Soaring rates: The crippling cost of shaping a great city

The upgraded wharf building at Matiatia on Waiheke Island. Picture / Kenny Rodger

Residents in Auckland City have been warned. In its long-term (10-year) plan, the council budgeted $2.8 billion of capital works projects and $5.9 billion for operational expenditure. But that's just the beginning.

"These things are already helping to contribute significantly towards achieving our vision," the plan says. "However, this level of funding will only pay for looking after our current assets [such as the art gallery, central library and roads] and some improvements to the service levels we already provide.

"It won't be adequate to cater for all the things we want to do to shape a great city, such as developing the city's waterfront and creating sustainable local communities with effective transport links."

Depending on which projects go ahead - a political call - cumulative rates rises over 10 years could vary between 11 per cent and 31 per cent.

Unbudgeted items include $300 million for upgrading the waterfront, including the tank farm and surrounding area, and $300 million for urban development initiatives.

"We will look to use funding sources other than rates wherever possible, but ultimately, doing more will cost more."

Under the lowest cost option, rates revenue would rise from $363 million next year to $532 million in 2016.

Neighbouring Manukau City faces similar growth pressure - it is preparing to cater for much of Auckland's population growth in the next 20 years.

There are highways and bridges to build, parks, libraries and pensioner housing to provide, and a whole new town for 40,000 people is being developed on council land in Flat Bush.

Yet Manukau's total "asset development" budget over 10 years is $1.45 billion, whereas Auckland City's starts at $2.8 billion and could reach $4.8 billion. That's with an optimistic $50 million contribution to the $322 million Eden Park redevelopment.

Comparisons are difficult. Manukau (population 330,000) is a young city lacking its neighbour's ageing infrastructure and with greenfield space for new development. Auckland City (400,000 people) is built-out but needs to refurbish to maintain economic growth.

Ten years from now, Manukau's average residential rate is expected to be $2352, Auckland City's $3705 and the national average $3093, according to Local Government NZ.

Is Auckland City's "vision" simply beyond the capacity of its ratepayers? That's not what ratepayers have been telling the council, says finance manager Andrew McKenzie. Funding for additional improvement projects this year increased rates by only 1.9 per cent, he says.

Consultation and research suggests that people don't mind paying if they see what they are getting, says McKenzie.

"To do what everybody wants to do costs a huge amount of money. Whether it's us or the ARC [in the case of tank farm redevelopment] it still has to be paid for. If you don't want things to happen, tell us what to drop and your rates will go down."

McKenzie urges ratepayers to keep things in perspective. "Most Sky Digital subscribers pay about $1000 a year. People should think of all that they're getting [from council services] for another $500 or so."

Major Projects 2006-2016

Auckland City

Next three years: Art gallery redevelopment $90m; Civic carpark repairs $37m; stormwater works $90m; transport network improvements $220m (net); streetscape improvements $82m; park land purchases $23.5m; Waiheke & Blockhouse Bay libraries $6.5m.

Next 10 years: Urban development initiatives $300m; waterfront redevelopment (including tank farm) $300m; "Development with vision" $160m (net); Aotea Square transformation $53m; swimming pools at Avondale, Otahuhu $20.5m; stormwater works $44m-$62m; waterfront access $56m; Westhaven development $20m; Tamaki Edge development $30m; Eden Park contribution (indicative) $50m; additional transport initiatives $89m (net); school transport safety $10m; Gulf Islands tourism infrastructure $11.5m; restoring Pah homestead $5m; flexible theatre $12.5m.

Manukau City

Next 10 years: Flatbush parkland $115.2m; roading land purchases $69.9m; pensioner housing redevelopment $30.9m; Whitford arterial roading $29m; Flat Bush stormwater $27.1m; Ormiston Rd and bridge $20.4m; Flatbush pool & recreation $18.8m; Waiouru Peninsula to SH1 $16.9m; Te Irirangi Drive extensions $12.5m; city centre library $11.8m; pensioner housing renewals $11.7m; Flatbush library $11.1m; city centre carpark $9.1m; Flatbush arts/cultural centre $8.8m.