The Southland District Council rates increase is likely to be less than expected this year in response to the impact of COVID-19 on its communities.

The council met via live-streamed video conference yesterday where it agreed to include a 2.65% rates increase in the Draft Annual Plan – less than the 3.27% originally projected in the long-term plan. 

The reduction is made possible by "identification of operational savings", using $1.7 million of roading reserves and an additional $0.4 million from the forestry reserve. This is a "one-off approach" to assist with the potential impact of rates increases on ratepayers, given the effect that the COVID-19 pandemic will have on the economy.

The report considered by councillors yesterday says: "As a result of the pandemic, there will be widespread impacts within our communities including, but not limited to, an increase in unemployment and widespread economic and social disruption anticipated for some time. On this basis, measures have been taken in this Annual Plan to reduce the rates increase to our ratepayers, without compromising the services that Council delivers to the community."

Finance manager Sheree Marrah cautioned that using the reserves to off-set rates may result in a higher rates increase in 2021-22 and following years. 

"By using reserves to off-set rates, Council is not covering all of its operational cost from current years revenue and therefore these will need to be paid from revenue in future years, thus increasing the rates requirement," she said.

Cr Karyn Owen said she was disappointed that no option was given for a 0% rates increase, suggesting perhaps rates increases could wait until the economy was in a stronger position. She also suggested making the most of low interest rates and borrowing money while interests rates were low for the next 12 to 18 months. 

She said she would like to see the council focus on borrowing and spending of reserves to keep the rates increase off of the ratepayer.

"I think it's just going to help with recovery and is just a bit more sympathetic to what our local communities are going through at the moment," she said. 

Mayor Tong agreed with Cr Owen that this was a difficult time for ratepayers but he stressed the importance of getting the balance right between supporting the community and redeveloping the region and the local economy.

"To put something on paper about what a zero percent rates increase would look like would be very difficult," he said. 

Chief financial officer Anne Robson said the council was "very engaged" in discussing options for ratepayers who were struggling financially – such as the potential for a six-month deferred payment if necessary – but all cases would be assessed individually on a "case by case basis".

Cr Rob Scott asked if there were any expenses the council could look at reducing to keep rates low, such as the $900,000 fit-out for the new council office, now that many staff were working from home.

In December last year one of the three buildings that comprise Southland District Council’s headquarters on Forth Street, Invercargill, was rated as earthquake-prone and the council decided to move staff to a temporarily leased premise in the city.

General Manager of Services and Assets Matt Russell said the building was a core service and is "not an exorbitant fit-out at any cost".

"We can't operate as a council if we don't have anywhere to house our staff," he said.

The council also endorsed a reduction of the Te Anau Airport Rate from $128 (incl GST) to $67.69 (incl GST) to be included in the Draft Annual Plan, subject to the agreement of the Fiordland Community Board. 

The reduction would be achieved by extending the airport loan by one year and deferring the 2020/21 airport loan repayment and by funding the interest charge by adding it to the airport loan balance to be repaid over the life of the loan. 

Deputy Mayor Ebel Kremer said there was a significant loan still outstanding on the airport at the time of its construction "in excess of $1 million". 

Councillors Scott and Owen were the only councillors to vote against yesterday’s recommendations. 

As the council is not consulting on the Annual Plan 2020/2021, stakeholders, groups and individuals are encouraged to provide feedback through the council's website, social media sites including Facebook, or www.makeitstick.nz. 

The public also has the opportunity to provide feedback to the council by commenting on live-streamed council or committee meetings during the COVID-19 lockdown, or in person at meetings once the lockdown is lifted.

The full Draft Annual Plan 2020/2021 document will be provided to the Finance and Assurance Committee for its review and formal recommendation on June 22 and it will be presented to the council for adoption on June 23.