Draft Annual Plan Engagement and Covid-19 response

    What is Council doing now and why?

    In light of the unprecedented situation we are facing as a result of Covid-19, we have taken stock of the key projects planned in the 2018-2028 Long Term Plan (LTP). The focus now is on ensuring that investment in essential services can continue – things like upgrading our water infrastructure, and services that you would expect in a modern thriving city. We have made some tough choices which include just under $3 million of operational savings.

    Significant proposed changes to the LTP have been put on hold and will be progressed in our Long Term Plan 2021-2031 next year. This includes Three Waters, Naenae pool and fitness centre development, Cycleways and Cross Valley Connections, and proposed changes to funding solutions.

    The financial challenges remain and we will need to review our financial strategy in the next LTP. This is likely to require increased revenue and borrowings to fund our priorities for the city. We will need to work towards finding a financially sustainable solution in the long-term where there is sufficient revenue to match the costs of delivering services for our growing city. A plan will be further developed along with a redeveloped infrastructure strategy and other plans to provide financial stability to our operations and services.

    How has the engagement approach changed because of Covid-19?

    We have delayed making the necessary changes and shortened our engagement process to meet the legal timeframe required for adoption of next year’s Annual Plan. The Covid-19 response is fast-moving, and the social and economic disruptions of lockdown have created uncertainty for people and businesses in our city. 

    Although significantly advanced in our LTP Amendment/Annual Plan process to address infrastructure and financial challenges, Council quickly recognised the impact of Covid-19 and prepared an emergency one-year budget focused on ‘getting us through’. This provides the ability for some key work to continue but on a reduced scale.

    The emergency budget responds to our city’s needs for essential services, enables delivery of year three of the 2020-2021 Annual Plan and increases investment in key areas such as the Three Waters repairs and renewals.

    How has the approach to the proposed rates increase changed?

    Our elected members and council officers clearly stated that we need to lessen the economic and financial impacts on our community. We have reduced costs in line with a reduced rates rise to lessen the impact ahead of final decisions being made in June 2020. 

    The proposed rates revenue rise means less revenue at a time when operating expenditure has increased by $16 million compared to what was originally projected for 2020-2021 in our LTP. Largely due to unbudgeted or higher than anticipated costs for Three Waters repairs and renewals, depreciation and insurance, the review of the District Plan, preparatory work for Naenae Pool, our homelessness strategy, sports initiatives for tennis and gymnastics and the development stimulus package. 

    This is an average increase of $2.35 per week per household or an average increase of $122 per annum. Investment in our three waters infrastructure makes up $84 of the average $122 per annum rise. The remaining $38 covers cost increases for all the other services provided. 

    Crucially, we will stay within the borrowing limits set in our Financial Strategy for 2020/21. The downside is that there is a $9 million projected deficit for 2020-2021 compared to the $4.4 million surplus projected in the LTP. The gap in revenue to meet operational costs will be funded through additional debt as a short-term solution.

    What happens if Council stops the engagement process?

    The infrastructure and growth issues we’re facing locally are not going to go away. Putting off decisions for too long will have a negative effect on services later on.

    As Covid restrictions are lifted it would make the economic impact of Covid-19 worse if council did not continue to invest in infrastructure – particularly the Three Waters. We need to stimulate our local economy as much as we can. We need your considered feedback to decide the best way of addressing the challenges facing all of us at this time. 

    How has Council changed the original engagement plan?

    The information in the plan reflects the proposed one-year emergency budget. We explain the savings made to keep the rates revenue increase as low as possible while still making sure we are able to respond to the opportunities and challenges that recovery will bring.

    Does Council think it’s realistic for ratepayers to keep paying existing rates? How can people cope with a rates increase?

    We recognise that life is going to be more difficult for some of us so we’re proposing an emergency budget as a way forward. This will enable essential services to continue and ensure we are ready to take the opportunities that recovery will bring our way.

    It’s vital that we strike the right balance between supporting the needs of the community  facing financial hardship as a result of Covid-19, without overly burdening our future generations with an inappropriate level of debt and reduce their choices. Council will critically take a prudent approach – one that involves an overall assessment of circumstances, and ensures decision-making recognises the future impact of financial and non-financial consequences of any decision. 

    We’re focused on helping those in our community who are experiencing significant social and economic changes because of the lockdown.  We have implemented a number of responses including:

    Welfare Support

    • Grants to food banks and charities supporting food distribution,
    • Established new Community Resilience Fund of $100k,
    • Council staff at Emergency Operations Centre leading welfare support efforts across the region.

    Rates and charges

    • Promotion of rates rebates,
    • Revision of our rates postponement policy to include small businesses impacted by events like Covid-19,
    • Lobbying to extend rates rebates funding by central government, and freezing recent general property revaluations,
    • Extended payment terms for ratepayers and extending rates postponement policy,
    • No parking charges and library fines.

    Business Support

    • Planning for “shovel ready” projects to provide economic stimulus,
    • Paying Council suppliers within 5 days,
    • Partnering with Hutt Valley Chamber of Commerce and Upper Hutt City Council to provide support to businesses.

    Have you considered a zero rates increase?

    We believe a zero rate increase for next year will have greater detrimental effect on our communities than the increase currently proposed.

    For every dollar we do not get in rates, we must either borrow or reduce our operational spend, or reduce levels of service. Extra borrowing must be repaid and that could add a greater burden in the coming years, or exacerbate the required rates increase in future.

    How has Council reviewed the budget?

    We’ve completed a line by line review of our budget looking at the ways we can reduce costs and therefore the rates rise included in the documents.

    Operational savings of just under $3M have been included in a revised emergency one-year budget while we continue to identify more efficiencies in the coming year.

General questions

    How can I give feedback?

    Fill out the online feedback form

    • If you are unable to give your feedback online, we can take your feedback over the phone. Call us on 04 570 6666.
    • You can write to us at: Annual Plan, Freepost 100039, Private Bag 31912, Lower Hutt 5040.
    • Korero with your Councillors. Your elected representatives will be online - send them a message.
    • We can also speak with your club, group or association. Call us on 04 570 6666 to arrange a time for us to talk to you.

    Why do I have to register to use the site?

    Registering is quick and simple. Your personal details will not appear online.

    Registering helps us because we get to understand who we are engaging with.  Using a registration process instead of anonymous participation can also prevent participants taking over discussions by someone leaving multiple comments to support their own position.

    If you participate, only the user-name you create will appear with any of your comments. If you do want to remain anonymous, do not use your name as a user name. Find out more about using this site.

    What are Long Term Plans and Annual Plans?

    The Long Term Plan (LTP) is Council’s key strategic document.

    It sets out our priorities for the next 10 years, including what we will do, how much it will cost and how we will fund it. It is reviewed every three years to make sure it is still relevant and accurate. The LTP enables Council to make decisions in the context of what is happening in the whole region, its goals and its resources.

    In non-LTP years, Council develops an Annual Plan to reflect any changes to the LTP required for the year ahead.

    The Annual Plan is more operational than the LTP. It includes Council’s annual budget, the funding impact statement for the year, and any minor variations from the current LTP. Our financial year runs from 1 July to 30 June.

    You can view previous Annual Plans and Long Term Plans on our website. 

    How can I find out more information?

    Keep in touch and up to date through our Hutt City Council Facebook and Twitter

    Due to Covid-19 restrictions on printed material, information will primarily be available online for people to engage from the safety of their home. As printed publications become available we will use these to communicate with you.

    When will Council make a final decision?

    Council is scheduled to make final decisions on 30 June 2020.

Naenae Pool and Fitness Centre

    Why isn't Naenae Pool and Fitness Centre included in the Annual Plan?

    We’re committed to reinstating Naenae pool and fitness centre and reinvigorating Naenae town centre. This remains a top priority however we have not agreed a solution as to how it will be funded. We need to complete our next Long Term Plan 2021-2031 to work through all our priorities and resolve the funding of these priorities. This is likely to include higher borrowing costs and rates increases to fund these priorities.

    $1.5M has been put aside in the emergency one-year budget for preparatory work on Naenae Pool and a further $300k is in the draft Annual Plan for CBD activation and activities.

    Council has submitted a “shovel ready projects” proposal to the Infrastructure Industry Reference Group for key capital projects that will reduce the impact of the Covid-19 lock down on the economy and Naenae Pool and fitness centre is one of these projects.

    Do we have to replace Naenae Pool? Aren’t five pools enough for a city our size?

    Council has carried out significant community engagement around Naenae Pool and fitness centre and found there was a lot of support for replacing the pool from Naenae residents and residents across the city.

    Two thirds of pool users came from outside of Naenae, and the pool was also part of a regional network of aquatic facilities and was the home base for many aquatic sports and groups. As well as that, the pool was an important place for the Naenae community to gather, especially young people, and it brought a lot of foot traffic to local businesses. Returning the pool is important for Naenae’s future success. Naenae residents make up about 8-9% of the population of Lower Hutt, with around 8,700 residents in the latest census, so a highly functioning Naenae is a long term investment for the city.

Rubbish and recycling changes

    Why aren’t changes to rubbish and recycling included in the Draft Annual Plan?

    Due to Covid-19 we have delayed consulting on changes to rubbish and recycling until later in the year.

    Subject to consultation we expect that by 1 July 2021 every householder in our city will have some changes to services.

    Rolling out a new system for rubbish and recycling across our city is a big undertaking. We want to introduce a service which is the best it can be and continue to help households to reduce waste.

    We need to make decisions on a preferred system and contract the new service.

    Why is Council planning to ask residents about rubbish and recycling?

    Every year, on average, every person in the Wellington region sends more than 600kg of rubbish to landfill.  We need to overhaul the current system for rubbish and recycling to provide a service to residents that meets your needs. That’s why we’ll be consulting with you as soon as possible on the options available for the future.

    Stopping rubbish entering our waterways and reducing what we send to landfill all helps. We can all help better protect our environment. A rubbish and recycling system that functions well will provide a solid base for improvement.

Financial sustainability

    Why is financial sustainability important?

    To be a thriving city, we need to:

    • Have good basic services provided where and when needed,
    • invest in our assets for future generations and to support growth,
    • nurture our natural environment,
    • work with our communities to be the best we can be,
    • focus our attention on climate change and a sustainable future.

    What’s Council’s role in ensuring financial sustainability?

    Our role is to manage our finances prudently so we ensure our city functions properly, services are available to our community and ensure we thrive as a city.

    What steps has Council taken to manage the budget and keep rates low?

    Council is committed to financial sustainability and has examined all spending and income sources. We are focused on delivering services in the most efficient manner, to ensure we get the best value from every dollar we collect. Ongoing efficiency initiatives include:

    • improved business processes
    • optimising use of technology
    • robust procurement and tendering processes
    • controlling the growth in our core operating expenditure
    • cost reductions reflected in a lower proposed rates increase and $3M of operational savings in the one-year emergency budget.
    •  as per the engagement document and Draft Annual Plan
    • line by line review of Council’s budget in light of Covid-19 to reduce costs.

    If we’re asking our residents to pay more through their rates, we need to be able to demonstrate we can squeeze the most out of every dollar we collect.

    Is Council facing other financial challenges?

    Yes. Three Waters, and maintaining its infrastructure, is fundamental to a functioning city and the wellbeing of residents. Around 60% of the city's water infrastructure needs to be renewed in the next 30 years as its near end of life and absorbs population growth. We also need to plan to make our city’s infrastructure and land use resilient to climate change.

    We have exceeded our 110,000 population target in advance of 2032 while Covid-19 may slow the population growth seen in the last three years,, it will likely return by 2024 resulting in growth of 10-20% in that timeframe.  

    Data and research available demonstrates that comprehensive planning and investment is needed. Failing water systems can no longer be deferred, when doing so puts people and places at risk.

    In the past, funding available was to ensure the asset’s lifespan simply extended. Information shows we can no longer take that approach. Significant investment in underground water infrastructure to improve performance and support growth must be one of our top priorities. By planning for our future we give the city control over the circumstances it faces, rather than becoming a victim of them.

    These important issues will be addressed as part of the Long Term Plan 2021-2031.

    What about Council debt levels?

    Interest rates are at historic lows and our forecasts project borrowing costs ranging on average between 3% and 3.5% over the next ten years. Reviewing debt to revenue limits will be considered as part of developing the Financial Strategy for the Long Term Plan 2021-2031.

    The proposed overall rates revenue rise in 2020-2021 means less revenue at a time when operating expenditure has increased by $16 million compared to what was projected for 2020-2021 in our LTP. This is largely due to unbudgeted or higher than anticipated costs for Three Waters repairs and renewals, depreciation and insurance, the review of the District Plan, preparatory work for Naenae Pool, our homelessness strategy, sports initiatives for tennis and gymnastics and the development stimulus package.

    Crucially, the proposed rates revenue increase means that we will stay within the borrowing limits set in our Financial Strategy for 2020-2021. However on the down side there is a $9 million projected deficit for 2020-2021 rather than the $4.4 million surplus projected in the LTP.

    The gaps in Council revenue to meet ongoing operational costs will be funded through additional debt as a short-term solution.

    What’s included in the one-year emergency budget?

    While preparing the Draft Annual Plan council has made decisions to prioritise Three Waters infrastructure budget requirements. The Draft Annual Plan includes additional operating expenditure across a range of areas:

    • $200k to fix water supply leaks
    • $250k for infiltration issues with the wastewater network
    • $200k for critical asset condition assessment
    • increased bulk water costs of $410k.

    Capital expenditure budget increases include:

    • $2M to enable fast tracking construction of key renewals for water supply and wastewater pipes which are in poor condition, as well renewing a number of critical wastewater pumps,
    • $1.2M for the seismic upgrade of the Seaview Wastewater plant.

    $MLTP year 3 2020/21
    (A)
    DAP 2020/21
    (B)
    Variance
    A-B
    Commentary
    Total capital expenditure74.367.27.1Details are covered below. The most significant change is due to moving $9M for the Naenae Pool that was in the LTP but has been moved to later years.
    Comprising:
    Roading and Accessways19.614.25.4Mainly due to the Riverlink - East Access Route $3.5M projects and Cycleways/Shared Path Eastern Bays $1.9M projects that were included in the LTP but moved to later years.
    Three Waters26.827.5(0.7)Mainly due to additional funding for network renewal of about $3M offset by deferring $2.3M for Trunk Wastewater projects in the LTP.
    Leisure and Wellbeing15.76.69.1Reduction is mainly due to the Naenae Pool project which had $9M in the LTP but has now been moved to later years.
    City Growth6.77.6(0.9)Increase is mainly due to extra funding for Riverlink $2.3m and $0.3M for a Dog Park offset by a reduction in the Urban Growth Strategy budget $1.7.
    Solid Waste4.04.4(0.4)Mainly due to extra funding is for landfill building improvements.
    Other1.56.9(5.4)Mainly due to extra investment in IT of $4M plus $1.3M for Seismic Strengthening work of buildings.


    Operating expenditure has increased by $16M compared to the LTP, largely due to unbudgeted or increased costs. This is how it looks:

    • Three Waters cost $1.8M
    • Depreciation $3.3M
    • Development Stimulus Package $4M
    • Insurance $1.3M
    • District Plan $1.2M
    • Naenae Pool demolition and planning $1.5M
    • Homelessness strategy $520k
    • Hutt Valley Tennis and Hutt Valley Gym Sports get $1M between them
    • Wainuiomata Sportsville $2.7M – removal of planned capital works.
    • Wainuiomata Hub $3.7M – reduction in planned capital works.

    What have you taken out to reflect a lower rates revenue increase?

    We have made operational savings of just under $3 million and have made a number of reductions in the budget.

    • International Co-operating Cities from $45k down to $5k
    • Hutt City Council’s contribution to the Regional Amenities Fund $200k 
    • Suburban Shopping Centre Fund reduced by $50k
    • Biodiversity Assistance for Landowners reduced from $265k down to $200k
    • Reduction of $100k of unallocated community funding for 2020-2021 
    • Community Engagement $250k -Delay implementation of our planned community engagement approach and focus on increasing capability in existing roles to fulfill this function in the interim
    • Roading $200k- Slightly reduced service provision across a number of areas including road reconstruction, minor safety improvements (speed calming, mid-carriageway pedestrian refuges, street and intersection realignments) local area traffic management and carpark resurfacing – only in areas where this can be achieved without compromising safety. 
    • Hutt Valley Gym Sports (HVG) $1.5M - operational grant funding of $0.5M included in the DAP in support of a new option of a redeveloped facility at Fraser Park. The proposal includes Council providing a loan guarantee of $500k to HVG.  This is a budget reduction of $1.5M from the original budget.
    • Hutt Valley Tennis (HVT) $850k - operational grant funding of $500k included in the DAP towards seismic strengthening works. This is a reduction of $850k from the budget in the Annual Plan 2019/20.  
    • Libraries $100k - offering some programmes online and closing the War Memorial Library on Sundays and earlier on weeknights when there is reduced demand for onsite services 
    • Museums $50k - slowing the exhibition programme, moving some programmes on-line and reducing use of casual staff 
    • Pools $100k- Shorten season for three summer pools shortened by three weeks, aligned to times of lowest-use
    • Accommodation $263k - With an increasingly agile workforce, we plan to rationalise our office space and transition more people to hot-desking and remote working, which will decrease the space required for our staff to operate. 
    • Parks $100k - Reduce level of upkeep of some parks and reserves, with focus on areas that are least-used, or where lower-quality is acceptable for planned activities.  

Rates

    What does the Draft Annual Plan 2020/21 mean for my rates?

    To deliver the proposals set out in our Draft Annual Plan 2020-2021 engagement we’re proposing a rates revenue increase of 3.8% for ratepayers, together with an extra 1% of rates funded growth in the rating base (to be confirmed at the end of June 2020). This is a decrease from the originally proposed 7.9% increase reflecting the economic and social uncertainty facing our community and all of New Zealand at this time. Council will make decisions about rates and the other matters proposed in the engagement document in June 2020.

    Why is Council asking for feedback on rates?

    In terms of the draft Annual Plan 2020-2021, and as per Council’s decision to progress a one-year emergency budget, a “light touch” public engagement period is proposed from 8 May to 22 May subject to Council’s decisions on 7 May. It’s important that you have your say on things that affect you. This year we’re asking for your feedback on our approach to get us through this period of uncertainty. We also want to hear your views on how rates are split across different property categories in our city.

    Following the public engagement process, hearings and submission analysis, Council will have the opportunity to make changes to the 2020-2021 budgets at meetings scheduled for 29 May 2020 and 18 June 2020.

    What does the rate rise mean?

    The proposed rates revenue increase is now much lower than previously contemplated. An additional 1% is allowed for growth in rating base but this will not be able to be confirmed until June. 

    An overall 3.8% increase in rates charges for ratepayers equates to an average increase of $2.35 per week per household or an average increase of $122 per annum. Investment in our three waters infrastructure makes up $84 of the average $122 per annum rise. The remaining $38 covers cost increases for all the other services provided by Council. 

    Projected rating impact for average residential ratepayer

    Graph showing rates increase with water supply, waste water and other services included


    What is a differential rate?

    Differential rates are where councils set different rates in the dollar for different categories of rateable land. Councils are able to levy either a uniform rate across all properties, or one or more differential rates.

    Do residents and businesses across Lower Hutt pay the same amount of rates?

    No. Residents and commercial property owners pay a different proportion of our city’s overall rates.

    Over time, there’s been a significant transfer of rates from the business sector to residents. For more information about the rates differential see page 12 of the Engagement Document.


    What is the impact of the proposed rates increase and revaluation changes on properties?

    This rates increase, and the revaluation changes are included in the tables below.

    Due to the three yearly property revaluations completed in late 2019, the average residential property across the city has increased in value from $476,000 to $627,000 (32%), whilst the average central commercial property has increased from $1.38M to $1.69M (22%). As a result individual property rates for 2020-2021 will vary depending on the changes in the property revaluation. The average residential property rates increase will be $122 per annum or $2.35 per week. Of this annual increase 68% or $83.50 relates to the changes to the wastewater and water supply targeted rates. The DAP includes examples of rates on a range of typical properties.

    The DAP includes a proposed change to the rating differential policy. The estimated average increase in table 4 assumes this change in policy proceeds. If this does not happen then the average increase would be $28 p.a. higher.

    The three waters investment and targeted rates impact

    Table 2: DAP targeted rates for 2020-2021 

    Differential2019-2020DAP 2020-2021$ Change and %
    Wastewater – per rating unit $478.50$520.00$41.50    8.7%
    Water supply rate – per rating unit$448.50$490.50$42.00    9.3%


    The revised lower rates revenue results in projected increased borrowing and a delayed balanced budget result. We will need to work through changes to our financial strategy as part of the Long term Plan 2021-2031. This will include working through investment choices and priorities and ensuring we find a funding solution that is financially sustainable in the long term.

    Wellington Water has provided early advice regarding the next LTP that investment needs to double to fund ageing infrastructure and a growing city. So we will clearly have some difficult funding challenges to work through as part of the next LTP.

    As the emergency budget is a one year budget only for 2020/21, all capital projects from 2021/22 onwards are effectively on hold pending reprioritisation and funding solutions through the LTP 2021-2031.


    What is a revaluation and how does it affect my rates?

    Each year, in our Annual and Long Term Plans, we set the rates we need to collect to cover investment in the city and providing the day to day services and facilities needed to keep the city working.  The amount you pay is primarily based on the capital value of your home (the building and the land).

    Every three years ‘Quotable Value (QV)’ reviews the capital value* for all properties in Lower Hutt. And in some cases this means that your home is worth more; however, it also means that you could be paying more rates.

    We have prepared some key information for you. It can be found on the rates and valuations page on our website.

    How does the capital value rating system work?

    At a very basic level, there are three steps:

    1. Council works out how much income is needed in order to run the city.
    2. Some rates income is used for specific things such as drinking water supply. These are called “targeted rates” and are charged only to the properties that use these services. The cost of the service is shared among those properties.
    3. The ‘general rate’ income is collected to fund things that benefit the general good of the city, like roads, community facilities, storm and waste water and parks and sportsground maintenance. 

    The amount of general rate paid by each property is proportional to each property’s capital value compared to the total capital value of the city.

    For example, if there were two properties in the city each worth $500,000 (making the total value of the city $1,000,000), then each house would pay 50% of the general rates required to run the city. This is because each house makes up half of the total value of the city.

    If, when they are revalued, house 1 is still worth $500,000 but house 2 is now worth $750,000, then they would no longer pay the same amount of rates. House 1 would pay less than 50%, and house 2 would pay more, because each pay a share of the rates in proportion to the value of their house compared to the value of the city as a whole which is still $1,000,000. In this case 40% and 60%.

    Pie charts showing how the split of rates change when revaluations happen.

    Following a property revaluation, the proportion Council take in rates revenue stays the same, but the distribution of the rates changes will reflect the revised property values.

    In Lower Hutt the capital value of our homes has increased on average by 31.8% through the September 2019 revaluation.

    So:

    • If your capital value of your home increased by 31.8%, you’ll have an average rates increase.
    • If your capital value of your home increased more than 31.8%, you’ll have a greater-than-average rates increase.
    • If your capital value of your home increased by less than 31.8%, you’ll have a lower-than-average rates increase.

    *The reason we charge rates based on the capital value of homes is viewed as being more equitable – it means that a house with a higher capital value pays more than a house with a lower capital value.

    What ways can I pay my rates?

    There are a few options available - direct debit, online banking, automatic payment or credit card. Council’s preferred option is by direct debit and this can help spread the cost weekly, fortnightly, monthly or on the due date. For more information visit the paying your rates page on our website. 

    Can I get help paying my rates?

    Hutt City Council and the government offer help to ratepayers to subsidise the cost of rates or to get short term relief if you have financial hardship. This is called a rates rebate. 

    We have developed a new rates postponement policy. If you’re having difficulty paying or are over 65 we may be able to help out. We also have a range of payment options available to you.

    See our website huttcity.govt.nz/rateshelp for further details, or call us on 04 570 6666 so our staff can explain the schemes available to you.