Western Bay of Plenty District Council rates are increasing by 5.1 percent.

Mayor Ross Paterson says an increase of this size was achieved after councillors deferred capital costs, slashed operational expenditure and cut discretionary spending.

Deferred are $7.5 million in capital costs, operational spending is cut by $2.4 million.

He says this annual plan round has been one of the toughest in memory due to the council facing huge fiscal challenges in light of the continuing economic downturn.

This has manifested itself for the council as significantly less growth and the consequent shortfall in financial contributions from subdivision development.

'However, council feels that it is facing the new financial year in the best possible position having kept rate increases as low as possible, while still being financially prudent,” says Ross.

'In addition we are making sure we are not spending any more money than is absolutely necessary.

'There are two main constraints on council: firstly we cannot keep putting up rates beyond the affordability of our ratepayers, and secondly we cannot keep spending money and increasing our debt.

'Remaining within these constraints will place council in a good position to start building again when growth returns.”

The council expects total rates income to be $45.7 million for the 2011/12 financial year, compared to $42.5 million in the 2010/11 year.

The rates increase is less than one percent higher than last year's 4.2 per cent rate increase.

During the annual plan process, the council considered 1000 submissions, more than 800 of which were from sporting individuals and groups requesting council's funding support for the Waikato-Bay of Plenty National Cycling Centre of Excellence that is to be located in Cambridge.

Apart from minor changes, the council held firm to its commitment not to increase council's debt levels.

Compared with similarly high debt councils, like Tauranga, Hamilton and Whangerei, that have spent a great deal on growth-related infrastructure, the Western Bay is at the healthier end of the scale because it recognised the worsening growth situation before it became too severe, says Ross.

'We have done our best this year to keep rate rises to a minimum and to curb spending and I believe it will be some time before we see any upturn in growth.”

2011/12 Annual Plan Decisions:

Waihi Beach Coastal Protection

The council has reduced the Uniform Annual Charge (UAC) for coastal protection work for Waihi Beach ratepayers in Glen Isla Place from $844 to $641 and the Northern Dune Care UAC from $817 to $647 due to the cost of sand replenishment being less than expected.

Water and wastewater uniform annual charge increase:

There is no change to the decision to increase water and wastewater uniform annual charges by 10 percent this year. The increase is expected to return to an annual three percent increase from 2012/13 and will be reviewed as part of the upcoming 2012-22 Long Term Plan.

Maketu-Little Waihi wastewater scheme:

This remains the only major capital project being undertaken in the 2011/12 year. Central Government is subsidising the $10.5 million cost of the scheme and Environment Bay of Plenty is funding a further $2.1 million. The balance of $2.6 million will be loan funded by Council and recovered over the communities of Maketu and Little Waihi.

In the 2011/12 year the Maketu wastewater capital charge will be $321 and there will be an availability charge of $161 for vacant sections. In 2012/13 the full uniform annual charge of $641 (plus GST) will be charged.

PSA and rates remission:

Kiwifruit growers have requested the council review its rating policies to take into consideration rate remissions for those growers severely impacted by PSA. The decision was ‘no'. There will be no remission policy due to the precedent it would set.

The council will however consider growers' plight on a case-by-case basis in 2011/12. The council will monitor the situation recognising the spread of PSA will be an ongoing risk to the industry and the wider Bay of Plenty economy.

Discretionary grants of $45,000 have been stopped for the 2011/12 year only, and will be reviewed in the upcoming 2012-22 Long Term Plan.

All applications for additional funding submitted to the draft Annual Plan have been declined this year. Fee Abatements have not been reinstated.

Infrastructure costs to increase:

The council will fund an additional $455,000 for removing and replacing water mains for the two-laning of State Highway 2 between Katikati and Athenree this year. The money will come out of the existing roading and utilities budgets and will not be passed on to ratepayers in 2011/12.

In future ratepayers will have to pay because the government changed the rules.

A change to the Government's Infrastructure Act excludes Land Transport New Zealand from all future responsibility to pay for the replacement and removal of any infrastructure under roads that need construction. Instead local authorities will have to pick up the cost.

To illustrate average rate increase in 2011/12 on properties across the Western Bay of Plenty District, examples have been made using five different property types.

A typical land and capital value has been assigned to each type. For example the urban residential property type represents a typical house with a land value of $250,000 and a capital value of $500,000.

The five typical property types are: urban residential, commercial/industrial, dairy farm, orchard, and lifestyle block.

For each typical property total rates examples were calculated for each of the five Council wards; Maketu, Te Puke, Kaimai, Katikati and Waihi Beach.

There are a number of different ward-based or area of benefit charges that apply, which affect the total rates paid.

Some properties are connected to services like reticulated water supply and wastewater, which also affect rates.

There are three main categories of rates:

The General Rate consisting of:

• a rate in the dollar charged on capital value and

• a Uniform Annual General Charge (UAGC), which is a flat amount levied on each rating unit.

The General Rate is used to fund the day-to-day operations of Council and activities that are considered to be mainly for public benefit.

Roading Rate - this consists of:

• a rate in the dollar charged on land value

• the roading charge, which is a flat amount levied on each rating unit

• the rural works charge, which is a fixed amount on every rural zoned property in the District.

The Roading Rate is used to fund the building and maintenance of the roading network within the District.

Targeted Rates – Council uses targeted rates to collect funds over areas of benefit. This rating tool is chosen where the services are specific to a particular community or area within the District and it is not considered fair to charge all ratepayers eg charges for water, wastewater and town centre promotion.

Urban Residential property with:

The average rate increase for the urban residential properties in Waihi Beach, Katikati, Kaimai (Omokoroa) and Te Puke is 6.6%. The increase for the Maketu example property is 25%, due to a new wastewater charge being introduced.

Commercial and Industrial property with:

The average rate increase for the commercial/industrial properties in Waihi Beach, Katikati, Kaimai (Omokoroa) and Te Puke is 5.6%. The increase for the Maketu example property is 23%, due to the introduction of a new wastewater charge. (See bullet point on Maketu - Little Waihi wastewater scheme above).

Rural Dairy Farm property with:

The average rate increase from 2010/11 to 2011/12 for the diary farm example is 4.7%.

Lifestyle Block with:

The average rate increase from 2010/11 to 2011/12 for the lifestyle block example is 4.8%.

Rural Orchard with:

The average rate increase from 2010/11 to 2011/12 for the rural orchard example is 5.1%.