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Status Quo

Council would keep all of its current housing and have an annualised $2.2 million shortfall that would need to be covered by increased rates or rents or a combination of both.

Status Quo (Keep all)

This option sees Council continuing to own all 377 housing units operate the housing service. Changes in the Residential Tenancy Act have meant the complexity of providing tenancy management services has increased. Should Council retain the service, additional staff resourcing is required.

This option generates an average annual deficit of $2.2 million which would reach $70 million after 25 years (2046). To cover this shortfall, an increase to rates or and increase to rent, or a combination of a rates and rent increase is required. The impacts to rates and rents are shown on the bar below. We have provided two examples of a rates/rent split – if Council selects the split option, the actual split would be based on the benefit and impacts to each party.

The current rent setting formula will have to be changed from 30% of tenant’s income to a percentage of market rent. Because this could be a significant increase for some tenants, the increase could be phased in over a number of years. Until the full increase is applied, the shortfall could be funded through loans, as outlined in Council’s Long Term Plan 2021-31

Pros

  • Key benefits of this option include the relative ease of implementation, retention of housing and land in Council ownership and a higher level of certainty for tenants.
  • It allows Council to retain full control of the asset and tenancy policies.
  • Moving to a subsidised market rent policy will provide predictable income and reduce the administrative requirements that income related rent settings cause.
  • In the case of tenants funding the full costs, financial impact to the ratepayer could be low in the medium term.
  • Retaining the housing portfolio places Council in a position to take advantage of potential opportunities any Local Government reform may provide.

Cons

  • This option does not provide for any additional housing to be built to meet growing demand, or any upgrades to existing housing to meet modern living standards or accessibility.
  • It does not address the issue of the deteriorating condition of the units, and while replacing componentry will extend the life and buys some time, ultimately decisions on full replacement may still be needed in the future. The need to pay for replacements might arise earlier than forecast and this will be challenging given the lack of current cash reserves and the time needed to build these up.
  • While rent increases may potentially be unpopular with current tenants, and in some cases unaffordable, the opportunity for the housing to remain with Council may outweigh these concerns.
  • In the case of ratepayer contribution increasing, the financial impact on ratepayers could be significant on an ongoing basis.

What financial impact will this option have on rate payers and tenants?

Click on the options to fund the annualised shortfall to see how each option impacts ratepayers and tenants.

Disclaimer: Please note this interactive graphic is for demonstrative purposes only. Although the values shown are based on real figures, they have only been provided as an example to show how costs may be distributed under this option. Actual figures are subject to change.

*The Retiree Tenant category includes tenants receiving Supporting Living Payment.

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