Long-term Plan 2018–2028 Rates issues
Agenda for today’s workshop 1. Introduction 2. Revaluation and transition – (Valuer-General on 21 November) 3. Infrastructure funding • Transport funding • Water quality targeted rate • Environment targeted rate • Development contributions Infrastructure/growth targeted rates • 4. Other rating policy issues • Waste management targeted rate for food waste collection - Papakura • Application of APTR to online sector • Governance framework review – local targeted rate pilot • Local targeted rates – local board project funding Other rates issues •
Process reminder 7 September 26 September 18 October Today 2 November 6 November 30 November Revaluations Local board Trade offs & Mayor’s Infrastructure Infrastructure Other budget Mayor’s & rating projects & prioritisation intent funding investment items proposal policy funding process • Regional community & culture Links to other • Funding scenarios programmes • Local Board One workstreams Initiatives • Funding levers • Environmental programmes 28 Feb – 28 11 December 7 February May 17-18 May 31 May 27 June Mar Consideration Agree Adopt Decision on Submission Local Board Adoption of of submissions consultation consultation final LTP process and budget advocacy LTP items document content items
Purpose for today’s workshop • Understand and discuss choices and trade-offs for rating and infrastructure funding issues • Decisions on rating and infrastructure funding will be made in May 2018
Context | What are we planning for Plan for Auckland Council Plan for Auckland Long-Term Plan Auckland Plan 10 years 30 years Reviewed every 3 years it is the 10-year Reviewed every 6 years it is the 30-year growth budget of Council. Identifies Council’s strategy for Auckland. A plan for Auckland, not just investments to achieve Auckland Plan Council. outcomes. Key challenges over next 30 years The immediate issues we will focus on The pathway to achieve the outcomes we want in 30 years Outcomes we want in 2050 High population growth Auckland is growing fast. We need a plan • Belonging and participation for where and how people live and how they access jobs , facilities and services. Funding • Māori identity and Housing & Accelerate for growth urban renewal wellbeing transport • Environment and cultural heritage • Homes and places Sharing prosperity amongst all Auckland’s success is dependent on how • Access and connectivity everyone fairly shares in Auckland’s prosperity. • Opportunity and Investment Inclusive city prosperity Development across the region Strategy Timing and sequencing of how Greater environmental pressure Auckland will grow The natural environment is one of the and change over time most valued part of Auckland’s identity. The way we grow must protect, sustain Protect environment Water Quality in our and enhance our environment. and respond to climate harbours and change streams
Financial framework Debt to • XXX Infrastructure Funding revenue Operational Revenue <265% Funding • Cash operating surplus • Rates tools • Capital revenue • Fees & charges • Asset disposal • NZTA operating subsidies Cash • Debt • Dividends surplus • Partnerships Capex Cost Funding recovery Capital Costs Consequential Operational Costs • Renewals opex • Direct costs • Growth Costs of providing • Interest • Service improvement services & assets • Depreciation (non-cash)
Revaluation and transition
Revaluations 2017 • The revaluation is a mass appraisal valuation of 540,000 properties undertaken for rates purposes • The valuations are based on market sales as at 1 July 2017 • The valuations will take into account the Unitary Plan zonings • The values must be approved by the Valuer-General before they are able to be used for rating purposes • 2017 Revaluation is due for publication in November 2017 • Property owners can object to their valuation • The values will be used to assess rates from 1 July 2018 • Revaluation doesn’t impact on the total amount of rates collected by Auckland Council
Revaluation • Triennial revelation ensures equity • Same value properties pay the same rates • Properties pay a share of rates based on their valuation • Increases in value don’t necessarily mean an increase in rates o increases above average rates increases above average o increases below average rates increases below average • Relative business and residential farm/lifestyle movements insulated within groups Business Residential and farm/lifestyle 32.4 per cent of rates 67.6 per cent of rates
Revaluation • Average rates change assuming: o 2.5% general rates increase o LTDS continues o revaluation +2.5% Gen rates increase Category +0.5% LTDS Ave general rates change -0.5% reval shift to farm/lifestyle Business 1.5% Residential 2.5% Farm/lifestyle 9.5% Overall 2.5% Rezoning – continue to be rated farm/lifestyle until developed
Revaluation • Unaudited preliminary data – requires VG sign-off • Table shows impact of revaluation and general rates increase and LTDS Percentage change in general rates Category -20% to -10% to 2.5% to 10% to -20%< >20% -10% 2.5% 10% 20% 5,000 16,200 213,500 155,600 63,700 19,300 Residential (1%) (3%) (45%) (33%) (13%) (4%) • 78% ratepayers changes within + or – 10% or $235 per year or $5 per week • Some large increases reflect house builds on vacant land • Some movements resulting from rezoning o reflecting major wealth increases
Revaluation and transition • Caps on rates decreases cannot pay for caps on rates increases – requires legislation change • Unique circumstances of amalgamation provided for rates transition • Option 1 – remit increases over 10 per cent until next revaluation for residential and farm/lifestyle only • average additional rates increase for all other res & farm ratepayers by 2.5% • increases average rates until finished, cost reduces each year • Option 2 – remit increases over 20 per cent for 2018/2019 for residential • increases rates for all other ratepayers by further 0.6% • 273,000 residential ratepayers with increases above average (2.5%)
No transition • All changes occur in 2018/2019 o similar value property similar rates • No cost to other ratepayers • Rates postponement available to residential ratepayers • Rate rebate available for low income ratepayers • From 2019/2020 changes only driven by underlying rates increases (plus LTDS) • No ongoing issues with increases in excess of headline rates increase
Infrastructure funding
Infrastructure funding options 10 year LTP capex programme • XXX Indicative Demand Current Capacity $30b $20b Increased Funding Prioritisation Targeted rate and DC options to increase funding • Transport: an extension/replacement of the Interim Transport Levy • Water quality: a regional rate to deliver improvements • Environment: a regional rate for environmental outcomes Housing: Development contributions and targeted rates in specific • development areas – beneficiary pays • Open space: Changes to DC prices to recover increase in investment
New targeted rates
New targeted rates • Additional funding considered for: • Transport (replaces ITL) • Water Quality • Natural Environment 1. Should ratepayers bear additional costs for increased investment? • key question for consultation • present project benefits relative to costs 2. Should this be funded from general rates or a targeted rate applied across the region? • targeted rate provides for more transparent decision making (can only be used to fund the projects it was raised for) 3. How should the rates requirement be shared across the region? • Region wide targeted rates preferred to localised as everyone benefits
New targeted rates 4. How should the rates requirement be shared between the business and non- business ratepayer groups? • Does one group receive more benefit or impose more costs in relevant service areas? • Are rates more affordable for some ratepayer groups? 5. How should the rates requirement be shared within the business and non- business ratepayer groups? − Fixed charge means higher value properties pay the same as lower value − Capital value means lower value properties pay less than higher value − Mix of fixed and capital value
Transport funding
Transport funding • Earlier workshops highlighted significant gap in transport funding capacity • Interim Transport Levy expires this year – raised $60m p.a. • Potential replacement by regional fuel tax • Extension vs replacement • extension – specific period awaiting road pricing • replacement – permanent - could restructure burden sharing
Transport funding: issues • Funds transport activities across the region • Current ITL o $114 residential and $183 business o AP 16/17 feedback - higher business share – 43% for and 38% against • Businesses place more demand on transport system ‒ larger businesses tend to place more cost on transport system • Businesses have tax advantages
Water Quality Targeted Rate
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