Council adopts capital value rating system

Hamilton City Council has today adopted a capital value rating system.

The motion was passed nine votes to two to move from a land based rating system to a capital rating system. Councillors Tooman and Yeung voted against the motion. Councillor Macpherson was absent from the meeting. Councillor King abstained from the vote based on a conflict of interest.

It will mean over half of Hamilton will see a decrease in rates (approximately 53 per cent) while ratepayers in the north of the city are likely to see increases.

The change will be staggered over 10 years to alleviate to impact of increases and allow people time to adjust.

Mayor Julie Hardaker said she supported the move because it "is more reflective of services provided. Economic analysis [found] that it does not appear to have a material impact and that is further mitigated by the 10-year lead-in time."

Council received 666 submissions on the proposal. Chief executive Richard Briggs said it was a low number compared to 2763 submissions received in the 2011 rating review.

He said the low number of submissions gave council staff confidence in the proposal.

Council began the rates review in March this year, and has considered three different options during workshops and meetings; capital value (CV), annual value (AV), and the current land value (LV).

He said the change was driven by concern that the current land based rating system was unfair, and too complex.

"A land based system penalises some ratepayers because rates are not applied to the full value of each property."

Hamilton is the only major city in New Zealand where capital rating is not already in place.

The current land value system determines how much each property owner pays in rates based on the value of their land. Capital value would mean rates would be determined by the land value and what is on that land, for example a house.

The average city wide increase for rates over the past 10 years is five per cent. The largest increase for a Hamilton ratepayer is $120,863 (current rate of $87,575 to the proposed rate of $208,438), with the biggest decrease being $26,767 (current rate of $51,844 to the proposed rate of $25,077). The lowest of the top 10 decreases is $13,471 and the lowest of the top 10 increases is $9,921.