Wellington rates could rise by as much as 17 per cent from July, the biggest annual increase in a quarter of a century, as the City Council grapples with decades of under-investment in the capitals infrastructure.
A double-digit increase would likely cause sticker-shock among ratepayers, but comes amid increasing calls for the council to properly tackle some of the problems that are now surfacing in the city literally in the case of the sewage pipes.
There are a lot of challenges that we are facing in a lot of areas, and we have to invest in and fix them all now, Mayor Andy Foster said on Thursday, after presenting his proposed 10-year plan for the city to the council.
Notably for a council that has had its fair share of disagreements, there was general consensus around the table that rates needed to rise to generate the kind of money needed for this investment.
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The investment in water infrastructure is necessary and urgent, said Fleur Fitzsimons, a Labour-endorsed councillor often on the opposite side of an issue from Foster. She agreed a rates increase was required but said the council needed to ensure residents who could not afford to pay were provided with fair rates deferral options.
Rates are calculated every three years based on capital value land value plus improvement value. The next valuation is due in September this year.
The median residential rate for 2020/21 is $3487, and a 17 per cent rate rise would increase this by $593.
However, Foster said even with a proposed 14 per cent rates increase, the council would still be about $600 million short if it wanted to fund everything on its “wish-list”.
Full details of Foster’s proposal will not be released until Friday, but city councillor Diane Calvert said details provided to councillors on Wednesday outlined where the shortfalls were.
There were gaps of $150m for sludge treatment, which could be paid for through other funding tools; $180m for the central library earthquake-strengthening project, which could be funded through divesting other council assets; and $267m for social housing upgrades, which could require central government investment.
Wellington faces rapidly mounting bills for infrastructure work, including earthquake strengthening in landmark buildings such as the central library, and transportation upgrades.
But the biggest and most pressing work is under the streets. Wellingtons wastewater network has been falling apart over the past 12 months, with Wellington Water recording more than 2000 pipe bursts or more than 40 a week in its latest annual report. Foster and Wellington Water recently announced a $40m plan to provide two back-up pipes.
To begin to meet these costs, Foster suggested a rates increase of 14 per cent to fund Wellingtons biggest ever long-term infrastructure investment. His draft 2021-31 long-term plan included $2.7 billion for upgrading the citys water infrastructure.
Another $220m is for the councils share of the $6.4b Lets Get Wellington Moving transport programme. The council needs to pay $1.3b towards the programme over the next 20 years, so that figure would likely increase over time, he said.
Wellington Mayor Andy Foster says his proposed 10-year plan is heavily focused on infrastructure and resilience. (File photo)
Capital investment in my 2021 LTP [long-term plan] is the largest we have ever made, by a significant margin, Foster said.
Rates could go up by 17 per cent under a scenario in which the council quickly paid off debt incurred because of the coronavirus pandemic, which amounted to about $54m. It included things like the loss of its Wellington Airport dividend, deferred rates payments, and the loss of user charges because of closed council facilities.
If approved, that rates increase would be the biggest in 25 years, topping the 16 per cent increase imposed in 1995-96. But Foster expected rates increases to level off over the next few financial years.
Uncertainty surrounds the $6.4 billion Lets Get Wellington Moving programme, which includes a proposed mass transit system between Wellington Railway Station and the airport. (File photo)
Foster also proposed to increase the councils borrowing cap through the Local Government Funding Agency, from 175 per cent of revenue to 225 per cent of revenue.
He said this years plan had been by far the most challenging budget that Ive seen.
Were walking the tightrope between the communitys ability to afford rates, but also the need to invest in critical infrastructure that the community has been calling very, very loudly for.
Calvert, who holds the councils economic development portfolio, applauded the mayors proposals.
Its better for us to be transparent with reality than try and fudge it or push things down the track, she said. Its now time for us to step up and deal with what weve got.
Wellingtons big bills
Upgrading water pipes $2.7b
Social housing upgrades $400m
Lets Get Wellington Moving $220m
Central library earthquake-strengthening $180m
Convention Centre $179m
Demolition of Michael Fowler car park, Civic Administration Building, and Municipal Office Building $15m

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