Vacant land owners, contestable funds targeted in Chch’s draft budget
Saturday, 10 February 2024
Vacant land owners and funding applicants beware: The Christchurch City Council is set on generating and saving money in its $16.4 billion spending plan.
The city council published its proposed draft long term plan late Friday afternoon, ahead of a two-day meeting over Wednesday and Thursday where councillors will play tug of war over rates increases and public services.
Although 18 months of mahi has resulted in the council finding $41 million of operational cost savings and additional revenue, as it stands Christchurch ratepayers face a cumulative 53.57% increase to rates over the next decade.
The rates rise starts at 15.84% on average for the 2024/2025 financial year (an extra $501), ending with 0.85% in 2033/34.
Those figures will change depending on what ideas councillors decide to float with the public next week, then will likely change again before councillors vote on a final plan in late June.
Ideas being considered next week include:
- Charging owners of vacant commercial land in Linwood, Sydenham, New Brighton and Lyttelton more rates, as the council does in the central city. Currently, owners of inactive commercial properties in the central city pay four times the standard general rate.
Cutting five contestable funds (city placemaking, biodiversity, sustainability, heritage and accessibility) to save $2.67m over two years.
Stopping the Events Ecosystem Fund for three years, saving $2.9m but risking the likelihood of major events coming to Ōtautahi for up to six years.
Stopping pensioners from being allowed to postpone paying their rates on demand, and instead applying the same hardship test to them as younger ratepayers.
Lowering satisfaction targets. Including the council’s target for residents’ satisfaction with their participation, contribution and understanding of the council’s decision-making from 34% to 32% (but returning to 34% from mid-2026).
Decreasing the council’s target for identifying and repairing issues on stop banks within 9 months (relating to flood protection and control works) from 100% by 2031, to 50% by 2034.
Borrowing more money over time to decrease rates rises in the next year by 3.57%.
Spending $1.8m in 2024/2025 - rather than in 2027 - on work to better understand climate hazards and get communities prepared to adapt.
Creating a climate fund to cover the anticipated costs associated with relocating or modifying core infrastructure and buildings in the future, at a cost of a 0.25% rates increase over ten years, totalling $360m
As it stands, the next ten years of the council’s combined capital and day-to-day expenditure will largely be made up of Three Waters (28%) and transport (17%), followed by a combined parks, heritage and coastal environment spend (10%).
Debt repayments will take up 7% of the total spend, followed by waste recoveryat 6%, recreation and sport at 5%, and libraries at 4%. Te Kaha accounts for 2% of total spend over the decade.
Art galleries and museums, housing and council’s governance costs are allocated 1% of the total spend each.
The draft plan suggests that council has handled its debt better than expected in 2021, with staff saying the current and forecast debt will be serviced comfortably.
In the 2021 long term plan, the council forecast a net debt to revenue ratio to peak at 236% in 2026, then gradually improving after 2028. In the Friday draft, the council forecasts a peak of 186.7% in 2028, with gradual improvements to follow.
The council’s gross debt will be $2.64b in July, with council expecting it to increase to $3.69b in 2034. Both the 2021 and 2018 long term plans overestimated council’s gross debt increases.
By 2034, the council expects to be able to borrow up to $1.2b without breaching debt covenants. The council has increased its debt headroom in the last three years, from $400m to $600m, to allow for unexpected disaster events.
The draft long term plan will be adopted on March 11, with public consultation beginning just days later.
There will be oral submissions heard in May, with public feedback collated and considered ahead of the final plan being adopted in late June.