Debt levels at Horowhenua District Council reach $100 million

Veronica from Manakau

Horowhenua ratepayers are increasingly paying for the consequences of debt levels at Horowhenua District Council that have climbed to $100 million or $3000 per resident.

Explaining the debt level included in Bancorp Treasury Services December 2018 report Council's chief financial officer Doug Law said $68 million was spent on essential and community services, $9 million on property and $25 million on a category referred to as "Other activities."

Over the next 20 year Council's Long Term Plan (LTP) 2018-2038 estimates, "The total capital and operational expenditure for water supply, wastewater, storm water and land transport is expected to be approximately $1.9 billion"

No funding has been set aside in the LTP for a much needed new water source and storage reservoir, estimated to cost $35 million and about $100 million respectively.

According to the LTP, "Renewals and growth are estimated to cost $131.2 million over the next 20 years."

Ratepayers also face big increases – between $2000 and $3000 - in annual rates within the next ten years due to zoning changes and LTP intention to build water and waste water plants in rural residential areas set aside for land and property development in the Horowhenua Growth Strategy 2040 including Ohau, Waitarere and Manakau.

Last year Local Government Minister Nanaia Mahuta announced plans to overhaul legislation governing the delivery of water, waste water and storm water services in recognition of the, "critical funding and capability challenges."

As part of legislative changes Mrs Mahuta also wants to re-introduce the ability of councils to collect development contributions for "social, cultural, economic and environmental well-being of communities" as well as essential infrastructure.

One Council project’s that could benefit from legislative changes allowing the collection of development contributions for social and cultural well-being includes an ambitious Levin Town Centre Strategy which, the strategy states, “no Council funding has been set aside for.”

Council collected development contributions between 2006 and 2015 for essential infrastructure services but voted against reintroducing them in November last year due to legislative changes proposed by the Government.

Council’s Group Manager Corporate Services Mark Lester said, "these factors create an uncertain policy environment for making changes to Council’s Revenue and Financing Policy."

Instead, the Council has stated an intention to continue increasing rates above the inflation rate until 2023, "to ensure a balanced operating budget."

The Council has also increased its debt limit from 175 percent to 195 percent of revenue to, "ensure that Council can handle the proposed $84 million worth of growth projects and..for disaster recovery."