Western Bay of Plenty ratepayers are facing a 4.7 per cent increase in their rates compared to last year after the council adopted its Long Term Plan this week.

The council resolved to collect rates of $49.3million in 2012/13 claiming the real rates increase is less than 1 per cent as the remaining 3.8 per cent is the result of inflation, leaving a 0.9 per cent increase in real rates in 2013.

The increase is a reduction from the proposed 6.7 per cent in the draft Long Term Plan due to concerns of affordability in submissions.

Western Bay of Plenty District Council Mayor Ross Paterson says the low rate increase is a result of council's tight fiscal management in the last two years.

'We have cut more than $3million of costs out of the business in the last two financial years and we will continue to make further cuts,” says Ross.

'Our ability to keep the rates increase under one per cent reflects this financial prudence and also signals clearly that Council will be sticking to this approach in the foreseeable future.”

The council considered about 400 submissions from more than 700 individuals and organisations when making its decisions on the draft plan.

'We have listened to our ratepayers,” says Ross.

'We have taken the blow torch to costs and capital works programmes and driven greater efficiencies into asset management to ensure ratepayers are getting value for money. However, the one thing on which we refuse to compromise is our level of service.

'Yes, we have minimised a rates increase but we have achieved this by deferring projects and reducing costs rather than resorting to more borrowing as that would be unsustainable in the long term.”

The main drivers behind the revised rates are deferral of major capital works, the biggest being the $330,000 new McLaren Falls footbridge.

The council has also slashed $150,000 from the 2013 seal extension budget, $150,000 off the seal widening budget and a $250,000 reduction in staff salaries.

The district's urban ratepayers may have rates increases of more than 4.7 per cent because of property revaluations, while some rural ratepayers may have lower rates increases.

There is no change in the council's decision to pay $1.2million from general rates to make up the shortfall in financial contributions paid by developers. This will be used to fund interest on growth-related debt of about $110million.

Contributions from the roading rate and a 5 per cent increase in utilities charges for 2013-15 will also contribute to this growth-related debt funding shortfall.

Real increases in existing ratepayers' rates are forecast at 2.1 per cent above inflation in 2014, and 1.8 per cent above inflation in 2015.

The changes to the draft plan have also resulted in a reduction in council's peak forecast debt from $173.5million in 2018 to $160.5million.

By 2022 debt is expected to be down to $98million.

'There is no doubt the past three years have been financially challenging for households and businesses as the global financial crisis has continued to impact on affordability,” says Ross.

'In the Western Bay this ongoing financial downturn has impacted particularly severely on the district's development and growth.”

From the security of a consistent 2 per cent from 2005-2007, the district has experienced a severe downturn since the global economic recession began in 2008 – forcing the council to take a tough focus to address the challenges.

Ross says holding rates, reducing debt and improving operational efficiency, while not compromising on levels of service, are the hallmarks of this focus and central to the 2012-2022 Long Term Plan.

The downturn in building and development activity and the consequent reduction in financial contributions has presented the district council with the challenge of raising additional income to cover a $2million annual shortfall between interest on growth-related debt and financial contributions income from developers.

Council staff numbers have been reduced and building, consenting and regulatory services, streamlined.

'We are expecting growth to remain sluggish until at least 2017, so this $2million annual shortfall must be funded to prevent council having to borrow more to fund interest repayments on growth-related debt of $110million over the next five years,” says Ross.

This will be achieved by the council paying $1million from general rates in 2013 and up to $700,000 each year for 2014-2016 plus $300,000 per year from roading rates. The council is also increasing utilities charges by 5 per cent above inflation for 2013-15 and by 3 per cent in 2016.

'We will review actual growth every year and will reduce the percentage increase above inflation if growth returns earlier than expected.”

'Council has been particularly mindful of the impact on individual households of the financial downturn and the apprehension of ratepayers that any rate increases will further erode their affordability,” says Ross.

'To this end Council has reviewed capital expenditure for the next 10 years and reduced the total spend from $299.3million in the draft plan to $286.6million in the final adopted plan.”

Those changes to the draft plan have also resulted in a reduction in council's forecast peak debt from $173.5million in 2018 to $160.5million. By 2022 debt is forecast to drop even further to $110million.