Annual Plan 2023/24 Frequently Asked Questions

Council undertakes a ‘bottom-up approach to determining the costs required to run Council, that is, to fund it to deliver its services.

A computer-based rating model is used to determine how that is to be allocated across all rating units in the district. The model only allocates costs based on the services each rating unit has access to.

The rating model is currently under review by Councillors as part of the Rating Review project and our communities will soon have the opportunity to provide feedback on what they consider the most equitable model through a public consultation process.

Current rating model for SWDC rates [PDF]

Rates are charged for the services you have access to and benefit from, and parts are based on the value of your property.

The cost of services the Council provides have increased dramatically (as it has for households and businesses). As we have a small ratepayer base of around 7,400 rating units compared to the size of our district, these costs need to be spread across that small base.

Another factor unique to our district is the fact that we have three main towns, which means three sets of libraries, three town halls or venues, three wastewater and drinking water systems, three swimming pools, and so on.

We also have ageing infrastructure meaning that buildings, roads, footpaths, culverts, pipes and water systems need serious maintenance as many are past their use-by-date and at risk of failing.

Like our household costs, all these essential services now cost more than they did in previous years and that is why rates are going up.

The $9.7m total surplus of 2021/22 includes a gain from revaluation of our investment assets such as land and buildings that SWDC rent out, and carbon credits we received from tree plantations on council land. These assets have to be revalued annually for accounting purposes, and the gains contribute to total surplus, even though we haven’t received any cash from the gain, which in 2021/22 was $1.5m.

The other gain Council has to include in the total surplus is the value of assets given to us, e.g. footpaths, pipes, and storm drains created by developers. These are known as vested assets. Council don’t pay the developers for them, but we do take on the maintenance of them after they’ve been vested. In 2021/22 SWDC received $2.4m of vested assets.

These revaluations and vested assets show that our assets have risen in value, pushing up the surplus. But it is an accounting surplus, in that we have not actually gained any cash for these, e.g. unrealised gains. It should be remembered that assets can also fall in value – again this could result in a loss – in other words, it would not necessarily make a difference to the Council’s cashflow.

So, ignoring the accounting gain from assets, if you take only the operating surplus from 2021/22 of $5.7m:

• $2.8m of contributions from development and subdivision are ringfenced in reserves for new infrastructure and green spaces due to growth in the district
• $2.2m of rates income, and
• $1.2m of capital subsidy from Waka Kotahi goes into the Depreciation Reserve to fund future replacement of assets

None of this income is available to fund general Council services; it’s held so that assets can be added or replaced in future.

Once $2.8m, $2.2m, and $1.2m have been taken from the income and ringfenced for these purposes, the operating surplus of $5.7m actually means that in 2021/22 Council received $0.5m less income than the cost of providing services and maintaining assets.

A proposed rates increase of 15.9% on the 2022/23 year was in the 2023/24 Annual Plan Consultation Document. This was an increase to the rates required to run Council.

After careful consideration of all the submissions from the public, Council passed four resolutions based on the questions asked in the Consultation Document.

• Increase the water budget to $4.871m, from the forecasted Long-term Plan amount of $3.541m.
• Retain the Rural Roading Reserve at $300k per annum. Councillors agreed the upcoming rating review should address how rural roads are funded in future as it is currently fully funded by rural ratepayers yet used by all.
• Remove the $165k for a casual pool of library staff on an ‘as needed’ basis to cover scheduled and unscheduled leave, such as sickness. This means that libraries will be closed on some days due to a lack of sufficient staffing numbers, estimated as 4 days per month.
• Reduce the funding for community and youth grants from $170k to $120k.

In addition, Council chose to further increase the wastewater budget by $1m to help remediate the Martinborough Wastewater Treatment Plant. The amount of $500k of this additional expense will be funded by the Better Off Funding from the Department of Internal Affairs and the remaining $500k is to be collected via the rates increase.

The proposed rates increase was recalculated based on these changes. At this time other assumptions were also reviewed, such as inflation and the capital expenditure programme, that resulted in a reduction in depreciation costs.

The rates increase required on the 2022/23 year is $4.21m, making the 2023/24 rates required a total of $25.45m.

Our biggest costs are always in the water, roading and community facilities space:

As the Annual Plan has been adopted by Council, not much can be done to change that decision. However, Council can review levels of service in the future and decide if certain expenditure is to be modified in some way. This can be done as part of the 2024-34 Long-term Plan process.

Please refer to the tables in the published 2023/24 Annual Plan.

You can work out your estimated increase by using the Rates Estimator on Council’s website available after 3 July 2023.

A There are no discretionary projects on the work programme or list of priorities for 2023/24. All of Council’s budgeted items are considered essential.

Council is very conscious of the tough economic times many in our community are facing. For those who are having difficulty paying their rates, we encourage you to talk to our Rates team. They have a number of solution, some of which may be right for you. You can find more information at www.swdc.govt.nz/services/rates

Ratepayers are increasingly aware of the basis on which their rates are charged and some have expressed a desire to have it reviewed for equity purposes.

Council is obligated to undertake a rating review, and it commenced this earlier in 2023. The rating review will not change what is charged to ratepayers, however, it will look at how that charge is allocated and what basis it is charged on. Residents will have the opportunity to provide feedback through their submissions during the consultation process.

The General Rates is the only Council rate that is based on land value. It pays for the district’s:

• Roads & footpaths
• Urban stormwater (only levied on urban properties)
• the remainder of the district’s Governance costs
• elements of resource management (district planning) and animal control that are not covered by income from fees such as planning consent and dog registration fees.

For this rate a ‘differential’ is applied, to each dollar of rateable land value, to determine the cost per rating unit. This is where an ‘above average’ increase in land value, such as during a revaluation year, would result in an above average increase in the General Rate applied.

The property revaluation completed by QV in September 2020 resulted in greater urban land values than rural land, except for lifestyle blocks which had a significant increase. The next property revaluation by QV is expected in late 2023.

Rates are charged based on the services ratepayers have available for use and the value of their property.

Rural ratepayers that are not connected to town water supply are charged for:

• Maintenance and extension of rural roads and culverts
• Access to pools, libraries
• Care of cemeteries, parks and reserves
• Community buildings, senior housing, and public toilets
• Governance costs and elements of resource management/planning

Some also pay for the maintenance of water races on their properties.

Rural ratepayers also contribute to the Rural Road Reserve, set up to respond to emergency events. This was used to respond to the recent cyclone related events that caused major flooding and landslips on many rural roads.

The Rural Road Reserve is an equity fund that is specifically for the purpose of works on rural roads. It is funded through the General Rural rate, and Council can approve its use on relevant works.

At the beginning of the current financial year (2022/23) this fund had just under $1.5m available, but nearly all of this will be used on the Hinekura Road realignment project.

The need for safe and accessible footpaths always features strongly in community feedback and is also part of the Wairarapa Region Positive Ageing Strategy, which was adopted by all three Wairarapa Councils in 2019.

Older people and users of mobility scooters – as well as wheelchair users and people with pushchairs – need smooth, safe footpaths to move around towns with confidence.

Our footpath work can be split into new work, renewals and maintenance. In terms of new footpaths, the goal that Council set in 2021 was to gradually extend the urban footpath network so that we have footpaths on at least one side of the road down the whole street. These are streets where there is no current footpath access on the other side.

Our Annual Plan KPI is to have 90% of urban streets compliant with this goal. However, our current budget allocation is forecast to be completely spent. At current funding levels, it will take us more than 10 years to achieve the 90% target for urban streets.

In our most recent funding agreement with Waka Kotahi, no new walking or cycling improvements or extensions were funded.

Footpath renewals, or resurfacing, is prioritised on the life of the asset. We have an independent condition rating done on all footpaths every two years as part of our Department of Internal Affairs obligations. Very few of our footpaths were found in poor condition, and most of those were metal surface. Overall, our rating was average to good, and we spend roughly $140,000 per annum on footpath renewals across the three towns. New footpath funding has been frozen in the upcoming 2023/24 year.

Our footpath repairs and maintenance budget across the three towns was only $25,000 in the last year and no new money is allocated for this Annual Plan. Council’s roading team generally prioritise those that are known trip hazards or health and safety requirements or other such situations. The bulk of problems centre on tree roots and uneven service covers (for sewage and drinking water).

If landowners don’t repay us for removing tree roots, Council has to absorb the cost. This further erodes the budgets.