Auckland Council is backing off the idea of a 3.5 per cent by asking ratepayers if they want to go with that figure or a 2.5 per cent rates rise from July 1.
The decision follows a marathon 10-hour meeting of council's emergency committee yesterday at which councillors also agreed to waive the bed tax on the struggling hotel and accommodation sector for three months.
Ratepayers experiencing financial hardship from the impact of Covid-19 will also be given the opportunity to defer payment of the fourth and final rates instalment this year.
Auckland Chamber of Commerce chief executive Michael Barnett said more than 80 per cent of businesses responding to a survey gave the thumbs down to a planned 3.5 per cent rates rise.
"Businesses have no income, ballooning debt and ongoing costs from paying employees and trying to keep them on the payroll to rental and tax obligations," he said.
Mayor Phil Goff said councillors were unanimous the council needed to take decisive steps to reduce the pressure on residents and businesses facing economic hardship, while ensuring it could protect and maintain the essential services.
"I think Aucklanders want their council to understand the hardships that some people will be facing and show compassion and flexibility around that. There will be a range of measures to target support through deferral and postponement of rates for those facing genuine hardship and unable to pay their rates in the current circumstances."
After discussing the financial impact of Covid-19 behind closed doors, Goff said some projects and services would need to be cut or postponed because of a substantial reduction in non-rates revenue caused by the recession.
The council has already cut the number of temporary or contracted jobs by several hundred.
Goff said Aucklanders would want the council to continue to provide core services that the city needed, and which make Auckland a great place to live.
"Aucklanders will also want us to partner with the Government to invest in the construction of vital infrastructure that the city needs, and which will contribute a stimulus to growth and jobs to assist our recovery.
"Auckland Council will consult with the public on a rate increase of 2.5 or 3.5 per cent. For the average ratepayer, a 2.5 per cent increase would be equivalent to an extra $1.35 per week, while a 3.5 per cent increase would be $1.83 per week," Goff said.
The emergency committee looked at all options for rate increases and the impact different levels of rate increase, including a zero per cent increase, would have on the ability of the council to provide services for Aucklanders and to invest in infrastructure for jobs.
"There will be a new round of consultation, with Aucklanders providing a clear explanation of what each rating option would mean for council services and infrastructure and we will be providing robust information as part of the consultation document to ensure that picture is very clear," he said.
The Emergency Committee agreed measures to immediately offer some support to all ratepayers, including businesses, facing hardship because of the crisis:
• Waiving the APTR payment (bed tax) from April 1 to June 30 for all accommodation and tourism businesses.
• Offering all ratepayers experiencing financial hardship the opportunity to defer payment of their fourth quarter rates instalments.
Options Aucklanders will have a say on are:
• A recommendation brought by the mayor for both a 2.5 per cent and 3.5 per cent rate rise to be considered, with information included outlining the potential impact of both those options.
• A broadening of the council's rates postponement policy to include businesses experiencing financial hardship.
• Suspension of the Accommodation Provider Targeted Rate, and the expenditure that it would fund, until March 31, 2021.
Goff said businesses in the accommodation and tourism industries were under particular pressure, so the council was waiving the fourth quarter instalment of the APTR to provide some relief.
Hotel Owners Association executive director Amy Robens welcomed the relief, but said it wanted the APTR to be removed indefinitely to relieve the financial burden so hotels could focus on getting back on their feet.
"Next year looks to effectively be a write-off for hotels and a full recovery could be up to five years away," she said.
Goff said all businesses and residents facing financial hardship would be able to request deferring their fourth-quarter rates payments until the due date of the first rates instalment for the new rating year (August 31, 2020) without penalties.
The committee also requested staff to undertake further analysis of the impact different rates increases between 0 and 3.5 per cent would have on council services and business activity in Auckland. That analysis would help inform the public consultation process.
Finance and performance committee chair Desley Simpson said: "I believe that it is really important for Aucklanders to understand what services they might lose if we went for an even lower rates rise which is why this will be clearly outlined in the consultation document.
"We need to ensure our residential and business ratepayers are supported if they need assistance but at the same time keep key council services funded and operational. We know that not all ratepayers will be in a position to pay their rates during this financial hardship and that will impact on our income."