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Wellington’s rates could rise by as much as 17 percent since July, the biggest annual increase in a quarter century, as the City Council grapples with decades of underinvestment in the capital’s infrastructure.
A double-digit increase would likely cause a stir among taxpayers, but it comes amid growing calls for the council to properly address some of the problems that are now emerging in the city, literally in the case of sewer pipes.
“There are many challenges that we face in many areas, and we have to invest and solve them all now,” Mayor Andy Foster said Thursday, after presenting his proposed 10-year plan for the city to the Council.
In particular, for a board that has had its fair share of disagreements, there was a general consensus around the table that rates needed to go up to generate the kind of money needed for this investment.
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“Investment in water infrastructure is necessary and urgent,” said Fleur Fitzsimons, a Labor-backed councilor who often finds himself on the opposite side of a Foster problem. She agreed that a rate increase was required, but said the council needed to ensure that residents who could not pay had fair rate deferral options.
Fees are calculated every three years based on capital value: land value plus improvement value. The next valuation is due in September of this year.
The median residential rate for 2020/21 is $ 3,487, and a rate increase of 17 percent would increase this by $ 593.
However, Foster said that even with a proposed rate hike of 14 percent, the council would still be $ 600 million short if it wanted to fund everything on its “wish list.”
Full details of Foster’s proposal won’t be released until Friday, but City Councilor Diane Calvert said details provided to councilors Wednesday detailed where the deficiencies lay.
There were gaps of $ 150 million for sludge treatment, which could be paid for through other financing tools; $ 180 million for the Central Library Earthquake Strengthening Project, which could be funded through the divestment of other council assets; and $ 267 million for social housing improvements, which could require an investment from the central government.
Wellington faces mounting bills for infrastructure works, including earthquake fortification of iconic buildings like the central library and transportation improvements.
But the most important and urgent work is under the streets. Wellington’s sewage network has collapsed in the last 12 months, and Wellington Water recorded more than 2,000 pipe breaks, or more than 40 a week, in its latest annual report. Foster and Wellington Water recently announced a $ 40 million plan to provide two backup pipes.
To start covering these costs, Foster suggested a 14 percent rate increase to fund Wellington’s “largest ever” long-term infrastructure investment. His draft long-term plan 2021-31 included $ 2.7 billion to improve the city’s water infrastructure.
Another $ 220 million is for the council portion of the $ 6.4 billion Let’s Get Wellington Moving transportation program. The council needs to pay $ 1.3 billion for the program over the next 20 years, so that figure will likely increase over time, he said.
Ross Giblin / Stuff
Wellington Mayor Andy Foster says his proposed 10-year plan focuses primarily on infrastructure and resilience. (File photo)
“Capital investment in my LTP 2021 [long-term plan] It’s the biggest we’ve ever done, by a significant margin, ”Foster said.
Rates could rise 17 percent in a scenario where the council quickly paid off debt incurred due to the coronavirus pandemic, which amounted to around $ 54 million. It included things like the loss of its Wellington airport dividend, deferred fare payments and the loss of user charges due to the closure of the city hall facility.
If approved, that rate increase would be the largest in 25 years, surpassing the 16 percent increase imposed in 1995-96. But Foster expected the rate hikes to stabilize over the next financial years.
LET’S GET MOVING WELLINGTON
Uncertainty surrounds the $ 6.4 billion Let’s Get Wellington Moving program, which includes a proposed mass transit system between the Wellington train station and the airport. (File photo)
Foster also proposed raising the council’s borrowing cap through the Local Government Finance Agency, from 175% of revenue to 225% of revenue.
He said this year’s plan had been “by far the most challenging budget I’ve ever seen.”
“We are walking a tightrope between the community’s ability to pay fees, but also the need to invest in critical infrastructure that the community has been asking for very, very hard.”
Calvert, who holds the council’s economic development portfolio, applauded the mayor’s proposals.
“It is better for us to be transparent with reality than to try to avoid it or push things down the road,” he said. “Now is the time to step up and deal with what we have.”
Wellington big bills
Improved water pipes – $ 2.7 billion
Social Housing Improvements – $ 400 million
Let’s Get Wellington Moving – $ 220 million
Central Library Earthquake Strengthening – $ 180 million
Convention Center – $ 179 million
Demolition of Michael Fowler’s Parking Lot, Civic Administration Building, and City Office Building – $ 15 million
