Low rates rise hopes washed away by river
Prospects of a low 2 per cent rates rise in Palmerston North, or a chance to pay back $600,000 in debt have been scuttled by the Manawatu River.
The city council has voted to spend $500,000 in the coming financial year to pay one-third the cost of permanently protecting Ashhurst Domain from further erosion.
This would be in addition to $100,000 in emergency works being carried out in an attempt to curb the damage.
The river has been eating away the bank for more than 18 months, with April’s floods accelerating the loss, swallowing up hundreds of metres of bush and tracks.
Mayor Grant Smith said it was ‘‘a bitter pill’’ that the city council was going to have to invest so much in the project.
Talks with Horizons Regional Council and the NZ Transport Agency were about paying equal shares of the $1.5 million plan.
‘‘This is the only way to do it, or more will be washed away.’’
The council would have to contribute its full share in the 2017-18 year, and did not have the option of borrowing because it could not be treated as a capital project.
The council had predicted it would need a total 3.1 per cent rates increase when it went out for public consultation.
At the beginning of the meeting, advised by staff to defer some capital projects to achieve a ‘‘realistic’’ works programme, the increase temporarily looked like dropping as low as 2 per cent.
Most councillors supported Cr Jim Jefferies’ recommendation to pay $600,000 off the city’s debt.
Jefferies said it would reduce a forecast 5.2 per cent increase the following year. It was also an upfront way of making inroads into the $102 million debt that the council expected to be carrying at the end of June.
He said the council had paid off debt in the past using the interest savings from doing less capital work than it said it would.
Finance and performance committee chairwoman Susan Baty said reducing debt would have benefits into the future.
‘‘It will have a flow-on, the same as if you pay off your mortgage early.’’
But the repayment plan had to be pegged back to $130,000.
The combination of the full $600,000 repayment, the $500,000 river work, and other added projects would have meant a 3.5 per cent rates increase.