What difference does a differential make?

There’s been plenty of publicity now on Hutt City Council’s decision to cut the proposed 7.9% rate increase for the year beginning July 1 to 3.8%.  There’s too much business and household hurt as we recover from COVID-19 for the higher figure, and to go to zero just puts off dealing with a growing deficit and digs a bigger financial hole. 

The 3.8% compromise has been described as an emergency/holding budget while we – as a community – debate in depth the spending priorities for the Long-Term Plan review in 2021.

For the average residential ratepayer, a 3.8% hike in the Council’s total rates revenue equates to an extra $122 for the year (or $2.35 a week).   But other factors come into play on whether the increase on your rates bill is less or more than that. 

First, there’s last year’s revaluation.   Second, there’s what we decide about differentials.

Let’s start with the revaluation.  

There’s a widespread misconception that when Quotable Value does the 3-yearly city-wide property valuation reassessments, if your property’s value goes up your Council rates will inevitably go up.   That’s not necessarily true.   In terms of rates impact, they key is how your property’s value has changed in relation to everyone else’s.

Think of the Council’s rates revenue requirement as a cake.  The capital value of your home/property compared to everyone else’s decides what size of slice of that cake you have to pay for.

The average rise in value of residential properties in Lower Hutt in last year’s QV revaluations was 32%.   Check out the table below.

The average residential property rises in Melling, Avalon and Moera were right on the 32% average.  You’ll see that with the 3.8% bump in the city’s total rates take added in, the average annual rise for those suburbs is $117-$122.

Very different story for Wainuiomata.  Average house values there leapt 55% – ways above the city’s 32% average.  Their average annual rates increase is therefore $278.

With 41% average valuation rises in Stokes Valley and Taita, home owners in those suburbs face an average $190 and $194 bigger bill respectively.  Naenae residents are also hit.

Petone folk, with a 20% valuation increase, well under the city’s average, actually end up with a rates decrease of -$47.   Hutt Central, with average property values up 24%, face only $19 extra on their rates bill.

Important note:  These are all suburb averages.  If your home is worth less or more than the suburb’s average, your rates bill will be accordingly higher or lower.

A couple of things about these valuation changes.  Even if Council went for a zero increase in the rates take, homeowners in Taita, Naenae, Stokes Valley and Wainuiomata were always in for paying more because the jumps in their revaluations were significantly higher than in the rest of the city.  But note that even with a 55% average jump in property value, and council’s proposed 3.8% increase added in, Wainuiomata’s average rates bill ($2,187) is still lower than every other part of the city save for Haywards.

Also, many times in past years the suburbs whose valuations this time are lower (e.g. the likes of Woburn and Eastbourne), have seen bigger valuation rises and thus have shouldered higher than average rates increases.

Second thing.  Council has no influence over valuations, nor can it somehow manipulate or circumvent valuation changes in certain suburbs to favour others.  There would be a legal challenge straight away.

In light of the unprecedented upheaval from the pandemic and that our generally less well off suburbs are going to be badly affected by rates rises, Mayor Campbell Barry has written to the government asking whether it is possible – in terms of 20/21 rates – to ‘freeze’ valuations to what they were prior to the revaluation last September.  The government has yet to respond.

But even Mayor Barry has acknowledged that if the government allowed this, there would be a downside were we to adopt the ‘freeze’.  It could mean some suburbs, if another valuation exercise was done next year, could be hit by an even bigger hike/rates impact.

So that’s valuations.   

There’s another tool that has an impact on the sharing of the city’s total rates revenue – differentials.

Remember the cake analogy as a way of looking at the how much rates money is needed to pay for pools and local roads and sewerage pipes and all the rest of it?   Councils are able to start dividing up chunks of the cost of the cake based on ‘classes’ of ratepayer (residential, rural, business central, business suburban, etc).   We can put in place different rates amounts per dollar of capital value for these groups of ratepayers, but are required to take into account principles such as fairness, consumption of services, public vs private benefit, etc.

Valuations have again had a part of play.  In last year’s QV property assessments, residential property increased 31.8% but commercial property values only went up at average of 16.9% and utilities properties just 12.8%.

Back in 2012, general business rates were almost four times the amount of residential properties of the same value.  In 2010/11, despite there being far more residential ratepayers than numbers of businesses, residents paid 51% of Council’s total general rate revenue, and businesses paid 44%.

Councillors of the day recognised that businesses did not benefit four times more from Council services than residents, and with the threat of legal action from the business community spurring them along, decided on a policy of gradually reducing the business differential over a 10-year period.  The aim was to the point where businesses’ rates per dollar of Capital Value had dropped to 2.8 times that of residents’.  

The target was that residents should pay about 60% of the total general rates take.  

The thing is that over the intervening years, increases is residential property values have accelerated faster than for commercial properties.   The result is that in the current financial year, homeowners are picking up 63% of general rates and businesses only 31%.

If we continued the ‘gradual decrease’ policy, next year residents would shoulder 65% of the general rates burden and businesses only 29%.  That would mean another $28 p.a. of rates on the average homeowner on top of the $122 extra they’re already facing.

Check out the graph below.

Councillors are recommending holding the rates differentials to the percentage splits that applied in the current year (i.e 63% from residential property, 31% from commercial property).   That eliminates the extra $28 the average residential ratepayer would otherwise have faced, but it does mean significantly higher rates bills for commercial properties than they would have faced if we continued the gradual decline of business differentials.   See the graph below for the impact, for example, on the average value central business property.  Instead of an $834 rates decrease, they face a $650 increase.

And here’s the overall impact of holding the differential percentages:

Is the proposal fair, given that businesses are also facing hard times from pandemic disruption?  Your answer probably depends on whether you own a business that pays rates!

The residential and commercial sectors have long been at loggerheads on the proper share of council costs.  Homeowners tend to argue businesses can claim tax deductions on rates paid.  Businesses point out in a competitive marketplace, their costs drive the prices of their goods, and besides, rates should at least try to reflect who benefits from council services.

Over to you.  What’s the fair call on this?

I’d love to hear your thoughts – email simon.edwards@huttcity.govt.nz

The rates debate – why we didn’t go for a zero increase

In a pandemic aftermath, when thousands of businesses and households are trying to get back on their feet, what the hell is Hutt City Council doing putting up rates by 3.8%?!

Well, the reasons follow.  If you get to the end of this opinion piece, and you still think the rates increase should be lower, even zero, I have a request for you.

For starters, right up until the headlines started appearing that the scourge of COVID-19 was rapidly spreading beyond Wuhan, the Hutt’s proposed rates increase was 7.9%.  If financial prudence was the only consideration, it probably still should be.

The 3 waters (drinking water, wastewater, stormwater) are one of the big drivers.  Mid last year Wellington Waters’ messages about the need for us to invest more in pipe infrastructure, reservoirs, etc., got very pointed.  

In 2020 we’re fast reaching the increased population (110,000) we weren’t forecast to hit until 2030.  Consents for new homes continue to track upwards and with Riverlink we want a whole lot of inner-city apartments to bring life to the CBD.  But our stormwater systems in the central city and other neighbourhoods are at capacity.

Two thirds of our piped water and wastewater infrastructure needs replacing over the next 30 years.  We don’t want a situation like Wellington’s raw sewage in Willis St.  Over the next 10 years we need to double capital spending on 3 waters infrastructure (an extra $240 million – for example, this year $1.2m for a seismic upgrade of Seaview sewage treatment plant).  And we need to boost 3 waters operational (day to day running cost) spending by $30 million over the same period.

A 3.8% hike in HCC’s total rates take in the financial year starting July 1 translates as an extra $122 per year on the average value home ($627,000).  The lion’s share of that increase is an extra $41.50 on every ratepayer’s fixed charge for wastewater, and $42 on the fixed charge for water supply.

Among the extra annual operating costs are $200,000 to boost the work by teams fixing the water leaks that seem to have popped up everywhere since the Kaikoura earthquake; $250,000 to start to get to grips with stormwater infiltrating and overwhelming our sewerage system when it rains hard; $200,000 for critical assessment of 3 Waters assets and $410,000 extra for bulk water because Hutt residents are continuing to use more water than other cities in the region.

Okay, so what about the other $38.50 extra the council has its hand in the pocket of the average ratepayer for?  

Some of the extra costs coming at us include: higher insurance ($600,000), higher depreciation ($3.3m), a start on the government-mandated District Plan Review ($1.2m), $500,000 each for HV Gymsport and HV Tennis (cut back from $1.3m and $2m respectively), Homelessness Strategy $500,000, climate change engagement $200,000, a start on dealing with inefficient IT systems $2.1m, assistance for landowners with significant biodiversity $200,000….

Yes, yes but these are unprecedented times.  People say ‘Cut your cloth to fit ratepayers’ circumstances’. 

We have made cuts/targeted savings.  As well as accepting our CE’s target of finding $1m in operational savings, we will:

  • Remove our contribution to Regional Amenities Fund – $200,000
  • Reduce Council accommodation costs by consolidating into Laings Rd building – $263,000
  • Reduce operating budgets by $100,000 each out of pools, libraries and parks – $300,000
  • Cancel staff pay increases – $1.2 million
  • Reduce the International Co-operating Cities funding – $45,000
  • Cut the suburban shopping centres fund by – $50,000
  • Savings in unallocated community funding – $100,000
  • Reduce minor road works budget – $200,000
  • Reduce museums funding – $50,000
  • Reduce biodiversity funding assistance for landowners – $65,000

Our revenue has also taken a $900,000+ hit during the COVID-19 lockdown.  Every month we suspend parking fees we lose around $350,000.  We’ve lost swimming pool entry charges.  Ratepayers have asked for extended terms to pay bills.   We put $100,000 into a Community Resilience Fund and more than $20,000 from the 10% pay cut volunteered by our chief executive has gone to Foodbanks.

Unfortunately, the bad news doesn’t stop there. 

For many years now Hutt City Council has taken pride in the fact that while other councils in the region have levied rates hikes often double or more than ours, we’ve held increases to the local government cost index (LGCI, or if you like the local government inflation rate).  The Productivity Commission highlighted this in its report on local authority financing (see the table below).

All well and good.  But simple logic says you can’t keep increasing services (Fraser Park Sportsville, upgraded Walter Nash stadium, new community hub in Stokes Valley, homelessness initiatives, Living Wage, etc) with no increases in budget beyond inflation. 

The upshot is that the council is now running operational deficits.  Halving that deficit was the main reason for the originally proposed 7.9% rates increase.  With that, and an extra 2% on rates for the following two years, we’d eliminate the deficit and achieve a balanced budget.  But recognising these are extraordinary times for many households and businesses, we’ve proposed the 3.8% increase in an emergency budget until we can do line by line scrutiny of every item of council expenditure to see if we’re still getting bang for buck, and whether indeed the way we’re delivering that service is best way, or is even still worthwhile given new priorities.

The city has a very long and expensive list of projects we’ll need to borrow for – a new Naenae Pool, Riverlink, the Eastern Bays shared pathway, restoring Petone Wharf, the Cross Valley Link and all the 3 Waters renewals to name a few.   By borrowing we spread the costs of these long-life assets across several generations, as is proper, but we can’t prudently borrow without adequate and balanced operating revenue to service the debt and budget for depreciation.

A majority of councillors think a 3.8% rates increase is the responsible course when anything less means we just dig ourselves a bigger financial hole in years to come. 

A big thank-you for sticking with all of that to get to here in the blog. 

And so to the request I mentioned right at the start.  If you think a 3.8% rates jump this year is too much, even with the policy we’ve expanded to allow residents and businesses facing an income shock to defer their rates bills (click here for information), you can help us out by giving us feedback on where else you think we should look for savings.

Check out the table below, and have a look at the Annual Plan consultation documents (here) and when you email or phone in your comments, tell us what else we could trim.  

To get to a zero rates increase, we’d need to find another $4 million or so in savings in addition to the cuts/reductions already detailed above.

If you have any questions, brickbats or other feedback – my email is simon.edwards@huttcity.govt.nz, phone 027 484 8892.

My pitch for re-election to HCC

Simon Edwards

City-wide candidate

Hutt City Council

 

The Hutt, my home

 

I was proud to be editor of The Hutt News for nearly 27 years, and to help give voice to scores of community groups and thousands of residents.  I know what makes this city tick.

 

In my first term on council, representing the Central Ward, I’ve worked hard to thoroughly understand the issues and keep residents informed and involved.  I’ve been the only councillor to serve on all four main standing committees and I’m one of only a handful with Resource Management Act qualifications.  I helped formulate the city’s Local Alcohol Plan to limit health harm and social issues from too many liquor outlets and I’ve stood up for heritage, the environment, expanding housing options and the Living Wage.

 

I put out a regular E-Newsletter to interested local residents to let them know what’s being debated during each current round of meetings, so that they can have their say and indicate to me their preferences and priorities as I vote.

 

I’m 56, and Lee-Anne and I have been married for 35 years.  We’ve raised three kids and our favourite weekend activity is to get out in the Hutt ’s parks and trails to walk our dogs Lily and Albus.

 

We love the Hutt and want the very best for its families.

 

Asking the hard questions

 

I’ll continue to ask the hard questions around the city council table…

 

I covered local authority meetings as a journalist for more than 30 years and now I’ve served my apprenticeship as a first-termer on council.

I’m not aligned to any political group, and I believe strongly in independent thinking based on the merits of an argument, not bloc voting.

I’d be honoured if you made me one of your picks for the six councillors to be elected ‘at large’ across the city.

 

If elected I’ll continue the approach I’ve taken as Hutt News editor and first term councillor:

 

  • I will listen to and encourage people from all walks to life to have their say.  I’ll continue to use social media and regular emailed newsletters to anyone who wants them so that locals know what council is up to, and can get real input on key decisions.

 

  • I will ask questions to get to the heart of issues.  Hutt City Council spends other people’s hard-earned money.  Every item of expenditure has to be closely scrutinised for delivering value.

 

  • I will strive for fairness for all parts of our city and for practical solutions.

 

These are my priorities –

 

  • A new Naenae pool.  Building a new pool is better long term value than trying to refurbish the old one, and construction periods are similar for either option.  We need to get on with it.  On the Naenae hub, I want to hear from people whether we co-locate it with the pool or find a better way to integrate it with Hillary Court and the original/heritage Plischke outdoor mall.

 

  • We have a rates rise and debt limit strategy that should be adhered to.  The Naenae pool shock may require temporary breaches (the costs of a building that will serve us 75-plus years should be spread across more than just the current generation), but we need to get back on track with financial and spending discipline as soon as possible.

 

  • I believe climate change is a real threat, and that we should be doing our bit with the global community to limit greenhouse gases.  Council can show leadership by switching council building heating from gas to electricity; creating safe cycleways and bike parking to encourage school children and commuters to reduce car trips; composting green waste and working with the regional council to have a much better central city bus hub than exists in Bunny St.

 

  • We need lidded wheelie bins for recycling, to stop wind-blown littering.  Re-negotiation of council’s rubbish & recycling contract will allow this.  There are also options for future refuse collection that could be lower cost than currently.

 

  • The Riverlink floodway, promenade and Melling rail improvements project will transform the central city.  We must maintain relentless pressure on the government to commit to a new Melling bridge/interchange and save tax/ratepayers money by doing joint resource consents.  By creating the right environment, developers will build the inner city apartments that will bring new life to central Lower Hutt, with more cafes, restaurants and boutique shops – just as we’ve seen in Wellington and Petone.

 

  • We need more investment in smoother, even and pothole-free footpaths.  They’re an over-looked piece of infrastructure but they’re vital, especially for the young, the old, those with disabilities, mobility scooters and other micro-transport options. Falls from tripping on cracked pavements can have a devastating impact on an older person’s health and mobility

 

 

A bit more about me:

  • Trustee Hutt Hospital Foundation Trust
  • Member of the NZ Order of Merit for services to journalism
  • Rotary Club of Hutt Valley member
  • Enthusiastic (but pretty slow) Saturday morning Park Run participant
  • Cycling and rail commuter
  • Belmont resident since 1988

 

What others say about Simon Edwards

During my time as chair of the Eastbourne Community Board I have seen Simon in action. As a councillor he has been a strong advocate for the city to face up to the challenging environmental and social issues ahead of us. He cares about individuals, their neighbourhoods and the city. At Council meetings Simon has read and considered the vast reams of council papers and his vote is based on understanding and principle. Hutt City would be lucky to have Simon on our Council.

  • Virginia  Horrocks, Eastbourne Community Board

I have enjoyed working alongside Simon for the betterment of Lower Hutt. He brings a wealth of knowledge, integrity, an eye for detail and has the city’s best interests at heart. He is always listening to the community and trying to find the best solutions. Simon will continue to serve us all well as a City Wide Councillor, he has my full support.

  • Josh Briggs, City Councillor

 

In his role as editor of the widely read and very community focused (Hutt News), Simon has been a significant and very vital part of this city.  He had led us in times of despair and lifted us in celebration.  He has been a great supporter of the rejuvenation of the city.

  • Mayor Ray Wallace

 

 

 

If you have feedback, or need help with a Council issue, I’d love to hear from you:

 

Email    simon4hutt@gmail.com

Phone   027 484 8892

Website:  simonedwards.nz

Facebook:  search  Cr Simon Edwards

 

July e-Newsletter – Naenae pool, possible cats by-law

Naenae pool – build new or refurbish?

What to do about Naenae pool and the proposed community hub, and how fast we can get it done, will be a key talking point in the upcoming elections, and no doubt for most of the next triennium. There are tough calls ahead for the incoming council, which is expected to make a decision in November.

Meantime, widespread consultation will happen from July-September on the options, and costs (high level estimates only, at this stage):

  • New integrated pool and community hub ($66M)
  • Refurbish existing pool and separate new community hub ($39M)
  • New pool and separate new community hub ($61M)
  • New Pool only ($52M)
  • Refurbished Pool only ($30M)
  • Do nothing.

Continue reading “July e-Newsletter – Naenae pool, possible cats by-law”

Four to two-wheel commuting option adds up

It’s amazing how switching up your routine can change your perspective.  I never expected to look forward to the commute in and out of Wellington for work but that’s what’s happened.

 
Spurred by the desire to reduce the beer gut, to save on train fares and eliminate the carbon dioxide from car trips to and from Melling railway station, I took up cycling to the day job in Featherston St.
 

Continue reading “Four to two-wheel commuting option adds up”

Fireworks, dog tags and a brothel – May E-Newsletter

Would you support a ban on the sale of fireworks to the general public and an end to their private use?
That’s a question that will come before the full Council in June after a majority of councillors on the Community Services Committee last week recommended that the Hutt follows Auckland Council’s lead, and requests the government to change fireworks legislation.
I know that fireworks can injure people, frighten animals and keep people awake – especially when they’re let off weeks and even months after Guy Fawkes Night.  But they’re also the stuff of warm childhood memories, extended families gathering for a night of fun, etc.
Continue reading “Fireworks, dog tags and a brothel – May E-Newsletter”

Central Ward December E-Newsletter

                

Wishing you and your family a very Merry Christmas and a safe and fun start to 2019

Hutt’s rates rises are lower than most

Nobody likes getting their rates bill but there is independent evidence that Hutt City Council is keeping its rates rises lower than most.  The government has asked the Productivity Commission to run a major review of the cost pressures on local authorities and how New Zealand’s councils might fund growing infrastructure costs.  The Commission recently published an issues report and one of the tables compared average annual growth in rates  per capita across all 67 territorial NZ local authorities from 1996-2017 (i.e. not including regional councils).

Hutt City’s average  – at less than 1% – was the second lowest in the country.  Only Napier had a better record than us. 
Continue reading “Central Ward December E-Newsletter”

Central Ward July 2018 E-Newsletter

Boost for Hutt health services
Lower Hutt is to get a new – and large – medical centre.  It’s to be built on the former bowling club land off Witako St, adjacent to the Hutt Hospital campus.  Resource consent has been granted for a two-storey building with a gross floor area of 3,398m2 (that’s the equivalent of a large supermarket), which will include GP consulting rooms; physio, pharmacy and dental areas; a health food shop, a cafe and child care centre.  There will be 133 off-street carparks.
The developer is buying the land from Hutt City Council, which will go a long way towards offsetting the cost of the regional bowling centre council built on Walter Mildenhall Park.
Continue reading “Central Ward July 2018 E-Newsletter”

Fired up over future of boards vs panels

It took more than two hours of at times heated debate on Wednesday night before a majority of Hutt City councillors voted to stick with current representation arrangements – at least until March 2021.

Two councillors – Chris Milne and Leigh Sutton – said the move was “kicking the can down the road” and failing to confront the issue of second tier representation inequality.  But the majority believed the city’s four community panels, set up 18 months ago, haven’t yet been properly tested, and it was too early to consider replacing the three long-standing community boards  in the southern parts of the city with panels.
Continue reading “Fired up over future of boards vs panels”

Melling interchange designs – what’s your pick?

The ‘straight’ interchange and new bridge option, linking into Queens Drive.

The ‘dog-leg’ option or straight as an arrow?  Connect with Melling Link or with Queens Drive?

Locals are being asked for their views on what traffic improvements and a new bridge at Melling should look like.

After considering more than 40 interchange designs, the NZ Transport Agency/Greater Wellington/Hutt City Council Riverlink project team has short-listed three top options.
Continue reading “Melling interchange designs – what’s your pick?”

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