Inland Revenue is weighing up its accommodation options in Hamilton - with one possibility being shifting 500 staff out of the central city.
The government department employs 920 staff at two Hamilton locations - Bryce St and Garnett Ave.
The leases of those sites expire in 2016.
Inland Revenue media adviser Sarah-Lee Ryan said the department had issued a request for information on suitable commercial office space in Hamilton.
"We are at the early stages of the process and no decisions have been made at this time," Ryan told the Waikato Times.
"Our intention is to have a presence and staff in the central city - what that looks like may change over time as we look at the future needs of our customers, our business and our people."
Hamilton deputy mayor Gordon Chesterman said Inland Revenue had given real estate companies only two weeks to prepare expressions of interest, which was an "unreasonably short time" for a major response by a developer or investor.
"If Inland Revenue relocated totally to the north of the city then they are kicking the city in the guts because to have 920 IRD staff members in the CBD would create a huge economic impact for many of the smaller businesses there," Chesterman said.
Major entities like IRD were needed in the city so Hamilton could continue to be the commercial centre of the region. There were properties in the central city suitable for Inland Revenue to move to, Chesterman said.
"Government entities like IRD should check with their staff as to where they would like to work."
Hamilton Central Business Association general manager Sandy Turner said the central city was an attractive environment for office workers who could take advantage of the facilities and eateries at lunch and after work.
The current trend was for businesses in Te Rapa to shift back to the central city, she said.
Colin Jones, of Commercial and Industrial Consultants, said many older buildings were not well laid out but Inland Revenue's tight timeframe made it difficult for a new building to be considered as an option.
He said it would be disappointing if Inland Revenue shifted out of the central city but one of the underlying problems was the high rates for CBD properties.
Hamilton uses a land-value based rating system but a shift to a capital-value rating system could see rates for a CBD commercial property fall by up to 51 per cent.
"One of the things the council can do to help keep tenants in the CBD is to address the cost of the rates, but it has to be part of a combination of things," Jones said.
"Maybe one of the things they could do would be to say there's no development levies, or they could discount permit fees.
"At the moment the rating system is not fair and it stops the city from going forward."
Ryan said Inland Revenue staff had recently met with Hamilton Mayor Julie Hardaker to ensure her office was fully informed of the department's plans and would continue to engage with the council.
IRD IN HAMILTON
About 500 staff located in Bryce St and 420 staff in Garnett Ave. The leases for both sites expire in 2016. Inland Revenue has started the process to look at future accommodation options in Hamilton.
- Waikato Times