Adoption of Amended Rates Remission Policy, Amended Revenue and Financing Policy, and User Fees and Charges (DC No: 184)

35 Adoption of Amended Rates Remission Policy, Amended Revenue and Financing Policy, and User Fees and Charges (DC No: 184) Council Monday 27 June 2016 Objective ID No: A7161333 Tauranga Qty Purpose 1. The Council is presented with the amended Rates Remission Policy (Attachment A), amended Revenue and Financing Policy (Attachment B) and User Fees and Charges for 2016/17 (Attachment C) for adoption. Executive Summary 2. Consultation on changes to the Rates Remission Policy, Revenue and Financing Policy and User Fees and Charges was carried out alongside consultation on the draft Annual Plan 2016/17. Submissions on these topics were considered at hearings. 3. Through the deliberations process no further changes were made to the documents. Minor changes are proposed through this report to ensure clarity. 4. Recommendations are made to adopt the Rates Remission Policy, Revenue and Financing Policy and User Fees and Charges for 2016/17, as presented in the attachments (please note that minor drafting or presentation amendments will be made following adoption). 5. Following Council adoption, the Revenue and Financing Policy will come into immediate effect. Following Council adoption the Rates Remission Policy and User Fees and Charges will come into effect as of 1 July 2016. Recommendation/s That the Council: (a) Receive Report (DCI84) - Adoption of Amended Rates Remission Policy, Amended Revenue and Financing Policy, and User Fees and Charges. (b) Adopt the Rates Remission Policy (Attachment A) with effect from 1 July 2016. (c) (d) Adopt the Revenue and Financing Policy (Attachment B) with immediate effect. Adopt the User Fees and Charges for 2016/17 (Attachment C), with affect from 1 July 2016. Adoption of Amended Rates Remission Policy, Amended Revenue and Financing Policy, and User Fees and Charges (DC No: 184)

Council Monday 27 June 2016 (e) Delegate to Chief Executive Officer the ability to make any necessary minor drafting or presentation amendments after adoption. Rates Remission Policy 6. The Council's Rates Remission Policy enables the Council to acknowledge special circumstances of particular ratepayers, to provide targeted financial relief to community organisations and to provide relief to ratepayers who have excessive water rates due to a leak. 7. Council proposes to retain the Long Term Plan 2015-25 (LTP) decision to change the wastewater remission on schools to 50% in the 2016/17 rating year, reducing by 10% each year until 2021/22 when there will be no remission on wastewater rates for schools. 8. Council proposed amending the wording of the Rates Remission Policy (the Policy) to move remission on wastewater for not-for-profit early childhood centres back to their original categorisation with places of religious worship and Marae. This means the change in school wastewater rates remission will not impact not-for-profit early childhood centres. 9. Council proposed to extend the rates remission for commercial earthquake-prone buildings that are undergoing earthquake strengthening or rebuilding from Tauranga City Central Business District to all commercial buildings in Tauranga City. 10. These changes were publicly consulted on alongside the Annual Plan 2016/17, with submissions considered at deliberations. No changes were recommended as a result of deliberations. 11. The Council is presented with the amended Rates Remission Policy for adoption, with an effective date of 1 July 2016. Revenue and Financing Policy 12. The Revenue and Financing Policy sets out the funding options available to Council for each of the activities of Council. The proposed amendments enable Council to consider a range of options for various issues facing it during 2016/17 and to implement these options if decided upon. 13. The Revenue and Financing lead policy identifies the principles of funding operational and capital expenditure. It identifies operational expenditure as applying to the day to day activities and services of Council. However, there are cases where operational expenditure results in long term benefit in the same manner as capital expenditure. An amendment was adopted for consultation to enable Council, by specific resolution, to fund such operating expenditure from loans. 14. Council has reviewed the Building Services to ensure it continues to meet the requirements for Building Consent Authority accreditation. The main beneficiaries of Building services are those requesting consents and other services. As such the activity is primarily funded by user fees. However, some services provided within the activity provide a wider public benefit. To recognise this potential wider public benefit it Adoption of Amended Rates Remission Policy, Amended Revenue and Financing Policy, and User Fees and Charges (DC No: 184)

3 Council Monday 27 June 2016 was proposed that the Revenue and Financing Policy should be amended to allow up to 10% ofthe Building Services to be rate funded, and public feedback sought. 15. The Historic Village is currently under review. Some of the options proposed within the review include a portion of rates funding. To enable the range of options for the Village to be assessed and implemented during 2016/17 it was proposed that the Revenue and Financing policy be amended to enable rates funding of up to 50% of the costs of this activity, and puldlic feedback sought. 16. Council has previously agreed in respect of Animal Services that 10% of dog control costs would be funded from rates. A small wording change was proposed to the funding of animal services to better reflect this earlier decision. This was included in the Statement of Proposal for public consultation. 17. The proposed changes to enable rate funding within the Historic Village and Building Services activities provide an option for Council when considering future financing of these activities, if user fees are not sufficient. No specific change to the current fully user fee funded basis is being proposed as part of the Annual Plan. 18. These changes were publicly consulted on alongside the Annual Plan 2016/17, with submissions considered at deliberations. No changes were recommended as a result of deliberations. 19. A further minor change is proposed to section 4.6, for clarity, updating a reference to the Council's current bylaw. It has no implication on water revenue, which is collected as a base rate and a volumetric rate, but relates to information about how meters are situated at properties and should be read in conjunction with the Revenue and Financing Policy. 20. The Council is presented with the amended Revenue and Financing Policy for adoption. User Fees and Charges 2016/17 21. Fees and charges are key to ensure that the costs of an activity are suitably contributed to by those that benefit from the service. 22. User fees and charges are updated by staff on an annual basis. Updates reflect changing circumstances, CPI adjustments, new or removed fee requirements, or benchmarking with other Councils. Some user fees and charges are set by government legislation. 23. Fees and charges are based on the 2015/16 financial year and have been increased for the 2016/17 year where appropriate. The majority of changes are a CPI adjustment which is set at 1.6%. 24. Examples of other changes include new fees for the Tauranga Domain athletics track, resource management fees, and Resource Recovery and Waste activity. In the Libraries activity, fees are removed children's overdue items, and the hiring of computers. 25. Changes have also been made for functions under the Building Act 2004. An assessment of Council's fees and charges against other councils' fees and charges identified that there are some services that Tauranga City Council are not currently Adoption of Amended Rates Remission - 3 - Policy, Amended Revenue and Financing Policy, and User Fees and Charges (DC No: 184)

Council 38 Monday 27 June 2016 charging for. Charges for these services have been included in the proposed 2016/17 fees and charges. This will help ensure that the Building Services function of Council remains sustainable into the future. 26. Changes have also been made for functions under the Food Act 2014. Under the Act Council is required to register food businesses, undertake verification activities and compliance monitoring. The Act gives Council the ability to set fees to recover both the direct and indirect costs of these activities. The proposed fees will ensure that the costs are recovered. 27. Council also made changes to the fees and charges for planning activities which include the Councils plan making, resource consenting and monitoring functions under the Resource Management Act 1991. 28. These significant or material changes were publicly consulted on alongside the Annual Plan 2016/17, with submissions considered at deliberations. No changes were recommended as a result of deliberations. 29. Additional fees have been included under Development Works fees (highlighted in blue), to charge for maintenance in lieu of developer maintenance. This provides a new option for developers to pay for maintenance of all plantings and landscaping upfront and for Council to manage the assets at the developers cost. Currently the developer is required to maintain all plantings and landscaping for twelve months, following vesting in Council. The changes provide an additional option and do not remove the current process. The change has the benefit of removing the need for a second handover and Council can ensure that all necessary health and safety is applied to maintenance on Council owned land. The changes are a result of a working party between developers and the Council. The changes were consulted on at each stage and developed/modified to ensure a suitable solution for all parties, including Council. 30. Minor changes have been made under Road Zone Occupation fees (highlighted in yellow). These changes ensure clarity and prevent ambiguity. 31. Minor corrections have also been made to the document. The new charges for Tauranga Domain have been corrected to be expressed as 'per person', not 'per hour' as originally stated. There was also a minor typo in the statement of proposal where the full day charge was reported as 'up to 4 hours' instead of 'up to 8 hours'; this has been corrected. 32. Further corrections have been made to the Parking Fess due to the introduction of an automated system at Spring Street and Elizabeth Street Parking Buildings. The correction includes deleting some existing fees that are no longer relevant and amending fees that include 50 cents. The new system cannot accommodate this size coin. The monthly lease fee has also changed to incorporate the monthly multiple entry fee. 33. Attachment C sets out the User Fees and Charges for 2016/17. Attachment D outlines the current fees and charges, the amended fees and charges and notes the level of change. 34. The Council is presented with the User Fees and Charges 2016/17 for adoption. Adoption of Amended Rates Remission Policy, Amended Revenue and Financing Policy, and User Fees and Charges (DC No: 184)

Council 39 Monday 27 June 2016 Options 35. The Council may wish to amend the Policies or User Fees and Charges, as presented in this report. The level of change may have impacts on the budgets contained in the Annual Plan 2016/17 and put at risk adoption of the Annual Plan by the legislative timeframe. 36. The Council considered the options when deciding to adopt the Rates Remission Policy, Revenue and Financing Policy and User Fees and Charges for public consultation. No significant changes are proposed through this report. Consideration Strategic Context 37. The Revenue and Financing Policy sets the Council's funding options for all of its activities, as such it contributes to Council achieving all of its. 38. The Rates Remission Policy ensures that we are acknowledging how particular circumstances should be considered in rating decisions. This policy contributes to the Community Outcome of being ' '. 39. The User Fees and Charges 2016/17 ensure that the costs of an activity are suitably contributed to by those that benefit from the service. They cover the full range of Council's activities and therefore contribute to Council achieving all of its Community Outcomes. Community 40. Statements of Proposal were prepared and consulted on alongside the Annual Plan 2016/17, for the Rates Remission Policy, the Revenue and Financing Policy, fees for functions under the Building Act 2004, fees for functions under the Food Act 2014, Resource Management Fees, and Tauranga City Council Fees and Charges. 41. The Council considered and deliberated on public submissions received as a result of public consultation. Significance and Engagement 42. Under the Significance and Engagement Policy 2014, these matters are of low to medium significance as they relate to relatively minor changes to policies and user fees and charges, with a limited number of people directly affected and with little budget impacl 43. Consultation has been carried out in accordance with this Policy and in accordance with the relevant legislation, resulting in submissions which were considered alongside deliberations on the Annual Plan 2016/17. Adoption of Amended Rates Remission - 5 Policy, Amended Revenue and Financing Policy, and User Fees and Charges (DC No: 184)

40 Council Monday 27 June 2016 Implementation 44. Following Council adoption, the Rates Remission Policy, Revenue and Financing Policy and the User Fees and Charges 2016/17 will be made publicly available on Council's website. 45. The Revenue and Financing Policy will have immediate effect. The proposed amendments enable Council to consider a range of options for various issues facing it during 2016/17 and to implement these options if decided upon. 46. The Rates Remission Policy and User Fees and Charges 2016/17 will be effective from 1 July 2016. Attachments No. Title Rates Remission Poiicy Objective: ID:A7165853 B Revenue and Financing Policy Objective: ID:A7165853 User Fees and Charges 2016/17 Objective: ID:A7184319 Annotated User Fees and Cliarges 2016/17 Objective: ID:A7167724 Signatories Authors Matthew Leighton; Corporate and Policy Planner Kathryn Sharplin; Financial Controller Jim Taylor; Team Leader: Revenue Authorisers Mohan De Mel, Acting Chief Financial Officer Adoption of Amended Rates Remission Policy, Amended Revenue and Financing Policy, and User Fees and Charges (DC No: 184) -6

Attachnnent A Tauran^aCity Policy Title: Lead Policy: Minute Ref: Date Adopted: 41 COUNCIL SUPPORTING POLICY RATES REMISSION Rating Ml 5/44.7 23 June 2009; updated 31 May 2012; updated 29 June 2015; updated 27 June 2016 POLICY OBJECTIVES To enable Council to acknowledge the special circumstances of particular ratepayers. To provide targeted financial relief to community organisations. Provide relief to ratepayers who have excessive water rates due to a leak. PRINCIPLES The overarching principles identified in the lead Rating Policy apply. DEFINITIONS General rate is a rate that the local authority sets for the general purposes of the local authority. Uniform Annual General Charge (UAGC) is a fixed dollar rate set on each separately used or inhabited part of a rating unit for tne general purposes of the local authority. Wastewater rate is a fixed dollar targeted rate set on the number of water closets and urinals within the rating unit. Ratepayer is the person or persons identified in Council's rating information database as the person liable for rates - generally that person is the owner of the rating unit. Rates penalty is an additional rates charge made when payment is not received by the due date specified. Rating unit is defined in the Rating Valuations Act 1998. It is the block of land which attracts the liability for rates. The main criterion is the existence of a separate certificate of title. Remission means the requirement to pay the rate for a particular financial year is forgiven in whole or in part. Residential means a rating unit whose permitted activity in the Tauranga City Plan is residential, rural or conservation. Commercial means a rating unit whose permitted activity in the Tauranga City Plan is commercial or industrial.

4. POLICY STATEMENT 42 4.1 General Consideration When considering any remission Council will take into account the circumstances at the time the rates are set. 4.2 Remission of Uniform Annual General Charge (UAGC) Council may remit on application the additional UAGC for a separately used or inhabited part of a rating unit where a person is unable to fully utilise the unit's facilities e.g. due to disability and/or age. Utilities owned by Tauranga City Council will receive 100% remission of Uniform Annual General Charges (as such rates would othena/ise be indirectly recovered from ratepayers). 4.3 Remission of General Rates Utilities owned by Tauranga City Council will receive 100% remission of General rates (as such rates would otherwise be indirectly recoversd from ratepayers). 4.4 Rates Penalty In order to provide relief of penalties incurred on unpaid rates where specific events or circumstances have occurred. Council will remit penalties on rates where any of the following apply and a remission application has been received: An agreement has been reached for the ratepayer to make payment within two weeks of the penalty being issued or make regular aulomatic payments to settle all arrears and current rates within the current rating year, and the ratepayer has a good payment history (being three clear years' histor/ without penalty). A bereavement, serious illness or relationship brea<down in the ratepayer's family occurred around the time the instalment was due. The penalty is less than $10.00 for any rates excluding water rates or $2.00 for water rates. An administrative error. The Team Leader: Revenue may remit rates penalties for reasons other than those specified up to $1,000 on any one rating unit. Applications to remit penalties on any one rating unit over $1,000 for reasons other than those specified above are to be decided upon by the Financial Controller. 4.5 Community and Not-for-Profit Organisations In order to provide relief to applicable community and not-for-profit organisations, who deliver social benefits to the community where neither government nor business is best or appropriately placed to do so CouncilvAW allow the following: Land used for a place of religious worship, Marae or no:-for-profit early childhood centres with a non-rateable status under the Local Government (Rating) Act 2002 may be remitted 66.66% of the Wastewater rate.

43 Land used for a place of religious worship or Marae with a non-rateable status under the Local Government (Rating) Act 2002 may receive full remission of the water base rate over the minimum base rate where there is a water meter connection greater than 20 millimetres. Land used primarily for the promotion of sport, art, health, recreation or education and not used for private pecuniary profit may receive a 100% remission on General rates. These organisations must provide evidence of a significant portion of local community voluntary contribution to operations and funding (other than from Government Agencies). This remission will not apply to land used for organisations who are affiliated or who could be affiliated to Clubs New Zealand Incorporated or used for horse racing. Land designated a Maori Reservation under the Te Ture Whenua Maori Act 1993, excluding land used for permanent housing, will be granted a 100% remission on General rates. 4.6 Water Rates Attributable to Water Leaks In order to provide relief to people in situations where water usage is high due to a water leak. Council may remit water consumption rates where all of the following apply: A remission application has been received; and Council is satisfied a leak on the property has caused excessive consumption and is recorded on the water meter; and The leak has been repaired within one calendar month of being identified (unless evidence is provided that the services of an appropriate repairer could not be obtained within this period); and Proof of the leak being repaired has been provided to Council promptly after repair of the leak. The amount of the remission will be the difference between the average consumption of the property prior to the leak, as deemed reasonable by Council, and the consumption over and above that average. Remission is limited to the period where the leak was identified and fixed and the last invoice. Remission for any particular property will generally be granted only once every year. Where a remission for a water leak has been granted to a property under this policy within the last year, the remissi Dn decision is to be made by the Financial Controller. Any remission over 4,000 cubic metres of water is to be referred to the relevant Council Committee for decision. 4.7 Remission for Wastewater Rates Commercial Properties In order to provide relief to commercial ratepayers that choose to install more toilets than required by the building code, Council may partially remit the wastewater rate for commercial ratepayers where the number of toilet pans installed exceeds the number of pans required under the building code.

44 4.8 Remission for Wastewater Rates Schools Land used for an educational establishment which has a non-rateable status under Schedule 1 Part 1 section 6 (a) and (b)(i)&(ii) of the Local Government (Rating) Act 2002 may be remitted 50% of the Wastewater rate for the 2016/2017 rating year. This remission will reduce as follows: 50% of the Wastewater rate in the 2016/2017 rating year 40% of the Wastewater rate in the 2017/2018 rating year 30% of the Wastewater rate in the 2018/2019 rating year 20% of the Wastewater rate in the 2019/2020 rating year 10% of the Wastewater rate in the 2020/2021 rating year 0% of the Wastewater rate in the 2021/2022 rating year 4.9 Remission for Natural Disasters and Emergencies In order to provide relief to ratepayers where a natural disaster or other type of emergency affects one or more rating units' capacity to be inhabited, used or otherwise occupied for an extended period of time, Council may remit all or part of any rate or charge where it considers it fair to do so. Individual events causing a disaster or emergency are to be identified by Council resolution. Council will determine the criteria for the remission at that time and those criteria may change depending on the nature and severity of the event and available funding at the time. Remissions approved under this policy do not set a precedent and will be applied for each specific event and only to properties directly affected by the event. 4.10 Remission for Buildings Undergoing Earthquake Strengthening (CBD) In order to provide relief to ratepayers of commercial properties in Tauranga City that are undergoing earthquake strengthening, including rebuilding, that affects one or more rating units' capacity to be inhabited, used or otherwise occupied for an extended period of time. Council may remit all or part of the general rate where it considers it fair to do so. Applications must be received before 1 July prior to the year when the remission is to apply. If the earthquake strengthening work is over multiple rating year's applicants must reapply before 1 July to be eligible for remission for the next year. 4.11 Exceptions Rates may be fully or partially remitted where the Financial Controller considers that the characteristics of land use, location or special circumstances warrant a remission. Any remission granted under this section is to be reported to the appropriate Council Committee. RELEVANT DELEGATIONS

4 With the exceptions of decisions required to be specifically made by Council (section 4.9) or the relevant Council committee (sections 4.6 and 4.11) or that which is specifically delegated to the Financial Controller (sections 4.4, 4.6 and 4.11), implementation of this policy is delegated to the Team Leader: Revenue. REFERENCES AND RELEVANT LEGISLATION Local Government (Rating) Act 2002 (in particular sections 85 and 86) Local Government Act 2002 Te Ture Whenua Maori Act 1993, Lead Policy: Rating Policy

Attachment B Tauranga City 46 Council Lead Policy POLICY TITLE: REVENUE AND FINANCING POLICY Minute Ref: Date of Adoption: 27 June 2016 The Policy is set out in six sections, with three attachments, as follows: 1. Approach 2. 3. Funding Mechanisms 4. Rating 5. Relevant Delegations 6. References and relevant legislation Attachment A identifies how the principles of the Policy relate to funding the operational expenditure of each activity area. Attachment B provides a list of definitions of terms used in the Policy. Attachment C summarises Types of capital expenditure along with the preferred funding sources, in order of preference. 1. APPROACH The Revenue and Financing Policy sets out how the Council funds each activity it is involved in and why. The Council is required to have this Policy to provide predictability and certainty to customers about the sources and levels of funding. 2. PRINCIPLES In determining how activities are funded the Council is obliged to equitably share the costs of delivering services across different users as well as ensuring equity between current and future generations. In deciding how to fund each activity, the Council considers the nature of the services provided and who benef ts from those services. In doing this, Council takes into account the following princip es; Accessibility - that Council facilities ard services should be accessible to as many people as possible. Affordability - both that Council facilities and services should, wherever possible, be affordable to users and that rates should, to the extent possible, be affordable to ratepayers. Benefit - that those who benefit from a Council facility or service should contribute to the costs of that facility or service, and the period during which the benefits are expected to occur. Objective ID A7167916

47 Exacerbators - that those who contribute to the need for a Council facility or service should contribute to the costs of that facility or service. Legislative - that the funding of operating and capital expenditure shall complywith relevant legislative. - that the funding of operating and capital expenditure should encourage public participation in activities provided through Council facilities and services. - the funding of operating and capital expenditure should take account of the practicalities and efficiencies of the available funding methods. Attachment A shows how the principles above relate to each activity area of operational expenditure (Section 3.1 ofthe Policy). In addition, when considering the appropriate funding for operating and capital expenditure, Council recognises that with regard to the principles above, there are conflicts between principles, and that in practice trade-offs between competing principles will be requirecl. The Council considers that communities throughout the City benefit from those services, and has therefore attempted to undertake a consistent approach to the way it views the beneficiaries and exacerbators ofthese services. The Council also acknowledges the diversity of our communities, and wishes to recognise the different users and needs in its rating structure. This includes targeting funding (whether it be through rates or user charges) to those who generate demand or benefit from Council services, but only to an extent that is considered affordable. 3. FUNDING MECHANISMS Broadly speaking the Council has two types of expenditure: operating expenditure and capital expenditure. 3.1 Operating expenditure (OPEX) is money spent on the on-going day-to-day activities and services of the Council. All operating expenditure will be funded each year in accordance with the adopted Annual Plan and Budget. With regard to OPEX, the following information should be considered; Balanced budget - In accordance with section 100 of the Local Government Act 2002, Council will set each year's projected operating revenues at a sufficient level to meet that year's projected OPEX, except in limited situations where Council considers it pmdent not to do so. Loans Funding Opex - Loans will not be used to fund OPEX, unless it is othena/ise resolved by Council. Interest on reserves - Interest on depreciation reserves and interest on sinking fund reserves will not be used to fund OPEX. Debt retirement - OPEX does not include debt retirement. For the purposes of clarity. Council will nol unless it is othenvise resolved, fund through rates the retirement of debt except as required by the Use of Financial Year Surplus or Deficit Policy or by the Funding Depreciation and Use of Depreciation Reserves Policy. Objective ID A7167916

48 Capital fund - OPEX does not include creation of a capital fund or reserve. For the purposes of clarity, Council will not, unless it is cthena/ise resolved, fund through rates the creation of a capital fund or reserve. Council's policy on funding of operating expenditure (OPEX) on a activity-byactivity basis, and how each activity relates to the Prindples in Section 2 of the Policy, is shown in Attachment A. 3.2 Capital expenditure (CAPEX) is money spent on property, plant and equipment. Property, plant and equipment are tangible assets that are held by the Council for use in the provision of its goods and services (for example: bridges, libraries, swimming pools), for rental to others orfor administrative purposes, and may include items held for the maintenance or repair of such assets. CAPEX is funded in accordance with the type of expenditure that is incurred. That is; New capital expenditure that is not growth-slated; Renewals expenditure; or Growth-related capital expenditure Table 1 below sets out the types of capital expenditure along with the preferred funding sources, in order of preference. New capital expenditure (not growth-related) Renewals expenditure Growth-related capital expenditure Preference 1 Other sources first, where available New Zealand Transport Agency grants (Mainly for Transportation) /\ssel sales Grants from other organisations, including Project Tauranga partners Resen/es Preference 2 Loans Preference 1 Other sources first, where available New Zealand Transport Agency grants (Mainly for Transportation) Asset sales Grants from other organisations, including Project Tauranga partners Preference 2 Depreciation Reserves Preference 3 Loans Preference 1 Other sources tirst. where available New Zealand Transport Agency grants (Mainly for Transportation) Asset sales Grants from other organisations, including Project Tauranga partners Preference 2 Development Contributions,' financial contributions Preference 3 Loans Table 1: Capital Expenditure preferred funding sour::es (in order of preference) A copy of Table 1 is attached as Attachment C. With regard to capital expenditure, the following information should be considered; Development contributions and financial contributions fund capital expenditure over the capacity life of the project (e.g. the number of years until a pipe reaches capacity and a new pipe has to be built) or the planning period for an urban growth area. This is likely to be shorter than the period over which benefits are expected to be provided by the asset resulting from the capital expenditure. Objective ID A7167916

49 In all other cases capital expenditure is funded over a period that is consistent with the period over which benefits are expected to be provided by the assets resulting from the capital expenditure (limited to a reasonable period in the case of perpetual assets such as land). The Council has three categories of capital expenditure spread across its activities: Renewals - Defined as capital expenditure that increases the life of an existing asset with no increase in service level Increased Level of Service (ILOS) - Defined as capital expenditure that increases the service level delivered by the asset. Additional Capacity (AC) - Defined as capital expenditure that is required to provide additional capacity in whole or part under Council's Development Contributions Policy necessary to accommodate growth. 4. RATING When determining a rate Council will seek to reflect the following: Fairness and equity, in that those who benefit contribute to costs and due consideration is given to the ability to pay. Transparency, in that rating is clear and readily understandable. Simplicity and cost-effectiveness; in administration and implementation 4.1 Rating System A Capital Value rating system will be used as the basis for setting and assessing General rates. 4.2 Uniform Annual General Charge Council will charge a Uniform Annual General Charge for each separately used or inhabited part of a rating unit. The Uniform Annual General Charge and targeted rates set on a uniform basis are to be maximised at 30% of total rates revenue in accordance with the Local Govemment Rating Act (2002). 4.3 Targeted Rates Council will use Targeted rates where it considers it is appropriate to rate one or more groups of property to reflect a specific benefit received. Attachment A: Funding of Operating Expenditure by identifies activities where targeted rates are used. 4.4 Differential Rates Council will set General rates differentially only where it considers it is appropriate to rate one or more groups of property to reflect the distribution of benefits received, or costs borne or generated by those groups. Targeted rates may be set differentially where Council considers it appropriate to rate one or more groups of property to reflect the distribution of benefits received, or costs borne or generated by those groups. 4.5 Penalties Council will charge the maximum additional charge by way of penalty for unpaid rates. 4 Objective ID A7167916

4.6 Water Rates 5Q With regard to water rates. Council will charge: a base rate, being a set rate per meter size; and a consumption rate, being a rate per cubic metre of water consumed, pursuant to the Supply of Water Bylaw 2007. 5. RELEVANT DELEGATIONS The implementation of this Policy is delegated to the Chief Executive and/or his/her sub-delegate. 6. REFERENCES AND RELEVANT LEGISLATION Local Government Act 2002: Section 101, 102, 103. Local Government (Rating) Act 2002 Rating Valuations Act 1998 Supporting Policies Debt Retirement Funding Use of Financial Year Surplus and Deficit Funding Depreciation and Use of Depreciation Reserves Development and Financial Contributions City Investment Partnerships Strategic Property Rates Remission Rates Postponement Rates Remission and Postponement on Maori Freehold Land Attachments A: How the principles of the Policy relate to each activity area of operational expenditure B: A list of definitions of terms used in the Policy. C: Types of capital expenditure along with the preferred funding sources, in order of preference. Objective ID A7167916

Tauran^aCity 51 Attachment A to the Revenue and Financing Lead Policv Funding of Operating Expenditure by Activitv This attachment provides information on Council's operating expenditure, including; A table containing an assessment of the activity against the (the table shows only the primary contributions and it is acknowledged that some activities contribute to more outcomes than those shown); and A table showing how the activity assessed against the principles contained in Section 2 of the Revenue and Financing Policy. This analysis assists Council in determining which funding mechanisms are appropriate for each activity. The low/medium/high rating relates to the degree by which each activity conforms to the principles. 1. TRANSPORTATION 1.1 Local Roads Local Roads All residents and visitors to Tauranga benefit from the Local Roads activity. Those contributing to the need for this activity include: Vehicle users Cyclists; and Pedestrians Accessibility Affordability Benefit Exacerbators Legislative Local Roads HIGH HIGH MEDIUM MEDIUM HIGH LOW HIGH Where available, operating expenditure will be funded from grants from other organisations, in particular the New Zealand Transport Agency. This is expected to be

52 approximately 10% to 30% of annual operating expenditure, to the extent that it is funded. User fees will be levied where such fees are possible and practicable. This revenue is not expected to exceed 5% of total operating expenditure. General rates and a small proportion of targeted rates (where a higher level of service has been agreed) will fund the remaining balance. This is expected to be approximately 65-85% of operating expenditure. 1.2 Parking Management Parking All road users benefit from the efficient monitoring and enforcement of parking regulations. Those contributing to the need for this activity include all vehicles parking legally or illegally on Tauranga's roads or in Tauranga's car-parks. Accessibility Affordability Benefit Exacerbators Legislative Parking MEDIUM MEDIUM HIGH HIGH HIGH MEDIUM HIGH Operating expenditure will be 100% funded by user fees (parking fees and fines paid by vehicle-users). Any surpluses or deficits in a particular year will be retained in the activity. Any surpluses may be used to repay debt within that activity. 2. AIRPORT Airport The principal beneficiaries of the Airport activity (and those contributing the need for this activity) are those people who use the Airport as a passenger or for recreational purposes, and

53 those who lease Airport land for business purposes. The city as a whole indirectly benefits economically from the Airport activity. Accessibility Affordability Benefit Exacerbators Legislative Airport MEDIUM MEDIUM HIGH HIGH HIGH LOW HIGH Operating expenditure will be 100% funded by user fees (users and and occupiers of the Airport). Any surpluses or deficits in a particular year will be retained in the activity. Any surpluses may be used to repay debt within that activity. 3. ARTS AND HERITAGE Arts and Heritage The principal beneficiaries of the Art Gallery (and those contributing to the need for the Art Gallery) are those people who access the Art Gallery, either as a visitor or an exhibitor. The Art Gallery is operated by the Tauranga Art Gallery Trust, a council-controlled organisation. The Arts and Heritage activity also provides benefits to the general public of Tauranga and the sub-region. There are no specific individuals or groups that contribute to the need for this activity to a greater extent than others. There are no practical opportunities to implement user fees and charges for these elements. Accessibility Affordability Benefit Exacerbators Legislative Arts and Heritage HIGH MEDIUM LOW LOW HIGH HIGH HIGH With regard to the Art Gallery, at least 20% of operating expenditure will be funded from sources other than rates. Council has indicated that it expects the proportion of nonrates funding to increase over time. The methods used to ensure this target is met are at the discretion of the Tauranga Art Gallery Trust. Opportunities to generate revenue from external sources will be taken. This revenue is not expected to exceed 5% of total expenditure.

54 Except as provided for above, all operating expenditure will be funded from general rates. 4. BAYCOURT COMMUNITY & ARTS CENTRE Baycourt Community & Arts Centre The beneficiaries of the Baycourt (and those contributing to the need for this activity) include those holding or attending events at Baycourt. Accessibility Affordability Benefit Exacerbato rs Legislative Baycourt Communit y & Arts Centre MEDIUM MEDIUM MEDIUM MEDIUM HIGH HIGH HIGH At least 25% of operating expenditure will be funded by user fees (from patrons or exhibitors/performers). No more than 75% of operating expenditure will be funded by general rates. This approach recognises the balance between the need for beneficiaries to contribute to costs and Council's desire to ensure facilities and services are accessible to potential users. A discount system operates to help local not-for-profit organisations and youth organisations access the facilities and services provided by this activity. 5. UBRARIES Libraries

55 The principal beneficiaries of the Libraries activity are those people who use the services and facilities provided by the Libraries. Benefits also accrue to the wider community through the availability ofthe Libraries' resources. Council recognises that there is a significant public benefit accruing from the Libraries activity and that ensuring wide accessibility to the Libraries' resources is very important. Council also recognises that applying direct charges to the Libraries' resources will, in many cases, restrict accessibility to those who currently benefit the most from the activity. Accessibility Affordability Benefit Exacerbators Legislative Libraries HIGH HIGH LOW MEDIUM HIGH HIGH HIGH Council will seek to maximise revenue from sources other than general rates and direct charges on users. Such sources may include sponsorship or grant funding. Council expects that at least 4% of operating expenditure will be funded from sources otherthan general rates. Council expects that no more than 96% of operating expenditure will be funded by general rates. 6. PARKS AND RECREATION Parks and recreation The Parks and Recreation activity includes both outdoor recreation facilities (e.g. sportsfields) and open space and indoor recreation facilities. Open space areas provide benefits to all residents of the city through, for example, the provision of green space, trees, sports grounds, recreational reserves, walkways and so on. Those contributing to the need for the activity include individuals, community groups, and teams wishing to use outdoor sporting facilities. Indoor facilities are managed by Bay Venues Limited a wholly owned CCO of Tauranga City Council. The beneficiaries ofthe Bay Venues Limited activity (and those contributing to the need for this activity) include: Users of Council's indoor sports facilities; Users of Baypark; Users of council's aquatic facilities; Users of Council's community halls and community centres;

5G Users of services provided by Sport Bay of Plenty on behalf of Council; Those organisations who have community share relationships with Council; and Those individuals and organisations who benefit from Council's facilitation Accessibility Affordability Benefit Exacerbators Legislative Bay Venues Limited HIGH HIGH LOW MEDIUM HIGH HIGH MEDIUM The limited opportunities to generate revenue from external users of open spaces and outdoor recreational facilities will be actioned. These include recovering costs for the provision of sports surfaces at a higher than local-level standard, camping at McLaren Falls and other similar services. This revenue is not expected to exceed 15% of total operating expenditure. There are opportunities to charge external users of indoor facilities. These user fees and charges are collected by Bay Venues Limited (including for Baypark, indoor sports facilities, aquatic facilities and community halls and centres) This revenue is retained by Bay Venues Limited and the balance of the cost of running these facilities is paid for by TCC grant funded through general rates. A small proportion of the costs of the Parks and Recreation activity is funded from targeted rates on specified subdivisions. This occurs where a higher level of service has been agreed to for that subdivision. Except as provided for above, this activity will be funded by general rates. This recognises the broad public benefit available from this activity. 7. MARINE FACILITIES Marine Facilities The beneficiaries ofthe Marine activity (and those creating the need forthis activity) include: Commercial and recreational users of wharves, jetties, boat ramps; and the Marine Precinct Leaseholders of land held by the Marine activity. 6

57 Accessibility Affordability Benefit Exacerbators Legislative Marine Facilities MEDIUM HIGH LOW MEDIUM HIGH MEDIUM MEDIUM Operating expenditure will be funded 100% by user fees and charges across the whole Marine activity. Within the activity, the following approaches will be taken: o User fees and charges on commercial users of wharves and jetties will fund 100% ofthe operating expenditure related to wharves and jetties. o o User fees and charges on the Marine Precinct will fund 100% of the operating expenditure related to the Marine Precinct. Other leases will fund the balance of the activity. Any surpluses or deficits in a particular year will be retained in the activity. Any surplus may be used to repay debt within that activity. This activity is to be reviewed in 2015-16. 8. BEACHSIDE HOLIDAY PARK Beachside Holiday Camp The beneficiaries of the Beachside Holiday Camp activity (and those creating the need for the activity) are the users ofthe camp facilities. Accessibility Affordability Benefit Exacerbators Legislative Beachside Holiday Camp MEDIUM MEDIUM HIGH HIGH HIGH LOW HIGH Operating expenditure will be funded 100% by user fees (camp fees) and charges.

58 Any surpluses or deficits in a particular year will be retained in the activity. Any surpluses may be used to repay debt within that activity. A contribution from surpluses will be used to fund the maintenance of Mauao annually. 9. CEMETERIES Cemeteries The beneficiaries of the Cemeteries activity (and those creating the need for the activity) are the families and friends of those using the services of the cemetery and crematorium. Accessibility Affordability Benefit Exacerbators Legislative Cemeteries HIGH HIGH HIGH HIGH HIGH HIGH HIGH Operating expenditure will be funded 100% by user fees and charges. Any surpluses or deficits in a particular year will be retained in the activity. Any surpluses may be used to repay debt within that activity. 10. ELDER HOUSING Elder Housing The beneficiaries of the Elder Housing activity (and those contributing to the need for this activity) are the residents ofthe elder housing units. Accessibility Affordability Benefit Exacerbators Legislative 8

Elder Housing HIGH HIGH HIGH HIGH HIGH MEDIUM HIGH Operating expenditure will be 100% funded by users fees (rental charges on occupants of the elder housing units). Any surpluses or deficits in a particular year will be retained in the activity. Any surpluses may be used to repay debt within that activity. 11. CITY CENTRE 11.1 Local Area Revitilisation Local Area Revitilisation The Local Area Revitilisation activity plans, designs and implements revitalisation programmes for the city centre and neighbourhood centres. The beneficiaries of these programmes (and those contributing to the need for this activity) are the people and businesses located in, or visiting, these areas. Accessibility Affordability Benefit Exacerbators Legislative Participati on Local Area Revitilisa tion HIGH HIGH MEDIUM MEDIUM HIGH HIGH HIGH Where appropriate, operating expenditure is allocated out to the other Council activities that own the assets created in this activity. Except as provided for above, operating expenditure is funded from general rates. 11.2 Transformational Projects 9

Transformational Projects GO The Transformational Projects activity identifies opportunities across the organisation and externally to progress and deliver transformational projects as well as property acquisitions and divestment which can provide significant benefit to the whole city. The beneficiaries of these projects (and those contributing to the need for this activity) are the people and businesses located in, or visiting, these areas. Accessibility Affordability Benefit Exacerbators Legislative Practicalitie s Transfor mational Projects HIGH HIGH MEDIUM MEDIUM HIGH HIGH HIGH Where appropriate, operating expenditure is allocated out to the other Council activities that own the assets created in this activity. Except as provided for above, operating expenditure is funded from general rates. 12. ECONOMIC DEVELOPMENT Economic Development The direct beneficiaries of the Economic Development activity are considered to be the businesses in Tauranga. Indirect benefit accrues to all residents in Tauranga from the direct economic benefits experienced by the business community. Those contributing to the need for this activity include: Tourism-related businesses; Export-related businesses; and Other businesses. 10

Accessibility Affordability Benefit Exacerbators Legislative Economic Developmen t MEDIUM HIGH HIGH HIGH HIGH MEDIUM HIGH All operating expenditure will be funded by rates (predominantly targeted rates on commercial ratepayers). This activity is to be reviewed in 2015-16. 13. SOLID WASTE Solid Waste The principal beneficiaries ofthe Solid Waste activity are the people and businesses who dispose of waste in the city (and those from outside the city who dispose of waste using Council's facilities). Those contributing to the need for this activity include those beneficiaries identified above, together with those who contribute to litter and illegal dumping in the city. Accessibility Affordability Benefit Exacerbators Legislative Solid Waste HIGH MEDIUM HIGH HIGH HIGH MEDIUM HIGH Waste collection and disposal services are 100% funded by user fees and charges. Asset holding costs related to waste disposal are funded by general rates. Where possible. Waste reduction services are funded by grants from other organisations including the waste levy grant from the Ministry for the Environment. It is expected that grant funding will cover between 90% to 100% of total operating costs for waste minimisation projects. Any remaining balance of operating expenditure will be funded by general rates. Recycling facilities provided at Council's transfer stations are funded 100% by fees for disposal of rubbish at the transfer stations. 11

B2 Litter collection, street cleaning, the after-care of closed landfills, and the net cost of holding the future landfill site are all funded 100% by general rates. Where possible, costs related to abandoned cars and "fly-tipping" are recovered from those contributing to those costs. Costs not able to be recovered in such a way are funded from general rates. 14. STORM WATER Storm Water The beneficiaries of the Storm water activity include all people and businesses in the city who would be adversely affected if storm water was not managed appropriately. Those contributing to the need for the activity (to a greater extent than other businesses and residents) include those contributing pollution to the storm water network and those buildings that impact on overland storm water flows. Accessibility Affordabili ty Benefit Exacerbators Legislative Storm Water HIGH MEDIUM MEDIUM MEDIUM HIGH HIGH HIGH Any opportunities to generate revenue from external users will be taken. This revenue is not expected to exceed 5% of total operating expenditure. Except as provided for above, all operating expenditure is funded from general rates. 15. WASTEWATER Wastewater The beneficiaries of the Wastewater activity include all people and businesses in the city who are connected to Council's wastewater system. Those contributing to the need for the activity (to a 12