Tuesday 24 October 2023
Comrie Board Room
Franklin Local Board
OPEN ADDENDUM ATTACHMENTS
Attachments Under Separate Cover
12 Franklin Local Board Paths Targeted Rate
Franklin Local Board
24 October 2023
When deciding from what sources to meet its funding needs, council must consider the matters set out in section 101(3) of the Local Government Act 2002, see below. This involves elected members exercising their political judgement and considering the proposal in the context of council’s funding decisions as a whole.
101(3) The funding needs of the local authority must be met from those sources that the local authority determines to be appropriate, following consideration of,—
(a) in relation to each activity to be funded,—
(i) the community outcomes to which the activity primarily contributes; and
(ii) the distribution of benefits between the community as a whole, any identifiable part of the community, and individuals; and
(iii) the period in or over which those benefits are expected to occur; and
(iv) the extent to which the actions or inaction of particular individuals or a group contribute to the need to undertake the activity; and
(v) the costs and benefits, including consequences for transparency and accountability, of funding the activity distinctly from other activities; and
(b) the overall impact of any allocation of liability for revenue needs on the community.
The following section considers funding for the proposed additional investment in walking and cycling pathways in the Franklin Local Board area against the criteria in section 101(3) of the Local Government Act 2002.
The community outcomes to which the activity primarily contributes
The proposed Franklin Local Board paths improvement programme plans to invest in pathways in the Franklin Local Board area.
The community outcomes to which the road and footpaths (active networks) primarily contributes to are:
1. Providing safe opportunities for physical activities
2. Reflecting Māori identity in transport network and services
3. Supporting and enabling growth by unlocking development opportunities
4. Making walking and cycling preferred choices
5. Providing sustainable travel choices that mitigate negative environmental impacts
6. Delivering efficient transport networks to support productivity growth
While the proposed additional investment in paths connect to wider regional outcomes they have a large impact within the immediately surrounding area and a small overall impact at a regional level. The proposed additional investment in paths are not identified as priority investments for funding by Auckland Transport. Recovering the costs from the landowners in the immediately surrounding areas is the most appropriate source of funding.
The distribution of benefits between the community as a whole; any identifiable part of the community; and individuals
Users of the new paths will directly benefit from their use. However, as these are public goods there are no mechanisms available to charge users and they should be funded from rates.
Development of the Franklin Regional Connection Plan will generally benefit all Franklin residents.
Properties located near to the paths will benefit most from the availability of the service by providing safe and sustainable transport choices to nearby locations and to the rest of the city via the wider public transport network.
Properties located in the wider Franklin Local Board area will also benefit as they will be relatively near to the new paths, increasing alternative active recreation options. All properties will benefit from an improved urban environment, localised decongestion effect, and reduced air pollution from reduced use vehicles due to mode switching. Although these benefits are likely be very small.
Properties near the paths will receive these benefits uniformly as the opportunity to use these paths is the same. Properties located closer to the paths will have slightly greater accessibility than those further away. As the investment in paths is distributed throughout the Franklin Local Board area it is appropriate for ratepayers of properties located in the Franklin Local Board to fund this service from a local targeted rate.
The period in or over which the benefits are expected to occur
The benefits associated with additional operating expenditure should be met by rates and recover costs from as they are realised.
The assets (walking and cycling paths) to be built with additional funding and the Franklin Regional Connection Plan will deliver benefits over their lifetime. Capital costs should be funded from borrowing to spread the costs of the assets from users through the useful lifetime of the assets.
The extent to which the actions or inactions of particular individuals or as a group contribute to the need to undertake the activity
None of the proposed additional investment in paths is driven by a response to the actions or inactions of particular individuals or groups.
The costs and benefits, including consequences for transparency and accountability, of funding the activity distinctly from other activities
Funding these projects from a targeted rate will improve the transparency of decision making on additional funding. Ratepayers will be able to clearly see exactly how any additional funding they provide is used. This will make it easier for them to express a preference on increased funding.
The use of a targeted rate will also improve accountability for expenditure. If a decision is made to raise additional funding by use of a targeted rate then ratepayers can be confident it will be used for that purpose. Targeted rates can only be spent on the activity for which they are raised.
There are no administrative issues with implementing user charges and targeted rates. There will be small one-off set up costs which can be managed within councils existing budgets and processes.
Consideration of overall impact
Having considered the above criteria, the council needs to consider the proposal in terms of the overall impact on the community. This involves elected members exercising their judgement and considering the proposal in the context of council’s funding decisions as a whole, not just in relation to this activity.
Matters for council to consider as part of this overall political judgement could include:
· The additional targeted rates are unlikely to cause material affordability issues for ratepayers. The average impact will be $52 per separately used or inhabited part of a property per annum (or $1 per week) and increase average residential rates by around 2.0 per cent. A range of existing support options are already available for ratepayers.
· Properties with higher capital value generally have higher household incomes which result in a greater ability to pay. Additionally, business also have a higher ability to pay as they can claim rates as an expense and claim back GST.
· Funding this programme entirely from general rates would constrain council expenditure on other council provided activities. This could lead to less investment in other council services or increases in rates that will impact on the affordability of rates on general ratepayers across Auckland. It would also face future competition for funding in response for changing council priorities.
· There is some uncertainty around the costs of delivering all of the proposed investment in paths, particularly for the later years of the programme. The full delivery of this programme anticipates significant savings from community led delivery. If costs change or the full extent of savings cannot be made from community led delivery then this may require prioritising of investment within the programme to maximise outcomes, the reduction in scope of the investment, or increased rates revenue requirement.
Funding the Franklin Local Board paths investment programme from a targeted rate is fair while at the same time providing increased transparency and accountability around how funding raised will be spent.
Funding the programme from general rates is not recommended given the financial pressures the council is currently facing and the potential that this will result in competition for council funding in the future if council priorities change. It will also assist the community and decision makers to consider the trade-offs between the proposed investment and the impact on rates.
Investment in paths infrastructure is a public good. However, as the additional investment is above council baseline investment from general rates, and is occurring only in the Franklin Local Board area, then it is appropriate that the targeted rate be set only across properties in the Franklin Local Board. Charging the targeted rate as a fixed charge rate aligns with how the benefits of the investment accrue. This will result in slightly higher percentage rates for ratepayers in lower valued properties and slightly lower percentage rates increases for higher valued properties.
The targeted rate should seek to recover the costs of the programme over a 10-year period to align with the timing of the investment over the period of the 10-year Budget.