Predicted Dunedin rates rise…

### ODT Online Sat, 16 Jan 2010
Rate rise of 7.3% projected
By David Loughrey
Dunedin ratepayers look set to pay an extra 7.3% in rates for the next financial year, along with increased fees and charges for activities ranging from building a house to burying the dead. This year’s draft budget shows the city’s rates bill will rise by 61.3% in the next 10 years, 35.7% of which is the result of inflation.

“Beyond regular, annual inflation effects, the two main reasons for the increases in rates are the increasing debt servicing costs associated with the capital expenditure programme, and the 5% per annum increases in the funding of water and wastewater depreciation.”
-Jim Harland, chief executive

Read more

****

ODT Online Sat, 16 Jan 2010
Operating costs will jump $1.4 million
By Chris Morris and David Loughrey
With the big decisions made, and the borrowing under way, the Dunedin City Council now has to find a way to manage its debt-heavy budget for the next year and beyond. Annual plan meetings begin next week, and the result will determine just how much the city dips into ratepayers’ pockets to pay for water and wastewater, the Forsyth Barr Stadium, the Town Hall upgrade and many other projects. Dunedin City Council reporters David Loughrey and Chris Morris examine the issues.
Read more

Related stories:
Cost of dying, other services may rise
Council housing rents set to rise in order to cover increased costs

Post by Elizabeth Kerr

17 Comments

Filed under Economics, Media, Politics, Project management, Stadiums

17 responses to “Predicted Dunedin rates rise…

  1. Elizabeth

    This query relates to Operating costs will jump $1.4 million in ODT print and digital editions:

    ### ODT Online Sat, 16/01/2010 – 11:50am.
    Comment by MikeStk on $105 billion?
    I’d like to suggest that the graphic above (the second one) that shows that the total rates bill for this year will be $105 billion (105,025.9 million) may be slightly inaccurate – that would imply an average rates bill of $2.1m each… even I don’t think the council’s gone that far. More likely it’s $105m.
    Full comment

  2. The surprise in the budget is $1.05 million to the property department, in part covering operating costs for the Wall Street mall including rates and cleaning.
    If rent from tenants is not covering expenses such as rates and cleaning, then Wall Street is losing money, not contributing to the City’s finances as was the expectation.
    Should Wall Street be added to the list of Council blunders?

  3. Anonymous

    http://tvnz.co.nz/business-news/new-34m-mall-launched-in-dunedin-2572951
    “It’s going to make a monetary return and help offset rates. It’s going to be a new employer and new ratepayers, and it anchors the heart of the CBD and shows that it is possible to do developments and grow in a difficult economic climate,” says McKenzie.

    Suggest edit: “…going to make a monetary return for Zelko and help offset rates in Alexandra”

    Also in that article:
    “The name of the mall comes from its four high-tech walls, which are environmentally designed to keep the cold out and the warmth in.”

    I hadn’t heard that one.

  4. JimmyJones

    It seems like the DCC went to a lot of trouble to attract F & P. Does anyone know if a special low rent was part of that?

  5. Phil

    The big concrete wall running the length of the building to one side as you walk in, is what holds the roof up. As a secondary feature it is also supposed to collect heat through the glass panel roof sections and distribute it during the day. Concrete is a very good provider of passive heat. It’s only a minor contributor of this however, with mechanical heating equipment still providing the bulk of the heating, and all of the cooling. Of course, if the heat can’t get to the concrete, then it’s not going to do anything. Except hold the roof up.

    I have always questioned whether it is Council’s role to get involved in commercial retail competition within its own rate catchment area. But it’s there now. My understanding was that one of Council’s requirements for the project was that no existing retailers currently in the city were allowed to relocate into the new mall. Avoiding the issue of unfair competition and more vacant shop fronts. This doesn’t appear to have been the case?

  6. Caz

    This immoral council hasn’t increased rates for the new stadium. They’ve just made it more expensive to die.

  7. Richard

    “The surprise in the budget is $1.05 million to the property department, in part covering operating costs for the Wall Street mall including rates and cleaning.” etc. etc.

    Wall Street opened during the past year so it should not surprise that its operating costs etc now form part of the Property Department’s expenditure.

    But you (and the ODT) have overlooked that there is also a Revenue side. This returns a ‘surplus’ to council.

    There is thus no ‘ratepayer contribution’.

    To the contrary, “the ratepayer” benefit from the surplus which is distributed as part of “Investment Income” or a credit against each rating account.

  8. Richard

    Caz: Any increase in operational costs for whatever activity has to be paid for either through a charge on rates or a direct charge related to the specific activity. Full stop.

  9. Thanks for clearing up this mis-understanding, Richard. But it would be clearer if the finances of commercial activity such as Wall Street were separated out from other Council accounts.
    What is the total revenue from Wall Street, and how much is it costing to service the $35 million debt?

  10. Phil

    I think the bulk of the money to fund Wall Street came from City Property’s endowment fund, so there’s probably not a lot of borrowed money to be repaid. Unless there is a requirement to restock that fund.

    One million dollars sounds a lot for operations and maintenance. But I guess it’s a big building.

  11. James

    @Alistair — It doesn’t appear to be split out, but while hunting for it, I noticed a number of New This Year performance indicators for City Property. This included a target of achieving a net rate of return of >8% for at least 85% of their property portfolio, along with some other sensible indicators. If they manage to hit that sort of criteria, then I think they are not doing too badly (but we won’t know how they are actually doing until maybe the next annual report or the next report after that).

  12. Phil

    They own some pretty good commercial investment properties outside of Dunedin (Christchurch and Wellington) which generate a good rate of return. I think they have usually returned around the 9% mark previously. Bought a few lemons in Dunedin, but some of those haven’t been by choice.

  13. Richard

    City Property will return just on $3.8 million surplus to Council in the current year. That’s a big jump from the (pds)100,000 or $100,000 dollars that came in when Dave McKenzie took over as Property Manager!

  14. Richard

    My vivid memory of the income from council-owned property relates to then DM – Bill Christie, calling at a committee meeting for the “red property book”. Property was then administered in The Town Clerk’s Department. On reflection, as it would be post 1980, it would be decimal currency (I was just being cautious)!

    Whatever, when Dave came to council he brought expertise that it did not previously have on property matters.

    The portfolio has changed but Dave made the original endowments really work to the benefit of council and the ratepayer as Phil has indirectly acknowledged.

    Not that “Anonymous” would concede!

  15. Phil

    I agree with your comments there, Richard. Without the shrewd property investments, the burden on ratepayers would have been considerably higher. The community asset properties such as the community halls, Fortune Theatre, Settlers Museum, and so forth, drag the end result down. But overall it’s a solid performer, and Dave did well there. Dukes Road was a possible exception, but you have to take a gamble every now and then.

  16. Richard

    The purchase of the land on Dukes Road was a Council decision and arose because of its rezoning for industrial purposes and that little space is left in the Taieri (Airport) Industrial Estate. Some has been sold.

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