South Wairarapa District Council [SWDC] is asking the community how it should pay for the replacement of assets as part of its enhanced annual plan consultation, which launched on April 5.
The council’s preferred option is to manage debt through “cashflow analysis” and only borrow what is needed as it is needed.
This option has allowed the council to keep the total “rates required increase” down by 10 per cent.
It means the council will likely reach its debt limit in the next three years, although SWDC said applying for a credit rating would enable it to increase the debt limit and “provide sufficient headroom for the next 10 years”.
Under this option, the council would continue to fund an appropriate level of depreciation to fund future renewals.
The alternative option for consultation is that the council continues to charge rates to fund both a loan reserve [to pay for existing assets] and depreciation [to pay for future replacement of the assets].
Funding a loan reserve means putting aside rates money over time to pay off debt.
SWDC said it currently saves this money as an investment and uses it to pay off asset loans at the end of the loan period.
“A disadvantage of this approach is that the interest earned on the money being saved as an investment is not as much as the interest being charged on the original loan,” it said in its consultation document.
“It also means that the current ratepayers are bearing an unfair burden by paying for both repayment and replacement at the same time.”
Acting South Wairarapa Mayor Melissa Sadler-Futter said it is important that the community’s views are heard, and encouraged people to “give us their thoughts”.
Consultation for the enhanced annual plan will take place between April 5 and May 5.
The month-long consultation process includes three community workshops, the first of which is at Greytown Town Centre today [Saturday, April 6] from 10.30am to 12 noon.
The Enhanced Annual Plan consultation and supporting documents, workshops, and other community events, information and ways to provide feedback are available on the SWDC website.
-NZLDR
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