Proposed Revenue and Financing Policy 2015 And New Rates Remissions Policies Consultation Document. Have your say by 17 April 2015

Transcription

1 Proposed Revenue and Financing Policy 2015 And New Rates Remissions Policies Consultation Document Have your say by 17 April 2015

2 What is Council Proposing? The Revenue and Financing Policy sets out how the Council funds each of its activities and explains the reasons for each. The majority of the income Council collects is through rates (62% in 2015/16). The balance is from grants, subsidies, dividends and user fees. The policy provides ratepayers and customers with predictability and certainty about the sources of funding for our activities and in conjunction with the Long Term Plan provides certainty on the level of those funds. Council is proposing to adopt the Revenue and Financing Policy to replace its existing Revenue and Financing Policy. There are four new Remissions Policies proposed in the draft Long Term Plan. 1. Partial Use/Partial Occupation of Maori Freehold Land 2. Development of Maori Freehold Land 3. Transitional Rate Remission 4. Pest and Plants, Rural Fires and Soil Conservation Targeted Rates Key changes to the Revenue and Financing Policy include: Consolidating some rates to have a consistent approach to funding, reduce complexity, increase understanding and increase predictability of rates system Consolidate the land drainage scheme rates from 19 targeted rates to 2 targeted rates groups. Increasing the portion of public good funding for Waipaoa Flood Control Scheme and River Erosion Protection Ruatoria to 60% general rate funding. In the Policy Waipaoa Flood Control Scheme had 5% general rates funding and River Erosion Protection Ruatoria had 10% general rates funding. Increase the forestry roading rate weighting from 4 to 5 to reflect the greater impact the forestry industry has on our road network compared to other sectors of the community. Table 1: The major changes are shown below: Activity Consolidation Rate Stock Control Status Quo Rating Method Differentiated targeted rate based on Land Value of which: 60% Outer Zone DRA5 & Townships, 30% from Outer Zone DRA3 & 4 and Townships 10% from Inner Zone Proposed Option Rating Method 70% - Outer Zone (excluding Rural Towns), Land Area: 30% - Inner Zone and rural towns -Capital Value Legacy Loans (District Loans) 100% targeted rate 70% - Outer Zone (excluding Rural Towns), Land Area: A Page 2

3 Activity Consolidation Rate Water Conservation - education and advocacy Water Conservation - Implementation of rules and sustainable management Consolidation Rate Building Services Non Subsidised Local Roads Consolidation Rate Aquatic and Recreation Facilities Status Quo Rating Method DRA1 8%, DRA1A 4%, DRA2 82%, DRA3 2%, DRA4 2.68%, DRA5 1.32% Land Value: Inner 70%, Outer 30% Capital Value: Inner 85%, Outer 15% 100% targeted rate on capital 80% DRA1/DRA1A, 10% DRA2-5 10% from DRA3-5 rural townships Capital Value Differential: Inner 1.0, Outer 0.3 Proposed Option Rating Method 30% - Inner Zone and rural towns -Capital Value Consolidated to one rate Water Conservation Land Value: Inner 70%, Outer 30% Capital Value: Inner 85%, Outer 15% Capital Value: Inner 85%, Outer 15% Capital Value - Differential Inner 1.0, Outer 0.3 Theatres Fees and Charges 25% 75% rates funded as: UAGC 50% General Rate inner zone 50% Capital Value - Differential Inner 1.0, Outer 0.3 Activity Consolidated Rate Subsidised Local Roads - UAGC Portion combined with targeted rates Status Quo Rating Method 58% NZTA 42% Rates Funding - 10% UAGC - 32% Capital Value Targeted on Use, Proposed Option Rating Method 58% NZTA 42% Rates Funding - 10% UAGC - 32% Capital Value Targeted on Use, A Page 3

4 Activity Flood Damage and Emergency Reinstatement Consolidated Rate Economic Development (including Tourism Eastland or City Centre Management and Promotion (previously Heart of Gisborne) Strategic Planning and Engagement (Previously Community Development) Strategic Planning and Engagement Resource Management Act (Previously Environmental Policy) Consolidated Rate Uniform waste management charge for City (and environs) Status Quo Rating Method Residential and Lifestyle 1.0 Horticultural and Pastoral 1.5 Industrial and Commercial2.0 Forestry % NZTA 25% targeted rate on Capital Value as follows: DRA1, DRA1A 20% DRA2 5% DRA % 40% undifferentiated general rates 10% UAGC 50% targeted rate based on Capital Value to accommodation, retail, industrial and commercial sectors over the district Proposed Option 100% UAGC 100% UAGC 100% targeted undifferentiated rate based on Land Value 100% Uniform targeted rate over the areas served charged per each Separately Used or Inhabited Part (SUIP) of a property Rating Method Residential, Lifestyle and Other 1.0 Horticultural and Pastoral 1.5 Industrial and Commercial 2.0 Forestry % NZTA 42% Rates Funding - 10% UAGC - 32% Capital Value Targeted on Use, Residential, Lifestyle and Other 1.0 Horticultural and Pastoral 1.5 Industrial and Commercial 2.0 Forestry % undifferentiated general rates 10% UAGC 50% targeted rate based on Capital Value to accommodation, retail, industrial and commercial sectors over the district 100% UAGC 100% Uniform targeted rate over the areas served charged per each Separately Used or Inhabited Part (SUIP) of a property A Page 4

5 Activity Uniform waste management charge for Ruatoria Status Quo Consistent Approach to Public Good Waipaoa Flood Control Scheme Rating Method 100% Uniform targeted rate over the areas served charged per each Separately Used or Inhabited Part (SUIP) of a property 95% targeted rate on Capital Value to direct beneficiaries in flood scheme area 5% General Rate Proposed Option Rating Method 100% Uniform targeted rate over the areas served charged per each Separately Used or Inhabited Part (SUIP) of a property 60% General Rate, 40% Targeted Rate on Capital Value to direct beneficiaries in flood scheme area River Erosion Protection Ruatoria Consolidated Rate Land Drainage consolidation (19 rates groups to 2 rates groups) 60% targeted rate on Capital Value to direct beneficiaries 15% targeted rate on Capital Value to indirect beneficiaries 15% targeted rate on Land Area to contributors 10% General Rate 100% targeted rate on Land Area in the area of benefit (19 rates groups) 60% General Rate, 40% Targeted Rate - 27% targeted rate on Capital Value to direct beneficiaries % targeted rate on Capital Value to indirect beneficiaries % targeted rate on Land Area to contributors 100% targeted rate on Land Area in the area of benefit (2 rates groups) Why is Council proposing to change the Revenue & Financing Policy? Council has undertaken a thorough review of the rates system including the Revenue and Financing Policy over the last 18 months. One of the drivers for the review was to have a rates system that was less complex. Significant rates issues of the past few years had highlighted that our system had grown in complexity over time and this had made predicting the rates incidence across the district difficult. As a result of the rates system review a number of the rating activities have been consolidated, reducing complexity and increasing the consistency of application of funding streams. In some cases that means treating or funding like activities the same. This result is a more understandable and predictable rates system. The rates system outcomes have been modelled extensively at an activity by activity level and overall rates movement level. A Page 5

6 What does Council consider when proposing to change the Revenue & Financing Policy? In determining how activities are funded the Council is obliged to equitably share the cost of delivering services across different users as well as ensuring equity between current and future generations. In deciding how to fund each activity, the Council considers the nature of the services provided and who benefits from those services. The Council takes into account: the council outcomes to which an activity contributes the distribution of benefits between the community as a whole, identifiable parts of the community and individuals (beneficiary pays principle) the period during which the benefits are expected to occur (intergenerational equity principle) the extent to which actions, or inactions, of individuals or groups contribute to the need to undertake the activity (exacerbator pays principle) the costs and benefits of funding the activity distinctly from other activities. The Council then considers the overall impact of any allocation of liability for revenue needs on the District, local communities and communities of interest. As part of the Long Term Plan process Council has undertaken a thorough review of the Revenue and Financing Policy which involved many Council workshops. Council applied the following general principles when considering each activity's funding stream for the review: 1. Reduced complexity and ratepayer impact 2. Reduced administration and costs of implementation 3. Increased predictability in reporting 4. Enhanced consistency of application 5. Phased implementation of major changes if necessary to lessen impacts 6. Achieved fairness and equity 7. Increase in use of fees and charges 8. Use of beneficiaries and user pays through targeted rates where appropriate 9. Consideration of a public good component for the cost of infrastructure that qualifies as being for the good of the district 10. Consideration of not using Uniform Annual General Charge and other fixed charges to legislative maximum of 30%, allowing UAGC to be used as a lever to smooth rates when appropriate. 11. Use of targeted rates on inner/outer zone as appropriate 12. Use of General Rates (on Capital Value) where appropriate. A Page 6

7 Why Does Council have a Revenue and Financing Policy? The Local Government Act 2002 (LGA) requires Council to have a Revenue and Financing Policy in order to provide predictability and certainty about the sources and levels of funding. The funding sources need to cover both operational and capital expenditure. What options are proposed for the Revenue and Financing Policy? Councillors have undertaken a full review of the Council s rating system and Revenue and Financing Policy through a series of workshops. In the rates workshops, councillors were presented with iterative rates systems, analysis and modelling, which provided alternative options for some activities based on a various principles and rating tools. Changes were made to a number of the funding streams as a result of these workshops. Key changes to the policy include: Consolidating some rates to have a consistent approach to funding, reduce complexity, increase understanding and increase predictability of rates system Consolidate the land drainage scheme rates from 19 targeted rates to 2 targeted rates groups. Increasing the portion of public good funding for Waipaoa Flood Control Scheme and River Erosion Protection Ruatoria to 60% general rate funding. In the Policy Waipaoa Flood Control Scheme had 5% general rates funding and River Erosion Protection Ruatoria had 10% general rates funding. Increase the forestry roading rate weighting from 4 to 5 to reflect the greater impact the forestry industry has on our road network compared to other sectors of the community. Council now presents two options Option 1(preferred) and Option 2. Although the options noted below are the final two options Council reviewed Council is interested in the community s views on all of these rates changes. An alternative to the two options presented here is to make no changes to Council s policy and keep the Revenue and Financing Policy. Council is interested in feedback on any aspect of our Revenue and Financing Policy. The final two options considered by Councillors varied the amount of Uniform Annual General Charge (UAGC) funding for the Subsidised Local Roads. Please refer to Appendix 1 for detailed analysis of these options. Option 1 (preferred option) is the approach in Council s proposed Revenue and Financing Policy with the changes noted on page 2 Table 1. Subsidised Local Roads were funded 58% NZTA, 42% rates funding made up of UAGC 10%, and 32% differential targeted rates. Differentials are as follows: Residential, lifestyle and other 1.0 Horticultural and Pastoral 1.5 Industrial and Commercial 2.0 Forestry 5.0 A Page 7

8 Option 2 is the approach in Council s proposed Revenue and Financing Policy with the changes noted on page 2 Table 1. Subsidised Local Roads were funded 58% NZTA, 42% rates funding made up of UAGC 8%, and 34% differential targeted rates. Differentials are as follows: Residential, lifestyle and other 1.0 Horticultural and Pastoral 1.5 Industrial and Commercial 2.0 Forestry 5.0 What are Council s new Rates Remissions Policies? There are four new Remissions Policies proposed for the draft LTP: 1. Partial Use/ Partial Occupation of Māori Freehold Land: Allows portions of Māori Freehold Land greater than two hectares which are unoccupied to be eligible for rate remission. 2. Development of Māori Freehold Land: We can remit rates on Māori Freehold Land on a sliding scale where the land is being developed or used and has previously been unused or unoccupied. 3. Transitional Rate remission: We can remit rates on properties that have significant rates increases due to rating changes in the Revenue and Financing Policy if they meet a set criteria. 4. Pest and Plants, Rural Fires and Soil Conservation (2015/2016): Allows remission of rates for these activities to continue for certain properties already receiving this remission in 2014/15. As part of the preparation of the LTP, and as a result of the Strategic Review of Debt on Māori Land, Council has reviewed its remissions policy. There have been two new remissions policies created as a direct result of the findings of the Strategic Review of Debt on Māori Land (Policy 1 and 2 above). Over recent years there has been concern raised over large swings in rates incidence when there is a substantial review of the Revenue and Financing Policy. As a result Council has developed a Transitional Rate Remission Policy (Policy 3 above) that can be applied for when there are large unintended rates increases as a result of significant changes to the Revenue and Financing Policy. The rates remission on certain targeted rates - Pests and Plants, Rural Fires and Soil Conservation (Policy 4 above) has been applied consistently for 2013/14 and 2014/15 and will again be applied to those properties most affected by the change in the Revenue and Financing Policy in 2015/16. When will these policies apply? If approved the proposed Revenue and Financing Policy and the Rates Remissions policies will apply from 1 July How Can I find out more? Refer to for further discussion and information. A Page 8

9 You can download a copy of the proposed policies from Council s website. How Can I have my say? The draft Revenue and Financing Policy and draft Remissions Policies are being consulted on as part of the draft Long Term Plan consultation process 16 March to 17 April This involves: The draft Consultation Document being available on request and sent to relevant stakeholders. Hard copies of the draft Consultation Document and information on the proposed Revenue and Financing Policy and Remissions Policies will be available at the Council Administrative Centre in Fitzherbert Street, HB Williams Memorial Library and Te Puia Springs Service Centre. Electronic copies of all documents and summary information available on the Council website. Community update meetings, displays and selected stakeholder presentations from the Mayor. To make a submission or provide feedback on the above options or anything else relating to the proposed policies: Go to to fill out a submission form online Fill out a submission form in the Long Term Plan consultation document. Send it Freepost or by to longtermplan@gdc.govt.nz Attend a community update meeting, ask the mayor, councillors and staff questions and tell them what you think. Dates and venues are on our website A Page 9

10 Appendix 1 Analysis on Options1 and 2 (based on report 15/005 Adoption of Revenue and Financing Policy and New Remissions Policies for Consultation 26 Feb 2015 Council Meeting) Option 1 (preferred) Museum, Parks and Reserves, Pests/Plants, Rural Fires, Soil Conservation at 2014/15 Revenue and Financing Policy, Community Services in UAGC, Subsidised Local Roads - 58% NZTA, 42% rates funding made up of UAGC 10% and 32% differential targeted rates Number of Properties 12,000 Estimated 2015/16 (Yr1) % Rates Movement Option 1 10,000 9,612 8,000 6,000 4,000 2, % + 40% to 49.9% % to 20% to 10% to 39.9% 29.9% 19.9% 1,048 1,149 2,406 5% to 2% to 0.1% 9.9% 4.9% to 1.9% 0% to 1.9% 3,755 2% to 4.9% 2,596 5% to 9.9% % to 19.9% % to 29.9% 30% to 39.9% 40% to 49.9% ,048 1,149 2,406 9,612 3,755 2, % + Number of Properties with increases over $ Number of Properties with total rates over $ Key Observations Option % (5572) of properties have decreases 2. 43% (9,612)have increases between 0.1% and 1.9% 3. 17% (3,755)have increases between 2% and 4.9% 4. 88% (18,939) of properties either have decreases or increases under 5% 5. 12% (2,596) have increases between 5% and 9.9% 6. Just under 4% (858) greater than 10% increase 7. UAGC is $637 and the uniform cap is at 27.4% with corrected V6 8. Increases on forestry properties due to Subsidised Local Roads increased forestry weighting A Page 10

11 9. Increase on properties that have had an increase in rating valuation. Note that some are self-generated from capital value changes, for example, partial sell-off, improvements or expansion 10. Increases are spread throughout the district Analysis of Top 100 properties for Option 1 percentage variance 36 properties that previously had no UAGC are now being charged UAGC 61 properties have seen significant capital valuation increases Of these 61 properties, 29 have increases in capital value of $200,000 or more 4 properties are corporate properties that have had significant capital value increases One property is a large utility property with no land value and significant increase in capital value. One property is an apartment that has been sold privately and is no longer contiguous Increases identified at rates activity line level in top 100 by percentage Subsidised local roads impact of forestry roading weighting increasing from weighting of 4 to 5. Subsidised local roads pastoral properties weighting has not increased but it is quite common to have capital values increased causing increase in roading rate. Soil conservation rate is having an impact on properties due to increased budget for Waingake Restoration Project. Often the properties have very low capital value that are contiguous (i.e. Capital Values of approx. $900-10,000). Overall small dollar value in rates. Pests and plant driven by property valuation and increase in budgets for Pest Management Strategy. Water resources driven by property valuations and increased budgets for Environmental Monitoring and Non Regulatory Freshwater Management Projects. Rivers Control increased rates charges overall due to public good component of Waipaoa and Waiapu Flood Protection Schemes. A Page 11

12 Thematic Map Option 1 OPTION 1 - Preferred - Includes Community Services at 100% UAGC A Page 12

13 Thematic Map Option 1 highlighting increases over 10% OPTION 1 - Preferred - Includes Community Services at 100% UAGC A Page 13

14 Analysis of 2014/15 Properties affected by three Targeted Rates Pests Plants, Rural Fires and Soil Conservation (PPRFSC) Changes to the Revenue and Financing Policy in 2012/13 and 2013/14 resulted in large swings in the rates for some ratepayers in 2012/13 and 2013/14 for the three rates Pests and Plants, Rural Fires and Soil Conservation. Council has previously applied a targeted remissions policy to provide a consistent level of relief for those properties most affected in 2012/13, 2013/14 and 2014/15. The graph below shows the rates movement on the group of ratepayers that have been most impacted by the three targeted rates policy change in 2013/14 and 2014/15 many were in Tolaga Bay and Tokomaru Bay. This graph is based on the rates increase from 2014/15 to 2015/16 prior to any remissions being applied in 2015/16. Of this group of ratepayers 46% (291) of properties receive a decrease in rates when compared to 2014/15 rates. It should be noted that the activity rates for these three targeted rates (Pests Plants, Rural Fires and Soil Conservation) were significantly higher than most other rate payers. Number 140 of properties PPRFSC % Variance total rates movement from 2015/16 (Yr1) Option % + 40% to 49.9% 30% to 39.9% 11 20% to 29.9% 10% to 19.9% 5% to 9.9% 2% to 0.1% to 0% to 4.9% 1.9% 1.9% 2% to 4.9% 5% to 9.9% 10% to 14.9% 10 15% to 19.9% % to 29.9% % + Number of Properties with increases over $ Number of Properties with total rates over $ The next graph shows the rates movement on the group of ratepayers that have been most significantly impacted by the three targeted rates policy change if the targeted remission policy was applied again in 2015/16 on a consistent basis as the previous years. A Page 14

15 PPRFSC % Variance total rates movement 2015/16 (Yr 1) Number of properties Option 1 Post Remission % + 40% to 30% to 20% to 10% to 5% to 49.9% 39.9% 29.9% 19.9% 9.9% % to 0.1% to 4.9% 1.9% 0% to 1.9% % to 4.9% 5% to 9.9% % to 14.9% 15% to 19.9% % to 29.9% % + Number of Properties with increases over $ Number of Properties with total rates over $ Rates modelling Option1 for Years 2 and 3 of Long Term Plan The following two rates analysis graphs highlight that for years 2 and 3 the percentage rates increases remains mainly in the 0.1% - 5% increase range. There is less variability in the rates system in years 2 and 3 as there are no planned rates revaluation nor is there a Revenue and Financing Policy review. This means rates remain much more predictable and constant as the main factor affecting rates in these years will be any significant movement of budgets between activities. Number of properties 14,000 12,000 10,000 8, (Yr 2) Option 1 Total rates movement % Variance 8,183 12,848 6,000 4,000 2, % + 40% to 49.9% 30% to 39.9% 20% to 29.9% 10% 5% to 2% to to 19.9% 9.9% 4.9% 0.1% to 1.9% 0% to 1.9% 2% to 4.9% 585 5% to 9.9% % to 14.9% 15% to 19.9% 20% to 29.9% 30% to 40% to 50% % 49.9% ,183 12, Number of Properties with increases over $ Number of Properties with total rates over $ A Page 15

16 Number of 16,000 properties 2018 (Yr3) Option 1 Total rates movement % Variance 14,000 12,000 10,000 8,000 6,000 4,000 2, % + 40% to 30% to 20% to 10% to 5% to 2% to 49.9% 39.9% 29.9% 19.9% 9.9% 4.9% % to 1.9% 0% to 1.9% 4,055 2% to 4.9% 1,689 5% to 9.9% 9 10% to 15% to 20% to 30% to 40% to 50% % 19.9% 29.9% 39.9% 49.9% ,183 4,055 1,689 9 Number of Properties with increases over $ Number of Properties with total rates over $ A Page 16

17 Option 2 Museum, Parks and Reserves, Pests/Plants, Rural Fires, Soil Conservation, at 2014/15 Revenue and Financing Policy, Community Services in UAGC, Subsidised Local Roads - 58% NZTA, 42% rates funding made up of UAGC 8% and 34% differential targeted rates. Number of Properties 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1, Estimated 2015/16 (Yr1) % Rates Movement Option ,103 1,313 50% + 40% to 30% to 20% to 10% to 5% to 2% to 49.9% 39.9% 29.9% 19.9% 9.9% 4.9% 4, % to 1.9% 8,084 0% to 1.9% 3,667 2% to 4.9% 1,749 5% to 9.9% % to 20% to 30% to 40% to 50% % 29.9% 39.9% 49.9% ,103 1,313 4,603 8,084 3,667 1, Number of Properties with increases over $ Number of Properties with total rates over $ Key Observations Option % (8084) have increases between 0.1% and 1.9% 2. 17% (3667) have increases between 2% and 4.9% 3. 88% (19,671) of properties are either have decreases or increases under 5%. 4. 8% (1,749) properties are between 5% and 9.9% 5. Just over 4% (973) of properties are greater than 10% increase 6. UAGC is approx. $615 (GST exclusive) per SUIP 7. V5 Results in general rate 6%, targeted rate 67% and uniform rate 26.5% 8. Increases on forestry properties mainly due to Subsidised Local Roads increased forestry weighting from 4 to Properties who have had an increase in capital value (CV) as a result of rates property revaluation have seen CV based rates increase 10. Some due to self-generated CV changes i.e. sold part of land/block, built, improvements 11. Increases are spread throughout the district A Page 17

18 Thematic Map Option 2 OPTION 2 - Includes Community Services at 100% UAGC A Page 18

19 Thematic Map Option 2 highlighting increases over 10% OPTION 2 - Includes Community Services at 100% UAGC A Page 19