Big district and regional council rates rises approved on the same day come after property valuations jump in the in-demand scenic locale.
A rates hike approved on Wednesday is about to push some Central Otago property owners’ bills up by 26 percent.
A recent 38 percent rise in property values across the area has combined with high inflation to create what Mayor Tim Cadogan is calling a “really nasty situation”.
At about 4 percentage points higher than budgeted for, the Central Otago District Council’s rates increase averages 11.2 percent across the district, varying depending on property type and location.
“It’s going to be quite a lumpy rates rise,” Cadogan said during a livestream this week. “I never thought we’d be talking those numbers. We will be one of the highest around the place.”
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The majority of lifestyle-block owners will face a hike of between 14 and 18 percent while urban homeowners in Alexandra and Cromwell should expect to pay about 8 percent more from next month.
A swanky house in Bannockburn with a valuation of $1.6 million – not unusual for the township – will cost its owners about $800 extra with the annual charge now close to $4000 according to examples published by the council.
The new rates were adopted as part of the council’s annual plan on Wednesday.
Central Otago residents will also be paying considerably more for regional rates after the Otago Regional Council on the same day approved an increase of 22 percent during its annual-plan process at a meeting in Dunedin.
The regional council had earlier predicted an 18 percent increase in total rates – general and targeted. The 4 percentage point lift in that figure was incurred in the general-rates portion.
Valuations way up
Over the past decade property values in Central Otago have risen by about 230 percent.
The previous three revaluations undertaken by Quotable Value saw average prices jump 36.9 percent in 2016, 36.6 percent in 2019 and 38 percent this year.
Continued demand for sections has contributed to the doubling of residential land values over the past three years, while commercial and industrial land values have increased by averages of 66 percent and 87 percent respectively, according to QV.
At Wednesday’s meeting Cadogan acknowledged that an increase in the number of ratepayers meant council costs could be spread over more households.
Revaluations are carried out across the country roughly three-yearly to help councils set rates.
Before the revaluation the predicted rates increase was in the 7.2-7.6 percent range.
But over the past 12 months “known unmanageable inflationary increases” pushed it well out of that range.
Running the district’s public swimming pools is one example, with chemical expenses doubling in some instances.
Waste management has also been hit by escalating costs.
The council’s various rate-funded insurance premiums accounted for 0.5-0.75 percentage points of the rating increase and water compliance work had added about 1 point.
Cadogan says the council opted to “suck it up this year” and not to reduce services nor abandon projects.
Next year, however, when budgets are reviewed for the next long-term plan, there may need to be a “conversation with the community” about ways to reduce spending.
“It costs money to do the things we want to do,” he says.
It may be necessary to separate the “nice-to-haves” from the “have-to-haves”.
He predicts the area’s rents will rise and is keen to review how public consultation is done by council to ensure those most affected are being heard.
Cadogan has assured councillors depreciation costs will not be deferred to manage the situation.
“This isn’t a council that is going to hide realities through things such as not depreciating assets then creating bow waves for future generations.
“Too much of that has gone on in local government.”
Last week the council officially opened a new water-supply scheme for Alexandra and Clyde.
The $16.1 million upgrade brings water quality for the towns up to new national drinking-water standards.
Major projects due to begin this year are the building of a Cromwell cultural centre and museum estimated at nearly $38 million and a Cromwell town-centre upgrade at around $42 million.
New council boss
A new council chief executive, Peter Kelly, will start on September 1.
Kelly, the former head of the New Zealand Army, is leaving the chief executive job at Upper Hutt District Council.
He will replace acting chief Louise van der Voort, who has been filling in since the departure of Sanchia Jacobs, who resigned in March after five years in the job.
Made with the support of the Public Interest Journalism Fund
