ARC rating policy 2004/05 – details for business ratepayers

29 June 2004

The Auckland Regional Council’s introduction of a 1.5 times business differential reflects the Council’s view that businesses should pay more for the services they receive.

Prior to adopting this year’s regional community plan, the Council carried out significant community consultation and believes it has addressed many of the concerns raised by ratepayers.

Last year the average business ratepayer received a reduction in their ARC rates due to the shift from local council rating policies to the ARC’s rating policy. The introduction of the business differential means the business share of this year’s rate take will be slightly less than in 2002/03.

The business differential was adopted for a number of reasons:

The costs of some council activities could be attributed more to the business sector, for example environmental monitoring and complaints and AREDS, and Council felt that businesses should bear a higher share of passenger transport costs

The Council has decided that the change in rating burden applicable to the residential and business sectors last year contributed to the financial hardship experienced by some residential ratepayers. The introduction of the business differential means businesses will still pay a lower share of the rating burden than that paid by the business sector prior to 2003/04.

The introduction of a 1.5 business differential will result in 93% of business ratepayers facing increases of between 11% and 59%. Some business ratepayers will receive higher increases. These increases are due to (a higher) revaluation of their property (for example in Franklin or Papakura), and to newly entering a targeted transport area.

The ARC identifies approximately 32,000 business ratepayers in the Auckland region. “Business” ratepayers are defined as those rating units that are used solely or principally for business purposes. This includes communications, electricity, gas, water supply, sanitary and vacant utilities, medical facilities, theatres and similar entertainment facilities, motels and hotels and similar accommodation, and rating units used for purposes of mineral extraction. It excludes rating units used for farming and agricultural or educational purposes.

The ARC examined how local councils defined business ratepayers and found that the definition differed from each other within the Auckland region. The ARC decided to adopt its own regionally consistent definition rather than take on inconsistencies by using the various local council definitions.

The “business land use” definition was felt to be the fairest definition. It closely matches local council business definitions. There will be a small number of properties that will be rated as a “business” by the ARC but not by the local council, or vice-versa. Properties incorrectly rated as “business” will be addressed on a case-by-case basis.

A business differential of 1.5 means business ratepayers will pay one and a half times what a residential ratepayer will pay for a property of the same value.

Details of categories of business ratepayers presented to Council can be found on the ARC website, www.arc.govt.nz, in the Council agenda section in the policy paper presented to the Council meeting on 8 June.

The complete rating policy will be described in the ARC’s Long-Term Council Community Plan 2004-14, which was adopted in full on 28 June, and will be published about two weeks after that date.

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