Civic precinct IFF levy consultation

How should we pay for the community-funded portion of the future civic precinct - Te Manawataki o Te Papa?

Civic precinct IFF levy consultation

Tauranga City Council is seeking feedback on payment options for the future civic precinct – Te Manawataki o Te Papa. Should we use a levy or rates to pay for the community-funded portion of Te Manawataki o Te Papa?

Community consultation opens on Thursday, 14 September 2023 and will run until 5pm Friday, 6 October.

Take the survey now

The new civic precinct in the city centre will see the development of a library and community hub, civic whare (community meeting house), museum and exhibition gallery on the central city block bounded by Wharf, Willow, Harington and Durham streets. Upgrades to Baycourt and Tauranga Art Gallery, along with associated landscape and waterfront improvements, will also add to a greatly enhanced city centre environment.

Set to be developed over the next five years, the civic precinct will help revitalise the area and make it the economic, cultural and heritage heart of the region.

In July this year, the Commission gave the green light to move ahead with the development and reaffirmed its commitment to cap community rates-funded debt for the project at a maximum of $151.5 million. The additional funds to pay for this $306.3 million project will come from external funding sources, such as TECT’s recently approved $21 million grant and the $12.1 million already received from central Government.

Rather than paying for this through a rate funded loan, Council is proposing to use the Infrastructure Funding and Financing (IFF) Act as an alternative way to help pay for the community-funded portion of the development.

Financing through IFF puts less pressure on Council’s balance sheet and having to potentially re-prioritise and reduce capital investment in infrastructure. It means we can provide certainty that the civic precinct - Te Manawataki o Te Papa has the financial backing it needs to be delivered without risking delays due to financing. The total cost of borrowing would be fixed for 30 years.

The IFF levy also spreads the cost across current and future city ratepayers – ensuring that everyone benefiting from Te Manawataki o Te Papa contributes towards the cost.  

There will be no change to the programme of works for Te Manawataki o Te Papa. Council has approved these projects and if the IFF funding is not in place, they would still go ahead, but would be paid for through rates.

As the draft 2024-34 Long-term Plan assumes the levy will be in place, if it is not approved, debt levels and rates would increase above those to be presented in the draft 2024-34 Long-term Plan, and other infrastructure projects may need to be put on hold. The IFF funding would be subject to Government approval and achieving competitive borrowing terms.

We think the IFF levy is the right thing to do – tell us what option you prefer. 

Next steps

Once our survey closes, we'll have hearings on either the 16th or 17th of October, before deliberations and the decision is made at the Council meeting on 6th November.

FAQ's

What is the difference between paying through rates or a levy?

Rates function in a similar way to a levy, as they are both a way of funding debt. The key difference is a levy allows off balance sheet financing, whereas a rate does not, placing further pressure on Council’s balance sheet. The terms of loan and repayments may be different under each model.

Will we be charged the same amount if it is paid through rates or a levy?

Council has committed to capping the community funded debt to a maximum of $151.5 million. As the terms of the IFF levy are different to the traditional rates debt funding periods, the total amount paid under each model will be different. The IFF levy ensures a consistent amount over a longer period of time and means Council avoid having to repay debt through a higher rate revenue.

When will we be charged and how much will it cost us?

The levy is charged at the same time as your rates. If these projects start in our expected timeframes, the levy for a median value residential property is estimated to be between $107-$128 for residential ratepayers and between $368-$440 for commercial ratepayers when the levy is proposed to commence in 2026.

Is the levy paid through rates?

No, the levy is not paid through rates, but you would see it as a separate line item on your rates bill. This is a levy under a different piece of legislation however ratepayers will receive notice of this in their rates bill and pay this in exactly the same way they choose to pay their rates.

If paid through a levy, will it mean rates don't increase as much?

The draft 2023-34 Long-term plan assumes the levy is in place. However, if the levy is not approved, debt levels and rates would increase above those presented in the draft 2024-34 Long-term Plan. This would then be offset by a removal of this levy, so for the purpose of this consultation the choice is either a levy or a rate for the funding of these projects.

Will the levy increase each year?

The cost of the levy increases at approximately 2% per annum. However, the total debt commitment would be capped to a maximum of $151.5million.

How long will this levy be for?

The levy will be agreed for a 30 year-term.

Who pays the levy?

As the whole city would benefit from these improvements, the levy to finance this investment would apply to all households in the Tauranga region, meaning everyone would contribute fairly to its cost. Initial work has split the share of payment between residential and commercial ratepayers and this will be refined as the proposal progresses.