PALERANG COUNCIL Proposed Special Rate Variation 2016/ /21 Public Exhibition : Draft Long Term Financial Plan and Draft Delivery Program (as amended) 1

Community Meeting Agenda 7.00pmWelcome and Introduction (Mayor) 7.15pmPresentation (General Manager) 7.45pmQuestions 2

Key Considerations “Fit for the Future” (FFTF) benchmarks for long term financial sustainability – Council seeks to meet FFTF benchmarks with the proposed Special Rate Variation (SRV) IPART Assessment report – council assessed as financially sustainable with inclusion of SRV – suggests amalgamation : council resolved to remain as a stand-alone council and progress SRV Community Strategic Plan – funding required to progress community priority projects 3

Proposed Special Rate Variation Purpose The purpose of the proposed Special Rate Variation is to address two issues: – Financial benchmarks that are part of the FFTF program Accounting practices Revenue stream – Council’s ability to deliver on our Community Strategic Plan Maintain existing infrastructure Provide new infrastructure and community facilities 4

What is a Special Rate Variation? A Special Rate Variation is an increase to General Rates in addition to the annual increase by “Rate Peg” as set by the State Government Specific time period Specific purpose Approval required from State Government (IPART) Community awareness 5

Update : Council Resolves to Progress SRV Community submissions to date considered – varying levels of support Long Term Financial Plan and Delivery Program amended to reflect proposed special rate variation (SRV) – Public exhibition of Draft Delivery Program (as amended for SRV) and Draft Long Term Financial Plan (as amended for SRV) – for community comment by 30 January 2016 IPART notified of Council intention to apply for SRV 6

Update : Rate Peg 2016/17 On 4 December 2015 IPART advised that the 2016/17 rate peg has been determined at 1.8% despite an increase of: – 2.4% in employee benefits and on-costs, – 5.1% in other business services costs, and – 3.6% in plant and equipment, Proposed SRV scenarios will be adjusted for rate peg of 1.8% for 2016/17 (remaining years unchanged) as follows : 7

Draft Long Term Financial Plan (as amended) The Draft Long Term Financial Plan as amended (LTFP) reflects Council’s proposed Special Rate Variation with 3 scenarios for the next 10 years: Scenario 1: – based on OPTION 1 “Deteriorate” with no SRV (ie rate peg only) Scenario 2: – Based on revised OPTION 2 “Stabilise” with 7.5% SRV Scenario 3 : – Based on OPTION 3 “Improve” with 9.5% SRV 8

Scenario 1—Base Case (“Deteriorate”) Annual increase limited to estimated 2.5% Rate Peg – Rate increases remain at rate peg – Council remains unsustainable – Assets deteriorate further – Possible service reductions and/or sale of assets – Minimal new works - developer contributions & grants – Loss of autonomy (possible forced amalgamation) 9

Scenario 2—Stability (“Stabilise”) Annual increase of 7.5% (2.5% Rate Peg plus 5% special rate) – Over five years 2016/17 to 2020/21 – To be held permanently in the rates Following this five-year period (i.e. from 2022) the annual increase is limited to the estimated 2.5% Rate Peg. – Improved performance against the financial benchmarks established by the State Government – Improved maintenance of existing assets including roads – No significant upgrades or new assets. 10

Scenario 3—Sustainability (“Improve”) Annual increase of 9.5% (2.5% Rate Peg plus 7% special rate) – Over five years 2016/17 to 2020/21 – To be held permanently in the rates Following this five-year period (i.e. from 2022) the annual increase is limited to the estimated 2.5% Rate Peg. – Meets the financial benchmarks established by the State – Improved maintenance of existing assets including roads – Improvement to assets and services as identified in Community Strategic Plan with projects progressed over next 10 years 11

12 How do we compare?

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What are our options? Don’t have access to business rates as many other Councils Council’s expenses are in line with revenue Expenditure on governance and administration is below average Staff numbers are about 30 less than group average Generating substantial revenue through external work Efficiencies and innovations actively pursued Only remaining option is to improve our revenue stream 17

Why do we need an SRV? 18

What will an SRV deliver? A Special Rate Variation will: Provide the revenue required for financial sustainability. Recover lost income – eg. no indexation on FAGs, road grants below cost increases Improve funding for projects & services identified as high priorities by the community and council. 19

Proposed increases would be permanent It is proposed the increase will be held permanently in the rates – This means that your general rate will increase by 7.5% or 9.5% in 2016/17 and then for each year for 5 years to 2020/21 These increases will then be maintained in your general rate – Your general rate as at 2020/21 will then rise each year from 2021/22 by the rate peg, currently around 2.5% – ‘Permanent’ simply means at the end of the five years of SRV increases, the ending figure is your starting point from that period onwards 20

Impact on median residential rates Note: SRV has no impact on water, sewer or waste charges 21 Median Residential Rate - based on unimproved land value of $248, /172017/182018/192019/202020/21 Annual increase to rates with estimated rate peg of 2.5% $23.06$23.53$24.22$24.83$25.45 Annual cost of an additional 7% rate rise only $64.56$72.30$80.83$90.20$ Year on year increases with 9.5% SRV (2.5%+7%) $87.61$95.94$105.05$115.03$ Weekly increase with 9.5% SRV $1.68$1.84$2.02$2.21$2.42

Impact on median farmland rates Note: SRV has no impact on waste charges 22 Median Farmland Rate - based on unimproved land value of $404, /172017/182018/192019/202020/21 Annual increase to rates with estimated rate peg of 2.5% $45.41$46.54$47.71$48.90$50.12 Annual cost of an additional 7% rate rise only $127.14$142.40$159.18$177.65$ Year on year increases with 9.5% SRV (2.5%+7%) $172.55$188.94$206.89$226.54$ Weekly increase with 9.5% SRV $3.32$3.63$3.98$4.36$4.77

Impact on median business rates Note: SRV has no impact on water, sewer and waste charges. 23 Median Business Rate - based on unimproved land value of $163, /172017/182018/192019/202020/21 Annual increase to rates with estimated rate peg of 2.5% $17.15$17.58$18.02$18.47$18.93 Annual cost of an additional 7% rate rise only $48.03$53.79$60.13$67.10$74.77 Year on year increases with 9.5% SRV (2.5%+7%) $65.18$71.37$78.15$85.57$93.70 Weekly increase with 9.5% SRV $1.25$1.37$1.50$1.65$1.80

Cumulative Impact The cumulative impact over 2016 – 2021 in the 3 scenarios : Scenario 1 : Base case - annual increase by a 2.5% rate peg results in: – a cumulative impact of 13.1% over the five years – median residential rate cumulative increase of $121 pa by 2021 Scenario 2 : Annual increase by 7.5% SRV results in: – a cumulative impact of 43.5% over the five years – median residential rate cumulative increase of $402 pa by 2021 Scenario 3: Annual increase by 9.5% SRV results in: – a cumulative impact of 57.4% over the five years – median residential rate cumulative increase of $530 pa by

Typical rate notice 25

Identified priority projects Projects across the council areas have been identified as priorities to be progressed with a Special Rate Variation: – Roads renewals and upgrades – Town and village renewal and upgrades – Flood works – Improved playing fields – Drainage – Hall improvements – Community development services Not necessarily fully funded by SRV A full list of identified priority projects for the next 10 years is available on council’s website at 26

Consultation Council is consulting with the community to January 2016 to seek feedback and support on this important initiative: – Newsletter and Mayors letter mailed to ratepayers in October 2015 – Website information – On-line survey – Telephone survey – Public meetings October 2015 at various locations across the council area December 2015 – Bungendore December 2015 – Braidwood Amended Delivery plan and amended Long Term Financial Plan incorporating the proposed SRV impacts exhibited for public comment to 30 January

Submissions All property owners and residents are encouraged to provide feedback on the proposed SRV and amended Draft LTFP and Draft DP: – Make a written submission: To The General Manager, Palerang Council, PO Box 348 Bungendore NSW 2621, or Drop in to council offices at Bungendore or Braidwood – – Complete an on-line survey - – Attend public meetings Submissions close 30 January

Next steps Council to review community submissions at its meeting in February 2016 and determine whether to apply for / level of a Special Rate Variation Application to IPART – February 2016 IPART determinations – anticipated May