Opinion + Survey: Should Council Pause Any rates Increase For 2020/21 Year?
I am one of your City Councillors. Towards the end of April, I will be asked to vote on a rate increase for the 2020-21 year (commencing June 2020).
It is my view that given the forthcoming financial impact of Covid-19, we should have a zero rate increase. Alongside that, Council is reviewing its hardship policy and is also looking to a mechanism that allows businesses that are closed and then slow to recover, to have rates deferment (no rates until they reopen, with a catch up after that).
The issue is not just that simple. One of the matters to keep in mind is that as we get into a recovery phase, ICC will, by its activities, be able to tender work that will help many local companies in their recovery. So, we will need funds to do that, hence some of my colleagues may wish to maintain the 3.5% rate increase already in our Long Term Plan (or a rate between zero and 3.5%).
ICC has several influences on it’s income streams and operating costs:
- Dividends from our trading companies
- Possible sale of assets (like the forestry estate, Don St building and Awarua farm)
- Interest from $75.797m we have invested with banks
- Borrow more (increase debt) – we have a AA+ rating and that is a credit to management
- Cut operating costs – 25% of that cost is personnel costs (staffing)
- Revenue from costed services
- Annual rates which are being increased by approx $2m a year
So, for me, we need to focus on the community cost of pushing up rates at a time when central government and bank mortgages are attempting to support businesses and individuals who will be hurting, while still being mindful of our need to be part of stimulating a community recovery.
The difference between a zero rate increase and 3.5% increase is about $2.1m. Factor in hardship applications and business deferments, and we may have a much larger shortfall. We will also need to continue to fund the City Block project which will be our largest post Covid-19 stimulus.
Offset against this need for income/funding, is the $75.797m that ICC and its HoldCo has invested in banks. These reserves are often referred to as being for a “rainy day”. Well, that rainy day is now.
I still believe that we should have a zero rate increase and use borrowing or released investments to fund any shortfall.
I encourage you to participate in the online survey on this website so that you can guide me on how I should vote on this issue.
Nobby Clark – ICC Councillor
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