Tauranga CBD businesses have been dealt another blow with rising commercial rates. Photo /George Novak
Tauranga business tenants are in for more ''pain'' as commercial landlords pass on huge rates hikes.
"A kick in the guts" was how one leasing agent described the rates rise by the Tauranga City Council, and a proposal for another one targetting transport funding.
He fears for those on the brink in the CBD - and sectors who had been hammered by Covid.
Calls for rates relief for businesses hardest-hit are growing louder. Hospitality New Zealand said some of its members could go under, while an inner-city business owner said the CBD was ''dying''.
However, the Tauranga City Council said in a written statement the commercial sector only contributed 23 per cent of total rates revenue this year (excluding water), while other metropolitan councils collected 30 per cent on average.
The council's commissioners increased the commercial differential from 1.2 to 1.6 on July 1, in the Long-term Plan 2021-31.
That meant commercial ratepayers would pay $1.60 to every $1 residential ratepayers pay for a property of the same value.
Council corporate services general manager Paul Davidson said the council recognised ''some sectors are not doing as well as others and will work with business owners who need more time to pay''.
Analysis and modelling was under way to look at the level of resources currently used across residential, commercial and industrial ratepayers.
''This will include the review of the transportation rate as well as looking at the overall balance of rates over all activities, which would be included as part of an overall rating rise for the sector.''
A new industrial category of rating could be another option and the council would reach out to the business community for feedback next year, he said.
Mainstreet Tauranga chairman Brian Berry said a survey of six businesses in the CBD revealed they had faced rate increases of 24 to 32 per cent.
Those increases were also based on 2018 rateable values. These were in the process of being reviewed for the rating year beginning July 1, he said.
''There is a danger if rateable values increase rates payable will also increase further, increasing the burden on ratepayers.''
However, most property and business sector representative organisations recognised under-investment had left Tauranga with major infrastructure problems. Those issues needed to be ''dealt with sooner rather than later'', he said.
Commercial property owners pass the rates directly on to their tenants, which ''affects a city centre business community that is already reeling from the Covid lockdowns and associated subsequent restrictive levels''.
He acknowledged future developments in the CBD such as the council's civic administration headquarters and proposed Tauranga Civic Precinct Masterplan meant the end result would be very exciting.
Berry was advocating targeted rates relief for the CBD due to ongoing disruptions that would affect businesses.
Craig Cameron, owner of Macau Bar Kitchen & Lounge, said any extra cost had an impact.
He had to let three staff members go due to the vaccine mandate, which meant the restaurant could only open five days a week instead of seven.
"Our potential to earn income has dropped already.''
A rates hike on top of other escalating costs such as the price of produce and deliveries was the last thing he needed.
Mansworld clothing store owner Murray Watts has been a business owner in the CBD for more than 55 years and agreed tenants would pick up the tab.
"This [rates increase] is supposed to be for the commercial owner – it gets passed on to tenants. The tenant will have to pass it on to the consumer, or ultimately make less profit."
Another CBD business owner, who did not want to be named, said their landlord had already told them they'd be footing the bill.
"If you look around the city centre, it's empty. This [the CBD] is dying. Nothing happens.''
Ray White commercial managing director Phil Hunt said the CBD was not trading at its potential and wouldn't be for a long time.
''How can those poor businesses be expected to pay a dramatic increase in rates. It's a kick in the guts.''
The shortage of parking was another issue and he heard from businesses every day who would not move to the CBD because of it.
Hospitality New Zealand accommodation sector Bay of Plenty chairman and 850 Cameron Motel owner, Tony Bullot, said it was ''absolutely unfair and is hitting us when a lot of businesses are struggling anyway''.
''Every extra per cent [differential rated] is another nail in the coffin.''
He said tourism and hospitality brought visitors into the region who spent money, and moteliers were already paying a ''pan tax'' for every toilet on-site.
AirBnBs escaped the rates rise because they weren't classified as commercial businesses and ''that really hurts us''.
Bullot also wanted rate relief for sectors hardest hit by Covid and said some could go out of business.
Tauranga Chamber of Commerce chief executive Matt Cowley said the rising cost of doing business in Tauranga ''is a very real issue''.
Staff wages - as house prices continually increase - were a greater risk to businesses than rising council rates.
''But council must prove to businesses that their plan to increase rates will help achieve more reasonable living costs for their workforce.''
Retail NZ chief executive Greg Harford said a massive rates hike would have big impacts on businesses and customers.
''Covid has seen reductions in revenues for many businesses, and higher costs. It's deeply unhelpful for councils to be contributing to this through rates hikes.''
Harford said many landlords had been working to support their tenants with rent relief over the last 18 months, but there was a significant minority who had not been willing to do so.
- Additional reporting Talia Parker
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