Should Hamilton City Council retain its land value system or change to a capital value based option?
A shift to a capital value rating system could see Hamilton's northern suburbs face rate increases of more than 30 per cent - while a triple figure hike looms over the city's major retail centres.
City councillors were yesterday briefed on the ramifications of changing the city's rating system from land value to capital value, with one option likened to a "doomsday scenario" for homeowners.
The council has one more workshop on the plan next month, after which councillors will be asked to make a decision.
Two capital value options were yesterday modelled as alternatives to the city's current land value system - with each option carrying a sting for Hamilton's more affluent northern suburbs.
Under the capital value (current yield) option, residential ratepayers would continue to pay 65 per cent of the city's $153 million rates bill, but relatively expensive suburbs such as Rototuna, Huntington and Flagstaff would foot a greater portion of the yield.
A second capital value option would ditch differentials, by which businesses pay rates at a higher level than residential ratepayers. This would see residential ratepayers shoulder about 77 per cent of the city's rates bill.
Both capital value options have major implications for the city's three major retail centres - The Base, Centre Place and Westfield Chartwell.
Under the capital value (current yield) model, Westfield Chartwell's rates would skyrocket from $317,606 a year to $1.6 million, an increase of 418 per cent.
This is not the first time the council has looked at changing the rates system to capital value and inevitably it has been controversial.
In 2011, the council considered changing from land value to capital value with no differentials over a five year period.
That proposal attracted 2763 submissions, with 80 per cent opposing rating on capital value.
Previous councils have had similar reactions.
Councillor Leo Tooman said the idea of shifting the city's rating system to capital value appeared to be motivated by a desire to get at big businesses, such as The Base, "because the perception is they're getting a pretty free ride".
But such a move would unfairly hit residential ratepayers in the north: "You've got people in the northern suburbs and that sort of stuff who work damn hard to get what they've got.
"They're trying to improve their lot and everything else and others who maybe take it as it comes and they will get all the benefit from it [rating system change]. It just doesn't seem fair to me."
Hamilton Mayor Julie Hardaker asked staff to bring to the next workshop information detailing how a ratings system change could be phased in while addressing potential rating inequities.
Councillor Angela O'Leary doubted whether the council would go ahead with a rating system change and warned that excessive "tweaking" risked undermining a system's principles.
Councillor Ewan Wilson said he was interested in exploring a move to capital value (current yield) option together with "some fine work and tweaking".
- Waikato Times