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Hutt City Council looks to make rating system fairer

Today Hutt City Council met to discuss its approach to how rates are allocated between residents and commercial property owners.

Council’s current policy means that commercial property owners would be set to continue to pay a declining proportion of the overall rates charges. This is because Council made a decision in 2010 to reduce the proportion of rates paid by commercial property owners over a ten year period.

New valuations of residential properties in Lower Hutt show significant increases in property values, while commercial properties have seen a much smaller increase. The effect of this means residential ratepayers would be required to pay a much greater share of the rates bill.

Mayor Campbell Barry says Council is looking at this issue to ensure that distribution of the city’s rates is fair and the differential policy is appropriate in 2020 – almost ten years after it first came into effect.

“Everyone who lives, works, and does business in Lower Hutt wants a city that they can be proud of, one that has great services and fit-for-purpose infrastructure,” says Campbell Barry.

“If no changes are made to the current rating policy, more than two-thirds of the rates bill will be paid for by home owners in 2020/2021 with commercial property owners paying the rest. This, along with new property valuations, has created a situation which goes far beyond the original intent of Council when it brought in this policy.”

“The business community has told us they require certainty and clarity about this issue. We understand this and will consult them directly about any proposed changes. People across Lower Hutt will have the opportunity to put forward their views as part of the formal consultation on the Annual Plan which starts on Monday 6 April.

“As a council we have some hard decisions to make in the coming weeks on the options for rates in 2020/2021. This not only includes future rates increases, but also decisions like this where we set the proportion of the rates bill being paid by residential and commercial property owners.

“What’s clear though is that the level of investment to get our city to the place we all want it to be at needs to be carefully considered. Addressing the share of the rates burden between the commercial sector and residents is one way we can work towards a fairer deal for everyone.”

Council will meet formally on Tuesday 11 February to agree the options for public consultation on rates and other matters as part of the Annual Plan 2020/2021.

Background information

In 2011/12 the general business rates were between three and nearly four times the amount of a residential property of the same value.

In the 2012-2022 Long Term Plan the priority focus for the Council was on “growth and rejuvenation of the city”. The Council began a process of adjusting the share of general rates paid by businesses, utilities, residential and rural ratepayers. A gradual transition over ten years of the rating differentials was introduced. This was considered to be a more equitable allocation between sectors. The intention was that by 2021/22, the general rates paid by business ratepayers would be 2.3 times that of a residential ratepayer (a reduction down from 3.7 in the case of businesses in the CBD.)

Following the three yearly revaluation of properties in 2017/18, Council agreed to freeze the differential transition for one year and extend the transition period by a year to reduce the rates impact on residential property values.

If no rating policy changes are made then the residential share of the general rates will continue to pick up a higher proportion in 2020/21 of 65%, a further increase of 2% from 2019/20.

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