Central Otago’s mayor is standing by a suggestion to use debt to fund rates rises, which an angry ratepayer facing a 33% hike has labelled an insult.
As reported yesterday, Central Otago District Mayor Tim Cadogan had suggested, during consultation on the Central Otago District Council’s annual plan, reverse mortgages could be used to pay for the proposed average rates increase of 18.4%.
He told the Otago Daily Times he would only propose a reverse mortgage for ratepayers as a last resort.
"I would only ever suggest a reverse mortgage as an absolute last option — when the reality people were facing was being described to me as cutting food or heating when faced with a cost-of-living crisis that rates increases are adding to."
Retiree Stephanie Sommers, of Roxburgh, said the proposed rate increases in her area, on top of existing financial pressures, would leave some people in "dire situations".
Rates on a Roxburgh residential property were expected to increase by about 33%. .
"It’s almost like heart-attack territory," Ms Sommers said.
She attended an annual plan drop-in session in Roxburgh in early May and had made an online submission on the annual plan.
She said at the session she asked Mr Cadogan how people in Roxburgh would be able to afford the rates increase.
"That was when he said ‘oh, well they could get a reverse mortgage’.
"I was so stunned when he said that ... I left the meeting feeling very insulted."
It was inappropriate and "callous" for the mayor to suggest ratepayers put their houses on the line, she said.
"[People] save for years to buy their own home and have their little piece of their dream and then to have to put it into a reverse mortgage situation to help the council get out of their nightmare.
"[It is] helping them get out of their debt situation by encouraging us to get in it."
Trevor Gouldie, of Alexandra, was an accountant with the council for 20 years and had submitted at annual plan deliberations on Wednesday, where he said elected officials had "lost touch with reality".
Speaking yesterday, he told the ODT suggesting ratepayers reverse their mortgages to pay rates was not normal.
"It seems a bit like using a bulldozer to open a walnut."
Reversing a mortgage was a large-scale action which should provide long-term benefit, Mr Gouldie said.
"Tim [Cadogan]’s proposing we should do that for short-term benefit ... it’s not good personal management to do that kind of thing.
"I’m surprised people aren’t up in arms, waving placards and screaming from the rooftops."
The council will vote on the adoption of the annual plan later this month.
