A statement from the Queenstown Lakes District Council yesterday said the council was facing cost increases on many fronts.
Queenstown-Lakes Mayor Glyn Lewers said the council was facing many of the challenges shared by others at this time.
"Rising interest rates, high levels of inflation, staff shortages linked with accommodation challenges and supply issues are all factors affecting our budget, with the cost of running any business increasing.
"Recent building defect and weather tightness claims against the council have also had a significant impact.
"The combination of these conditions has required council to seriously review its capital works programme and service delivery."
The draft annual plan proposed a higher-than-expected rates increase, at an average of 13.6%. The original annual plan, set two years ago, had a planned rate rise of 5.5%.
Because of the impacts of defective building settlements, a highly inflationary market environment and rising interest rates, there was a strong focus on funding, affordability and deliverability. Those factors led to the proposed deferral of $106.7million worth of projects to the 2024-25 year and beyond, a council report said.
More than 20 projects have been deferred, including the $17 million project on the Wanaka water treatment plant, put out to 2027; $10 million on the Quail Rise Reservoir, to 2029; $8.2 million on the Two Mile water treatment plant, to 2025; and the Luggate water supply scheme, which is set to cost $4.5 million and has been pushed back to 2027.
The council had settled late last year with the body corporate of the Oaks Shore apartments, on Frankton Rd, near the centre of Queenstown, which claimed against the council for $163 million for leaky building repairs.
The council previously said the Oaks Shore claim could result in each ratepayer having to pay $305 more in rates each year for 30 years — potentially amounting to $9150 per ratepayer.
The settlement was confidential but council has obviously paid a hefty price.
It indicated in a council report for a meeting next week, the costs for the court settlement had singularly pushed up rates by 4.03% this year.
A dramatic overall increase in interest rates in the last 12 months, with the balance of higher interest costs, contributed an additional 4.5% on top of the impact from building defect claims. Inflation was also hurting and, coupled with growth in operational costs to maintain service levels, it had managed to push up rates by another 4.1%.
Council chief executive Mike Theelen said council was also expected to receive an improved dividend from Queenstown Airport which would help offset some increases to ratepayers.
Under annual plan rules the council does not have to consult, but because of the changes it is putting the annual plan document out for consultation.
It will begin on March 24 and close on April 26.
