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Funding Impact Statement

Introduction

The Local Government (Rating) Act 2002 sets out the methods by which local authorities can rate and the detailed criteria around their uses.

The Local Government Act 2002 sets out processes and policies that local authorities must apply in the establishment of their rating systems, including the provisions of information to communities.

This funding impact statement, which has been prepared in accordance with clause 13 of schedule 10 of the Local Government Act 2002, sets out:

            The revenue and financing mechanisms used;

            An indicative level or amount of funding for each mechanism;

            Explanatory information supporting the use of general and targeted rates; and

            A summary of the total rates requirement.

The application of funding methods to Council’s activities is summarised in a table at the end of this section.

This statement should be read in conjunction with Council’s Revenue and Financing policy that sets out Council’s policies in respect of each source of funding of operating and capital expenses.

Maximum Revenue from Certain Rates

Subject to Section 21 of the Local Government (Rating) Act 2002 certain rates must not exceed 30% of total rates revenue.

1)  The rates revenue sought by a local authority in any one year from the rates described in subsection (2) must not exceed 30% of the total revenue from all rates sought by the local authority for that year.


 

2)  The rates are:

a)       Uniform Annual General Charges that are set in accordance with section 15; and

b)      Targeted Rates that are set on a uniform basis and are calculated in accordance with section 18(2) or clause 7 of Schedule 3.

3)  Subsection (2) does not apply to targeted rates that are set solely for water supply or sewage disposal.

Currently Otorohanga District Council’s maximum revenue from certain rates is set at 21.09% of the maximum.

Revenue and Financing Mechanisms Background

Council will fund all its activities for the coming ten-year period from a mixture of the following tools:

            General Rates;

            Targeted Rates;

            Fees and Charges;

            Subsidies;

            Depreciation Funds and other reserves;

            Loans and Borrowings; and

            Financial Contributions.

            Development Contributions

The exact nature or source of funding will vary between significant activities.

Each activity or group of activities show the proposed funding arrangements.

The Otorohanga District Council proposes the following rating system:


 

District

a) . General Rate and Uniform Annual General Charge

A General rate on the rateable capital value of all properties in the District and a uniform annual general charge are levied to fund all or part of activities that benefit the whole of the District.

The uniform annual general charge is levied to ensure that every ratepayer makes a reasonable contribution to the activities of Council.

b) . Targeted Roading Rate

A Targeted Roading Rate on the rateable capital value of all properties in the District and a uniform targeted roading rate are levied to fund Council’s roading activity. The uniform targeted roading rate is levied to ensure that every ratepayer makes a reasonable contribution to the roading activity.

Rural Wards

a) . Rural Targeted Rate

In addition to the general rate a rural targeted rate on the rateable capital value of all rural properties and a uniform targeted rate are levied to fund all or part of activities that exclusively benefit the rural area.

The uniform targeted rate is levied to ensure that every ratepayer makes a reasonable contribution to the rural activities of Council.

b) . Water Supply

Residential properties receiving water from the Otorohanga Community supply are levied a uniform targeted rate.

Extraordinary users are charged at a rate per cubic metre for consumption.

All properties in rural water supply areas are on a metered supply and charged accordingly.

In addition rural water schemes levy an availability charge on each metered connection to ensure that a reasonable contribution is made to the scheme.

c) . Water Supply Targeted Loan Rates

Properties in the Tihiroa and Waipa Rural Water supply areas that have not made a capital contribution to their respective schemes are levied a targeted loan rate to finance loan repayment costs in respect of loans raised in lieu of the capital contributions being received.

d) . Hall Targeted Rates

Rates are levied in defined Hall areas. Funds received are generally available to Hall Committees to go towards the operation, maintenance, renovation and/or extension of those facilities.

e) . Refuse Targeted Rate

All properties situated in the Aotea Community that have a building erected thereon are levied a uniform targeted rate for each separately occupied portion of any building.

f) .. Account Balances

In the normal course of business Council will from year to year recover accumulated deficits or provide for surpluses for various activities.

Otorohanga Community

a) . Otorohanga Community Targeted Rate

In addition to the general rate a targeted community rate on the rateable capital value of all properties in the Otorohanga community and a uniform targeted rate are levied to fund all or part of activities that exclusively benefit the Otorohanga community. The uniform targeted rate is levied to ensure that every ratepayer makes a reasonable contribution to the activities undertaken in the Otorohanga community.

Differential Rating is applied in the Otorohanga Community and is the basis to levy the Otorohanga Community targeted rate and targeted rates to finance sewerage and water loan charges. Properties are defined by use into two categories, which are, Commercial/Industrial properties and Residential properties. The Commercial Industrial properties pay a differential of 2.5 times the residential rate for those rates levied on the basis of valuation of the property.

b) . Security Targeted Rate

A security targeted rate and uniform targeted rate is levied to finance a security patrol service in the central area of Otorohanga.


 

c) . Refuse Targeted Rate

All properties situated in the Otorohanga Community that have a building erected thereon are levied a uniform targeted rate for each separately occupied portion of any building.

d) . Water Supply

Properties receiving water from the Otorohanga Community supply are levied a uniform targeted rate per connection. Extraordinary users of water are metered and charged on a consumption basis less a free allowance.

All non-rateable properties are levied a minimum charge.

e) . Sewerage

All properties that are connected to the Otorohanga Sewerage Treatment & Reticulation Scheme are levied a uniform targeted rate per connection.

f) .. Targeted Loan Rates

Properties in the Otorohanga community sewerage and water supply areas are levied a targeted loan rate on a differential basis to finance loan repayment costs in respect of loans raised for capital expenditure on sewerage and water schemes.

g) . Account Balances

In the normal course of business Council will from year to year recover accumulated deficits or provide for surpluses for various activities.

Kawhia Community

a) . Kawhia Community Targeted Rate

In addition to the general rate a targeted community rate on the rateable capital value of all properties in the Kawhia community and a uniform targeted rate are levied to fund all or part of activities that exclusively benefit the Kawhia community.

The uniform targeted rate is levied to ensure that every ratepayer makes a reasonable contribution to the activities undertaken in the Kawhia community.

b) Refuse Targeted Rate

All properties situated in the Kawhia Community that have a building erected thereon are to be levied a uniform targeted rate for each separately occupied portion of any building.

c) . Water Supply

Properties receiving water from the Kawhia Community supply are levied a uniform targeted rate per connection. Extraordinary users of water are metered and charged on a consumption basis.

d) . Targeted Loan Rates

Properties in the Kawhia Community water supply area are levied a targeted loan rate to finance loan repayment costs in respect of loans raised for capital expenditure on the Kawhia water scheme.

e) . Account Balances

In the normal course of business Council will from year to year recover accumulated deficits or provide for surplus for various activities.

1)      Otorohanga District

a) . General Rate

A General Rate of 0.0548 cents in the dollar on the Capital Value of all
rateable land within the District of Otorohanga.

b) . Uniform Annual General Charge

A Uniform Annual General Charge of $277 on every separate rating unit within the District of Otorohanga.

(The total general rate and Uniform Annual General Charge are estimated to produce $3,058,500 and this revenue will be used for the following purposes: Drainage and Utility Services, Community Services, Regulatory, Democratic Process and Other Activities).

2)      Otorohanga Rural

a) . Rural Targeted Rate

A Targeted Rate of 0.0016 cents in the dollar on the Capital Value of all rateable land within the District of Otorohanga with the exception of the Otorohanga Community and Kawhia Community areas.

b) . Separate Uniform Targeted Rate

A Uniform Targeted Rate of $88 on every separate rating unit within the District of Otorohanga with the exception of the Otorohanga and Kawhia Community areas.

(These rates are estimated to produce $235,000 and this revenue will be used for the following purposes: Drainage and Utility Services, Community Services and Other Activities).

3)      Otorohanga Community

a) . Otorohanga Community Targeted Rate

A Targeted Rate levied on the Capital Value of all rateable land within the Community of Otorohanga on a differential basis as follows:

i) .. Differential Rating Area No. 1 – 0.0478 cents in the dollar – estimated to produce revenue of $38,000.

ii) .. Differential Rating Area No. 2 – 0.0191 cents in the dollar – estimated to produce revenue of $51,300.

b) . Otorohanga Community Uniform Targeted Rate

A Separate Uniform Targeted Rate of $199 on each separate rating unit within the Community of Otorohanga.

(These rates are estimated to produce $256,900 and this revenue will be used for the following purposes: Drainage and Utility Services, Democratic Process, Community Services, and Other Activities).

4)      Kawhia Community

a) . Kawhia Community Targeted Rate

A Targeted Rate of 0.0298 cents in the dollar levied on the Capital Value of all rateable land within the Community of Kawhia.

b) . Kawhia Community Uniform Targeted Rate

A Uniform Targeted Rate of $66 on each separate rating unit within the Community of Kawhia.

(These rates are estimated to produce $94,400 and this revenue will be used for the following purposes: Drainage and Utility Services, Community Services, Democratic Process and Other Activities).

5)      Targeted Loan Rates

a) Otorohanga Sewage Treatment

A Targeted Loan Rate levied on the Capital Value of all rateable land within the Community of Otorohanga on a differential basis as follows:

i) .. Differential Rating Area No.1 – 0.0328 cents in the dollar – estimated to produce revenue of $22,700.

ii) .. Differential Rating Area No.2 – 0.0131 cents in the dollar – estimated to produce revenue of $33,600.

(This rate is estimated to produce $56,300 for the purpose of paying Sewage Treatment and Reticulation Loan Charges).

b) . Otorohanga Water Supply

A Targeted Loan Rate levied on the Capital Value of all rateable land within the Community of Otorohanga on a differential basis as follows:

i) .. Differential Rating Area No.1 – 0.0223 cents in the dollar – estimated to produce revenue of $15,500.

ii) .. Differential Rating Area No.2 – 0.0089 cents in the dollar – estimated to produce revenue of $23,900.

(This rate is estimated to produce $39,400 for the purpose of paying Water Supply Loan Charges).

c) . Kawhia Water Supply

A Targeted Loan Rate of 0.0122 cents in the dollar on the Capital Value of all rateable land within the Community of Kawhia.

(This rate is estimated to produce $16,700 for the purpose of paying Water Supply Loan Charges).

d) . Arohena Rural Water Supply

A Targeted Loan Rate of 0.0153 cents in the dollar on the Capital Value of all rateable land within the Arohena Water Supply Area.

(This rate is estimated to produce $17,900 for the purpose of paying Water Supply Loan Charges).

e) . Aotea Erosion Protection

A Uniform Targeted Loan Rate of $680 on each separate rating unit within the Aotea Community.

(This rate is estimated to produce $19,000 for the purpose of paying Loan Charges).

6)      Targeted Rates

a) . Roading

i) .. A Targeted Rate of 0.1036 cents in the dollar levied on the Capital Value of all rateable land within the District of Otorohanga.

ii) .. A Uniform Targeted Rate of $228 on each separate rating unit within the District of Otorohanga.

(These rates are estimated to produce $4,592,600 and this revenue will be used for Roading).

b) . Security Patrol

i) .. A Targeted Rate of 0.0883 cents in the dollar on the Capital Value of all rateable land within the “Security Patrol Area” (formerly Differential Rating Area No 1) in the Community of Otorohanga.

ii)       A Uniform Targeted Rate of $336 on each separate rating unit within the “Security Patrol Area” (formerly Differential Rating Area No 1) in the Community of Otorohanga.

(This rate is estimated to produce $83,250 for the purpose of funding a Security Patrol Service in a defined area of the Otorohanga Community.

c) . Otorohanga CBD Development Rate

i) .. A Targeted Rate of 0.0106 cents in the dollar on the Capital Value of all rateable properties within the Otorohanga Commercial Area (differential Rating Area No 1).

ii)... A Uniform Targeted Rate of $137 on each separate rating unit within the Otorohanga Commercial Area (Differential Rating Area No 1).

(This rate is estimated to produce $29,200 for the purpose of funding  services specific to the Otorohanga Commercial area.

d) . Aotea Erosion Targeted Rate

i) .. A Uniform Targeted Rate of $102 on each separate rating unit within the Aotea Community.

(This rate is estimated to produce $17,000 and this revenue will be used for the following purposes: maintenance costs relating to the Aotea Seawall).

e) . District Halls

Targeted Hall rates as follows:

Hall Separate Rating District

Rate in $

Rating System

Uniform Annual Charge

Est. Rate Levy

$

Arohena

0.0005

Capital Value

$45

3,560

Kio Kio

0.0009

Capital Value

$20

6,170

Tokanui Crossroads

-

Capital Value

$15

2,430

Puketotara/ Ngutunui

0.0003

Capital Value

$9

2,865

Maihiihi

0.0019

Capital Value

-

2,080

Otewa

-

Capital Value

$18

2,300

Whawharua

-

Capital Value

$10

740

Honikiwi

0.0013

Capital Value

-

1,700

 

(These rates are estimated to produce $21,845 for the purpose of maintenance, operation, renovation and extension of the respective Halls).

7)      Targeted Refuse Rates

Otorohanga Community

A Uniform Targeted Rate for Refuse Collection and Disposal of $114 in respect of each separately used or inhabited part of a rating unit in
the Otorohanga Refuse Collection area.

(This rate is estimated to produce $149,000 for the purpose of financing the Otorohanga Refuse Collection and Disposal costs).

Kawhia Community

a) . A Uniform Targeted Rate for Refuse Collection and Disposal of $213 in respect of each separately used or inhabited part of a rating unit in the Community of Kawhia.

(This rate is estimated to produce $110,200 for the purpose of financing the Kawhia Community Refuse Collection and Disposal costs).

8)      Targeted Water Rates

Otorohanga Community

a)   A Uniform Targeted Rate of $206 on every separately used or inhabited part of a rating unit within the Community of Otorohanga which receives an ordinary supply of water from the Otorohanga Community Water Supply.

b)   A Uniform Targeted Rate of $280 on every separately used or inhabited part of a rating unit located outside the Community of Otorohanga which receives an ordinary supply of water from the Otorohanga Community Water Supply.

(These rates are estimated to produce $271,500 for the purpose of contributing to the costs of operating the Otorohanga Community Water Supply).

Kawhia Community

c).. A Uniform Targeted Rate of $293 on every separately used or inhabited part of a rating unit, which receives an ordinary supply of water within the Community of Kawhia.

(This rate is estimated to produce $122,400 for the purpose of contributing to the costs of operating the Kawhia Community Water Supply).

9)      Targeted Sewerage Rates

A Uniform Targeted Rate of $290 for the first water closet or urinal and $0 for the second to fourth, $50 for subsequent closets or urinals, on every separately used or inhabited part of a rating unit connected, either directly or through a private drain to the Otorohanga Community Sewerage Scheme.

(This rate is estimated to produce $371,300 for the purpose of financing the costs of operating the Otorohanga Community Sewerage Scheme).

10)    Targeted Rates for Extraordinary Water Supply

i) Otorohanga Community

a).. Each rateable separate rating unit within the Otorohanga Community on a metered supply to receive a free allowance of 220 cubic metres per annum with excess consumption charged at 64 cents per cubic
metre.

b).. Each non-rateable separate rating unit within the Otorohanga Community to pay a charge of $206 per annum and those on a metered supply 86 cents per cubic metre with a minimum charge of $206 per annum.

c).. Each separate rating unit whether rateable or non-rateable outside the Otorohanga Community on a metered supply 86 cents per cubic metre with a minimum charge of $280 per annum.

d).. In addition to the above charges each separate rating unit whether rateable or non-rateable receiving an extraordinary supply from the Otorohanga Community Water Supply $115 per meter.

ii) . Kawhia Community

a).. Each separate rating unit whether rateable or non-rateable in the Kawhia Community on a metered supply to receive a free allowance
of 220 cubic metres per annum with excess consumption charged at $1.14 cents per cubic metre.

b).. Each separate rating unit whether rateable or non-rateable outside the Kawhia Community on a metered supply - $1.32 cents per cubic metre with a minimum charge of $319 per annum.

c).. In addition to the above charges each separate rating unit whether rateable or non-rateable receiving an extraordinary supply from the Kawhia Community Water Supply $115 per meter.

iii) Rural Water Supplies

a).. Each separate rating unit whether rateable or non-rateable within the Arohena Rural Water Supply Area on a metered supply – 36 cents per cubic metre plus an availability charge of $425 per meter per annum.

b).. Each separate rating unit whether rateable or non-rateable within the Ranginui Rural Water Supply Area on a metered supply – 31.0 cents per cubic metre, plus an availability charge of $1,000 per meter per annum.

c).. Each separate rating unit whether rateable or non-rateable within the Tihiroa Rural Water Supply area on a metered supply - 68.0 cents per cubic metre for consumption in excess of 100 cubic metres plus an availability charge of $450 per meter per annum.

d) . Each separate rating unit whether rateable or non-rateable within the Waipa Rural Water Supply Area on a metered supply - 55.0 cents per cubic metre plus an availability charge of $100 per meter per annum.

11)    Instalments

The above rates and charges will be payable in two equal instalments due on 8 August 2008 and 9 January 2009 at the Council Office, Maniapoto Street, Otorohanga.

12)    Additional Charges

a) . An additional charge of 10% will be added to all rates levied and due for the 2008/09 year that remain unpaid after 29 August 2008 and 30 January 2009.

b).. A further additional charge of 10% will be added to all rates that have been levied in any financial year previous to 1 July 2008 and which remain unpaid on 1 July 2008.

c) . A further additional charge of 10% will be added to all rates to which an additional charge has been added under 12(b) and which remain unpaid on 1 January 2009.

 

            The valuation roll and rate records for the District are available for inspection at the Council Office, Maniapoto Street, Otorohanga during normal office hours.

            The above rates and charges take effect from 1 July 2008 and are inclusive of Goods and Services Tax.

 

Funding Impact Statement

 

2007/08

2008/09

2008/09

 

 

Annual Plan

LTCCP

Annual Plan

Variance

INCOME

 

 

 

 

 

 

 

 

 

Rates Income

 

 

 

 

General Rates & UAGC

2,491,186

2,572,691

2,744,892

172,201

Rural Targeted Rate

210,084

247,274

209,039

(38,235)

Otorohanga Community Targeted Rate

336,062

348,572

312,759

(35,813)

Kawhia Community Targeted Rate

91,787

74,140

84,099

9,959

Land Transport Targeted Rate

3,805,122

4,068,328

4,061,872

(6,456)

Refuse Collection Targeted Rate

196,913

207,651

229,418

21,767

Water Supply Targeted Rate

361,901

405,904

363,710

(42,194)

Water Supply Targeted Loan Rate

94,199

96,241

50,834

(45,407)

Sewerage Treatment Targeted Rate

310,000

307,980

330,000

22,020

Sewerage Treatment Targeted Loan Rate

80,000

70,000

50,000

(20,000)

Rural Halls Targeted Rate

20,300

19,900

19,560

(340)

Aotea Erosion Targeted Rate

15,000

8,900

15,000

6,100

Aotea Erosion Targeted Loan Rate

18,946

19,200

16,828

(2,372)

CBD Development Rate

15,450

-

15,000

15,000

Security Patrol Targeted Rate

74,000

78,588

74,000

(4,588)

 

 

 

 

 

Total Rates Income

8,120,950

8,525,367

8,577,011

51,642

 

 

 

 

 

Other Operating Income

 

 

 

 

Funding Assistance

3,213,871

3,187,940

3,232,600

44,660

User Fees and Charges

1,727,121

1,721,696

2,152,282

430,586

Interest on Investments

70,200

70,000

85,000

15,000

 

 

 

 

 

Total Other Operating Income

5,011,192

4,979,635

5,469,882

490,246

 

 

 

 

 

Other Funding Sources

 

 

 

 

Capital Income

627,777

654,975

362,500

(292,475)

Loan Income

694,733

-  

743,789

743,789

Investment Loan Income

2,068

-

-

-

Reserve Transfers

(45,700)

40,000

(33,000)

(73,000)

Utilisation of Account Balances

(102,394)

182,279

176,013

(6,266)

Utilisation of Cash Surpluses

3,620,228

2,862,154

2,889,753

27,599

 

 

 

 

 

Total Other Funding Sources

4,796,711

3,739,408

4,139,055

399,647

TOTAL INCOME

17,928,853

17,244,410

18,185,948

941,538

 

2007/08

2008/09

2008/09

 

 

Annual Plan

LTCCP

Annual Plan

Variance

EXPENDITURE

 

 

 

 

 

 

 

 

 

Operating Expenditure

 

 

 

 

Gross Operating Expenditure

8,685,056

8,637,143

9,614,936

977,793

Depreciation

3,030,204

3,213,055

2,936,291

(276,764)

 

 

 

 

 

Total Operating Income

11,715,260

11,850,198

12,551,227

701,029

 

 

 

 

 

Other Expenditure

 

 

 

 

Loan Repayments

17,121

786,183

7,352

(778,831)

Capital Expenditure

6,300,600

4,737,387

5,731,500

994,113

 

 

 

 

 

Total Other Income

6,317,721

5,523,570

5,738,852

215,282

 

 

 

 

 

Less Depreciation not Funded

104,131

129,358

104,131

(25,227)

 

 

 

 

 

TOTAL EXPENDITURE

17,928,853

17,244,410

18,185,948

941,538

 

Examples of contribution to Council Services – 2008/09 Year

Property Value

250,000

300,000

250,000

500,000

200,000

300,000

1,000,000

1,500,000

4,500,000

Note:

1

2

3

4

5

6

7

8

9

ACTIVITY

 

 

 

 

 

 

 

 

 

Democratic Process

109

119

114

139

109

119

189

240

542

Council Grants

6

10

8

16

6

10

32

48

145

Corporate Planning

39

42

40

49

39

42

67

85

192

District Promotion

29

31

30

35

29

31

44

54

111

Planning and Development

27

38

33

62

27

38

121

180

535

Civil Defence

12

12

12

12

12

12

12

12

12

Building Control

6

8

7

14

6

8

28

42

127

Environmental Health

19

21

20

25

19

21

34

43

97

Dog Control

3

3

3

3

3

3

3

3

3

Ranging and Impounding

-

-

-

-

-

-

-

-

-

Litter Control

8

9

9

10

8

9

12

14

27

Sport Waikato

14

15

15

16

14

15

20

23

45

Roading

433

536

484

742

433

536

1,258

1,773

4,867

Reserves

53

64

59

86

53

64

142

198

533

Library

34

38

36

47

34

38

69

90

220

Cemeteries

2

3

3

6

2

3

11

17

52

Democratic process

63

74

111

181

45

54

-

-

-

 (Community Board)

 

 

 

 

 

 

 

 

 

Sewer Loan

26

39

82

164

-

-

-

-

-

Water Loan

18

27

56

111

24

36

-

-

-

Oto Water Supply

5

5

5

5

5

5

5

5

5

Oto Sewerage

5

5

5

5

5

5

5

5

5

Kawhia Water Supply

2

2

2

2

2

2

2

2

2

Pool

140

140

140

140

11

11

70

70

70

Stormwater/Land Drainage

32

48

101

201

35

53

6

10

29

Refuse

116

116

116

116

215

215

23

24

28

Wharf

2

2

2

3

9

10

4

5

11

Property

(2)

(3)

(4)

(7)

8

10

(10)

(12)

(25)

Community Centre/Halls

-

-

-

-

19

19

-

1

2

Rural Fire Control

-

-

-

-

-

-

13

19

57

Security Patrol

7

7

563

784

-

-

1

2

5

CBD Development

-

-

163

190

-

-

-

-

-

Movement in Funds

12

7

(15)

(51)

12

15

31

44

120

Uniform Water Charge

206

206

206

206

293

293

-

-

-

Uniform Sewerage Charge

290

290

290

290

-

-

-

-

-

 

 

 

 

 

 

 

 

 

 

TOTAL:

1,715

1,916

2,694

3,603

1,478

1,678

2,193

2,996

7,816

1.       Residential Property Otorohanga Community Rateable Capital Value of $250,000.

2.       Residential Property Otorohanga Community Rateable Capital Value of $300,000.

3.       Commercial/ Industrial Property Otorohanga Community Rateable Capital Value of $250,000.

4.       Commercial/ Industrial Property Otorohanga Community Rateable Capital Value of $500,000.

5.       Kawhia Community Property Rateable Capital Value $200,000.

6.       Kawhia Community Property Rateable Capital Value $300,000.

7.       Rural Property Rateable Capital Value $1,000,000.

8.       Rural Property Rateable Capital Value $1,500,000.

9.       Rural Property Rateable Capital Value $4,500,000.

 



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