Floods push rates rise higher

LOIS CAIRNS
Last updated 05:00 04/06/2014

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Christchurch rates may need to go up an extra 1.7 per cent to cover the estimated $5 million cost of cleaning up after the floods.

Rates were already forecast to rise by an average of 6.5 per cent from next month, but yesterday the city council's finance committee was told they may need to go up even higher because of the unforeseen costs associated with this year's adverse weather.

Christchurch has been hit by severe flooding on numerous occasions this year, leading to unexpected costs for clean-up and remediation work. Those costs are still being tallied up but staff estimate they could be as high as $5 million.

"Any idea how we might cover that?" finance committee chairman Cr Raf Manji asked yesterday.

"No, not at this stage," council corporate finance manager Diane Brandish replied.

She said staff had been looking for savings across the organisation but at this late point in the financial year it was unlikely they would be able to find sufficient to cover the additional costs, meaning the money would have to come from rates.

The council is due to strike next year's rates at the end of this month. Under its draft Annual Plan, the weekly rates bill for the average homeowner in Christchurch was due to jump from $36.38 to $38.74.

If the rates have to go up by a further 1.7 per cent to cover the flooding costs, the average weekly rates bill would jump to $39.36.

In a report presented to the finance committee, staff said they had already used a $6m increase in the dividend paid by the council's investment arm, Christchurch City Holdings, to reduce the size of the council's cash operating deficit but it remained an issue.

The council's operating expenditure for this financial year was expected to be significantly higher than budgeted, mainly because the organisation had spent:

$9m reorganising the council's building control group in the wake of the consenting crisis.

$1.4m on earthquake-related rates remissions and legal costs.

$1m on restructuring the chief executive's office and getting legal advice on the council's earthquake-related insurance claims.

Yesterday Cr Yani Johanson questioned the $9m that had been spent on re-organising the building control team, saying it was an extraordinary amount, particularly as it was still not meeting agreed levels of service.

Under those levels of service the council aimed to get 95 per cent of all building consent applications processed within 20 working days. Only about 72 per cent of residential applications are being processed within that timeframe now, and only 38 per cent of commercial applications.

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Council chief financial officer Peter Gudsell acknowledged the building control reorganisation had been costly but said the council had no control over that as it fell under the purview of the government-appointed Crown manager.

"It seems extraordinary to me we don't have any say," Johanson said.

- The Press

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