New Plymouth where rates increases for the next two years may be confirmed tomorrow. Photo: 123rf
New Plymouth councillors have been warned if they adopt the council's draft long-term plan - which includes more than a 20 percent rates rise over the next two years - they risk ratepayers being unable to pay and being forced to sell their properties.
The council is proposing an average rates rises of 11.5 percent next year and 10.3 percent for 2026 before rates increases plateau in the 8 percent range over the next five years and then drop off.
Council officers sounded the warning bell in a risk analysis included in a report prepared ahead of an extra-ordinary council meeting to adopt the 10-year plan on Thursday.
"There is a risk that LTP 2024's rate rise means some ratepayers may struggle to pay," they said.
"This could lead to more late rates payments or non-payments, which in turn may lead to more rates penalties, postponements and/or enforcement actions (such as rating sales)."
In the same report, the officers recommended adopting the LTP.
According to the draft plan, residents whose property's land value was $390,000 would pay the average rates rise of 11.5 percent, jumping from $3160 to $3524, a rise of $364.
Those with land valued at $790,000 would face a rates increase of 19.5 percent, a hike from $4346 to $5192 or a rise of $846.
The focus of community consultation on the LTP had been on a $9 million upgrade of Brooklands Zoo, finding a $3m solution for the quakeprone Bellringer Pavilion at Pukekura Park and putting aside $50m to get work started on the Tūparikino Active Community Hub multi-sports complex.
But the big spending included $1.5 billion in capital expenditure, more than half of which would be spent on renewing wastewater treatment and transport assets.
Five areas - transportation, waste minimisation, waste water treatment, water supply and parks and open spaces - accounted for more than half of the $2.9 billion day-to-day operating budget.
Neil Holdom Photo: RNZ / Robin Martin
In a foreword to the draft plan, mayor Neil Holdom and chief executive Gareth Green said council faced increasing costs which they acknowledged was putting additional pressure on ratepayers and residents.
They said while the international S&P Global ratings agency had upheld the council's AA+ credit rating and endorsed its financial management, it "still faced serious economic headwinds".
The leaders said while inflation at the supermarket checkout was up 19 percent since 2020, since the council prepared its last LTP capital costs were up 25 percent and civil construction costs up 27 percent.
"Like homeowners our borrowing costs have also increased from around three percent three years ago to around five percent over the next few years, meaning our interest costs have risen 60 percent.
"These cost rises, the need to invest in our core infrastructure, plan for climate change and other contingencies, on top of the day-to-day financial pressures faced by many, places additional pressure on a number of our ratepayers and residents."
Holdom and Green said more than 3500 residents had given feedback on the plan and while voicing concern about cost rises they had supported its vision and goal of maintaining core services and infrastructure.
The council was currently undergoing a restructure - which had already seen significant job losses - aimed at cutting costs and saving $10m a year.