Our Financial Strategy explains how we manage Council finances in a way that sustainably promotes our community’s current and future interests.

We review the strategy with each long term plan. Council’s updated strategy aims to balance the need to keep rates affordable and limit borrowing with getting the most out of our capital spending and delivering as much as possible for the community.

Take a look at our Draft Financial Strategy in the supporting information – we want to know whether you think we have the balance right.

Rates cap proposal

Council is proposing to retain the rates cap from the existing Long Term Plan 2021-2031 of an overall increase in rates required each year of Local Government Cost Index (LGCI) plus 2.5% plus growth. This approach acknowledges that Council’s costs (particularly in relation to infrastructure) may escalate above general inflation because of the different basket of goods that drive Council costs. Also, it provides leeway for Council to maintain services to the community, or choose to increase them if public feedback indicates an appetite for this.

Debt cap proposal

Council is proposing to increase its debt cap from 175% to 200% of revenue.

Council is currently in a good debt position with reasonably low debt to revenue levels compared to many councils. Council has assets valued at $2.4 billion and net debt of $208 million (projected for June 2024), and it is projected that by 2034 our assets will be worth $3.8 billion and our net debt $526 million.

The current debt cap (debt affordability benchmark) is that net external debt is not to exceed 175% of revenue.(4) Increasing the debt cap is considered appropriate to provide for the funding of asset renewals, the recovery works from the August 2022 severe weather event, and limit rates rises. Not increasing the debt cap would require a further significant reduction in the capital programme over the Long Term Plan (of at least $65 million). The proposed increase in the debt cap is also affordable, noting that the Local Government Funding Agency (LGFA) sets a maximum debt cap for councils of 280%.

(4) - Net external debt is defined as total debt cash, term deposits and borrower notes. Revenue is defined as cash earnings from rates, government grants and subsidies, user chargers, interest, dividends, and excluding development contributions, financial contributions, vested assets, gains on derivative financial instruments and revaluations of property, plant or equipment.

Council’s financial approach includes rating proposals to transparently fund our services. The key proposals are explained below and included in the Draft Revenue and Financing Policy.

If you want to have your say on these rating proposals – make sure to comment on them through the ‘Other related consultations’ at nelson.govt.nz.

Council is proposing a 'Storm Recovery Charge' targeted rate for the next 10 years to pay off the cost of the recovery from the August 2022 severe weather event.

The total estimated cost of the recovery is $87.2 million, with some of this to be paid for by insurance and central government. That leaves about $60 million for us to pay.

We are proposing a uniform targeted rate of $300 (including GST) which will apply to all separately used or inhabited parts of a rating unit (SUIP) in Nelson. Council already uses the SUIP definition for charging the Uniform Annual General Charge and Wastewater Charges. A rating unit is typically tied to a title of land whereas a SUIP is based on separately occupied portions of a property, e.g., for a separate tenancy, lease, or license. So, the targeted rate would also apply to individual units of accommodation within retirement villages, multi-unit residential properties and individual commercial tenancies as SUIPs within a rating unit. Taking this approach spreads the cost of recovery to a wide group of ratepayers and reduces the charge's annual amount.

We think this is the most transparent way to pay for the recovery. Council is comfortable with setting a uniform rate, rather than a rate based on land or capital value. Council has formed this view following consideration of the impact on ratepayers of the full rating package, including the stormwater and flood protection rating proposal changes below (particularly the proposal for the general flood protection rate to be based on land value).

We need to pay this off over a relatively short period because we expect more natural disasters and intense storm events to come our way in the future. But paying off this debt faster means higher costs in the short term. If we had not been able to get Central Government support the targeted rate would be much higher – approximately $450.

Splitting the stormwater and flood protection targeted rate and changes to flood protection rate

Council is proposing to charge two separate rates – for stormwater and for flood protection.

Currently, we charge a combined rate for stormwater and flood protection as a uniform charge for all ratepayers (excluding most rural rating units, rating units east of the Gentle Annie Saddle and on Saxton Island and Council’s stormwater network). Multiple weather events over the last decade have resulted in an increase in flood protection costs, so as we invest in resilience works it is fairer and more transparent to split the rate into two.

We are planning to extend the flood protection rate to cover the entire Nelson region (excluding Saxton Island ratepayers and Council’s stormwater network) to better reflect the areas benefiting from the flood protection work we are doing. The rate would be based on land value. It would also be fairer if the flood protection work was funded as a land-value rate rather than a uniform charge as larger property owners would pay a fairer share.

The stormwater targeted rate would continue to be set as a uniform charge per rating unit but excluding rating units in the rural zone.

Council is proposing to split Forestry from the Rural category, and not apply the negative 35% differential to the Forestry category land. This would mean forestry land would no longer receive a 35% discount on general rates, while we would continue to make the differential available to other rural ratepayers. This better reflects the downstream costs and impacts of forestry, including on Council’s infrastructure, like roads.

If you want to have your say on these rating proposals – make sure to comment on them through the ‘Other related consultations’.

Also, we are proposing rates remission changes, which are noted below and discussed in the Draft Rates Remission Policy.

Draft Rates Remission Policy changes:

If you want to have your say on these proposed rates remission changes – make sure to comment on them through the ‘Other related consultations'’.

To help show the impact of our financial approach on rates, the rate changes between 2023/24 and the first year of the Long Term Plan, 2024/25, are summarised for a selection of properties on the following page. Please note this is a guide and current as at February 2024. The table is GST inclusive.

The actual proposed rates increase for each property is available at nelson.govt.nz/ratessearch.