Proposed 2014/15 Special Rate Variation - Infrastructure

Local Government Financial Sustainability TCorp (April 2013) assessed Council’s current Financial Sustainability Rating (FSR) as MODERATE with a short term Outlook rating of NEUTRAL TCorp definition of financial sustainability is: “A local government will be financially sustainable over the long term when it is able to generate sufficient funds to provide the levels of service and infrastructure agreed with its community”

Local Government Financial TCorp recommendations to assist in improving Council’s position is to: SOURCE additional revenue, such as Special Rate Variations (SRV) to improve financial flexibility and to assist in reducing the Infrastructure Backlog USE debt funding (loan borrowings) DEVISE programs and strategies to contain rising costs and improve efficiencies

Local Government Financial Sustainability TCorp recommendations to assist in improving the position IMPROVE Asset Management Plans (AMPs) and integration into the 10 Year Long Term Financial Plan (LTFP) INCREASE spending on maintenance and infrastructure renewal, balancing this with the need for capital expenditure on new assets

Local Government Financial Sustainability NSW Local Government Infrastructure Audit Report (June 2013) assessed Council’s infrastructure management as MODERATE Confirmed the large local government infrastructure backlog in NSW Estimated $7.4 billion as at 30 June 2012 (Compared to NSW total rate income 2011/12 $6.8 billion) $4.5 billion (61%) relates to road/bridge assets and $1 billion relates to buildings

Local Government Financial Sustainability Some councils face real and significant challenges in terms of maintaining and renewing the infrastructure Council’s backlog - equates to $ M Includes $6.587 M road related assets Current Replacement Value of the road related assets as at 30 June 2013 totalled - $ M Council’s AMP identifies that Council requires additional funds to sustain the current and expected level of services.

Singleton’s Productivity & Efficiency Improvements Revised organisation structure and reduced number of executive by two positions. New recycling contract in place which has identified $4 million in savings over 10 years. Efficiencies with introduction of technology eg, new website, e-planning, tablets devices. Rationalisation of assets including land disposal and plant and equipment. Reviewing of Council’s Light Motor Vehicle Fleet.

Singleton’s Initiatives to Improve Financial Sustainability Asset Management Planning Traditionally, the focus on infrastructure asset management was provision of new assets However it is becoming more and more apparent that it is no longer sustainable to focus on the investment in the creation of new assets alone Must also recognise long term lifecycle costs of ongoing operation, maintenance and renewal of existing assets

Singleton’s Initiatives to Improve Financial Sustainability Developed asset management Strategy Developed Asset Management Plans for all asset classes Developed a 4 Year Works Program Increased funding through resources for regions for local transport infrastructure Risk based rehabilitation of urban/rural roads Introduced new technology to gain efficiency Reviewed asset management processes Contracted specialist providers to assist e.g. Morrison Low and JRA

NSW Government Initiatives to Reduce Infrastructure Backlog NSW Local Infrastructure Renewal Scheme (LIRS) Helping councils meet the increasing challenge of infrastructure renewal by providing interest subsidy on council borrowings over a 10 year period (Normal term for council has been 15 years) Round One 2012/13 10 Year Loan $2,200,000 for the replacement of Bourkes Crossing 5.35%. Interest $656,234 Subsidy 4% $480,924 Net Interest cost of $175,310

NSW Government Initiatives to Reduce Infrastructure Backlog Round Two 2013/14 10 Year Loan $4,000,000 loan to be raised for road and culvert works. Works program to be finalised shortly. Interest $1,227,000 Subsidy 3% $645,000 net cost of borrowings of $582,000 based on an interest rate of 5.50%

NSW Government Initiatives to Reduce Infrastructure Backlog Round Three 2013/14 (Closes 31 December) Application for infrastructure backlog works Provide a 3% interest subsidy on loans taken out over 10 years for infrastructure backlog works as well as for projects providing infrastructure to enable new housing. Report to Council 16 December 2013 to consider an application for Singleton Regional Livestock Markets for $2.5 million.

Proposed Infrastructure Levy Special Rate Variation will provide additional funds to: 1.Increased heavy patching on local sealed roads $250K 2.Re-sheeting of unsealed road by adding pavement material - $200K 3.Seal unsealed roads where it is value for money - $250K

Expected changes in Infrastructure in 10 years In 10 years time, 5% of our roads will turn into poor condition Good Condition Road Poor Condition Road Wollombi Road, Broke, NSW 2330 Middle Fallbrook Road, Middle Fallbrook NSW 2330

Expected changes in Infrastructure in 10 years Poor Condition Bridge Good Condition Bridge In 10 years time, 10% of our bridges will turn into poor condition Herbert Street Bridge, Broke, NSW 2330 Oak Park Bridge, Middle Fallbrook Road, Middle Fallbrook NSW 2330

Expected changes in Infrastructure in 10 years In 10 years time, 30% of our roads will turn into poor condition Good Condition Unsealed RoadBad Condition Unsealed Road Mount Royal Road, Mount Royal, NSW 2330 Putty Valley Road, Putty, NSW 2330

Transport Infrastructure The Transport Infrastructure network comprises of: km Sealed Roads, 82.6 km Unsealed Roads, 82.8 km Regional Roads, 3997 m Bridges and Major Culverts, m Minor culverts and drainage structures, 21.37km Footpaths & other paved areas, 176.4km Kerb & Gutter, 15 Bus shelters, and 8,827 m2 Sealed Car Parks These infrastructure assets have a replacement value of $ M.

Financial Performance Benchmarks Seven (7) benchmarks applied by TCorp to determine Council’s FSRs * Source - Division of Local Government Comparative Report 2011/12

Average Rate Comparison

Average Rate Comparison 2011/12 – Neighbouring Councils CouncilAverage Residential Rate Average Farmland Rate Average Business Rate Cessnock City$934$1,867$2,789 Dungog Shire$689$1,939$793 Maitland City$865$2,232$4,464 Muswellbrook Shire$630$2,552$1,732 Singleton$669$1,241$1,352 Upper Hunter$576$2,610$974

Scenario 1 – No SVR Apply IPART rate pegging % for 2014/15 Rate peg amount of 2.3% Rate peg announced by IPART December 2013 Generates ordinary rate income of $320,860 pa Income used to maintain existing levels of service or may result in reduction Current budget contributed $880,000 to strategic and capital projects.

Scenario 2 – 5% Single Year Increase above rate peg limit for 2014/15 S508(2) application for a single year 2014/15 Road Infrastructure works Increase to be permanently retained in rate income base Rate peg amount of 2.3% + 5.0% Generates additional ordinary rate income of $700,000 pa

Impact of Levy on Ratepayers Average RateMinister’s Increase 2.3%Minister’s Increase of 2.3% + 5% SRV Annual Increase of SRV Weekly Increase of SRV Residential Singleton$755.87$792.94$37.07$0.71 Residential Rural Residential $1,060.41$1,112.30$51.89$1.00 Residential Village$502.52$527.15$24.63$0.47 Residential Ordinary$745.24$781.84$36.60$0.70 Business Singleton$1,762.87$1,849.23$86.36$1.66 Business Mount Thorley$2,277.91$2,389.51$111.60$2.15 Business Village$866.54$908.98$42.44$0.82 Business Ordinary$981.28$1,029.34$48.06$0.92 Farmland Ordinary$1,352.34$1,418.37$66.03$1.27 Coal Mine$103,930.65$109,009.09$5,078.44$97.66 Coal Rights$1.64$1.68$0.04$0.00

Impact of Levy on Ratepayers Excluding the revaluation impacts the SRV increase will have a minimal impact of less than $1.00 on the average rate assessment. Number of rate assessments – 10,514 Number of pensioner concessions – 1,034 Maximum pensioner concession claim - $425 Ordinary Rates/Domestic Waste Management Service $250, Water $87.50 and Sewerage $87.50 For Residential and Farmland ratepayers who experience permanent financial hardship, the Council’s Hardship Relief Policy may also provide rate relief.

Draft Community Engagement Strategy The Strategy is based on International Association for Public Participation (IAP2) principles of engagement It identifies stakeholder groups, outlines key communications and messages to be released throughout the engagement period and key consultation tools for engaging with the community Council will be able to make an informed decision about whether or not to proceed with an application for a Special Rate Variation, based on feedback from the community

Engagement Timeframe The guidelines for 2014/15 Special Rate Variation and minimum rate applications were released by the Division of Local Government in September. Councils are required to notify IPART in December if they intend to lodge an application for a Special Rate Variation, with the application due in February This is a tight timeframe and means that community engagement needs to take place over the January period as discussed with IPART.

Community Engagement Strategy 9 th December 2013 Council meeting to resolve to undertake community engagement process. 16 th December 2013 Community engagement and statutory public exhibition process commence. Local paper advertising. Displays at Library and Gym and Swim. Social media interaction. 13 th January 2014 Explanatory Newsletter to all households.

Community Engagement Strategy 20 th January 2014 Telephone survey conducted. Local paper advertising. 24 th January 2014 Rates notices and Council newsletter communicate “last chance” opportunity to complete online survey and make submission. 5 th February 2014 Focus groups and community information meeting held - 10am Library Meeting Room

Community Engagement Strategy 6 th February 2014 Focus groups and community information meeting held - 5pm Library Meeting Room. 6 th February 2014 Community engagement and public exhibition close. 17 th February 2014 Council meets to determine whether application will be lodged with IPART.

Council Decision Making Councillor Briefing – 2 nd December Council Meeting – 9 th December 2013 – proposed to resolve to advise IPART of intention to make a formal SRV application in February Council Meeting – 17 th February 2014 – consider community feedback and finalising a formal application to IPART by 24 th February 2014.