Blacktown City Council. Wayne Rogers Director Corporate Services

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1 Blacktown City Council Wayne Rogers Director Corporate Services

2 My experience 22 years in Local Government finance sector Since 2011 Director Corporate Services at Blacktown City Council 2005 to 2011 Manager Corporate Finance at Blacktown City Council 2002 to 2005 Manager Financial & Risk Management at Blue Mountains City Council 2000 to 2002 Manager Financial Planning at Hawkesbury City Council 2

3 Overview of Blacktown LGA Second largest local government area in NSW by population Current population of 348, % of the population below the age of 30 Projected population of 500,000+ by suburbs Wide cultural and social diversity 3

4 Revenue challenges 1. Increased operating costs Services / maintenance 2. Asset renewal Replacing existing aged infrastructure 3. New infrastructure in new release areas 4. New iconic infrastructure Debt Rates S94 4

5 Increasing operating costs Rising community expectations Rising safety / environmental standards Cost shifting 5

6 Sources of revenue 2003 to 2015 Biggest increase S94 contributions 2nd highest user fees and other revenue 2nd lowest increase rates Lowest increase - grants 6

7 Rates Council s largest revenue source Simple rating structure Minimum rates (2016/17 - $918) Pensioner rebate Mandatory $250 + further voluntary $200 One Special Rate Variation to fund asset renewal 2014/15 4.4% $5.6 million 2015/ % $2.8 million 7

8 Rates critical variables Rate pegging limit Rate of growth newly rateable properties Policy decisions Pensioner rebate Choice of rating structure Disciplined senior rates officer Minimise leakage Maximise growth revenue 8

9 Rates and charges Rate pegging 1977 Average rates 1966 $ $287 $443 $572 $727 $988 9

10 Rate pegging limit Single biggest impact on total rates revenue 1% = $1.5 million (or staff) SRV purpose was only asset renewal Limits any ability for value capture 10

11 Rating structure Minimum rates Maximise revenue from infill development Additional rates per unit Current minimum rate - $918 Ad valorem rate - $153 Land valuation Choice of unimproved or improved value 11

12 Rates growth new rateable properties Greenfield Northwest Growth sector Approximately 50,000 new lots Consequential cost new service Brownfield In-fill development Increase population/density also requires increased services 12

13 Rates exemptions (leakage) Schools Churches Charities e.g. community housing Government e.g. RMS Granny flats 13

14 Rates conclusion End rate pegging Allow option for valuation change Minimise leakages from rates exemptions 14

15 User fees and charges Not all fees are discretionary To obtain same increase from 1% rate rise needs 10% increase in discretionary fees and charges Difficulty to increase fees more than 10% in a year Many government services run at a subsidy e.g. public transport can be more than 50% subsidised Therefore, not always practical to increase user fees and charges 15

16 Financial Assistance Grant Reduction in our FAG due to indexation freeze and calculation change In 2016/17 our total FAG is down $4.6 million (20%) Urban councils also have financial challenges 16

17 Land value capture taxes Current rating system does not support this Extensively used in the U.S. (TIF) why not in NSW? Positive enable funding of transport infrastructure Negative can full cost of infrastructure be recovered from TIF Our sector should advocate positives of value capture 17

18 Section 94 Contributions Since 2010, Greenfield cap of $30,000 Since 2010, community infrastructure funding prohibited State Government funds the gap (approx. $30,000 per lot) Rising cost of land: land 34% / works 66% land 52% / works 48% Average Section 94 contribution is approx. $75,000 per lot 18

19 Section 94 cap v total contribution $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $ LIGS Section 94 19

20 Overall revenue LIGS v S94 140,000, ,000, ,000,000 80,000,000 60,000,000 40,000,000 20,000, / / / /16 LIGS Section 94 20

21 Community infrastructure cannot be funded from S94 We have no guaranteed funding source for community facilities / buildings serving future 140,000+ residents Community resource hubs and halls (including libraries) New aquatic centres Upgrading Riverstone Pool 21

22 What the exclusion of community infrastructure funding means for Council Estimated cost of facilities - $140 million Possible funding options External debt Increased user fees and charges Service cuts Increased rates 22

23 Community infrastructure funded through rates New properties (54,000) will be levied increase when created Rate increase Weekly $7.21 Annual $ % increase on minimum residential rates Rate increase for a defined payment term of 10 years per ratepayer 23

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