages

Disadvantages

·        Limited rates increase.

·        Spreads the burden of the capital costs across the life of the asset.

·        Shares the cost across a wide rating base, therefore reducing the impact on individual ratepayers.

·        Reserve funds are partially diminished and no longer available for future projects.

·        Partial interest on reserves is no longer available to offset rates.

·        Increases the rates collected by targeted rate and therefore may result in a breach of the 30% cap.

Development and Financial Contributions

138    At the Council meeting on 18 October 2017, Council approved the draft Development and Financial Contributions Policy for consultation as part of the 2018-2028 LTP.

139    The development contribution part of the policy is in remission. However, Council are continuing to use development contributions collected historically, to fund capital works.

140    Financial contributions are continuing to be collected in accordance with the requirements of the Resource Management Act 1991, however we note that from 2022 changes to the legislation may mean that these can no longer be collected.

141    This draft policy is consistent with the status quo in regards to Development and Financial contributions and therefore no changes are required in the Revenue and Financing Policy.

Metered Waters

142    Council staff from the Water and Wastewater Services (WWS) department have advised that some non-residential properties within the district are rated for metered water.  These properties are typically identified and notified to the WWS department during building or resource consent process, however where staff become aware of non-residential properties whose consumption is significant, this is also basis for changing the ratepayer to a metred supply.

143    Currently, Council’s Funding Impact Statement (Rates) does not explicitly include which properties are eligible for water meters.  Staff believe this needs to be corrected for the 2018-2028 LTP.  The proposed content to include in the Funding Impact Statement (Rates) is currently being reviewed and will be finalised prior to the LTP supporting information being approved.

144    Being eligible for metered water results in the ratepayer paying a fixed meter charge of $147.83 (GST excl) per meter per annum, plus a rate per cubic metre consumed (currently $0.93 GST excl), instead of the district water rate of $396.32 (GST excl) per annum (for 2017/2018 year).

145    Staff note that the fixed meter charge has been consistent since approximately 2009, and the cubic metre rate also consistent across the district since 2014/2015.  Staff have undertaken a review of the meter water charges and are proposing that these be increased to $170.43 (GST excl) for the fixed meter charge and $0.96 (GST excl) for the cubic meter rate from 1 July 2018. 

Analysis of Options

Option 1 – Clarify eligibility for metered water supply in the Funding Impact Statement (Rates) and increase fees from 1 July 2018 to $170.43 (GST exclusive) for the fixed water meter charge and $0.96 (GST exclusive) for the cubic metre water rate (Recommended).

Advantages

Disadvantages

·      Increased fees to offset costs and reduce rates funding

·      Transparency to ratepayers around eligibility for metered water

·        Risk associated with ensuring the metred water eligibility is adhered to

Option 2 – No changes to Funding Impact Statement (Rates) or water metre charges.

Advantages

Disadvantages

·      No changes required

·      Fees held constant

·      More funding from rates required

·      Uncertainty for ratepayers if they are eligible for metred water or not

Differential Rating (Meridian)

146    The rating of ECNZ/Meridian properties has a long history.  There are three properties within the district with hydro-electric assets all owned by Meridian.  A historical agreement was initially reached between Council and Meridian from 1990 to 1995, when Council agreed a base rate of $150,000 plus the district rate increase per annum.  In 1998 Council changed this approach to apply a differential rate to the 3 properties, which achieved a similar outcome to previous years and this approach remained until 2012.

147    In 2012, Council undertook a review of the differential being applied to Meridian, and after much discussion with the corporation and their legal representatives, Council opted to remove the differential.  The key points in the consideration were as follows:

·                      in 1995 Meridian’s rating liability was 0.99% of total rates, in 2012 it was 0.66%, removing the differential would see it revert to 0.99%

·                      Council was satisfied that it’s targeted rating structure and uniform targeted rates mitigate the exposure to over rating of Meridian.

·                      the LGRA 2002 does not provide for individual agreements with ratepayers.

·                      the LGRA 2002  allows differentials to be based on land use, permitted or controlled activities, land area, provision of service, where the land is situated and values specified by the Valuer General.  If a differential was to be based on the ratepayer of Meridian and it being a power station, they believed this could be challenged by those not receiving the heavily discounted differential on general rates.

·                      Council believed the removal of the differential would generate a level of reasonableness between, service, benefit and cost and balancing the inequity faced by ratepayers other than Meridian.

148    These comments were further supported in the response to Meridian by Council on its submission on the 2012-2022 LTP.  In summary the points included in the response supporting the removal of the differential were:

·                      there was no direct cost-benefit relationship in rates to Council services available due to the element of public benefit.

·                      Meridian receives the benefit of a differential within the land use classification of “Öther” in regards to the Roading rate, which without it, would see its contribution increase significantly.

·                      examples received of other lower South Island hydro-electric generation sites indicate Council’s level of rating in comparison to capital value without a differential was not unreasonable.

149    As a general note, since its development, the windfarm at White Hill has always been rated on its full capital value.

150    Meridian submitted on the 2015-2025 LTP, proposing that a rating differential in favour of them be reintroduced.  Their rationale for this proposal was based on section 101(3) of the LGRA 2002, being that Meridian received significantly disproportionate services compared to the rates it pays based on the fact that its capital value is high but its operational footprint has minimal impact on the District. They considered that Council should use s13(2)(b) of the LGRA 2002 for them which states:

“A general rate may be set at differential rates in the dollar of rateable value for different categories of rateable land under section 14”

151    In considering Meridian’s submission on the 2015-2025 LTP Council considered the following factors:

·                      Council needs to establish that Meridian is different in some way that means the application of a differential is appropriate

·                      Meridian contends that its operational footprint is such that they receive services disproportionately to other ratepayers, however they did not state how they established this compared to other ratepayers

·                      re-establishment of a differential would require significant consideration as to the methodology behind how it was applied and calculated.

Additionally, staff noted the following points for Council’s consideration in relation to this matter, all of which are still relevant factors to support a consistent approach to rating Meridian in the future

·                      Council must comply with the LGA 2002 and the LGRA 2002 in regards to its financial

            management. Section 101(1) of the LGA requires a local authority to manage its revenues, expenses, assets, liabilities, investments and general financial dealings prudently and in a manner that promotes the current and future interests of the community

·                      Under section 102 Council is required to adopt a range of funding and financial policies,

            including a Revenue and Financing Policy and Liability Management Policy. Under section 103, a Revenue and Financing Policy must detail how a local authority plans to fund its operating and capital expenditure from the range of sources listed section 103(2). The policy must also show how Council has had regard to the factors in section 101(3) in making these decisions.

·                      Case law has made it clear that each of the five factors identified in section 101(3) must be given equal consideration. In this regard Potter J[1] referred to section 101(3) as a “critical filter” when noting that:

“…the consideration required in respect of each activity to be funded must extend to and include each of the five factors in s 101(3)(a) in each case. The factors are clearly stated to be cumulative, not alternatives or options for consideration and determination by a council… the statutory processes required by the Act do not permit the Council to single out and adopt a causation or exacerbator-pays approach at a policy level…. While I accept that s 101(3) does not direct councils to any particular outcome, all the critical factors in s 101(3) must be weighed and factored in, in respect of “each activity”. … All the factors must be considered, weighed and evaluated, in reaching funding determinations in respect of each activity.”

·                      Council can demonstrate the application of Section 101(3) of the LGA          through its Revenue and Financing Policy (and supporting Activity Analysis) and through the wide use of rate types it has and the tools it uses to collect these rates. Section 101(3), states, the funding needs of the local authority must be met from those sources that the local authority deems appropriate after consideration of the identified factors. Council’s Revenue and Financing Policy outlines these funding sources and the policy overall explains that in deciding who should pay for an activity, asset or service it is more complex than simply allocating costs to primary users. Some activities result in benefits for the wider community as well as individuals who use them. For example, recreational facilities contribute to vibrant thriving communities and have impacts on community health, well-being and sustainability. It further adds that Council also considers people should not be excluded from using a service or engaging in an activity because of affordability. For these reasons, Council has decided to fund several activities using a general rate or a combination of targeted and general rates. Meridian gains a not insignificant level of benefit from these activities particularly given the scale and importance of their activities within the district.

152   Currently Council has over 150 rate types. The rate types it uses and the percentage collected from these rating tools is outlined as follows:

 

Share of total 17/18 rates

Share of total 18/19 rates

Roading Rate (model based on exacerbator, then based on Capital Value, excludes UTR component of Roading rate)

30.9%

27.1 %

Fixed charges (maximum of 30%)

23.8%

27.0%

Service rates (Fixed charge for water, sewerage, rubbish, recycling, waste management, water/sewerage loans etc)

22.8%

23.0%

RID on Capital value (General rate and 35% of waste management rate)

19.8%

22.0%

RID on Land value (Local rates)

2.7%

0.9%

·                      The impact of rates on the community is also a major consideration of Council.  The Rates Inquiry Panel noted that rates are a hybrid tax, a mixture of user pays and a tax on property as the “public good” element of services provided to the general public that are available for use but may or may not be used by a specific ratepayer. As such there will be no direct relationship between services and rates paid. In considering who should pay Council considers the over-arching concept of affordability, it does this in looking at its costs and also in the way it allocates these costs, such as via the rates that it sets. The report of the Local Government Rates Inquiry noted that councils are failing to adequately consider the affordability of rates increases for some residents, and noted that councils need to undertake more analysis of affordability issues when deciding on total expenditures to be financed from rates and on the rating mechanisms to be used to spread the burden. In fact the Rates Inquiry Panel went as far as to recommend that the differential rates and UAGC’s be removed as they tended to be set arbitrarily without explicit justification in terms of the services to be funded.  They favoured the capital value system because of the close relationship between capital values and household incomes.  They noted that Council should, in fixing overall rating policies, have regard both to services consumed and to ability to pay and noted that in considering who benefits has two parts which need to be considered (ie the benefits received and the ability to pay).

·                      To apply a differential, Meridian noted in its 2015-2025 LTP submission that Council needed to demonstrate that there is a different level of service or the cost of providing the service to one group is different than the cost of providing the service to others. Meridian justified the application of a differential for them on the basis that the service it gets compared to the rate it pays is disproportionate compared to other ratepayers given its high capital value.  Meridian does not attempt, however, to provide a financial and/or economic analysis to support its position.

·                      For context, Meridian’s rate represents 1.02% of the total rates proposed to be collected for 2018/2019.

·                      The capital value of Meridan’s properties currently represents 3.72% of the total capital value of the district.

·                      Below is a table of the rates (GST inclusive) that Meridian pays compared to the next top 10 ratepayers, sorted by capital.

Ratepayer

Total Capital Value

Roading rate

Waste Mgmt rate

Service/Loan rates

General rate

Other rates

Total rates

Meridian Energy

722,300,000

$106,169

$26,698

-

$364,001

$331

$497,199

Industrial

150,000,000

$207,293

$5,614

$43,976

$75,997

$424

$333,305

Other Utilities

131,000,000

-

$4,914

-

$66,436

 

$71,350

Pastoral Farming

70,000,000

$39,067

$2,579

-

$35,227

$4,164

$81,037

Industrial

48,000,000

$66,396

$1,857

-

$24,667

$622

$93,542

Commercial Accommodation

17,300,000

$25,723

$726

$69,114

$9,217

$793

$105,574

Commercial Accommodation

11,700,000

$17,426

$519

$43,199

$6,399

$827

$68,371

Dairy Farming

9,760,000

$9,112

$448

$39,883

$5,423

$852

$55,318

Commercial Accommodation

7,450,000

$11,130

$363

$45,408

$4,260

$776

$61,937

Mining

6,000,000

$113,070

$309

$811

$3,531

$323

$118,044

Commercial Accommodation

2,000,000

$3,055

$162

$50,493

$1,518

$758

$55,985

•          The total rates shown are those that Meridian is paying is on all properties under the name of Meridian Energy Limited and excludes White Hill as that is owned by MEL White Hill Limited.  “Other Rates” represents local rates and the regional heritage rate.

 

•          From the table you can see that Meridian is paying a reduced roading rate, based on the modelling system Council uses for distribution of that rate. They are also not liable for any service rates that are targeted to various ratepayers and the element of Other Rates is minimal generally due to these being local rates that are generally a fixed amount.

153   The majority of the rate is the general rate which is collected based on capital value. While there are variations between the different rates applying to different properties the above table does not suggest that the overall rates being paid by Meridian are significantly disproportionate to those being paid by others with high capital values.

154   Based on these considerations, Council opted to rate Meridian without applying a rating differential from 2015.  There was no indication to Meridian that this matter would be further investigated or considered in the future. 

155   In undertaking this review, officer’s also contacted other Council’s with power stations to understand their current rating approaches:

 

Power station CV

% of total CV

2017/18 Rates (GST excl)

% of total Rates

Differential

Southland District Council

$722,300,000

3.84%

$414,852

1.17%

No differential, other than 0.3 on RID component of roading rate

Clutha District Council

$39,200,000

0.53%

$21,874

0.09%

No differential rate for power stations

Waitaki District Council

$736,438,000

10%

$772,980

2.56%

A differential on Civil Defence/Roading and Lakes Camping rates of (53% and 741.25% respectively)

Central Otago District Council

(4 properties)

$787,520,000

8.62%

$825,746

3.13%

Apply an individually calculated differential to ensure annual rates increase is exactly the same as the overall district increase in rates.

156   The question of whether a level of rating is appropriate, is a decision for Council to make having regard to the relevant statutory process and factors that it is required to consider. Provided it follows an appropriate process it is for the Council to make the subjective judgements inherent in this process.

157   Meridian, like all ratepayers, has an obligation to contribute towards the costs of the Council.  The Council can demonstrate through its Revenue and Financing Policy and the rate types and tools it uses that it has carefully considered its obligations under the LGA 2002 and LGRA 2002.

Analysis of Options

Option 1 – Confirm that no differential be applied to the general rate for Meridian Energy (Recommended).

 

Advantages

Disadvantages

·        No changes required.

·        All ratepayers pay the same.

·        No increase to others due to a differential.

·        Meridian pays a high share of the general rate.

Option 2 – Include a differential on the general rate for Meridian Energy.

Advantages

Disadvantages

·        Meridian pays a lesser general rate.

·        All other ratepayers’ general rate will increase.

·      In contradiction to the legislation which requires differentials to be set on land use, permitted or controlled activities, land area, or provision of service, not individual ratepayers.

·        Could be subject to challenge as legislation does not allow for agreements with individual ratepayers.

Roading Rate Model

158   As part of the 2015-2025 LTP Council implemented a revised roading rate model which endeavours to collect the roading rate at a level which is representative of the impact their use has on the networks maintenance and repair.

159   As this model has been utilised for nearly three years it was appropriate that it be reviewed in preparation for the 2018-28 LTP.  Anthony Byett presented a review of the roading rate model at the Council LTP workshop on 10 August 2017.  In this presentation he discussed the following key points:

·                      level of rates being collected from the heavy vehicle portion of the model

·                      tonnage data per sector       

·                      rate per tonne for the heavy vehicle charge

·                      minimum tonnage levels

·                      appropriate level of uniform annual charge (access fee).

160   In response to these discussions and feedback, he has provided Council with his recommend model for 2018-2028 LTP as follows:


 

 

Current 17/18

Proposed 17/18

Variance

Heavy vehicle

$1.20 per tonne

$1.05 per tonne

$0.15 per tonne

$4,472,000

$4,183,000

($289,000)

UAC

$60.28 per rating unit

$80.02 per rating unit

$19.74

$938,000

$1,245,000

$307,000

General RID

0.439/$1,000 CV

0.438/$1,000 CV

0.001/$1,000 CV

$8,441,000

$8,423,000

($18,000)

TOTAL

$13,851,000

$13,851,000

-

 

Other Use Factor

Current 17/18

Proposed 18/19

Variance

Dairy

1.1

1.15*

0.05

Forestry

1.1

1.2

0.1

Farming (non-dairy)

1.0

1.15

0.15

All others

1.0

1.0

-

 

* Please note that subsequent to the workshop on 19 October, Mr Byett has amended his recommendation to increase dairy other use factor to 1.15, from 1.10 on the basis that distance travelled should not form part of the Roading Rate Model. His reasons for distance travelled not being included were:

 

-     any distance used would not be well measured/evidence-based,

-     the impact of the shorter trip length for dairy was a small effect anyway, and

-     this sort of differentiation was not used anywhere else in the rating system.

 

Minimum tonnage

Current 17/18

Proposed 18/19

Variance

Industrial

200,000 tonnes

230,000 tonnes

30,000 tonnes

Commercial

200,000 tonnes

230,000 tonnes

30,000 tonnes

Mining

212,602 tonnes (actual)

230,000 tonnes

17,398 tonnes

161   Consistent with the current model, the differential factor of 0.3 has been applied to the other industry sector for general RID component of the roading rate model.

162   The impact of the proposed changes on the overall roading rate collected from each industry sector (based on 2018/19 proposed rates) is as follows:

Alternatively, Council have provided three alternative options which are as follows:

1.   Leave the model consistent with 2017/2018 (ie make no changes)

2.   Use Mr Byett’s model prosed at the workshop on 19 October, whereby dairy other use factor remained at 1.10

3.   Use the recommended model, however increase the heavy use charge to $1.10 per tonne (from $1.05)

The impact of these options on the various sectors are included in Appendix 1 for your information. 

Staff note that a fixed uniform charge has been incorporated into all revised model of $80.00 (GST exclusive) per rating unit.  Historically this component of the model was calculated as 10% of the total roading rate excluding the heavy use factor, however it is considered an access charge to the network and therefore more appropriate to be set at a fixed rate. 

Modelling on the impact for different value properties will be available in the Council meeting.

Analysis of Options

Option 1 – Accept the proposed Roading Rate Model, where the uniform targeted rate is fixed at $80.00 (GST exclusive) per rating unit, heavy use rate is $1.05 (GST exclusive) per tonne, minimum tonnage applied to each relevant sector is 230,000 tonnes and other use factors are 1.15 (dairy), 1.2 (forestry) and 1.15 (farming non-dairy) (Recommended).

Advantages

Disadvantages

·        Clarification to all ratepayers how we calculate rates.

·        Evidence to support each component of the model.

 

·        Model endorsed by independent expert.

·        No unjustified manipulation of the model

·        Residential sector gets an increase in rates.

Option 2 – Adjust the Roading Rate Model with variations

Advantages

Disadvantages

·        Council can adjust the model as appropriate.

·        Rationale for adjustments may be unsupported.

Option 3 – Make no changes to the Roading Rate Model

Advantages

Disadvantages

·        No changes to the model required.

·        Model is potentially outdated based on more recent information.

Setting the General Rate

163    General rates are appropriate for funding activities or providing services where there is a significant public good element or where a private good generates positive externalities or benefits for the district community. General rates can also be appropriate in situations where funding a capital project, where imposing the cost on those who would benefit from the project, would otherwise place too great a burden on them.

164    The General rate is currently split into two rating mechanisms

(a)     rate in the dollar on capital value and

(b)     Uniform Annual General Charge (UAGC).

165    How Council collects the rate is outlined in the Revenue and Financing Policy, and driven by the activity, typically where there is a high public good aspect of the service and widespread benefit.  In assessing which component of the rate funds each activity consideration is given to section 101(3) requirements, specifically who gives rise to the need for the service and who benefits from the service as well as consideration of ability to pay.

166    Currently the general rate is derived on the following basis:

Categories

General Rate

Uniform Annual General Charge

18/19 Budget

General Rate

18/19 Budget

 UAGC

Building Regulation

100%

 

$334,537

 

Civil Defence and Rural Fire

100%

 

$419,261

 

Council Offices and District Support

85%

15%

$3,993,994

$704,823

Development and Promotions

 

100%

 

$2,381,088

District Heritage

 

100%

 

$62,604

Library Services

 

100%

 

$1,248,103

Public Health Service

 

100%

 

$211,486

Regional Initiative

 

100%

 

-

Representation

 

100%

 

$1,707,812

Strategy Policy and Planning

90%

10%

$4,017,969

$446,441

Roads and Footpaths

 

100%

 

$285,214

Total

 

 

$8,765,761

$7,047,571

167   Council no longer uses the categories noted above and it is appropriate that these be revised to align with the groups of activities in the LTP, however as there are only four groups of activities that effect the general rate, this would have an overwhelming effect on the allocation. It is recommended to use the sub-activities under the groups of activities for deriving the general rate.

Category

Activities

General Rate

UAGC

 18/19 Budget General Rate

 18/19 Budget

UAGC

Building Regulation

Building Control

100%

 

$334,537

 

Civil Defence and Rural Fire

Civil Defence & Emergency Management

100%

 

$419,261

 

Council Offices & District Support

Community Housing

85%

15%

$28,306

$4,995

Council Facilities

85%

15%

$1,163

$205

District Support

85%

15%

$3,633,611

$641,226

Parks and Reserves

85%

15%

$319,189

$56,327

Work Schemes

85%

15%

$11,726

$2,069

Development and Promotions

District Development

 

100%

 

$1,800,000

Grants and Donations

 

100%

 

-$114,165

Public Toilets & Dump Stations

 

100%

 

$695,253

 

District Heritage

Grants and Donations

 

100%

 

$62,604

Library Services

Library Services

 

100%

 

$1,248,103

Public Health Services

Dog and Animal Control

 

100%

 

$33,983

Environment Health

 

 

100%

 

$177,503

Regional Initiative

Grants and Donations

 

100%

 

-

Representation

Representation & Advocacy

 

100%

 

$1,707,812

Strategy & Planning

Representation and Advocacy

90%

10%

$303,524

$33,725

Resource Management

90%

10%

$1,057,450

$117,494

Strategy and Communications

90%

10%

$2,656,995

$295,222

Roads and Footpaths

Roads and Footpaths

 

100%

 

$285,214

 

 

 

 

$8,765,761

$7,047,570

As shown above, all of the activities have a one to one relationship with the old categories except two; Grants and Donations and Representation and Advocacy. At the workshop in October, Council indicated that it was comfortable with the majority of the methodology, however directed staff to consider funding 100% of grants and donations from the UAGC and 25% of both district development and representation and advocacy activities from the general rateThese proposed changes applied to 2018/19 draft rates are indicated in the table below.

 


Activities

General Rate

UAGC

 18/19 Budget General Rate

18/19 Budget

UAGC

Building Control

100%

 

$334,537

 

Civil Defence & Emergency Management

100%

 

$419,261

 

Community Housing

85%

15%

$28,306

$4,995

Council Facilities

85%

15%

$1,163

$205

District Development

25%

75%

$450,000

$1,350,000

District Support

85%

15%

$3,633,611

$641,226

Animal Control

 

100%

 

$33,983

Environmental Health

 

100%

 

$177,503

Grants & Donations

 

100%

-$51,561

-$51,561

Library Services

 

100%

 

$1,248,103

Parks & Reserves

85%

15%

$319,189

$56,327

Public Toilets

 

100%

 

$695,253

Representation & Advocacy

25%

75%

$511,265

$1,533,796

Resource Management

90%

10%

$1,057,450

$117,494

Strategy & Communications

90%

10%

$2,656,995

$295,222

Work Schemes

 

100%

 

$13,795

Roads & Footpaths (around the Mountains Cycle Trail loan repayments only)

 

100%

 

$285,214

 

 

 

$9,411,777

$6,401,555

It is also important to note that the UAGC is currently included in Council’s 30% cap on rates collected by UAGC/targeted rates. A significant change in the UAGC may result in Council breaching this cap, and consideration needs to be given to this matter in conjunction with the various other proposed targeted rates changes.

Council indicated at the October workshop that total targeted rates increasing to around 27.5%-28.5% for 2018/2019 and beyond was appropriate.

Based on the recommended options included in this report and the draft rates proposed Council’s targeted rates are approximately 27.0% of total rates for 2018/19.

Analysis of Options

Option 1 - Revise the categories and share of categories between General rate and UAGC as per the table above (Recommended).

Advantages

Disadvantages

·        Staff have clarification on how to set the general rate.

·        Uses current sub-activities.

·        None

Option 2 – Make no changes to current methodology for calculating general rate and UAGC.

Advantages

Disadvantages

·        None

·        Categories being used are no longer relevant

·        Based on historical data

Affordability

168   As noted earlier in this report, one of the key matters required by legislation to be considered in assessing how rates are to be set, is ability to pay, ie affordability (s101(3)b).  Additionally, this is also a key target in Council’s financial strategy.

169   In 2007, the Shand Report addressed the issue of affordability of rates in New Zealand and concluded with the recommendation that rates start to become unaffordable if they exceed 5% of total household income. 

170   Council have undertaken a comparison of the 2016/17 rates and the household income levels across our district as per the 2013 census.  Please note the rates are SDC only, ie exclude Environment Southland and the household income has been inflated for two years (1 July 2014 to 30 June 2016) at the Labour Cost Index (LCI) rate (being 1.6% and 1.5%) to get to an indicative level for 2016/17.  Additionally, it is important to note that this data is for owned residential households only.


171    A summary of this comparison is included below:

Community

16/17 SDC Rates (GST incl)

Indicative 16/17 Household Income

Rates as a % of Household Income

Ohai

$2,119

$40,012

5.30%

Wyndham

$2,637

$60,637

4.35%

Tuatapere

$2,365

$55,274

4.28%

Manapouri

$2,443

$58,265

4.19%

Nightcaps

$2,100

$50,737

4.14%

Riverton

$2,485

$63,215

3.93%

Te Anau

$2,596

$68,990

3.76%

Otautau

$2,281

$63,731

3.58%

Balfour

$2,057

$58,471

3.52%

Lumsden

$2,280

$68,681

3.32%

Winton

$2,297

$70,124

3.28%

Edendale

$2,559

$81,571

3.14%

Athol

$1,255

$42,693

2.94%

Stewart Island

$1,904

$67,134

2.84%

Waikaia Town

$1,206

$45,375

2.66%

Mossburn

$1,803

$72,599

2.48%

Riversdale

$1,748

$74,249

2.35%

Wallacetown

$1,890

$82,293

2.30%

Woodlands

$1,171

$75,384

1.55%

Gorge Road

$1,344

$90,646

1.48%

Garston

$1,580

$119,830

1.32%

172   The data illustrates that across our District for the 2016/17 year, Council’s rates are within the 5% threshold across all communities other than Ohai, however staff do note that an additional 4 of the 21 communities are above 4.0%.

173   It is also important to recognise that there is no benefit for the community in analysing historical data when considering affordability.  Council needs to be undertaking such an analysis as part of its annual and long term planning processes.  In this way it can form a subjective view as to the overall affordability of the rates that it is forecasting will need to be set in the future.

174   The graph below illustrates the average rates for Council over the 10 years from the 2015-2025 LTP based on the forecast rating units as published in the 2015-2025 LTP
(page 151).  This graph illustrates a total of 32.7% increase over the 10 year period (average of 3.27% per annum).

175   Additional information will be tabled at the meeting to give you further analysis of affordability across the district.  Staff will endeavour to show the impact of such changes on the average rate, however it is important that Council recognise that given the complexity and vast range of rates set for various services, that this is only an indication and actual results will vary depending on the property location, value and services being received (ie water, sewerage, wheelie bins etc).

176   As noted earlier, rates include a taxation component. The larger share of rates which are charged on a uniform basis the higher the burden of rates on urban ratepayers and in many of the smaller communities within our district, this is where there are areas of concern regarding ability to pay.  Alternatively, setting rates via a RID on property value, Council can assume a correlation to ability to pay (ie those with higher value properties, typically have a better ability to pay).

Factors to Consider

Legal and Statutory Requirements

177    Per Schedule 10 of the Local Government Act 2002 the Revenue and Financing Policy is required to be included in the Long Term Plan.

178    Council must consider the requirements of Section 101(3) of the Local Government Act 2002 when determining how each activity is to be funded:

Community Views

179    Once the draft Revenue and Financing Policy and Activity Funding Needs Analysis document have been revised and approved by Council, it will be available for public consultation in February/March 2018 as part of the 2018-2028 LTP process.

Costs and Funding

180    The final policy will affect how Council is financed and may require changes to levels of funding from the various funding sources available to Council.

Policy Implications

181    In developing its Revenue and Financing Policy, Council should have regard to its Financial Strategy and how it might want to give effect to that strategy.

182    The Revenue and Financing Policy and Activity Funding Needs Analysis has been updated to incorporate the recommended options included in this report and any other known inconsistencies.

Assessment of Significance

183    The revenue and financing policy is a critical Council policy as it outlines the way in which Council collects its $70-$80 million in total revenue each year to fund the services it provides to the community.  It is a requirement of legislation that this policy be reviewed and publicly consulted on every three years.  Changes to this policy effect the entire community in regard to how much they are required to pay in rates and other fees and charges, and thus this matter is considered significant.

Recommended Option

184    The recommended option (Option 1) in relation to each matter is identified in the issues section of this report.

Next Steps

185    Following approval of the recommendations at this meeting staff will finalise the draft Revenue and Financing Policy and Activity Funding Needs Analysis.

186    A statement of proposal will be prepared for adoption at Council on 13 December 2017.  

187    The draft Revenue and Financing Policy will be consulted on simultaneously with the Long Term Plan Consultation Document in February/March 2018.

188    The Revenue and Financing Policy and Funding Impact Statement (Rates) will be independently reviewed by Simpson Grierson lawyers during the consultation period and any necessary changes incorporated into a staff submission.

 


 

APPENDIX 1

 

Sector impact analysis for Roading Rate Model

 

 


 

APPENDIX 2

 

List of frequently used abbreviations

 


Abbreviation

 

AMCT

Around the Mountains Cycle Trail

AMP

Activity/Asset Management Plan

BU

Business Unit

CB

Community Board

CDA

Community Development Area

CV

Capital Value

DOC

Department of Conservation

GDC

Gore District Council

ICC

Invercargill City Council

LGA

Local Government Act

LGRA

Local Government Rating Act

LTP

Long Term Plan

LV

Land Value

RID

Rate in the Dollar

SUIP

Separately Used or Inhabited Part

UAGC

Uniform Annual General Charge

UTR

Uniform Targeted Rate

 

 

 

 

 


 

Attachments

a             Detailed Listing of budgeted hall rates for 2018/2019

b             Hall Rating Boundaries

c             Southland Pool Sites and Pool Rating Boundaries

d            Proposed rating boundary changes 

e             Targeted rate funding of sewerage and treatment and disposal of sewerage - Survey of 24 local authorities

f             Extract Part 6 Local Government Act 2002

g            DRAFT Activity Funding Needs Analysis LTP 2018-2028

h            DRAFT Revenue and Financing Policy 2018-2028 LTP (without track changes showing)    

 


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Council

23 November 2017

 

Proposed Fees and Charges for 2018-2028 Long Term Plan

Record No:             R/17/11/27735

Author:                      Jacobus Meyer, Financial Accountant

Approved by:         Anne Robson, Chief Financial Officer

 

  Decision                                        Recommendation                                  Information

 

 

Purpose

1        This report presents the draft Schedule of Fees and Charges for the 2018-2028 period for review and endorsement prior to audit as part of the information which underpins the LTP Consultation Document. This document will form part of the 2018-2028 Long Term Plan Consultation Document being adopted in February 2018 for consultation.

Executive Summary

2        As part of the budget finalisation for the 2018-2028 LTP, managers, local committees (Community Boards, Community Development Area Subcommittees and Hall Committees) have reviewed the proposed fees and charges for 2018/2019.

3        These fees and charges are presented to Council for review and endorsement prior to audit and finalisation for the LTP Consultation Document and supporting information. These will be adopted for consultation in February 2018.

 

Recommendation

That the Council:

a)            Receives the report titled “Proposed Fees and Charges for 2018-2028 Long Term Plan” dated 16 November 2017.

 

b)           Determines that this matter or decision be recognised as not significant in terms of Section 76 of the Local Government Act 2002.

 

c)            Determines that it has complied with the decision-making provisions of the Local Government Act 2002 to the extent necessary in relation to this decision; and in accordance with Section 79 of the Act determines that it does not require further information, further assessment of options or further analysis of costs and benefits or advantages and disadvantages prior to making a decision on this matter.

 

d)           Endorses the attached draft Fees and Charges Schedule, with any amendments from this meeting for use in the audit, noting that the final documents will be presented for adoption in February prior to consultation.

 


 

Background

4        All councils are required by legislation to adopt a Long Term Plan (LTP) and review it every three years.  The LTP is subject to audit.  The draft Fees and Charges Schedule will form part of the documents that the auditors will review to ensure that Council has fairly represented the matters and impacts disclosed in the LTP Consultation Document for effective public participation in the Council’s decision making process.

5        As part of the budget finalisation for the 2018-2028 LTP, managers, local committees (Community Boards, Community Development Area Subcommittees and Hall Committees) have reviewed the proposed fees and charges for 2018/2019.

6        Council has also discussed fees and charges during LTP workshops and Council meetings around the Revenue and Financing Policy and Activity Management Plans (in particular for the regulatory activities).

Issues

7        The majority of changes to fees and charges are related to the increased costs/time associated with providing the various services:

•     Within Building Control the standard hourly fees have not changed, however the time required to complete the necessary work historically has not been a true reflection of the actual amount of time taken.

•     A number of new fees have also been added for new activities or additional services. New fees are shown with yellow highlighting within the attached schedule.

•     Continual review of these fees will occur over the coming weeks prior to the proposed schedule for 2018/2019 being presented to Council at the December 2017 meeting. During this time staff will complete a full review to ensure general fees charged by multiple departments are consistent across the organisation (ie copying, mileage, scanning, certificate of title search etc).

 

Factors to Consider

Legal and Statutory Requirements

8        Section 150 of the Local Government Act (2002) states that Council can set fees and charges either through a bylaw or by consulting with the public. 

9        Council has discretion under section 82 of the Local Government Act 2002 as to the approach it wishes to take for consultation regarding any changes to fees set under section 150. 

Community Views

10      The level and format of consultation recommended is likely to be driven by the nature of the changes. Depending on the changes, Council may decide consult separately or concurrently with the LTP either as part of a supporting document for the LTP Consultation Document or via a separate consultation process.

11      This will be further considered by staff prior to the preparing the report to adopt of the LTP Consultation Document and supporting information.

12      It is likely that the fees and charges will be consulted on as part of the LTP supporting information. These will be publicly available on Council’s website during the LTP public consultation period.  As a result of submissions received, Council may decide to amend any of the supporting information documents when it adopts the LTP in June 2018.

Costs and Funding

13      These are the fees charged to the public to pay for the services provided by Council, and therefore are revenue for Council.

Policy Implications

14      The Council’s Revenue and Financing Policy (and supporting Funding Needs Analysis document) sets out from a policy perspective how Council’s activities are funded and in particular the different funding mechanisms that will be used to pay for expenditure. The policy indicates the level of activity funding that is expected to come from fees and charges.

15      The Policy states that

User Fees and Charges apply to individuals or groups who are directly using a Council service.  Where user fees and charges apply, there is a direct benefit to an individual. When a decision is made to fund an activity through user fees and charges, the beneficiaries must be able to be identified and charged directly for the service they receive. The Council also considers issues like the affordability of user charges or how they compare to the market rate for services. In some cases, user fees and charges may be balanced with other funding sources. This may occur where the Council believes that setting a charge too high will reduce the use of a service and therefore diminish its value to the community and impose a greater cost on ratepayers.

16      The fees and charges schedule provides the detail about actual fees and charges that will be applied to Council’s activities.

Analysis

Options Considered

17      Council could choose to:

•     Endorse the proposed Schedule of Fees and Charges for audit (as part of LTP supporting information)

•     Not endorse the proposed Schedule of Fees and Charge for audit (as part of LTP supporting information)

Analysis of Options

Option 1 – Endorse the proposed Schedule of Fees and Charges for audit (as part of LTP supporting information)

Advantages

Disadvantages

·        The proposed Schedule of Fees and Charges has been updated by staff to be relevant to the cost of Council to undertake these services.

·        Promotes user-pays system for people using specific Council services.

·        Changes reflect the 2018-2028 costs from the LTP budgets.

·        The proposed fees and charges can be reviewed by Audit NZ as part of the LTP audit.

·        None

 

Option 2 – Not endorse the proposed Schedule of Fees and Charge for audit (as part of LTP supporting information)

Advantages

Disadvantages

·        Fees and charges are unchanged for people using specific Council services

·        Council would have to retain the current Schedule of Fees and Charges, last updated as part of the 2017/18 Annual Plan.

·        The Schedule of Fees and Charges would not be relevant to 2018-2028 and the costs borne by Council to cover these fees would have to be funded by another source, such as rates.

·        The updated fees are unable to be reviewed by Audit NZ.

Assessment of Significance

18      The review of the fees and charges has not been assessed as significant. The financial impacts of any of the options listed above will be relatively minor and proposed changes are unlikely to have a substantial impact on communities or large numbers of ratepayers. However consultation will be undertaken as part of Councils Long Term Plan process.

Recommended Option

19      Option 1 – Endorse the proposed Schedule of Fees and Charges for audit (as part of LTP supporting information)

Next Steps

20      If recommended the draft fees and charges (incorporating any changes form the meeting), will be reviewed by Audit New Zealand as part of their audit of the LTP Consultation Document.

21      The draft fees and charges schedule will then be formally adopted by Council in February 2018 as part of the supporting documentation for the LTP Consultation Document. The final schedule, incorporating any changes as a result of consultation, will be adopted in June 2018.

 

Attachments

a             Draft 18-19 Council's Schedule of Fees and Charges for Annual Booklet 16 11 2017    

 


Council

23 November 2017