Council delivery plan for 2022/23
Rotorua Lakes Council’s delivery plan for the 2022/23 financial year is consistent with what was signalled in the 2021-31 Long-term Plan (LTP) for this year, which is Year 2 of the LTP.
This year’s plan includes a $143m capital works programme and an average general rates increase of 5.7%, which was also signalled in the LTP.
The district’s challenges haven’t changed and Council remains focused on five key priority areas to address these challenges – housing and thriving communities, infrastructure, community safety, economic development and climate change.
Key aspects of the Year 2 delivery plan:
- $143m investment in infrastructure and community assets ($44m on renewals, $10m on works to cater to growth, $89m on projects that increase levels of service);
- Investment in housing and development support, community safety and economic development;
- Completion and re-opening of Sir Howard Morrison Centre;
- Completion of lakefront and forest developments;
- Work on wastewater treatment plant upgrade, Tarawera wastewater reticulation, Aquatic Centre upgrade, museum restoration.
- A debt increase of approximately $84.4m, broadly in line with LTP and keeping Council’s debt level to within its limit;
- Average general rates increase of 5.7%. Increases will differ across properties and property types.
This year’s increase is in line with what was forecasted in the LTP.
Metered water rates have increased in line with an increase across the district, spreading the burden across all water uses, rather than only those on fixed charges.
Rates for individual properties will vary depending on a range of factors including property valuation, targeted rates that may apply and whether the property is used for business or farming purposes.
Average increases by category:
- Business – 5.14%
- Farming – 5.98%
- Residential rural – 5.39%
- Residential urban – 5.88%
You'll find 2022/23 LTP Year 2 Delivery Plan HERE. This includes more detail about what's planned and how it will be funded.
How we fund council and the purpose of rates
Rates are essentially a tax on properties in the district to help fund the cost of providing essential services to residents. They are not a charge for the use of services but for the provision and delivery of services.
Local councils are responsible for a wide range of services, projects and assets for the benefit of their district and have the ability to charge fees, collect rates and borrow to pay for it.
When it comes to funding Council's day-to-day running (operating expenditure) and the new builds/upgrades (capital expenditure) judgement is applied in assessing the options to determine the appropriate source of funding.
A number of funding sources are used:
- Fees/User charges - user charges are preferred when a private benefit can be identified and it is efficient to collect the revenue from those receiving the benefit ie those who create the need for the service pay for it.
- Subsidies, grants, sponsorship - external subsidies, grants and sponsorship are used to subsidise capital costs to upgrade or build new assets eg community facilities and infrastructure.
- Borrowing - debt is used to fund growth-related capital costs and new builds/upgrades and Council's debt level is determined by deciding on a prudent level of borrowing that can be serviced without putting pressure on the council's finances. Debt is not used for operational purposes or to fund asset renewals.
- Rates - rates are used to fund non-user pays operational costs and asset renewals. Rates in the Rotorua district are based on property values.
When charging rates Council considers a number of factors including: tax, equity, fairness and affordability.
Rates are a combination of charges for general and specific services/facilities provided by the Rotorua Lakes Council.
- Water supply services and infrastructure
- Parks and Reserves
- Animal control
- Library services
- Museum services
- Protecting and enhancing our environment
- Community facilities
- Community safety
- Household waste
- Community events
- Wastewater services and infrastructure
- Stormwater services and infrastructure
- Community and neighbourhood enhancement
Council sets a long term budget through the development of Long-term Plans and this is done every three years.
In the intervening years annual delivery plans are developed and the budget for these set. This is generally referred to as the annual plan process and links to the direction and programme of work that was set in the Long-term Plan.
The annual delivery plan also sets the total amount of rates to be collected from property owners to achieve what's planned, the level of fees and charges for users of services and an estimate of other revenue such as grants and subsidies.
How rates are charged
Rates are a combination of charges for general and specific services/facilities provided by Rotorua Lakes Council.
The charges are a blend of "tax" and targeted charges. In Rotorua these are mostly charged by a general rate and targeted rates.
General rates fund a 'basket' of services that are available to everybody and to which no one has exclusive access.
The amount of general rate a property is charged is partly determined by its capital value. Capital Value = Land Value + Improvements (eg buildings etc).
There are two parts to the General Rate in Rotorua:
- Variable portion - Based on the capital value of the property on a per dollar of rating unit value. This is the main part of your rates bill that is affected by the capital value of a property.
- Fixed portion - Uniform Annual General Charge (UAGC) - $425 (GST exclusive)
The Fixed portion of the general rate (UAGC) is applied to ensure every ratepayer pays a minimum contribution for council services. With services funded by the general rate, there isn't always a direct link between who pays and who receives services as it is to fund a 'basket of services'.
These are applied where this is a strong/direct link between the ratepayer and the service provided. In most cases, the property charged with a targeted rate has exclusive access to the service.
Examples of targeted rates in Rotorua:
- Water Supply
- Wastewater sewage
- Household waste disposal
- Business economic development
With services funded by a targeted rate, there is generally a direct link between who pays and who receives services. While we target rate, the cost of providing the service is generally equalised across the district.
Rating categories basically describe the general activity undertaken on a property for rating purposes. Our district is grouped into three rating categories;
- Farming (eg Forestry, Sheep/beef, Dairy etc)
- Business (eg Commercial, retail, industrial, Accommodation)
Residential is any property less than 5 hectares (anywhere in the district) - these properties pay the general rate plus individual target rates for any individual services received. Residential investment properties are NOT rated as 'business' as long as they are long term tenancies.
Farming is any property greater than 5 hectares - these properties pay the general rate plus individual target rates for any individual services received. Farms also pay a portion of the Economic & Development Levy. Farms are NOT rated as a 'Business'
Business is any property, where the primary purpose/activity at that property, is a business activity. Business properties pay a higher variable portion of the general rate. This is called a business differential and is charged at 1.72 on the variable portion. Businesses also pay a portion of the Economic & Development Levy. Residential properties that are rented on a short term basis (more than 100 days) are rated as a business.
Understanding your rates bill
A rates account is made up of:
- General rate - variable portion: based on capital value
- General rate - fixed portion: Uniform Annual General Charge (UAGC)
- Targeted rates: for individual services received
To view your own rates bill online you can use the Rates Information Database (RID). The database allows you to view rating and valuation information about any property in the Rotorua District, using either the property's physical address or valuation roll number.
View the Rates Information Database (RID)
An example of residential rates bill (Costs include GST):
(Note: Example is based off 2019/20 charges)
To elaborate on how properties are rated (using above example):
General Rate - fund a 'basket of services' available to everyone is in two parts:
- Variable portion - This rate is based off the properties Capital Value ($377,000). The capital value of this property is multiplied by 0.00285545. Hence, the variable portion for this property is $1076.50
- Fixed portion - Universal Annual General Charge (UAGC) of $425 (excluding GST). The uniform annual general charge (UAGC) is the fixed portion of rates that every ratepayer pays regardless of property value.
Targeted Rates - These are a fixed charge for service (Costs below include GST)
This example property receives the following targeted charges:
- Lakes Enhancement Rate - Fund to support wastewater developments around lakes areas ($20.22)
- Urban sewerage development rate - Funds existing sewage network capital works ($3.32)
- Sewage disposal charge - Sometimes referred to as a 'pan charge', pays for the operations and maintenance of wastewater services to the property ($539.63)
- Waste Collection Services - Curb/roadside rubbish & recycling collection service for the property ($205.06)
- Urban Water - For water supply connected to the property ($284.51)
All properties that receive these services in general pay the same charge for these services. Hence, targeted rate charges are equalised for all receiving the service (or a multiple of these charges).
For the full range of current rate charges in the Rotorua District (ie for the 2022/23 financial year which began 1 July 2022) please refer to the Rates Funding Impact Statements section of the 2022/23 LTP Year 2 Delivery Plan which you'll find HERE (go to p26).