City freezes rates as COVID impacts start to show

City freezes rates as COVID impacts start to show

Published on 27 April 2020

A freeze has been put on rates and other fees for the 2020-21 financial year, as the City of Hobart braces for the full financial impact of the COVID-19 crisis.

Lord Mayor Anna Reynolds said the freezes of rates was an important step in responding to the needs of the Hobart community during a time of economic hardship and uncertainty.

“We know people are doing it tough and any increase to rates would only cause further hardship,” she said. “We’ve made a decision not to increase rates and most other City fees and charges for the next year.

“This decision is in addition to more than $3.5 million in community support measures that we have already announced, including quick-response grants program, waiving of fees for businesses, rent relief for tenants of City-owned buildings, and extending our financial hardship arrangements to support those most affected by the downturn.”

At tonight’s Council meeting – held online for the first time – a report provided an overview of the City’s response to the COVID-19 pandemic and its financial impacts.

General Manager Nick Heath said the City was not immune to the economic impacts of the pandemic.

“Just as many businesses are feeling the effects of COVID-19, so too is local government,” Mr Heath said. “We are still providing essential services to our community, while facing a significant downturn in income and providing financial support measures to assist those in our community who are experiencing hardship.

“Closing facilities and standing down staff are never actions we would have contemplated or chosen to take, but these actions are necessary if we want to be here for our community as it recovers.”

It has been estimated that the pandemic could cost the City up to $22 million in lost revenue by the end of the next financial year.

“We will end the financial year in a deficit position – how much is not yet clear but expectations are that it could be up to $10 million,” Mr Heath said. 

“We are now re-drafting the 2020-21 budget, taking into account these predictions and the hardship that is being felt across our community.

“This will likely result in deferral of capital works projects or similar impacts on our service delivery, as we reduce our spending across the organisation. But we want to ensure our community that we will do everything within our power to keep our essential services operating at full capacity.

“We have also submitted an application for the state government’s $150 million interest-free loans scheme in partnership with the other three southern metropolitan councils in the hope that we can immediately progress a range of shovel-ready projects.”

City of Hobart’s Community support measures:

No increase to general rates and charges for 2020-21 (exception is fixed service charges for FOGO and recycling, which are determined by actual service costs). Freeze on fees and charges for 2020-21. Interest and penalties will be deferred for ratepayers having difficulty paying the fourth instalment of rates payments for the 2019-20 financial year. Amendment of Rates Postponement Policy to allow rates payments to be postponed if experiencing hardship. Relaxing of parking time limits in 1P and 2P regulated on-street parking zones. Free or discounted parking for hospital staff at the Argyle Street car park. E-Commerce grants to assist local businesses transition to online sales. So far, 40 grants have been awarded. Resilient Hobart grants to support community and creative projects that connect the community. Business and Creative Industries grants to be established with funds previously allocated to Dark MoFo. Rent relief for City’s tenants applied to 11 applicants to date. Waiving of fees such as for outdoor dining and food licences. Establishment of Hobart Together initiative to connect residents with services, information and support.

Financial impacts on City of Hobart:

Up to $6.9 million in reduced revenue expected a 30 June 2020. Up to $17 million in reduced revenue estimated for the 2020-21 financial year, including: 40 per cent reduction in parking revenue 25 per cent reduction in rents 27 per cent reduction in income from business units (eg Doone Kennedy Aquatic Centre) and other fees and charges. Reduction in rates income due to hardship, with modelling indicating a potential shortfall in Quarter 1 of $4.6 million.