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Thursday, March 31, 2011

Council braces for less money

Council braces for less money

Last updated 05:00 01/04/2011
The February earthquake has cut millions of dollars from the Christchurch City Council's coffers, but ratepayers have been assured this year's rates rise will be kept to an "acceptable level".

Running a deficit and deferring major projects, such as a new bus exchange, are options being considered as the council faces a massive upheaval in its budget.

Councillors yesterday scrapped a proposed earthquake levy, but the $45 million bailout of AMI Stadium owner Vbase is still in the draft annual plan, which has to be reworked because of the February 22 quake.

Council chief executive Tony Marryatt said he was aiming to recommend a rates increase of between 3 and 5 per cent for 2011-12, compared with the pre-quake proposed increase of 5.32 per cent.

He said staff were still estimating the loss of rating income because of widespread damage to homes and businesses.

Staff would recommend a reduced rates requirement to account for "the reduced value of the city", ensuring that any rates increase would be at an "acceptable level".

After the September quake, the council estimated a $6m loss of rates income, but February's quake caused much more damage, particularly to commercial buildings.

The closure of the central city also caused a big drop in parking revenue, which provided $6m a year to the council.

Asked if the income losses could lead to the council running deficits, Marryatt said: "It might be that we run a deficit for a few years. That's not what I'm sitting here proposing, but that is an option."

Savings would be made by deferring some major capital projects, which normally were funded for about $90m a year.

"The best example would be the underground bus exchange. What's the point of starting that this year when the CBD has got to be rebuilt?" he said.

Councillors yesterday agreed to seek a Government order-in-council that would allow the council to circumvent usual requirements for its annual plan.

The proposed order-in-council would allow the council to update the plan throughout the year to include any "unforeseen changes" and would exempt it from the requirement to report on some of its performance levels.

The staff report on the order-in-council recommended removing the public consultation process entirely because of the need to prepare a plan by the end of June.

However, councillors approved an amendment to allow the public to make written submissions on the draft plan before it was approved in June, while community boards would be allowed to make oral submissions to councillors.

Plans for a $52 earthquake levy have been shelved, but the $45m lifeline to help service venue manager Vbase's debts would still be included.

The meeting was the first to be held since the quake and opened with a moment of silence for those who died.

Environment Canterbury (ECan) commissioners were told yesterday that the quake could wipe $5 billion off Christchurch's capital value, which could cost the regional council more than $3m a year in rates.

ECan's acting director of finance and corporate services, Mark Vermeeren, said the assessment was based on figures from the Government and the city council and should be treated as a worst-case scenario.

ECan staff have estimated that 10,000 houses, worth an average of $380,000, will be demolished, while 635 commercial buildings, with a total commercial value of $1.2b, will be demolished.

The $5b estimate is just over 7 per cent of Christchurch's "equalised" capital value before the quake of about $69.7b. Capital values are "equalised" because rating areas are valued at different times.

- The Press

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