Brian Anderson The Western Front www.sunlive.co.nz

Councils calculate how much money they need to pay their debts, maintain infrastructure and services and hopefully be able to save for a rainy day.
Only then do they see how much they need to extract from the public through rates. Some money does come in from investments, compliance costs and charges, but a fair swag (probably the right word) is collected by sharing the rate burden between different sectors by way of property valuations. Unfortunately, this mechanical device is then misused and misinterpreted to the disadvantage of the ratepayers themselves. The mystical value of a property now has been given a number and people buy, borrow, sell and invest referencing their hard earned money to their council valuations that were never designed for that purpose.
WBOPD Council lowered the rural valuations about 25 per cent and the urban rates by five per cent, but these percentages were not the figures used for the current rates. They used the higher 2011 figures for a larger total take. Many believe the lowered valuations mean cheaper rates and somehow we are been done a favour. All that it meant is that urban ratepayers will be paying a much higher proportion of the inflated budget than the rural ratepayers next year. People have been using the phrase ‘smoke and mirrors' because they know we are all paying more.

Older residents, particularly those on pensions, saw the immediate effect of the rise. They are now paying the council a ‘rent' of $50 per week to live in their own house. Only recently has the consequences of the devaluation started to hit home. Pensioners who were about to sell their houses and move into a home believed that there was not enough money in the properties to afford the move. Many who believed that they would be able downsize their house and go for a trip overseas found that overseas might be a week in Waiheke Island. There is little confidence in the property market. It is flat. Houses have not been selling for anywhere near their replacement value and it is totally uneconomic to build a house.

Contrary to some very negative rumours, banks are still offering significant loans on lifestyle and urban properties. The conditions may be a little tighter, but lending appears to be based more on a client's ability to pay rather than fairy tale valuations. Real estate agents have always maintained that the market value of a house is the fair price that a reasonable customer is willing to pay for the property on the day. I have heard of many negotiations approaching a fair market price only to be stalled by a distant relative who has checked the council valuations and suggested that the vendor was being robbed.

There is one thing that property owners can do and it is very easy. In WBOPD Council's rate calculations, the proportion of the rate bill derived from the house value is very small. On a $250,000 house, it is only about $150. If an owner puts forward an objection with a case for an increased valuation before January 27, asking for an extra $20,000 to bring the valuation up to $270,000 it only adds about $10 more on his rates. In Tauranga, this part of the rates is more expensive, but an increase of $ 20,000 would still only cost about $40. This is a great investment. When the next person comes along to buy your house and makes the usual statement that he will not pay more than the CV, you stand to make another $20,000 out of the sale.

You don't have to believe me. Be a wise citizen. Exercise your democratic right to have your say on your own property. There is no charge for an objection. Contact the council for a form, read the fine print of your rate bill and do your own calculations. If you are not interested and are happy to lose $20,000 dollars, that is your democratic right also. You might also be very interested to check out the other 90 per cent of the rate bill, the fixed charges and the targeted rates that have just appeared without you understanding them. We will have to address these together later.