The Tauranga Chamber of Commerce has slammed Tauranga City Council over its proposed changes to the rating system, accusing the council of potentially breaching its own policies.
Chamber CEO Stan Gregec says a one-month window for the community to express their views on the changes is unsatisfactory.
“I’ve been knocking on the doors of many local businesses, and it’s fair to say a good number of people are still completely in the dark about what the council is proposing,” says Stan.
“The council has not even done ratepayers the courtesy of writing to them individually to let them know that major changes are in the wind. Instead we have had announcements by way of social media and a few public meetings. Is this really good enough?”
He says business owners should have been involved in a ‘more robust consultation process’ initiated by the council, at least a year ago.
“Such a process would have signalled that the current rating system was no longer fit for purpose, and invited all the city’s ratepayers into a conversation about what could be done about it.
“Instead, we had a series of internal workshops at the council where staff and elected members decided that they could not go to ordinary ratepayers with the prospect of a massive rates hike, therefore it was convenient to look at how more of the burden could be shifted to the business community.”
He says in this way the council may even have breached its Significance and Engagement Policy, which outlines its legal obligations to consult with the community under the Local Government Act.
Stan adds as part of a major reform of the current rating system, the council proposes to introduce a business rate differential – which means that businesses will pay 20 per cent more than residential ratepayers this year relative to a property’s value, rising to 40 per cent more next year and 60 per cent more in 2020.
“Hardest hit will be businesses based in the Tauranga CBD, which face a double whammy in the form of a new targeted rate that will be lumped on top of the higher business rate to pay for the extra costs of beautifying the city centre – which is supposed to happen over the next few years.
“The total impact will see many inner-city businesses this year face rates hikes of anywhere between 25 per cent and 50 per cent, and some in excess of 60 per cent.
“This is not the way to get the business community on side with change, or to inspire confidence in the council’s decision-making.”
Stan stresses that Tauranga businesses are not against paying their fair share of council rates.
“There may even be a case for increasing the contribution of rates that businesses currently pay. But a new rates structure must be the outcome of a fair and effective consultation process with the community.”
SHIFTING THE RATES BURDEN FROM RESIDENTS TO BUSINESSES
Tauranga City Council financial controller Kathryn Sharplin says the proposed changes to the rating structure will better balance the mix of who pays for how much of the total rates bill.
“The two most significant proposals are to reduce the fixed charge that every ratepayer pays (the uniform annual general charge, or UAGC); and to phase in a commercial differential over three years.
“A third proposal, to charge a targeted rate for 20 per cent of proposed expenditure in the city centre, would also impact commercial ratepayers in this area.”
She says the draft LTP has $23.65 million of capital funding available for city centre streetscape, waterfront and open space upgrades, to create more attractive streetscape and connections; enhance the city environment; and encourage people to visit and spend time in the city centre.
These include the Durham Street/Lane upgrade, and a planned upgrade to Aspen Reserve.
Concept designs are also being developed for an upgrade to Elizabeth Street.
“If the proposed changes go ahead, the UAGC would be reduced from 30 per cent to 15 per cent of the total rates bill from next year; and the commercial differential would be 1.2 times (20 per cent more than) the residential rate based on capital value. The differential would increase to 1.6 times (60 per cent more than) the residential rate by 2020/21.
“To date, the residential sector has paid a larger share of the rates bill than is justified by the capital value of their properties because of our large UAGC.
“This particularly impacts people with lower-value properties, who are paying more of a share of the total rates bill in relation to their properties’ capital value. Reducing the UAGC to 15 per cent would partially redress this imbalance.”
Kathryn says by 2020/21, the commercial sector would be paying a larger share of the rates bill than their share of capital value, but this reflects the commercial benefits of significant areas of expenditure proposed by the council.
“These proposals include investments in a more efficient transport network and attractions that bring people to Tauranga. The proposed city centre rate would further target properties benefitting from council expenditure in this area.
“What we’re proposing isn’t unusual: all other metro councils in New Zealand have a commercial differential. Wellington is the highest at 1:2.8 and the lowest at 1:1.66 is Christchurch. No other metros have a high UAGC.”
She says it’s important to remember that the final decision will be made by elected members once all the community feedback has been received.
“Our LTP consultation ends at 4pm on Monday, April 16. The LTP consultation document outlines all our proposed rating structure changes, as well as other items the council is consulting on and other issues that may affect the plan over the next 10 years.”
More information, including the consultation document, submission forms and a rates calculator, is on the council’s LTP webpage: www.goodquestion.nz
Customers can also pick up a copy of the consultation document in the Customer Service Centre or any library, or request a copy by calling 07 577 7000.