Hawke’s Bay Regional Council rates shake-up criticised for increasing burden on homeowners

The changes mean Hawke's Bay homeowners in general will face an increase in their regional council rates. Photo / Warren Buckland

A major shake-up to Hawke’s Bay Regional Council’s rating system could prove a barrier to people building homes the region “desperately needs”, according to a community leader opposed to the plans.

The regional council is proposing a raft of changes to the way it calculates how much each property pays in its annual rates bill - with some clear winners and losers.

The changes will not result in the council collecting more rates overall but will change the proportion of rates each property pays.

Farmers will pay less in rates - between $400 and $1140 less on average per year depending on where in Hawke’s Bay their farm is located - while homeowners and plenty of growers will pay more in rates.

If the changes are adopted, the average homeowner can expect to pay an extra $99 each year on their regional council rates in Central Hawke’s Bay, an extra $77 in Hastings district, an extra $46 in Napier and an extra $14 in Wairoa district.

The average horticultural property can also expect to pay $485 extra per year in Hastings district, a prolific district for orchards and vineyards recovering from Cyclone Gabrielle, although that figure will vary for different horticultural properties.

A major part of the proposal is switching to capital value (CV) instead of land value (LV) to calculate each property’s proportion of rates. The council currently uses land value.

“Hawke’s Bay Regional Council is one of a few regional councils still using land value to calculate the general rate,” a consultation document read.

“CV can be considered to be more equitable than LV because it considers the value of, and the capacity to earn from, both the land and the improvements on the land [such as buildings].”

Other proposed changes include how the council rates on flood protection, drainage schemes, passenger transport and other services.

Hawke's Bay Regional Council chairwoman Hinewai Ormsby says the changes will make rates easier to understand. Photo / NZME

Regional council chairwoman Hinewai Ormsby said the proposal followed a review and would “ensure rates are easier to understand and to implement”.

The changes only relate to the regional council and not district or city councils in Hawke’s Bay.

Hastings District councillor Ann Redstone said she was opposed to the regional council switching to capital value.

“The regional council’s mandate is around the environment and, for me, rating on land value would be the sensible option which fits with their kaupapa [principles].”

She said if the changes were adopted it could become a barrier for people “doing any developments or house building that we desperately need”.

The changes mean Hawke's Bay homeowners, in general, will see an increase in their regional council rates. Photo / Warren Buckland

“If you spend $1 million on your house, you are going to be rated accordingly which doesn’t seem very fair to me,” she said.

“Capital value disadvantages the homeowners that want to make improvements to their houses.”

The proposal is open for public consultation on the regional council website, with feedback closing at the end of January.

Hawke’s Bay Fruitgrowers Association president Brydon Nisbet criticised the timing of the proposed change, given many growers were trying to rebuild from last February’s cyclone.

“Many growers have borrowed huge amounts of money just to be able to get their businesses back afloat, so to be hit with another cost is for them hard to take.

“It is another cost they didn’t need to see.”

A helpful graph compiled by the regional council, showing in the last two columns the average impact the changes will have on rates. Image / Hawke's Bay Regional Council

Hawke’s Bay Regional councillor Xan Harding, who has written a Talking Point for Hawke’s Bay Today breaking down who he sees as the winners or losers, said the timing of the proposal had to do with rating cycles, as the next council year begins on July 1.

Pastoral properties (farms) see the greatest reduction in rates as most of their land is undeveloped, and therefore there is not much difference between their land value and capital value.

The way to check if your property will pay more in rates is to use the figure 1.78.

Divide your capital value (for example $700,000) by your land value (for example $400,000) and if the figure is more than 1.78, you can expect an increase in rates. If it is lower you can expect a reduction in rates.

The regional council is yet to compile and announce its proposed rates increases for the 2024/25 council year.

Gary Hamilton-Irvine is a Hawke’s Bay-based reporter who covers a range of news topics including business, councils, breaking news and cyclone recovery. He formerly worked at News Corp Australia.