Tauranga City Council is going to ask its ratepayers to help pay off $1.7million of its spiralling interest bills.
The bailout is to pay back loans used to purchase a Te Tumu block of land and the Pyes Pa bypass – two strategic investments that have resulted in compounding debt for the city council.
Tauranga City Council is seeking a $1.7million bailout from ratepayers.
The debt on the Te Tumu land purchase of 170ha is forecast to be $14 million by the end of the 2013/14 financial year with interest of $837,000 for the same year.
By the end of the 2014 year the loan is forecast to be $15.9 million, and the interest is expected to be about $1million.
The council paid $10million towards the purchase in 2007 and the land is now worth considerably less.
The debt on the Pyes Pa Bypass is also growing by about $750,000 each year, as interest is added to the original $10million loan.
The bypass is now vested with the New Zealand Transport Authority, but the debt remains with the council, and as it doesn't appear as an asset on the council's books it cannot be depreciated to create a funding source for debt repayment.
Transferring the bypass to the roading account will allow rates funding for the annual interest cost and provide debt retirement at four per cent, which will cost ratepayers $734,000.
The roading activity account can at present pay off the debt at $440,000 each year with no further rates increases, but it will need to be monitored.
The Te Tumu land was purchased as a ‘strategy property' investment to halt an unwanted 48-lot subdivision that threatened the planned Te Tumu satellite city development from going ahead.
As ‘strategic property' it is separate from the rest of the council property management portfolio. When it's lumped in with the rest of the council property, income from other properties can be used to offset some of the interest bill.
If it was able to be rate funded to the tune of about $1million for the 2013/14 year about 4 per cent of the debt or $590,000 could also be retired.
Councillors also agreed in a close vote to reduce the general land purchases budget from $2.5 million to $1 million.
Councillor Larry Baldock spoke against the motion saying the present low land values at Te Tumu are temporary and will eventually rise to the point the council will realise a good return on its investment.
Speaking afterwards he says the motion forces present day ratepayers to pay for an investment they will not see the benefit of.
The proposal, which will be publicly consulted as part of the Annual Plan process, is expected to add about half a per cent to the rates.
The staff solution is to transfer the bypass and the Te Tumu land into the general council accounts.
Meanwhile interest on Route K is rolling in at about $3.7million. Some of it is offset through tolls, but the debt on the toll road is increasing by about $1.8million this year.
Capital costs are $45million with interest calculated at June 30, 2013, of which $16 million is loan funded.
The total loan outstanding on Route K is $61million. The Route K loan represents about 15 per cent of the total council debt. The council has no option but to continue to pay the losses from borrowings – until either the tolls pay it off or the NZTA buys it as a state highway.
32 comments
losers pay
Posted on 31-01-2013 16:18 | By hapukafin
those who voted to purchase the land can pay.
.
Posted on 31-01-2013 16:27 | By Donnaw
This is a joke.......isnt it?
Posted on 31-01-2013 16:45 | By davidt5
Only idiots would have paid such a high price for that block of land. Those same idiots should have the balls to acknowledge their mistake and pay off the balance themselves. These idiots include the council staff who recommended the purchase and the councilor's who voted it through. Sadly Tauranga has been very poorly served by silly staff and incompetent councilors.
WTF is the council doing!
Posted on 31-01-2013 17:01 | By gothebay
I would say to ALL rate payers, if they lump us with this debt, we must all do a REVOULT of the rates and everyone pays NIL, I'm sure the council will wake up then. That is when they will bring in a government official to clean up the mess of this fiscal irresponsible council.
Posted on 31-01-2013 17:04 | By Sambo
You show me you are making savings on some thing, and I am sure ratepayers may help, who the hell do you people think you are?.
yip
Posted on 31-01-2013 17:12 | By Capt_Kaveman
and people voted these losers its not thier $ so they dont care, i want my Mt back to its own council i did not vote for this, my mum always said amalgamation with Tauranga was a dumb idea and how right she was
a hapuka fin
Posted on 31-01-2013 17:18 | By tabatha
Great idea, they did not ask us about buying the swamp plain.
Need Budget Advice
Posted on 31-01-2013 17:38 | By The Sage
Stop funding some of these organisations, such as Priority One, who don't actually produce anything. Put that money into the kitty and use it. Aajor overhaul of Council expenditure is needed here. Any good Accountant would be able to see that.
That's life Coucil
Posted on 31-01-2013 20:17 | By R1Squid
My property today is worth less than I paid for it in 2009. I still have a mortgage to service but I have not asked Council to assist. JUST GET OVER IT. I cannot afford any more.
TCC ratepayers told it would not cost them a cent and no risk of any loss
Posted on 31-01-2013 21:08 | By Scambuster
Whoever thought up this crazy Te Tumu/ Bells Road farm scheme deal should go 1 went a couple of years ago but 2 still remain at City Hall.The whole bloody thing has turned into a poison pill and TCC was sucker punched because under the deal they cannot sell it until 2026 that's $600k a year compounding loss on top of all the other garbage which is another $10m making $20m in total.Western Bay ratepayers should be over the moon too as it going to cost them $5m plus $5m or $10m in total.The Minister of Local Govt. should appoint an LG Commissioner to run Tauranga immediately before more crap appears out of the closet.
No thanks
Posted on 31-01-2013 21:56 | By Captain Sensible
I have thought about it long and hard and decided that I do not want to help to bailout the council on this. This is voluntary .....right?!
Kaipara 2
Posted on 31-01-2013 22:16 | By AuntyMavis
The council should resign on mass for poor decision making. People in this city are struggling as it is financially and now they are going to be burdened with this. When the council makes a profit on the land will they pay the people of Tauranga back doubt it
I have an idea!!!
Posted on 01-02-2013 11:41 | By Sambo
since there is a Hui going down, get Crosby to go and ask them for money, as I am sure they would have profited out of the Te Tumu/Belk road debacle.
You reap what you sow - AGAIN
Posted on 01-02-2013 13:27 | By The Tomahawk Kid
All those ratepayers who voted for the candidates who agreed on going ahead with this white elephant should pay. May teach them to be more responsible about who they vote for in the future. All care - no responsibility will lead to a disaster every time - yet you are all so indignant and seem so surprised that you are being asked to pay up AGAIN! Wake up folks. You reap what you sow. You have voted in a bunch of immoral, unprincipled do-gooders who are ALL, to every last man - more than happy to take your money and spend it on things they believe are for your own good - REGARDLESS of the expense and the consequences.
thick skinned
Posted on 01-02-2013 21:39 | By The Big Tomatosaurus
And these councillors will stand again for re-election !!!!!!!!!!!!!!!!
AUNTY MAVIS
Posted on 02-02-2013 17:34 | By PLONKER
On Kaipara 2, well Tauranga would be VERY lucky to get away with just "2 Kaipara's" Taurnaga looks to be more like X10 and maybe worse to come than that.
IT HAS STARTED ...
Posted on 05-02-2013 10:13 | By YOGI
Just, the stories now will creep out and become more unbelievable with a little time.
A CUNNING PLAN HATCHED?
Posted on 06-02-2013 14:09 | By PLONKER
What ever it is the end result for ratepayers is that they will be levied, rated, taxed and fee-ed into submission anyway possible. That sadly is the only choice left for these wobbles all by there own hand but all from ours to pay ... pay ... pay to remedy it.
REDUCE LAND PURCHASE BUo reduce the DGET
Posted on 09-02-2013 23:13 | By Crash test dummies
Looks to me that it is all a bit late for that, the money has gone, the debt is over the limit and some, and now they want to limit the "Spendup Budgets" you would think that was about 10 years to late and so. Seems like a complete waste of time as the money has all gone.
MATOSAWUS
Posted on 10-02-2013 10:25 | By MISS ADVENTURE
Yes sadly for everyone else they wil, they will also extoll what a wonderful job they have done, how hard they have worked and all the other virtues that they see as appealing to the voters but really should we have a bar of any of it or them? Clean sweep of the place is needed, new broom and more.
TO MANY BAILOUTS
Posted on 10-02-2013 11:50 | By Crash test dummies
Looks like the good ship lollypop (Tauranga) is about to run aground and it iss going to hit hard and fast.
WHY SO MANY BAILOUTS NEEDED??
Posted on 10-02-2013 15:04 | By Crash test dummies
Must because the debt is so high already, that can just keep borrowing now to hide the truth anymore. To get "bailout" money now means have to table to council to get approved for more money. All it provest is that no one has had a clue what has been happening for many years.
BELL ROAD
Posted on 11-02-2013 16:14 | By YOGI
That is not a strategic purchase it is better described as a "sucker purchase" as the vendors were way more savvy than the purchasers.
Adding up all the
Posted on 13-02-2013 12:58 | By YOGI
Seems like there are mega millions on the slate at present and all are heading for the ratepayers pockets to bailout Councils past bad decisions.
Te Tumu
Posted on 13-02-2013 14:43 | By YOGI
So I would say Carrus knew that development would not happen out there so they found a way for some mug to front up with some money so as they could get out of ownership and move on to bigger and better things, like something that was actually going to happen like the Lakes melt down.
Salary Reductions instead
Posted on 17-02-2013 21:03 | By carpedeum
How about an alternative ...... why not reduce the Councillors and Satff members salaries -across the board- to cover this debt? After all- they (collectively) blithly make these decisions and spend OUR money/rates. Reduction is what happens in the real world .
50% of salaries
Posted on 19-02-2013 09:28 | By YOGI
That is a great idea, then use that money to pay back some debt. A win win situaioton for everyone, even salaries would be more realistic.
Must repay debt
Posted on 21-02-2013 14:14 | By YOGI
Looks to me that this isi the only option, but really how is that going to happen there is clearly no stomach in TCC for making the needed decisions to cut costs to something a lot closer to what one could then say was efficient and economical so what to do what to do ...
Staff solution?
Posted on 21-02-2013 17:29 | By PLONKER
transfer some stuff around swap a few numbers about and the end result is that then all of this adds to the rates for this year. Hey presto the magic mushroom brigade have created another way to say, "Oh crikky dick we have no money left here lets shift it over there and everyone can pay in to help out"
next bailout
Posted on 23-02-2013 23:05 | By PLONKER
One of the biggest yet will be Route K and the Welcome Bay deal where COuncil will offlad $50-60m of debt but assume responsibility for $150m of roading costs for 15th Ave, Turret Rd and the second Causeway to Maungatapu, watch this space ...
Meritous salary
Posted on 25-02-2013 09:15 | By YOGI
When you have a "job for life" no pressure and little to do on a daily basis then a huge salary is unacceptable, the job title is no measure of what a salary should be, the comparison to the private sector is way off the mark for the same reasons.
Pyes Pa Bypass
Posted on 01-03-2013 16:42 | By TERMITE
No surprise with this lemon arriving back in the lap of TCC, this was planned to be the Coup-de-tar cunning plan just like Route K, that it would be so cunningly added to the mushrooming debt and NZTA would take it all away ... NOT!
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