One of Hamilton's biggest shopping centres has slammed as "unjustifiable" a possible change to the city's rating system which could quadruple its annual rates bill.
The council, which is one of the few city local authorities in New Zealand to still use land value rating, is to consider changing its rating system to capital value rating.
Two capital value rating options being looked at would 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.
Westfield New Zealand director Justin Lynch said Westfield was not ruling out legal action.
"In the interests of our retailers, Westfield will take an affirmative stance against the proposed rates increases and consider appropriate action, which may include a legal challenge, after any final council decision."
Lynch slammed the proposal, labelling it "unjustifiable".
"We strongly object to the Hamilton City Council unfairly loading costs on to the business community with little to no justification for such substantial increases," Lynch said.
However, it is not all doom and gloom for retailers as some smaller businesses would get a rates reduction.
Under either option being looked at, the owner of Frankton Mechanical, Barry Clifton, would have his rates bill halved. "That's what they [council] need to do," he said.
"We are paying miles too much for what we are getting."
Clifton said if the proposal was passed, the decrease would be felt by his customers. "We would drop our prices.
"We won't have to charge as much because we won't have to pay as much."
Centre Place manager Greg Wills said the increase would ultimately be passed on to the customers.
"If I went to our retailers, the response I'll get in relation to that; there'd be outrage . . . The likes of [a] 150 per cent increase is certainly not palatable and that just makes business commercially hard; especially in the central business district," Wills said.
Under one proposal, Centre Place would pay a hefty $1,152,498 - a 157 per cent increase on its current bill of $447,607.
The Base shopping centre's rates would rise to more than $1m, with another option bringing the bill to more than $2m.
Mike Pohio, chief executive of The Base owner Tainui Group Holdings, said the issue was not new to Hamilton and TGH would focus on the "framework" of the proposals rather than the dollars.
Pohio did not rule out court action but said it was not their first consideration.
"We will look at [and] be given the opportunity like every other ratepayer to assess what the framework is. We will very much have input into the process."
Like Frankton, many smaller businesses in the central city could have their rates bills halved.
But like the big shopping centres, utilities would also feel the heat, with some facing some astronomical increases. Wel Networks Ltd which pays $19,865 in rates, would face a rise to $788,607 - a 3870 per cent increase.
Wel Networks acting chief executive David Smith said Wel had made a submission to the council in the past about the issue.
"Any increase in rates costs would put significant pressure on the Wel group (including Ultrafast Fibre Ltd) to pass these costs on to our customers.
"As a community-minded organisation we would have to consider what options were available to us if such a change occurs."
The possibility of the council facing legal action was discussed at a council rates review workshop on Tuesday.
Councillor Dave Macpherson asked staff for a risk analysis on the chances of a large commercial ratepayer, such as Tainui Group Holdings, challenging the council's decision in court.
The council's chief financial officer, Richard Briggs, said having the council follow an "appropriate process" minimised the risk of a legal challenge.
The Local Government Act gives councils flexible powers to set and collect rates, and to determine what rates are in the best interests of the city and ratepayers.
Macpherson said the council had in the past followed good process on other matters only to be challenged in court.
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.
The council has budgeted $200,000 to consider changing Hamilton's rating system from land value to capital value.
- Waikato Times