Council consults on rates review

Ratepayers are being asked to provide their feedback on the council’s proposal to change the Waikato district’s rates structure.

Waikato District Council is required by legislation to undertake this review, which is an important part in the preparation for the release of the council’s Long Term Plan early next year.

The council has reviewed the rates to achieve one rates system across the whole district, following the local government reorganisation in 2010 which resulted in part of the former Franklin district being amalgamated into Waikato district.

The property revaluations which were released earlier this month are a significant factor in the outcome of the review.

Chief executive Gavin Ion says the revaluations in the former Franklin area had to be brought forward a year to put all the properties on the same base year for revaluations.

Waikato properties were last valued in 2008 at the height of the property boom, while the Franklin properties were valued one year later.

“This means the Franklin properties already reflected much of the reduced values because of the economic downturn. As a result, with the latest revaluation just carried out, the average changes in the property values are much lower in the former Franklin area than in the former Waikato district,” Mr Ion says.

“Therefore the rates distribution will have a more unfavourable effect for properties in the former Franklin area.”

In addition, property values change at different rates across the district as well as across the different categories (such as business, residential, rural). This affects the distribution of the rates charges across the properties in the district.

The council reviews its rates structure every three years as part of its Long Term Plan review.

“This time, however, it has been more complex because we have had to align the two rates systems. While both districts used capital value for its rating base, there are still some significant differences between the two systems,” Mr Ion says.

The key points of the council’s preferred option are:

• Five targeted rates - Economic development, transport, Hunua rural fire, Onewhero-Tuakau Community Board, and Tuakau Town Centre Upgrade – will be included in the general rate.
• These currently form part of the former Franklin district’s rates system.The targeted rate for stormwater will, from 1 July 2012, be set on the capital value of all property in the urban areas only.

The existing targeted rates for refuse and recycling and for water supply and wastewater will continue on the same basis as at present.

The council would also like to consider in the future, introducing consumption-based charges for water supply and wastewater.

“The council has strived to achieve a rates system that people will understand, that is as fair and equitable as possible, and that is transparent,” Mr Ion says.

This rates review is to decide the rates structure only.

“The council will still be raising the same amount of money for its work programme through this system.
“What this review will do is affect the way the total amount of rates is split between the properties.”

“The council will consider early next year as part of the Long Term Plan process whether the overall amount of rates we require is enough to manage the district.”

It will also allow for realisation of growth, minimise year-on-year changes, and enable the council to deal with the district’s evolution.

All ratepayers will be sent individual letters which will show the effects of the review on their properties. Submission forms will be included with those letters.

“It’s important people take the opportunity to provide us with feedback, so the council can include that in their decision-making,” Mr Ion says.

Submissions open today (15 November 2011) and close at 4.00pm on 19 December 2011. Hearings will be held at the beginning of February 2012.

Summary

The amount property owners pay in rates is made up of several rates. Since the amalgamation of part of Franklin into the Waikato the council has been using two different systems. The proposal refines this structure into one aligned system.

1.General rates, which are based on the capital value of the property, fund part of democracy (council meetings, council and community board members); community services; infrastructure (such as roads, street lighting and parks and reserves); and regulatory functions such as the District Plan; economic development; solid waste management; area offices; resource management and the like.

The council proposes five rates now charged separately in the former Franklin area should be included in the general rate:

• Economic development: With the new Waikato Expressway, population growth and industry and commerce looking south from Auckland to develop, Waikato district will experience a increase in economic development. The council believes the district as a whole will benefit from this development and so this rate should accordingly be district-wide.
• Transport: Regardless of where roads are located, all residents gain the benefits they generate through their direct use or through the transport of goods and services throughout the district.
• *Community boards: Because there is just one community board in the district funded from a targeted rate (Onewhero - Tuakau), including this rate in the general rate will bring consistency across the district. (*This issue will be reviewed within the council’s Long Term Plan which is now being developed for consultation early next year, to gauge public interest in a targeted rate for all community board areas.)

• Township development: Tuakau is the only centre in the district which has a targeted rate for town improvement. Improvements for other centres are met from the general rate. Putting this rate into the general rate will achieve district-wide consistency.
• Hunua Rural Fire Rate: This rate relates to a small number of properties only and raises a minor amount of revenue. For administrative efficiency and because of the minimal impact of this rate on other ratepayers it is proposed to include the amount in the general rate.

2.Uniform annual general charge (UAGC) funds parts of democracy, community services and regulatory functions that are people-related such as environmental health; libraries,; grants and donations; community liaison and animal control. Up to 30 per cent of the total rates can come from this rate and it is a fixed amount per property, regardless of individual property value. If money is also raised through other fixed rates such as a community facilities rate, or refuse, the total of these (including the UAGC) cannot be more than 30 per cent of the total rates.

The effect of the UAGC is that it shifts the rating burden from high value properties to low value properties or vice versa depending on the level it is set at.

This charge will be retained at the existing Franklin level and used as a tool to manage the distribution of rates across the district.

3.Community facilities is a targeted rate specifically to fund community halls and other facilities throughout the district. Some of these targeted rates are based on property value and others are a fixed charge with ratepayers in the communities gaining the benefit paying the charge.

Because both the former districts had a similar policy for community facilities and halls, the council proposes a charge for each area should be retained.

4.The refuse rate is paid by everyone who receives a solid waste collection and disposal service.
The council proposes that the former Franklin area retain the existing fixed charge for refuse and recycling collection using the present system.

The Raglan recycling and waste minimisation charge will continue to apply in that community.

The rest of the district would also retain the existing district-wide charge for the present system. In summary, the council is proposing to retain the status quo for the refuse rate in all areas.

In the longer term there will be work done to bring alignment between the different service levels.

5.Stormwater collection and disposal is funded from a targeted rate. In the former Franklin area, this is paid through a fixed Uniform Annual Charge (targeted rate) on all properties and an urban target rate based on value. In the former Waikato district area, there is a special stormwater targeted rate set for Tamahere to cover specific stormwater remediation and a general urban stormwater targeted rate charged in the main towns – these are fixed charge rates.

The council proposes that the fixed charge in the former Franklin area be removed and that the main urban areas across the district should be charged a targeted rate based on capital value. The stormwater targeted rate for Tamahere would continue.

6.Water charges are levied on those properties that receive, or can receive, water supply from the council to cover the costs of the water supply, including the maintenance of the water supply system. While the current basis for charging water rates is not fully in line with the principles that the council has used for determining which is the best option for rating, it was decided that it is the best option in the short term.

The council is currently in the process of installing meters on all properties that have a water supply and this will be completed over the next three years. Once this is done it will be possible to mitigate the differences that exist between our existing schemes and work towards a more consistent approach to charging for water. (Ideally the council would like to consider a system where ratepayers pay a charge for availability of the service and consumption is metered.)

The council proposes the former Waikato district area retains the present system of those connected to each water scheme meeting the cost of supply for each of those schemes through a targeted rate. In the former Franklin district area, ratepayers would continue to pay based on metering and stepped pricing bands.

7.Wastewater rates are charged to every property that receives or can receive a wastewater service in the district’s widely dispersed urban and peri-urban communities which have their own wastewater reticulation systems and treatment plants. Again, while the current basis for charging wastewater rates is not fully in line with the principles that council has used for determining the best option for rating, it was decided that it is the best option in the short term. The council is currently in the process of installing water meters on all properties that have a water supply and this will be completed over the next three years. Once this is done it will be possible to review the current position and determine whether a consumption based approach to charging for wastewater could be more appropriate.

The council proposes that in the former Franklin district area, the full fixed charge be retained, and half of that charge for availability of supply (but not connected). In the rest of the district, the present fixed charge would be retained in the present three zones and half that charge for those with the service available but not connected.