Tauranga City Council growth and strategy manager Christine Jones and corporate services manager Paul Davidson. Photo / George Novak
Tauranga City Council growth and strategy manager Christine Jones and corporate services manager Paul Davidson. Photo / George Novak
Tauranga City Council needs to spend $4.3 billion on infrastructure over the next 10 years according to new estimates - and it doesn't know how it will pay for half of that.
Senior council staff have warned elected members the decisions looming in the coming months are "significantly more challengingthan anything faced before."
They are tight-lipped on what the funding gap could mean for rates but have warned the council could be heading for an audit fail if it doesn't address the city's needs.
And the mayor says there's no central government "golden goose" coming to the rescue.
The high-level estimates are the first released as the council starts the months-long process of setting its next Long-Term Plan for 2021-31.
Earlier this year the council drafted a 12.6 per cent average rates increase to address growth challenges, but this was eventually whittled to 4.7 per cent after Covid hit.
The median ratepayer with a home valued at $650,000 will pay $2347 in rates this year, with the commercial equivalent (median capital value $1.07 million) paying $4833.
An extra 7 per cent will be added next year when the council brings in a citywide kerbside rubbish and recycling collection service.
In an interview yesterday ahead of a council meeting on Tuesday, two top council executives said the council only had the ability to fund and finance about half the $4.3b - between $2b and $2.5b.
Corporate services general manager Paul Davidson said the council's financial issues were a long time in the making.
"We've been talking about the debt issues and the finance issues of Tauranga for some time, but it has sort of accumulated in this 10-year plan being the biggest challenge that we've had to deal with."
He said the challenge was the need to make major investments in infrastructure and find a way to pay for it.
He put the increase down, in part, to better information about what the city needed and what it would cost.
"We have done a lot of work to actually really understand what that infrastructure deficit looks like. We now have a pretty good understanding of that and ... it does show a significant gap."
Growth and strategy general manager Christine Jones said research over the past three years found the council would need to spend about $650m on transport projects over the next 10 years, and $900m over 30 years on resilience against the impact of climate change.
Christine Jones, general manager of strategy and growth. Photo / File
The council had also taken stock of the city's community facilities and found many were "end-of-life and not fit-for-purpose for a growing city".
She said the council wanted to have a "conversation with the community" about what it wanted the council to deliver and the financial implications.
Davidson said a "competitive construction market" was another factor in the steep increase, as was the issue - faced by all "growth councils" - of funding multiple significant growth projects with long payback periods.
He said the process had made it clear that the current local government funding model "doesn't work for growth councils" and "isn't viable anymore".
"Therefore we'll be looking at other alternatives."
A debt retirement levy was one option, despite having been rejected at least twice by elected members in recent years.
The council last used a levy - a temporary rates top-up used to pay down debt - in 2009 after Audit New Zealand failed the council's draft Long-Term Plan.
Paul Davidson, Tauranga City Council's top finance executive. Photo / File
Targeted rates for critical infrastructure such as transportation and stormwater was another option.
The council was also looking at "efficiency initiatives", how it could use new funding and financing tools and what it could do with partners, including nearby councils.
Davidson would not say how general rates might be impacted if the council could not find alternatives.
"We're not at the point of doing that, we want to have the clear conversation about what the community wants. The rating options and how we fund that will be part of that.
"There is no silver bullet."
He said the first look at potential rates rises will come in mid-December, when the council presents a series of scenarios for addressing the infrastructure gap.
Asked if the council was operating as efficiently as it could, Davidson said it was "always looking for different ways to do things and opportunities for efficiency" and would continue to do so.
Tauranga Mayor Tenby Powell. Photo / File
Tauranga mayor Tenby Powell said the council had good relationships with central government but could not count on it to be the city's "golden goose" because it had been well and truly "plucked" by Covid-19.
"There's not even a golden gosling now."
He said the council had long known it had a problem looming but the new numbers had quantified it.
"We need to find a way to fund $4.3b over the next 10 years."
Powell, who backed a 12.6 per cent increase earlier in the year, would not say what he thought the situation would mean for rates.
"We need to find a way to work with our ratepayers and our citizens to understand what this city needs so far as infrastructure housing and social amenities, and what we can deliver over the next 10 years.
"The city has been kicking a can down a potholed road for many, many years."
Top 10 programmes for the next Long-Term Plan
The Bay of Plenty Times Weekend asked the council for the top 10 projects by cost in the early draft of the Annual Plan. It provided the information below but declined to give costs before they went to the council.
1. Completing Waiāri Water Treatment Plant 2. Te Maunga Wastewater Treatment Plant and outfall 3. Te Papa intensification (including Cameron Rd upgrades) 4. Community facilities investment plan (eg libraries, community centres, indoor courts, swimming pools) 5. Wairoa Active Reserve and other amenity projects (eg parks) 6. Transport System Plan rollouts (including cycleways, Accessible Streets, multimodal) 7. Resilience projects 8. Standard renewal and upgrade programmes 9. Completing existing growth areas (eg Tauriko Business Estate, Pyes Pa, Wairakei) 10. New growth areas (Te Tumu, Tauriko West).
