Tauranga city's proposed 12.6 per cent rates rise has been slashed to 7.6 per cent in response to the Covid-19 pandemic.

Tauranga councillors met today in a final meeting before New Zealand enters alert level 4 at 11.59pm tomorrow , meaning gatherings in any public area aside from essential services will be banned for at least a month.

On March 4, Tauranga City Council had voted to consult on a draft budget of $244 million in capital expenditure with a proposed 12.6 per cent rates rise.

While discussing the draft Annual Plan 2020/21 today , deputy mayor Larry Baldock said Covid-19 had since been felt "and the world has changed".

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A new proposed rates increase of 7.6 per cent was unanimously supported by elected members and could take effect from July 1.

"This is going to give us the greatest flexibility. Prior to Covid-19, we were faced with a tsunami of issues such as growth, infrastructure needs ... Then came Covid-19 and the world has changed. We are trying to respond to that. I hope this sends a message to the community we know people are going through hard times. We are reducing rates to a 7.6 per cent [increase]."

Under the new proposal, the owner of a $650,000 median-valued home would pay an extra $2.28 a week in rates. The owner of a $1.07m median-valued commercial property would pay an extra $12.13 a week in rates.

Baldock said this was possible by removing the debt management levy of 5 per cent.

He said the council could become overwhelmed by public feedback due to people being stuck at home now but that could only be a good thing.

Delaying the decision "won't help us at all", Baldock said.

Deputy mayor Larry Baldock says the world has changed and the council was doing its best to respond to the increasing pressure presented by Covid-19. Photo /File
Deputy mayor Larry Baldock says the world has changed and the council was doing its best to respond to the increasing pressure presented by Covid-19. Photo /File

"We have to do what we must to keep our city functioning."

Mayor Tenby Powell said he believed "we are all feeling it".

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"I certainly have had some sleepless nights thinking about what we need to do for the city."

Councillor Steve Morris is hopeful to debate a proposed rates rise once the worst of Covid-19 is over. Photo / File
Councillor Steve Morris is hopeful to debate a proposed rates rise once the worst of Covid-19 is over. Photo / File

Councillor Kelvin Clout said some people may say the reduction was not enough as "businesses are really going to be affected badly in the next few weeks and months".

Councillor Steve Morris said he felt the proposed rates increase was still too high.

"That being said, we are in this process where ordinarily we would have quite a number of meetings and robust debate before deciding.

"This is the last time the entire council will meet together until after the lockdown, so current events have not been kind to that particular process."

Tauranga mayor Tenby Powell is really feeling the pressure from Covid-19 as the city council reduces its planned rates rise. Photo / File
Tauranga mayor Tenby Powell is really feeling the pressure from Covid-19 as the city council reduces its planned rates rise. Photo / File

Morris supported the move "for the sake of the city getting on with the business it needs to".

Covid19.govt.nz: The Government's official Covid-19 advisory website

"But this is not final. We will come back and debate this. We are not there yet. Certainly not from my perspective."

The council also decided to reduce the commercial differential from the earlier-proposed 1.3 to 1.2, meaning owners of commercial properties would pay $1.20 for every $1 of general rates paid by owners of residential homes of the same value.

Public consultation was scheduled to begin tomorrow but was likely to be delayed.

People will be asked for their feedback on user fees, a uniform annual general charge, the draft development contributions policy and a change to the council's revenue and financing policy.

Prior to the meeting, Tauranga Chamber of Commerce chief executive Matt Cowley
said it was incredibly important the council invests wisely as part of the region's economic recovery, which could mean "tough decisions".

Cowley said businesses had been frustrated at rising costs and regulation from recent Government announcements such as the rising minimum wage from April 1.

"Small to medium businesses are tired of being squeezed. We occasionally hear of businesses having huge successes. This is great, but it is not the norm for most other businesses. Many business owners are residential ratepayers too, so they are paying twice."

Cowley said the council needed to invest to help local economic recovery, prioritising employment opportunities.