City rates pain — who will suffer?
Owners of flash Hamilton homes on cheap land would feel the sting of rating changes proposed for the city.
Along with a swap to full capital value rating, Hamilton City Council is suggesting two years of 9.5 per cent rates increases.
That figure is an average – some people would get a bill for less, others for more.
The changes are in the draft long-term plan which will go out for public consultation in late March.
Council decided on a gradual move to capital value rating in
2014 but is now pitching to go straight there in the 2018/19 financial year.
That means that if your land’s not worth much but your house, office or shop is, you’d notice a bigger difference on the bill.
‘‘If you have a shed on a quarter-acre section or if you have a seven-bedroom house on a quarter-acre section, those two ratepayers will pay significantly different rates [under capital value],’’ corporate general manager David Bryant said.
‘‘And the reason they will is because the shed will be a significantly lower-value building, so the total package of that property will be lower. If you have a big piece of dirt – as in, a big section – and you have a big house on it, you’re going to pay bigger rates. Because the total value of those combined is higher.’’
Council has suggested easing the effect of the change on more expensive properties with a $500 uniform annual general charge.
It wouldn’t increase the overall amount council collects from ratepayers, but the proposal to have two years of 9.5 per cent increases would. The 9.5 per cent figure is an average – the overall increase to council’s rates take – so some ratepayers will have a bigger increase, some smaller, Bryant said.
And Hamilton ratepayers will want to know what difference the collection of changes would make for them.
The bill would be $2219 for a property worth $405,000 – the median residential capital value for Hamilton – an increase of $83.
Rates would go up $151 for someone in a house and property worth $325,000, according to Hamilton City Council data.
That would take their rates total to $1882.
Owners of a property worth
$520,000 would notice a $214 difference, bringing their rates to $2704.
New areas such as Peacocke will probably have higher value land and homes, meaning ratepayers there would pay higher rates under the capital value system.
Council needs to spend money to develop those growth areas, Bryant said, so this change would help make sure growth pays for itself.
The rates system move could be good news for small to medium players in the commercial sector.
Rates on a commercial property worth $1.06m would go down $1363, council data said, and the rates for a $265,000 premises would drop $174. The flipside is that Hamilton’s most expensive commercial properties – worth more than $200 million – would get sizeable rates increases. Hamilton-based malls have previously opposed capital value rating and Kiwi Income Property Trust spokesman Greg Wills called it ‘‘a kick in the teeth for our retailers’’ back in 2014. The trust owns Centre Place. Hamilton’s semi-rural ratepayers would face an extra hit if changes go ahead, as council wants to bring their rates closer to residential levels.
That would make a $675 difference for a $490,000 property, and increase the rates for a $1.1m place by $1082.
Areas in this category don’t get full council services, Bryant said, so they wouldn’t pay for what they don’t get – such as town water or rubbish collection.
Rates rebates are available to low-income homeowners and ratepayers.
Hamilton City Council is not the only one finding it hard to pay for what it needs, and Labour and NZ First have pledged to hold a public inquiry into local government costs and revenue options.
National and Federated Farmers criticised the Government for not moving fast enough but Local Government Minister Nanaia Mahuta said in January that she planned to set up the inquiry this year.
And there are critical decisions ahead, according to a briefing for Mahuta.
‘‘Growth in council rates has outstripped common economic indicators. Continuing rates increases may challenge the future affordability of council rates for households,’’ a briefing to the incoming minister said.