sayitnapier.nz YOUR SAY ON NAPIER’S FUTURE Amendment to the Revenue and Financing Policy CONSULTATION DOCUMENT
Amendment to the Revenue and Financing Policy
As part of setting up a new activity of Council for property rights purchasing, the Council must also amend its Revenue and Financing Policy. That policy sets out how the funding needs of all Council activities will be met. The amended policy can be found in the full Long Term Plan Amendment document which will be available after the community consultation closes. In short, it concludes that:
• the costs and benefits are city-wide
• they can’t easily be differentiated between groups
• they will provide long term community benefit
• it will require all Napier ratepayers to fund the activity.
Analysis
Local Government Act - Section 101 Financial Management
(3) The funding needs of the local authority must be met from those sources that the local authority determines to be appropriate, following consideration of,—
a. in relation to each activity to be funded,—
i. the community outcomes to which the activity primarily contributes; and
ii. the distribution of benefits between the community as a whole, any identifiable part of the community, and individuals; and
iii. the period in or over which those benefits are expected to occur; and
iv. the extent to which the actions or inaction of particular individuals or a group contribute to the need to undertake the activity; and
v. the costs and benefits, including consequences for transparency and accountability, of funding the activity distinctly from other activities; and
b. the overall impact of any allocation of liability for revenue needs on the current and future social, economic, environmental, and cultural well-being of the community.
Section 101(3) of the Local Government Act 2002 requires councils to determine who benefits from each of its activities, and how the activities will be funded.
Community Outcomes
The relevant community outcome from our 2021-31 Long Term Plan is: “Our community is connected, safe, healthy and resilient.”
Within this Community Outcome, the voluntary purchase of Category 3 properties contributes to the following relevant strategic goals:
1. “Our neighbourhoods will be safe, well connected, and have good access to urban amenities,” and,
2. “We will enhance our resilience to the effects of emergencies, pandemics, and climate change to ensure we can respond and recover quickly.”
Climate change is increasing the intensity and frequency of weather events and this is impacting on the places where people can live without undue risk. The incidence of flooding to properties and risk to our community is worsening.
The proposed voluntary purchase of Category 3 properties is an acknowledgement that flood risks can’t be reasonably mitigated through flood protection in some situations. As a final measure, the remaining mechanism is to remove residential dwellings from areas of high risk and also remove future residential property rights.
Safety and resilience are core functions of Council.
Benefits
Council is purchasing residential property rights where the risk to life has been assessed as too high should a significant weather event happen again.
It could be argued that the affected property owners receive the most benefit from this. However, those benefits could be considered a disadvantage as they have lost their properties. Reducing the number of residential dwellings in high-risk areas will also reduce the cost of future emergency responses – which is typically paid for by all ratepayers.
The benefits are effectively citywide, because having all ratepayers share the cost of purchasing residential property rights from affected property owners is a community benefit in the same way as there is community benefit in all ratepayers paying for flood protection works.
The voluntary purchase of Category 3 properties replaces the need for more expensive flood protection / mitigation measures that would otherwise be needed to protect those properties at risk.
Timeframe
By taking action now, the community will benefit from increased safety from any future flooding event. The benefit is long-term.
Factors that influence the need for the activity
The increasing frequency in weather extremes creates risks for our community. Flood-prone areas have a reduced ability to rebuild safely.
Three groups have been identified as impacted: land owners, Council, and the wider community. Impacted land owners can’t easily reduce the risk from future flooding themselves, due to the scale of potential flooding events.
Council has more resources and means to reduce risk, but there are limits to what it can reasonably achieve.
The wider community provides resources to Council, primarily through rates. Action in this instance would be funding of the activity.
Action by both Council and impacted property owners will benefit the wider community through reducing the cost of emergency response and recovery actions.
The need for separate funding
The impact of Cyclone Gabrielle was significant, damaging or destroying residential and commercial buildings, roading, water, and other infrastructure. Recovery is not a business as usual activity and the Crown recognises that joint funding is needed. The voluntary purchase of Category 3 properties is not significant enough to need a new funding mechanism. Further, community transparency will need to be reduced to protect the privacy of impacted property owners during the negotiation and purchase period.
Impact of funding on four Local Government Well Beings (Environmental, Social, Economic, Cultural)
The cyclone impacted Napier and the region as a whole. Working with neighbouring councils, Napier City Council needs to take a coordinated approach to addressing the damage to our community.
A targeted rate on non-impacted properties was considered. However, as the number of impacted properties is relatively few, there is little benefit in creating a new targeted rate to fund the voluntary purchase of Category 3 properties. An existing general, targeted or uniform rate is the preferred approach.
The use of a fixed targeted rate was discounted for the following reasons:
1. The amount of fixed rates Council can charge is limited to 30% of total rates revenue, excluding water supply or sewerage. Currently 23.75% of rates at NCC are fixed.
2. A fixed rate puts disproportionate pressure on properties that have a lower land or capital value (relative to the average land value or capital value). This results in lower than average value properties receiving a higher than average percentage increase in rates.
3. As noted above, this expenditure benefits the whole community, therefore the best tool to recover the cost is the general rate.
Due to the scope of damage and work required, liability to fund the remediation rests with all of Napier. Future significant weather events put all four of Council wellbeings at risk. Council is not able to fully protect against such risks, and the cost of recovery and remediation will be borne both now, and well into the future.
What do you think? Tell us at sayitnapier.nz or on the submission form included.
YOUR SUBMISSION ON THE AMENDMENT TO THE REVENUE AND FINANCING POLICY
Have your say before 5pm 5 September 2023
We encourage you to complete the form online at sayitnapier.nz or post this form for free: FreePost Authority Number 772273, Amendment to the Revenue and Financing Policy Submissions, Napier City Council, Private Bag 6010, Napier 4142
You can use extra paper if you need to or you can attach a document. By submitting this form to us, you agree to the information in it being shared with an external company assisting us in analysing the submissions. The company will keep this information confidential and it will not be used for any other purpose. Your name and submission will be published, but your contact details will be kept private. Your submission form will be treated in accordance with the Privacy Act 2020. To view our privacy statement visit sayitnapier.nz
Your details
Full name:
Phone number:
Email address:
Address:
Postal address (if different from above):
Are you submitting on behalf of a group/ organisation? If so, what’s its name:
Your feedback
Do you agree with Council being able to fund the purchase of property rights assessed as being in Category 3 through resources such as government funding, general rates, reserves, and loans?
Comments:
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