Waihou Valley Scheme and Piako River Scheme funding systems review

Within this topic:

On this page:

• Why the review is being undertaken
  
• What is being proposed
  
• Would my rates change under this proposal?
  
• The review process that has been followed
  
• Next steps for the review
  
• Reference document
  
• Further information
  

Environment Waikato is undertaking a limited review of the way in which your rates help pay for the Waihou and Piako river and catchment works. These works help manage the catchment, reduce erosion, reduce damage flood flooding and debris, as well as protect your area from flooding by ensuring money is available for flood protection, soil conservation and river maintenance work.

During 2008 considerable effort was put into seeking community feedback on the review issues and then considering these in the development of the draft Statement of Proposal document. This document was then made available for public submissions in September 2008. A formal submission and Council hearing process has been undertaken on the Statement of Proposal during October 2008 to January 2009.

The resulting final Statement of Proposal (310 kb, 44 seconds to download, 56k modem), which outlines the proposed changes to the funding mechanisms for the Waihou and Piako areas, has now been adopted by Council for inclusion into the draft 2009-2019 Long Term Council Community Plan (LTCCP). The draft 2009-2019 LTCCP, which contains all the proposed work activities for Environment Waikato, is now being taken through a public consultative process in accordance with the Local Government Act (2002).

If you would like to submit to the Waihou Piako funding review, please email us.

Why the review is being undertaken

In 2002 Environment Waikato said it would review the Piako rating system after five years. That review has been widened to include the Waihou rating system as the existing rating systems overlap in parts and several issues within the Waihou had been raised that required resolution. Environment Waikato established the terms of reference for this review as part of the development of the 2006-2016 Long Term Council Community Plan, which included the opportunity for public input.

The terms of reference define that the review will be limited to:

• improving consistency of rating for the indirect (community good) elements and whole of catchment issues of the two schemes
• reviewing the complexities of the commercial and industrial rating within the schemes
• reviewing the rating of land within the schemes that is still in its natural state.

The purpose of the review is to address a number of known anomalies with the two rating systems and to improve the equity between ratepayers and provide better consistency across the schemes. This should also simplify the rating and make it more understandable to the community.

In undertaking the review Environment Waikato has received feedback during the early consultation with ratepayers, and the formal consultation process. The final Statement of Proposal incorporates this feedback from those ratepayers and aims to:

1. result in a more equitable, and simplified rating system
2. avoid moving the rates burden significantly from one group of ratepayers to another
3. be consistent with other rating systems for similar flood protection programmes throughout the Environment Waikato region
4. fix recognised anomalies in the existing rating systems.

What is being proposed

Environment Waikato has completed the final Statement of Proposal that outlines a range of proposed changes to the way the Waihou and Piako schemes are funded through targeted rates. These proposed changes relate to HOW the schemes are funded rather than the actual cost of the schemes themselves.

The community asked that the rating system be made more equitable, simpler, and that a number of existing anomalies be fixed. Across both catchments, it is proposed that:

• landowners pay a targeted differential catchment rate based on the capital value of the property,
• residential, industrial and commercial ratepayers in Ngatea, Thames, Paeroa, Waihi and Te Aroha and residential, commercial, and industrial properties in rural areas pay a direct benefit rate, based on the capital value of the property,
• relief is provided to owners of indigenous vegetation or exotic forests over 10 hectares, of the land value portion of the catchment rate.

As a result of these proposals, some other changes are also proposed. They include:

• putting in place a revised rural direct benefit rate (which was previously the existing Waihou rural rate) without the community good (indirect) benefit and community responsibility (contributor) portion.
• undertaking more work within the rivers and streams of the upper catchments of both schemes, particularly in Piako.

The proposal will add $50,000 for additional services in the Piako area, otherwise there will be no additional cost to the schemes.

The final Statement of Proposal and Funding Policy are available in pdf format below:

Final Statement of Proposal
(310 kb, 44 seconds to download, 56k modem)

Waihou Piako – Funding Policy Statement
(349 kb, 49 seconds to download, 56k modem)

Catchment rate

To achieve simplicity, a single overall catchment rate is recommended to reflect both the indirect benefit and contributor components for the different classes in both rating districts. This single catchment rate is to be applied over both the Waihou and Piako catchments.

It was also considered that the level of community good (indirect) benefits received within the two catchments was different by location. Some properties will be located in areas that get fewer community good benefits (employment or transport) from the two schemes. Accordingly, a three class differential is proposed. Introducing the differentials will avoid anomalies which would arise by simply replacing the current complex system with a simple single catchment rate. The differential areas are:

You can view a map of the catchment differentials in the pdf below:

Catchment Rate Map - 3 differential map
(552 kb, 78 seconds to download, 56k modem)

This rate has been applied on capital value as this was considered to be the fairest method. It more closely reflects the community good benefits received by a property, it helps to reduce the complexity of the rating system and produces the smallest shift in rates redistribution. It is also consistent with how rating is applied in the other river schemes of the region.

Other options considered

Other funding options were also considered during the limited rating systems review. Those options included:

1. Rating on the basis of land value. It was considered that land value does not accurately reflect the value of benefits received – either directly, or indirectly.
2. Rating on the basis of land area. It was considered that land area would have put the rating burden unfairly onto rural properties and more extensive burden shifts occur.
3. Options for applying a catchment rate.a. Flat Rate:b. Differentials of 1: 0.8: 0.6

These were rejected because, contrary to what ratepayers advised they wanted, it would result in a significant shift in rating burden; more so than what is proposed.

Residential/Industrial/Commercial rate

For both the Piako and Waihou, the proposed residential/industrial/commercial rate will remain in the direct benefit areas and will be struck on a capital value basis. This will simplify the Piako, provide consistency between the Piako and Waihou and increase the efficiency of the rating system.

The direct benefit only applies to the townships of Ngatea, Thames, Paeroa, Waihi and Te Aroha and residential, commercial, and industrial properties in rural areas.

Relief for indigenous vegetation and exotic forests

The initial consultation supported that rate relief be provided to land that is in indigenous vegetation, including all types of indigenous vegetation, and there was also support that production forestry be included in this category as it provides a catchment benefit in reducing rates of rainfall runoff. Where land is still in its undeveloped state or has reverted to indigenous bush or swamp cover, or has been planted in exotic forests, it is considered to have a neutral effect on rates of rainfall runoff. In addition the land improves the biodiversity within the catchment and retention of this land use is encouraged by council.

It is proposed to provide relief from rating for this type of land, on application, by providing relief from the land value portion of the catchment rate, where any continuous area is greater than 10 hectares and has stock excluded.

Upper catchment management

The level of service provided in the upper Piako catchment has been raised as an issue in the initial consultation. Feedback has requested a service, particularly regarding river and stream maintenance, while others have commented that if they pay rates they expect a service to be provided. The upper Piako is the area included in the proposed catchment 3 differential.

It is therefore proposed to provide a comprehensive river and stream service within the main tributaries of the Piako and Waitoa Rivers in addition to the catchment service already provided. The catchment works are provided on a 35/65 basis where the landowner funds 65% of the cost of works. The proposed river and stream service is to be provided on a cost share basis where the council undertakes and funds the works in the channels, such as removal of trees, and the landowner undertakes and funds the elements of work on the property, such as providing access, disposing of any debris and fencing.

Would my rates change under this proposal?

The estimated cost of the combined Waihou and Piako catchment schemes is $7,128,000 in 2008/09. The proposed changes will add no additional cost to the Waihou scheme, but a 1% increase in costs to the Piako scheme to fund the additional upper catchment works. The proposed changes relate to HOW the schemes are funded rather than the actual cost of the schemes themselves.

The proposed changes do have financial impacts for different groups of ratepayers. In particular, the proposed changes will:

1. mean higher capital valued properties – both urban and rural – pay proportionally higher rates than previously, conversely lower capital value properties will pay less.
2. increase a small portion (2%) of the rates burden in the Piako catchment area.

Any changes to a funding policy will create movements in how the rates are allocated across properties. Efforts have been made during the development of this proposal to minimise such changes whilst ensuring that the proposal is as fair and equitable as possible.

 If you wish to look at how this proposal might affect the rates that your property has, you can view what the rates will be.

What is the cause of changes to your rates?

Under the changes of this proposal the targeted rates in the Waihou and Piako schemes would be made up of three groups:

• rural direct benefit rates
• residential/industrial/commercial direct benefit rates
• catchment rate with differentials

Under the proposal the main drivers for movements in the rates are:

• using capital value for the catchment rate and residential/industrial/commercial rate - this moves rates towards higher value property
• one catchment rate - parts of existing rates are combined to form a single catchment rate, this creates shifts between the lines on your rating notice. The single catchment rate also removes the overlap between the existing two rating systemsTo further understand these changes, see the following document.

Factors creating changes in rates
(109 kb, 15 seconds to download, 56k modem)

The review process that has been followed

The process for undertaking this review began withfeedback from the community about issues within the existing Waihou and Piako rating systems in the years prior to 2006. Environment Waikato listened to those issues and developed the Terms of Reference included in the 2006/16 LTCCP. Initial work was undertaken in 2006 and the project itself was established in 2007. There have been several meetings with the Waihou Piako Liaison Subcommittee and a round of initial consultation with stakeholders and the community was undertaken in April-May 2008. Feedback received from this initial consultation was used to develop and test alternatives for changes to the rating system, and thereby create the draft Statement of Proposal and Funding Policies.

These documents were then made publically available for a formal consultation process.

Project timetable

Formal Consultation Process

A special consultative process has been undertaken from September 2008 – January 2009 as part of the review ( Part 5 – formal consultation process). This has involved making a Statement of Proposal available for public submission and undertaking a Council hearings process at which submitters could attend to present their views.

As a result of this process the Hearing Committees accepted that the Statement of Proposal is based on a rigorous examination of the alternatives, and in particular their impact on the wider philosophy of region wide catchment management. As a result the Hearings Committee accepts the key changes to the rating systems as defined in the Statement of Proposal and only some minor changes to the proposal have been made, but these do not change the key proposals that were put forward.

Although the extent of changes to the Statement of Proposal are minimal, the Hearing Committee noted that considerable effort and cost has been put on the process earlier on to identify and address the issues that have been raised. It is considered this approach has produced a robust proposal, although some submitters may feel their concerns have not been considered.

The issues considered by the hearings committee and recommendations made are contained in the Hearings Report below in pdf format:

Hearings Committee Recommendations on Submissions
(310 kb, 44 seconds to download, 56k modem) 

A technical document that was considered by the Hearing Committee is also available in pdf format below: 

Waihou - Piako Funding Systems Review Targeted Rating Systems Review
(1538 kb, 219 seconds to download, 56k modem) - David Hamilton & Associates Ltd

Next steps for the review

The outcome of the formal consultation process is a final Statement of Proposal and a Waihou-Piako Funding Policy, which outline the proposed changes to the funding mechanisms for the Waihou and Piako areas. These have now been adopted by Council for inclusion into the draft 2009-2019 Long Term Council Community Plan (LTCCP). The draft 2009-2019 LTCCP, which contains all the proposed work activities for Environment Waikato, is now being taken through a public consultative process in accordance with the Local Government Act (2002) from April – June 2009. 

Reference document

The following reference document includes more detailed information on the history and background of the schemes, or browse the summary of the draft proposal or some short questions and answers.

Reference document
(1142 kb, 163 seconds to download, 56k modem)
Summary of draft Statement of Proposal
(440 kb, 62 seconds to download, 56k modem)

Further information

Follow the web links below for further information:

• River and catchment services
• Piako and Waihou flood protection funding review - media release 26 November 2007
• Waihou and Piako River scheme proposed rating changes - media release 5 September 2008
• Waihou and Piako River scheme – funding review – media release 19 February 2009 

If you have any questions please contact Guy Russell on Environment Waikato's freephone 0800 800 401.

Guy Russell
Operations Manager
River and Catchment Services
Environment Waikato
PO Box 4010
HAMILTON EAST 3247