Change to rates on the cards

Hamilton has taken another step on the path to a capital value rating system despite the prospect of a legal challenge from the city's shopping centres.

City councillors will meet next week to consider a staff report recommending the city change to capital value rating.

Hamilton is the country's only metropolitan council to use a rating system based on land value.

Council chief financial officer Richard Briggs said staff proposed the city adopt a capital value (current yield) rating system to be phased in over 10 years.

Under the capital value (current yield) option, residential ratepayers would continue to pay about 65 per cent of the city's $153 million rates bill.

However, residents in Hamilton's newer suburbs, such as Rototuna and Flagstaff, would shoulder a greater portion of the yield.

"If we move to capital value current yield, 50 per cent of the properties will get a reduction in rates and 50 per cent of the properties will get an increase in rates," Briggs told a council workshop yesterday.

"Basically, older properties will go down and new properties will go up."

The capital value (current yield) option also creates winners and losers among the city's commercial ratepayers, with small and medium businesses expected to get a rates decrease while the city's three major retail centres - The Base, Centre Place and Westfield Chartwell - face a hefty rates hike.

A shop in Westfield Chartwell currently pays, on average, $2664 a year in rates but this could climb to $13,824 under the capital value (current yield) model.

Likewise, a retailer at The Base will see their rates increase from, on average, $3834 a year to $14,474.

But Briggs said this reflected an "appropriate result" when compared to rates paid by shops at Sylvia Park ($16,859) and Westfield St Lukes ($21,979) in Auckland.

In response, councillor Ewan Wilson asked if it was fair to conclude shops in Hamilton's large malls had been getting access to cheap rates under the current land value rating system.

"To the population we've compared them against, yes," Briggs replied.

Westfield New Zealand director Justin Lynch earlier told the Waikato Times the company was not ruling out legal action.

Briggs said any judicial review would focus on whether the council had followed an appropriate process.

"Be aware that changes are significant to some ratepayers and we can't stop our decisions being reviewed but if we follow a robust process, we're in a good position," he told councillors.

Utilities face the biggest rates hike, with Wel Networks Ltd and Vodafone New Zealand facing a spike in excess of 3800 per cent.

Wel Networks currently pays $19,865 in rates but this would increase to $788,607 under the rating model proposed by council staff.

If councillors opt for change, staff will prepare a statement of proposal for adoption in July.

The public will be able to submit on the proposal in August and September ahead of hearings in October.

Councillors would then be expected to make a decision in November.

Councillor Leo Tooman said a vote for change would take "courage", noting a proposal to change the city's rating system from land value to capital value in 2011 attracted 2763 submissions, with 80 per cent opposing rating on capital value.

That proposal advocated no differentials over a five-year period.

But Wilson said that model differed markedly from the capital value (current yield) model.

"Last time we went out changing the yield and removing the differentials so 80-odd per cent of the ratepayers saw an increase immediately, so there is no comparison," Wilson said.

Waikato Times