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Tuesday, December 20, 2011

Explanation Of Proposed Rate Variation

Council resolved at the Ordinary Meeting held on 12 December 2011 to advise IPART of our intention to submit an application for a Special Rate Variation.

In considering the report Council also resolved to adopt THREE rate options for the purpose of community consultation based on the following scenarios.

OPTION 1 Rate peg increase and discontinuance of special rates that expire in 2012/13 and 2013/14

2012-13 2013-14 2014-15 2015-16
1 Rate Peg 3.60% 3.00% 3.00% 3.00%
2 Discontinuation of Local Loan 1 -4.31%
3 Discontinuation of Local Loan 2 -3.10%
4 Discontinuation of Environmental Special Rate -2.17%
Sub Totals -0.71% -2.27% 3.00% 3.00%
5 Operational Catch Up 0% 0% 0% 0%
Total Proposed Decrease/Increase -0.71% -2.27% 3.00% 3.00%
Increase Above Existing Rate -0.71% -2.27% 3.00% 3.00%

What will happen if these special rates are discontinued?


1. Council will have no money to increase its capital works program for roads, and will have no money to continue its capital works program for drains, footpaths, parks and reserves unless maintenance and service standards are reduced.

2. Council will not be able to meet its statutory responsibility to maintain community assets.

3. Council will not be financially sustainable into the future.

OPTION 2 Rate peg increase and continuance of special rates that expire in 2012/13 and 2013/14

2012-13 2013-14 2014-15 2015-16 1
Rate Peg 3.60% 3.00% 3.00% 3.00% 2
Continuation of Local Loan 1 to become Special Rate - Roads (Further 10 years) 4.31% 3
Continuation of Local Loan 2 to become Special Rate – Infrastructure (Further 10 years) 3.10% 4
Continuation of Environmental Special Rate (Further 10 years) 2.17%
Sub Totals 7.91% 8.27% 3.00% 3.00% 5
Operational Catch Up 0% 0% 0% 0%
Total Proposed Decrease/Increase 7.91% 8.27% 3.00% 3.00%
Increase Above Existing Rate 3.60% 3.00% 3.00% 3.00%

What will happen if these special rates are continued?


1. Council will have money to support an increased capital works program for roads, and continue its capital works program for footpaths, parks and reserves without severely reducing maintenance and service standards.

2. Council will be able to meet more of its statutory responsibility to maintain community assets.

3. Council will be more financially sustainable into the future.

OPTION 3 Rate peg increase, continuance of special rates that expire in 2012/13 and 2013/14 and an operational catch-up increase to the general rate of 2.0%

2012-13 2013-14 2014-15 2015-16
1 Rate Peg 3.60% 3.00% 3.00% 3.00%
2 Continuation of Local Loan 1 to become Special Rate - Roads (Further 10 years) 4.31%
3 Continuation of Local Loan 2 to become Special Rate – Infrastructure (Further 10 years) 3.10%
4 Continuation of Environmental Special Rate (Further 10 years) 2.17%
Sub Totals 7.91% 8.27% 3.00% 3.00%
5 Operational Catch Up 2.00% 2.00% 0% 0%
Total Proposed Decrease/Increase 9.91% 10.27% 3.00% 3.00%
Increase Above Existing Rate 5.60% 5.00% 3.00% 3.00%

What will happen if these special rates are discontinued?


1. Council will have money to support an increased capital works program for roads, and increase its capital works program for footpaths, parks and reserves without severely reducing maintenance and service standards.

2. Council will be able to meet more of its statutory responsibility to maintain community assets.

3. Council will be more financially sustainable into the future.

In summary, what does this mean?


In basic terms the special variation will seek to extend the special rates that are due to expire in 2012 and 2013, to continue to provide much needed funds for improving infrastructure, continuing our existing environmental programs and funding initiatives identified by the community as priorities during the preparation of the community strategic plan in 2010 and this year.

These funds will be spent on a 10-year program of annual expenditure. For example the draft 10-year budget includes programs for: (Refer to Capital Works Program Below)

Road Reconstruction $300,000
Stormwater Improvements $80,000
Reserves & Bushland Improvements $78,500
Footpaths & Kerbs $30,000
Community Buildings & Facilities $280,000

Impacts on ratepayers are difficult to estimate, as the Valuer General will be issuing new property valuations in early January 2012. This is complicating information that we can provide now, but what we do know is that any potential rate increase will not be consistent with increases, or decreases, in property values, or the 3.6% variation already approved by IPART. Some ratepayers may experience a higher rate increase, while others may in fact see a decrease in rates, depending upon the value of the change in your property value.
Notwithstanding this because of rate pegging Council will only be able to increase its total overall revenue from rates by no more than approximately 9.91% in 2012/13 and 10.27% in 2013/14.
Toward the end of January a calculator will be available on our web site that will allow ratepayers to estimate their change in rates for 2012/13 based on the new valuations and as more information becomes available it will be placed on our website and a newsletter will be circulated in late January with more detailed information.
We will also be conducting community focus groups and undertaking a telephone and internet survey in February 2012, to not only explain the purpose of seeking a special rate variation, but to gauge the level of community support.

Following conclusion and analysis of these processes Council will then determine the content and value of its application.

Please forward any feedback or questions to council@huntershill.nsw.gov.au


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