Interest rates, inflation and three years without dividends from Gisborne Holdings Ltd (GHL) presented “a real big challenge for us”.
“It’s not practical to maintain rates as they were,” she said.
“Notwithstanding the challenges, Gisborne District Council is generally on par with other councils around New Zealand and they haven’t had two cyclones to deal with.”
Ms Thatcher Swann said the council faced significantly new levels of work, compliance costs and uncontrollable costs.
That included —
- $870,000 for woody debris clearance.
- $640,000 for sediment clearance, which was double the previous level.
- $15 million to buy out category 3 properties (no longer safe for houses; total cost $30m with the government contributing half).
- $7m for flood protection ($65m total, of which 90 percent is government funded).
- More resilience work in water supply, dams etc, wastewater and stormwater.
- $241m repairing roading networks, bridges, Tiniroto Road and major dropouts.
Road funding “won’t solve all our roading issues,” Ms Thatcher Swann said.
The total repair bill for roads is estimated to be between $465m and $725m.
Ms Thatcher Swann said staff were “using all levers” to keep rates levels reasonable.
Many people were struggling and provisions for remission on hardship grounds had been increased.
As previously announced by the council, the rate increases include two “sub limits” — a maximum increase of 7.9 percent to allow “business as usual” and another 3.5 percent in year one for cyclone recovery work, mostly charged as a fixed amount against every rateable property. The draft “recovery rate” for year two is 2.0 percent, and 0.6 percent in year three.
Chief financial officer Pauline Foreman said the recovery rate for 2025 equated to $82 for 95 percent of ratepayers, although forestry and the pastoral sector would have an additional charge for a targeted woody debris rate.
There had been a $1 million rates remissions fund during Covid which was not needed.
The fund would be increased by $600,000 per annum, she said.
Depreciation reserves would be used for water supply maintenance.
Emergency road funding of a minimum of $42.5m each year included an assumed council share of $14.6m — just under $2m of which would be rated for, with the rest loan funded. Trying to raise rates to cover all this cost would have resulted in an additional 6 percent increase in overall rates.
Depreciation was gradually being funded over 10 years for the wastewater plant and Kiwa Pools.
A loan of over $6m had been raised to cover three years of no dividends from Council Controlled Trading Organisation GHL (because of storm damage to Tauwhareparae Farms).
Councillor Larry Foster asked when the council would meet with GHL.
“Very soon,” replied Mayor Rehette Stoltz.
The draft plan says “it is assumed that the loan will be paid back from future dividends and/or any restructures”.
“GHL’s strategic plan will be critical to this process and will determine how quickly the loan will be repaid. Notwithstanding, it would be assumed the full loan will be repaid in full well within 10 years.”
The three-year draft plan includes —
Total capital expenditure of $430m, made up of $394m (or 92 percent) of infrastructure and category 3 property buyouts and $36m of other core projects.
Higher infrastructure renewals, especially in water supply and wastewater, meaning reserves are not being replenished at the rate they are being used during this period.
At the start of the draft plan, depreciation reserves were $29.9m while at the end of three years they are forecast to be $19m.
Council debt remains below the maximum 175 percent of revenue; it is forecast to peak at $231m in 2027, representing 160 percent of revenue.
The $232m includes the Crown’s $30m concessionary loan of zero percentage interest for the council’s share of category 3 residential property buyouts, and in recognition of its cashflow challenges as it remediates the worst of the cyclone damage.
A council spokeswoman said the above figures were only draft figures.
The modelling of rates and the confirmed incidence of rates would be confirmed once analysis had been completed, which would be in about two weeks, ready for consultation.
