Revaluation delay may be skewing city's rates
Some Christchurch homeowners may be paying 10 per cent too much in rates because of outdated and skewed valuation figures.
The Christchurch City Council is required to revalue all properties in the city every three years, but because of the quakes the 2010 valuations were never completed.
Council funds and financial policies manager Steve Kelsen yesterday told a council workshop a desktop exercise done by the body's valuers suggested that, based on 2012 sales figures, some residential ratepayers were paying 10 per cent too much or too little in rates.
Some business ratepayers were paying 30 per cent too much or 20 per cent too little, he said.
After the quakes the Government gave the council until December 2013 to complete a citywide revaluation.
Now the council is considering whether it should seek a further extension because of difficulties in establishing values in the city.
The quake damaged many of the city's 160,000 homes, causing major uncertainty in the market. And by this time next year the council expects there will still be 40,000 homes awaiting repairs or a rebuild.
If the council does decide to proceed with the revaluation it will have to ask the Government to alter the rules because now it is not allowed to include insurance and Earthquake Commission (EQC) entitlements when considering what value to place on a property.
If it cannot persuade the Government to change the rule, property values in Christchurch could be held at 2007 levels for another year.
If the Government does not change the rules, the council could proceed but it does not think it can meet the valuer-general's required standards.
"Regardless of what we do, we're going to need help from the Government," Kelsen told councillors.
He said deferring the revaluations was the simplest option, as in another year some of the uncertainties in the market place might have been resolved, but pushing ahead with the revaluations would maintain the integrity of the rating system by enabling rates to be based on current values.
If the council did proceed with the revaluations - a process estimated to cost $1 million - it was likely to have to do far more inspections than ever before and face more objections.
If the Government does not make the change, the council could proceed but it would not expect to meet the required standards.
The revaluations are important because council rates are essentially a property-based wealth tax.
The higher the value of the property you own, the more you pay in rates.
QV southern regional manager Brendon Bodger told councillors sales statistics were showing an overall 4 per cent rise in property values in Christchurch since 2007, when the property market was at its peak.
But he said those statistics had been skewed by the quakes because properties in the less affected areas of the city were selling more than those in the worst affected areas.
Acknowledging the quakes had "turned the city on its head", Cr Tim Carter said the 2007 property valuations no longer reflected current valuations and it would be unfair if the council stretched out the revaluation process any further.
Cr Peter Beck also argued the council should proceed with the revaluations with the insurance and EQC provisions.
"It feels to me we have to bite the bullet on this one."
But Cr Helen Broughton supported a deferment, pointing out that next year was an election year and the council already had a lot on its plate. "If we give ourselves another year, some of the problems will be ironed out," she said.
Yesterday's workshop did not have any decision-making powers and a formal report on the revaluation issue has yet to be presented to the full council.
- © Fairfax NZ News
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