Tauranga City Council general manager of corporate services Paul Davidson. Photo / NZME
Tauranga City Council general manager of corporate services Paul Davidson. Photo / NZME
Commercial ratepayers could be paying a larger slice of the city's transport costs if a Tauranga City Council recommendation finds support.
A spokesman for downtown business owners says the commercial sector has already been "smashed quite hard" by rate increases and the suggestion it should be paying still more was "difficult" to agree with.
The council met on Wednesday to adopt the Annual Report 2021/21 and endorse, in principle, the Annual Plan draft budget for 2022/23.
Overall rates are now expected to increase by 13 per cent, up from the 12 per cent consulted on earlier this year in the Long-term Plan 2021/31.
Tauranga City Council general manager of corporate services Paul Davidson told city commissioners the increase was due to several factors, including additional operating costs such as the Three Waters Reform.
Tauranga City Council commissioner Stephen Selwood. Photo / NZME
Operational expenditure was also expected to increase from $348 million to $356m in 2022/23 with operational revenue also increasing, from $335m to $341m.
However, the council predicts its net debt will drop from $952m to $921m and its debt-to-revenue ratio will also fall slightly from 220 per cent to 214 per cent.
The impact on commercial rates gained the most conversation in the meeting.
In July, the city commission approved increasing the commercial rates differential from 1.2 to 1.6.
On Wednesday, the commission explored increasing the percentage of transport rates the commercial sector should pay, which were included as part of overall rates the differential applies to.
The commercial differential is the difference between what commercial ratepayers pay compared to general ratepayers. For example, a differential of 1:1.2 means commercial property owners pay $1.20 in general rates for every $1 by homeowners.
Commercial rates costs are often passed on to business leasees. Differentials take into account that businesses can write off some of their costs.
Commission chairwoman Anne Tolley said feedback from residential ratepayers during the Long-term Plan consultation process was they "were carrying the burden of the costs of running the city".
The rates system needed to be changed to ensure "growth funds growth" and that people "who benefit the most from assets are also paying their fair share".
Tolley referred to the "considerably lower" differential of 1.6 local commercial ratepayers paid compared to other metropolitan centres.
In Hamilton they pay 2.65, in Palmerston North it is 3.37, in Hutt City it is 3, in Dunedin it is 2.46 and in Wellington it is 3.25.
Commissioner Shadrach Rolleston said the council was trying to "get equity for our ratepayers".
Downtown Tauranga chairman Brian Berry. Photo / NZME
Commissioner Stephen Selwood said Tauranga was "a long way behind" in its existing commercial rates differential.
"It's critical we signal that early with the community. Probably the most important thing to commerce and industry is certainty. That's one of our key opportunities in the Annual Plan, to see if we can nail that equity for paying for growth. They need to pay their fair share.
"This is a bit of a turning point."
Increasing transport rates for the commercial sector was expected to help the city cater to growth while "sharing the load" via one of four proposed scenarios.
In a report to the council, a breakdown of sector transportation activities and rates paid showed residential ratepayers made up 48 per cent of daily trips, 0 per cent of parking demand and paid 77 per cent of rates.
Commercial, when grouped with industrial and retail sectors, received 52 per cent of the benefits (of transport) but paid 23 per cent of the rate funding.
Chairman of mainstreet organisation Downtown Tauranga, Brian Berry, told the Bay of Plenty Times after the meeting he was not aware of the proposal to increase the commercial sector's contributions to the transport rate and it was something "that certainly needs to be consulted on".
"The commercial property sector has already been hit hard with the rate increases which came into effect in July.
"To further burden those in the commercial sector at a time when the economic environment has been and continues to be, challenging would be really quite difficult and I guess, if you look at where the issues have come from, it's come from population growth.
"A lot of it is being driven by the residential sector. I think that sector should be carrying the majority of the burden as they already are.
"I think the commercial sector would be up in arms about further increases when they have already been smashed quite hard," Berry said.
CVs delayed again
On Friday, the council announced another delay to the release of three-yearly property revaluations.
Usually sent out in November, then delayed till December, the council said in a statement the revaluations were being audited and were now expected to come out in mid-January.
"The Office of the Auditor-General is stepping through the audit process with council's valuers before releasing the audited valuations."
It has blamed Covid-19 lockdown for the wait.
The council said there was no "flow-on" impact of the delay as updated revaluations will not affect rates until July 1 next year.
