Council wants change on interest payments

​9 February 2018

Ratepayers will no longer foot the bill for interest payments on loans which help pay for new infrastructure under a proposal being mooted by Waipa District Council.

Waipa wants to make property developers responsible for the interest incurred by the Council when loans are taken out to build infrastructure needed for new developments. Currently, those interest costs are covered by Waipa ratepayers but this policy is inconsistent with that of many other councils around the country.

Waipa mayor Jim Mylchreest said over the next 10 years Waipa expected to need around $190 million to fund growth-driven development. That includes inflation plus $39 million in interest payments.

"Most large development projects across Waipa are loan-funded and at the moment, Waipa ratepayers are paying the interest on those loans, not the developers," Mylchreest said.

"Over the next 10 years, under the existing policy, ratepayers would incur an average 0.6 per cent rates increase every year just to cover those interest payments."

Mylchreest said his Council did not believe the current policy was fair to the wider community. 

"At the moment, Waipa ratepayers are essentially providing developers with large, interest-free loans. We don't think that's particularly equitable; ratepayers don't provide interest-free loans to anyone else."

Under the proposal, if infrastructure for a new development was loan-funded by Council, the developer would be required to cover the interest and inflation costs. But the Council would also commit to reviewing development contributions – the money paid by developers to help fund things like new roads and water services – annually. 

Mylchreest said staff have discussed the proposal directly with developers and he was expecting feedback. It will be formally released for public comment in mid-March as part of Council's draft 10-Year Plan. 

Media enquiries, contact Jeanette Tyrrell 027 5077 599

Page reviewed: 09 Feb 2018 1:43pm