Rates overhaul edges closer

AARON LEAMAN
Last updated 05:00 23/06/2014

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Momentum is building behind a possible change to Hamilton's rating system with business leaders saying it will help boost the central city's fortunes.

Hamilton City Council staff will present a report on Thursday recommending the city change its rating system from land value to capital value.

If councillors opt for change, the community will get the chance to submit on the proposal in August and September before a final decision in November.

Waikato Chamber of Commerce chief executive Sandra Perry said there was an appetite for change among members and believed Hamilton's land value rating system had disadvantaged small and medium size businesses.

Under the capital value (current yield) rating option, recommended by council staff, commercial ratepayers would continue to pay 33 per cent of the city's $153 million rates bill.

However big operators, such as the city's major retail centres would pay a bigger chunk of the yield.

Colin Jones, of Commercial and Industrial Consultants, said low rise properties in the CBD would be better off under the capital value (current yield) rating option whereas high rises would be disadvantaged.

Rates for a median CBD commercial property will decrease almost 22 per cent under the proposed model, whereas Centre Place faces a rise of 157.5 per cent.

Jones said the current land value rating system had held the central city back for 15 years.

"Capital value has to happen if the council wants to rejuvenate the CBD. We are going to have winners and losers but overall it will be a positive move," he said.

"Some commercial ratepayers will be adversely affected but you've got to remember the likes of Centre Place, [Westfield] Chartwell and The Base make up 30 per cent of all commercial ratepayers in the city if we counted up all the shops.

"If you've got 70 per cent that are at an advantage and 30 per cent that are disadvantaged, is that a problem?"

Although many commercial ratepayers welcome a rating change, the wider public appears less convinced.

A non-scientific Waikato Times online poll shows readers divided, with 55.2 per cent opposing a change to capital value.

Residents in Hamilton's northern suburbs, for example, could be hit with rates hikes of up to 18 per cent.

Huntington residents Joan and Eddie Robson face a possible rate increase of 15.4 per cent and said many northern residents would struggle to absorb the extra cost. The pair receive a British pension which was affected by changes in the exchange rate.

"Our rates recently went up when the council reclassified us as Huntington instead of Rototuna. If they change the [rating] system then that's another cost we have to meet," Joan Robson said.

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Poverty Action Waikato researcher Anna Cox said a capital value rating system could be more equitable as residents in suburbs such as Fairfield, Whitiora and Nawton would get a rates deduction.

"If the greatly valued homes are paying a little bit more and those with less value homes are paying a little less, that would have a positive impact on inequality," Cox said.

"What would be interesting to see is what the landlords in these areas do with the saving. Would they invest in their rental properties or perhaps reduce their rents?"

Hamilton Central Business Association general manager Sandy Turner said members' feedback on a possible change to capital value was mixed.

Turner said owners of older buildings could be discouraged from improving their properties in case capital value increased and attracted higher rates.

"Rating on capital value is going to make low grade retail and office space more affordable but definitely not higher value property," she said.

aaron.leaman@fairfaxmedia.co.nz

- Waikato Times

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