Talking Point: To avoid huge rate increases, tough decisions must be made

Napier City Council owns 377 units in 12 villages in Napier. Photo / Paul Taylor

We have had to make some tough decisions in getting to our current proposed rates increase. One of those decisions is to keep up the conversation about our community housing.

In the past five years, Napier has paid $3.5 million to help fund our housing units. This amount includes rent subsidies, maintenance, insurance and renovating units between tenancies.

This isn’t the end of the spending either. This obligation towards upkeep will continue every year. Our housing stock is ageing, with an average age of around 50 years, and maintenance is costing more. The way we provide housing has become financially unsustainable for our ratepayers and community.

The conversation does not start or end with money. There are many more factors that are important to our tenants, our residents and to us as their elected representatives.

We do want to make sure there is as little financial pressure as possible on our community and on our tenants. We want to be able to invest in our housing portfolio to make sure it’s fit for our tenants now and in the future. We believe the best thing for us is to focus on our retirement housing, potentially even increasing it, but to move away from social housing.

Napier Mayor Kirsten Wise says tough decisions must be made for the sake of the entire community. Photo / Ian Cooper

We think it’s better for those with specialist skills to look after social housing in Napier, rather than us as the local council. We also want to honour our current tenants, whether they are in social or retirement housing, and help make sure they always have a home.

To put you in the picture: We have 377 units in 12 villages in Napier. This housing is for people on low incomes with few assets and special housing needs. Nine villages – 304 units – have tenants who are over 65. Broadly speaking, this is our “retirement” housing. The 73 other units, mainly in three villages, are what is known as “social housing”. These tenants have low incomes with few assets, and some have accessibility needs that can’t be met through private rentals.

In 2022 we agreed to keep our housing portfolio intact. We increased rents in the hope that would be enough to maintain the units without having to put additional costs onto the rest of the community. It didn’t work. Costs have gone up too much: cyclone recovery is costing us, materials are getting pricier, the costs of labour and insurance are increasing.

Now we need to keep talking about housing because we need to find a new way to manage it in the future. The costs of 377 community homes can’t become a burden on every resident in Napier. Funding of maintenance expenditure was ring-fenced in 2015 and from 2019 all our housing activity has been fully ring-fenced, but, we’re looking at a 2.6 per cent increase every year across the board to keep our full portfolio.

It’s a fine balance as we look after our tenants’ interests and the interests of our whole community. It’s not just our current population but future generations we must think about also. Making tough decisions can’t just be a rallying cry. It needs to be a firm commitment. It means we can’t give the community everything it wants right now.

We are facing increases in costs in every direction. If we were to do everything on our work programme, when we wanted to, to the service level required with the resources we have, we’d be facing a rates increase of more than 40 per cent. To avoid that we need to look at every area of our business with a magnifying glass. Even in areas we’ve only recently reviewed, we need to look again.

Kirsten Wise is Mayor of Napier