Rates Review

30% of our funding for our services and activities comes from the rates we collect from each ratepayer. Last year we took a look at how whether or not the rating system we were currently using was equitable and met our District’s needs; or if a change to the system was required. It did not seek to change the overall amounts collected by Council or how the share of this is apportioned to the different rating sectors in our District.

Currently, we calculate general rates two ways:

  • based on the land value of a property and
  • uniform charges for each Separately-Used and Inhabited Part (SUIP) of a property (which we call a ‘Rating Unit’)

Feedback from our early engagement during May 2017 indicated that, on the whole, the community is happy with the current rating structure. However, there was some dissatisfaction expressed with the use of SUIPs and the fairness of rates based on land rating.

Rating units or SUIPs?

We took a look at whether we should be rating based on rating units or SUIPS but we found that using rating units for uniform charges did not resolve current perceived inequities. Rather, it created new issues, so it was decided to remain with SUIPs as the measure for setting uniform fixed rates.

However, we have revisited the definition of SUIPs which we propose properties are only rated separately if they are actually being used or if there is a clear intention for them to be used. As an example, if you have a separate self-contained unit attached to your house, currently this would be rated as an additional SUIP. However, if our proposed change proceeds and you are not using it or intending to use it, the unit would no longer be rated separately.

This option is a ‘modified status quo’, as all other elements would stay the same.

Land or capital value?

We also considered changing the value-based rating to capital value (the assessed value of the entire property) rather than land value (the assessed market value of the land minus its buildings) transport activities and services as capital value-based rating is considered to be a better measure of the use of Council services and the ability to pay.  But the high impact on many property owners saw us discount this option.

We also investigated using capital value-based rating to fund transport activities and land value-based rating for funding our other services, as roading and transport infrastructure is arguably used more by higher capital value properties. An example of this from the commercial sector would be to compare a vacant commercial lot with a similarly sized supermarket next door. Currently, both are rated the same, but the supermarket generates a higher volume of traffic and places greater demand on Council services.

Introducing capital value-based rating would mean that utilities properties would now be rated as they have no land value, but in many cases considerable capital value.  To align with this, we are proposing we split the commercial and industrial sector into separate categories for the commercial (13.8%), industrial (14.1%) and utility (1.1%) sectors.

Our preferred option is to:

  • introduce capital value-based rating for funding of transport activities as a targeted rate (with the amount collected offset by an equivalent reduction in general rates)
  • retain land value to assess general rates
  • reduce the Uniform Annual General Charge to provide a more equitable approach for all of our ratepayers (from $440.50 to $ 344)
  • adjust the rating categories to maintain current sector splits while incorporating the changes to commercial, industrial and utilities. We would also remove the miscellaneous and multi-unit categories, allocating these properties to commercial, residential or utilities sectors
  • make changes to the definition of SUIPs (as described in the modified status quo).

We would like your feedback on whether to go ahead with this proposed change, or whether to introduce with the modified status quo of land value-based rating, with a slight change to the SUIP definition.

Outline of change Who will be affected
Option 1 Modified status quo Change in criteria from ‘capable of use’ to ‘actual or intended use’ will reduce the number of SUIP’s charged rates Some ratepayers will see their rates reduce i.e. if the number of SUIPs on their property reduces.

However, as our overall rates take stays the same, their reduced rates will be spread (in tiny amounts) over all other ratepayers.

Option 2 Transport fixed rate on capital value, plus modified status quo As above, plus:

  • a new targeted rate based on the capital value of each property
  • reduced UAGC
  • general rates still based on land value
You are likely to pay lower rates if:

  • your land value is lower than average
  • the difference between your land value and capital value is less than the average.

You are likely to pay higher rates if:

  • your land value is higher than average
  • the difference between your land value and capital value is more than the average
  • you are in the new utilities category.
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