Whangarei District Council rates review will mean winners and losers

A rates review underway at Whangarei District Council will bring winners and losers.

Years of feedback from unhappy ratepayers has prompted a review of who pays what into Whangarei's $88 million rates pool.

Whangarei District Council (WDC) chief executive Rob Forlong said any change to the system would inevitably result in winners and losers.

Those in the commercial sector had been especially vocal. CBD businesses in particular said they felt they were paying too much.

Mr Forlong said the catch was when it came to rates "everybody is telling [council] that their sector pays too much compared to everyone else".

He indicated there was room for improvement within the current system. But what it would mean for individual ratepayers would not be clear for some time, with staff to take a look at the system next year. Any changes would likely be implemented in the 2018 financial year.

Change would essentially be a different way of slicing the pie, Mr Forlong said. The council was not going to collect less rates revenue and step increases, but would look at what each sector was paying and whether there was scope for more rating categories.

Currently, 62 per cent of general rates revenue came from the residential sector, 28.5 per cent from commercial and 9.5 per cent from rural. This did not include targeted rates. The council will collect $88m in rates this year.

Whangarei set its rates via land value, along with about a third of New Zealand councils and one of the main issues to be considered was whether rates off capital value (CV) were fairer.

Land value rating contributed to some unfair quirks in the system, where the owners of a 1.4-hectare lifestyle property at Maungatapere worth $400,000 and those who owned a $510,000 in Maunu paid less ($1367 and $1548 respectively) than the owners of a $160,000 600sq m property on Raumanga's Smeaton Drive ($1606). Admittedly only the latter paid the targeted $660 sewage rate.

CV held allure as it was a better indicator of ability to pay, reduced the spread between high and low rates, and was more likely to reflect demand on public services. Ratepayers were also more likely to be familiar with the CV of their property.

When the council last considered the switch to CV in 2012, it found it would result in a bill increase of $100 or more for 70 per cent of rate payers. This would have been balanced by reductions of $100 or more for 15 per cent of ratepayers and a smaller percentage with much larger reductions.

Mr Forlong said valuations had changed since these calculations were done.

"I suppose there will be an argument to let sleeping dogs lie," Mr Forlong said. "And maybe that will be the outcome ... But we haven't significantly changed the rating system since 1989, and if we let it drift forever, we won't have an improvement."