Low rates rise hopes washed away by river

The Tribune (NZ) - - YOUR PAPER, YOUR PLACE - JANINE RANKIN

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.

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