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Council warns of likely severe impact on revenue

Tauranga Mayor Tenby Powell. Images: Daniel Hines/SunLive.

Revenue modelling undertaken by Tauranga City Council indicates the ongoing effects of the COVID-19 pandemic are likely to have a severe impact on revenue, and potentially on the council’s ability to carry-out vital infrastructure investment projects.

Mayor Tenby Powell says the modelling data shows revenue for the 2020/21 year is likely to be between $53 million and $77 million lower than originally budgeted in its draft annual plan.

“The best-case scenario is that a revenue reduction in that range would halve our capital works programme.

"The worst-case is that our ability to deliver any of the vitally important capital projects on our books would be virtually non-existent, affecting our ability to renew our existing infrastructure, let alone invest in much-needed growth.”

He says Auckland, Wellington and Queenstown are facing similar issues.

“Fast growth councils like ours have no choice but to carry significant levels of debt to fund essential growth infrastructure.

"Our draft 2020/21 annual plan, which is currently the subject of community consultation, reflected the fact that the council urgently needs to increase revenue to avoid breaching its debt-to-revenue covenants, which would in turn affect our ability to borrow through the Local Government Funding Agency at a low interest rate.

“The first draft of the plan was prepared prior to the pandemic lockdown and proposed a 12.6 per cent average rate increase, to allow us to maintain a prudent debt-to-revenue ratio.

"That was pruned back to 7.6 per cent in recognition of the likely effects of the lockdown, but now we will need to look for new solutions, in collaboration with the Government, regional partners and the business community, so that we can play our role in the economic recovery and support local businesses and our residents, which will be so vital as we emerge from the pandemic.”

The council has acknowledged the positive and ongoing conversations with Government ministers around debt funding issues and the Government’s planned economic stimulus package.

Tenby says the council also has strong construction industry support, and the backing of the wider business community.

“The pandemic has had an enormous effect on us, as it has on communities around Aotearoa, but there are some significant opportunities open to us too.

"With Crown investment and support, there is a path that will help lift us out of recession and create the houses and jobs we will need to keep growing through the next decade and beyond.”

The council’s revenue forecasts predict significant reductions in all of its 2020/21 revenue streams, with the worst-case scenario involving a total revenue reduction of about 25 per cent.

Impacts include: revenue from rates down by up to $13 million; user fee revenue down by $20m–$34m; Bay Venues Limited (which runs swimming pools and community halls) external revenue down by $10 million–$16 million; and development contributions and other capital contributions down by $10 million–$14 million.

Tenby says council recognises the need to support local businesses through the pandemic recovery period, but must balance that with the ability to renew essential assets and invest in economic regeneration.

“Even while on a level 4 lockdown, we must lift our heads up and look to our post-COVID-19 future. Jobs and houses are key.

"Tauranga’s priorities post-lockdown are very much focused on the eastern and western corridors, together with residential intensification in existing urban areas, that will unlock thousands of houses and jobs and will enable the western Bay of Plenty to flourish over the next several decades. All of this has been in the planning for years; it’s now time to act.

“That will require investment in three waters infrastructure, transport networks and community facilities. Likewise, we see the state highway and rail routes to the port as critical to New Zealand’s recovery and we would now like to see an active partnership with the Government, Infrastructure NZ, NZTA, Kiwirail and the private civil construction sector, to take hold of this issue and map out the infrastructure needed to support and manage future city development and access to the port.”

Small and medium-size businesses will also be a particular focus and the council will be working with the Tauranga Chamber of Commerce and Priority One to develop and implement approaches which will support the sector’s recovery.

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Covid-19 changes everything

Posted on 13-04-2020 12:41 | By avon

It doesn’t appear that our Mayor gets it. Growth was a 2019 thing. Migration has stopped. Foreign workers, overseas students, and 3.9m foreign tourists has also stopped. The housing crisis was also a 2019, and not a 2020 issue. The demand for housing has gone. All those AirB&B houses will go back as rentals. The world has changed, and we must ensure that we learn from this - having our politicians (both local and central government) keeping their heads in the sand and not recognising this new para-dime will only cause more longer term pain. Tauranga city must go up, not out. The UFTI and Smartgrowth) model needs to be re-written. We need smart politicians who can think laterally. This is actually a huge opportunity to reset. Let’s do it positively, and taking our ratepayers with us - not bankrupting them

fix

Posted on 11-04-2020 08:52 | By dumbkof2

well said by old trucker

Come on

Posted on 09-04-2020 20:52 | By

I’m sure we all know that there is some ill informed comments on sunlive. But Old Truckers "I’m sure that staff cannot run this place from home" has to take the cake! Who do they think is keeping the water flowing, Cleaning graffiti, supporting the homeless, managing traffic, running the airport. Is it the Easter Bunny.

Carcass

Posted on 09-04-2020 20:44 | By Carcass

Growth is slowing so much.Remember 2008 when every thing came to a stand still what is the matter with this Council.Only some of them have some brains.

He sure has a way with words,

Posted on 09-04-2020 18:42 | By nerak

or should I say a mouthful of them. Why do his comments sound so hollow?

covid-19

Posted on 09-04-2020 16:05 | By ratepayer

isnt amazing everyone in the country is under financial pressure ,banks, govt hand outs , pay cuts in most business’s except the council .no rates increase should be their policy ,live on last years income hell no it shows their mentality

Pay Cut

Posted on 09-04-2020 14:13 | By Local Too

Would be a good opportunity for the mayor to take a pay cut.

STOP WASTING OUR MONEY

Posted on 09-04-2020 13:58 | By

Council needs to sort out what is really necessary to be spending our rates on. So many people don’t read the paper or go into websites such as Sunlive or the council info so they think the majority of people agree with what they are doing. Submission forms need to be e-mailed to every ratepayer. This council needs to LISTEN TO THE PEOPLE THAT PAY THEIR WAGES

hang on a minute

Posted on 09-04-2020 13:14 | By old trucker

Vital infrastructure,yeah like buying a $640,000 house to put in a new entrance to a kids park, for crying out loud, who let this be,also things that are not needed,like that new carpark building which will never get used as the town will be completly empty soon,the farmers building will be a black elephant and not used and will not bring people back here,also spending money on a disused side street off willow st will be a waste of money,i bet 2 bob that it will go ahead as this has a conflict of interest,(like concrete etc) and buddy system, please wait till this thing is over,me personally hope it carries on, also are TCC staff still drawing wages,this is a good time to lay off staff as another council have laid off hundreds,im sure staff cannot run this place from home,thanks No1 Sunlive,personal thought only,10-4 out.phew.

rates

Posted on 09-04-2020 12:15 | By

freeze rates, at this time to relive pressure on the peoples money as job loses a big and income has been reduced.