Matt Cowley Tauranga City Councillor

Yes, that's right – residents' debt will decrease even though Tauranga City Council's debt is increasing.

Council is investing in infrastructure so more housing can be built. New property owners repay us for building the lead infrastructure that services their land. Council essentially acts as a bank until all the new houses are built.

This is what ‘growth pays for growth' means – new property owners pay for the roads, water, sewerage, and reserves that enable them to build on their land. Most of the debt the new council is taking on has revenue streams and does not fall on the general ratepayer.

From our $29 million new carparks in the CBD, to the $60 million water treatment plant and new roads servicing at Papamoa East – most of our new debt has a user-pays revenue source, as shown in the ‘net-debt' graph below. You can see the proportion of ‘blue' ratepayer funded debt is going down.

Source: TCC's Long Term Plan 2015-2025, page 14

Unfortunately, growth does not completely pay for growth. Shortfalls are picked up by the ratepayers. About two per cent of the 3.6 per cent rate rise next year, as shown in the rates table below, is related to the city's growth.

Source: TCC's Long Term Plan 2015-2025, page 13

It's fantastic that some developers choose to build their own roads, pipes, stormwater ponds. But eventually the developer moves on and these assets are ‘gifted' to council to look after. General ratepayers then must fund the ongoing maintenance and depreciation of the ‘gifted' assets.

Today we look after $3.2 billion worth of assets. We expect to be looking after $5 billion worth of assets by 2025.

Each year, we work out how much it takes to run the city, and we divide those costs by each property according to their capital value. We have more properties to spread those costs over each year, but we are also ‘gifted' more assets to look after. This is the key driver of your rates rises.

Growing cities will always have debt, because it would bankrupt some homeowners if we increased rates to fund a $60 million water treatment plant upfront. It's up to the council of the day to ensure debt is sensible.

Feel free to email me your thoughts (matt.cowley@tauranga.govt.nz), call/text me on 027 6989 548, and follow me at www.facebook.com/a.younger.voice.