Long Term Plan 2021-2031 CONSULTATION TOPIC 2
Proceeds from residential sales
Council’s operating costs are anticipated to increase by $764,140 (5.2%) for 2021/22 - excluding the budgeted expenditure for residential developments.
The reasons for this increase are:
- Inflation - projected to be 1.5 to 7.2% for 2021/22.
- Additional costs for insurance and the district plan review.
- Additional people resourcing required to meet legislative and community demands (Three Waters, Solid Waste, Street Cleaning, Accounting, Communication and Information Technology/Services).
- Increased depreciation costs due to renewals and increased values.
When setting the rates for 2020/21 Council used approximately $600,000 from the proceeds of residential sales to keep the rates increase to below 3.5%.
Council considered various options of using the proceeds of residential sales in the coming years. We understand the use of these proceeds is not sustainable long-term as the proceeds will run out, but we also believe it is prudent to keep the rates affordable for residents.
Therefore, we have budgeted to use decreasing amounts of revenue from residential sales over the next three years to lower the rates increases. In year one, 2021/22 we propose using $500,000 and reducing that each year by $100,000. This will keep the annual rates increases within Council's affordability limit.
The graph below compares the options of using sales proceeds and the impact on the proposed total rates if no proceeds are used during the next three years.
