City of future debt: Hamilton's $448 million millstone

“Underperforming” Hamilton city may be the city of the future, but it’s also the city of future debt.

The city council’s latest debt projection to June 2012 is $448 million and it must be reduced to a manageable level, according to the Property Council’s Waikato branch.

The Property Council believes Hamilton’s financial situation is perilous due to its “ballooning” debt levels, and in a policy manifesto released today calls for the council to take immediate action.

The Hamilton City Council needs to cut back its “excessive” overspending on non-core business services, sell some council-owned assets and lower development contributions.

The manifesto, Initiatives for Hamilton, recommends a plethora of changes to help Hamilton become the city of the future.

It is a public policy discussion document, made up of 16 recommendations for the city and region.

The Tron is on a rapid growth curve, with population projected to increase from 143,000 in 2010 to about 225,000 by 2044.

Property Council Waikato branch president Graham Dwyer said the council had relied too heavily on a proposed flow of development contributions to alleviate debt and provide infrastructure.

“The lingering effects of recession on the property industry, combined with council overspending and the interest costs on city debt is a recipe for a negative growth cycle, unable to cater for the increased infrastructure and services needed to meet the population growth projected for Hamilton,” Mr Dwyer said, also calling for a review of Hamilton’s rating system.

“A fair rating system is one that achieves balance between the individual and businesses that provide revenue and the cost of providing the services and provisions they need. Those that use those services must pay their fair share.”

Hamilton, the super city

Mr Dwyer said Hamilton needed to amalgamate in the style of Auckland’s super city unitary council.

Amalgamation would help maintain a comparatively strong regional economy and counter the economic dynamism of Auckland.

“If we ignore the super city, we risk standing still while Auckland leaves the rest of New Zealand in its wake,” he said.

“We have always successfully competed against a divided Auckland, but Hamilton and other districts will struggle to attract people and capital against an Auckland that is no longer hamstrung by cross-council litigation and boundary squabbles.”

Other recommendations

The paper also recommends a district plan that encourages sustainable and affordable growth to help revitalise the CBD, with guiding principles that would provide certainty, yet flexibility.

“Hamilton and the wider sub-region need a sensible spatial plan to clarify growth and development nodes across the city, which will provide for economic growth and affordable housing opportunities.

“There is no doubt that Hamilton is underperforming.”

The Property Council’s manifesto:

• Hamilton is underperforming
• The CBD economy has stalled
• Local government is underperforming and consequently, ratepayers are paying more to receive less value for money
• Rating policies and development contributions are biased against development and urban regeneration and are seriously affecting business decisions
• Stakeholders currently do not have a say on how that funding is spent