The overall costs of providing the water service are traditionally distributed between the day-to- day operational expenses and the capital costs of developing, improving and renewing the infrastructure Operational Expenses There are many potential sources of funding for the activity - general rates, targeted rates, lump sum contributions, fees and charges, interest and dividends from investments, borrowing, proceeds from asset sales , development contributions, grants and subsidies and other sources as permitted by statute. Prior to determining the “Residual amount to be funded by General-type Rates”, Council identifies all other funding sources appropriate to the type of cost incurred for the water supply service after the exclusion of fees, charges, subsidies, grants and general revenue. Fees and Charges - These have been set at a level to recover private benefits where it is practical and economic to do so, unless there have been determinations arising from previous funding reviews to fund all or part of such benefits from rates. Grants and Subsidies -These are sought and applied for whenever they are available. General Revenues - these are allocated to geographic rating areas in proportion to the gross general-type rates and charges. The Council has determined the fair and equitable charge for the operational costs of the water supply service to be funded through a combination of general rates, uniform annual charge and metered charges. The allocation of charges is dependent on geographical location the details are included in the Long Term Plan. Funding of Capital Requirements In general, the sources of funds for capital expenditure will be utilised in the following order: • Development and financial contributions. • Capital grants and subsidies (where available). • User charges. • General revenue sources [see below]. • Council financial reserves, including Depreciation Reserves. • Loan raising [which will impact on rates in the form of loan servicing charges]. • Targeted rates [directly charged]. 5.2.1 Development Contribution Policy Marlborough District has experienced significant growth over the last decade. Although this is often hailed as positive for the community, growth also presents a number of challenges. Not least is Council’s task of expanding infrastructure networks to support the increased use of essential services. The cost of expanding these networks is often high, and the issue of funding inevitably arises. Funding the expansion of these core networks entirely from general rates (or other indirect means) is inequitable, because existing ratepayers may neither cause these works to occur, nor Page 75