Far North councillors throw out capital-value rates plan after outcry

Far North farmers who spoke out against a switch to capital value rating: Matt King (left, Ōkaihau), Shane Lawson (Ōkaihau), Andrew Brown (Ōkaihau), David Rhodes (Mahinepua), Murray Wright (Waipapa), Dot Dromgool (Mangakaretu) and Laurie Voigt (Kerikeri). Photo / Peter de Graaf

A switch to capital-value-based rating has been rejected by Far North District councillors for the second time in just over a decade due to concerns about hefty rates increases for some property owners.

Far North residents will still face rates rises averaging 5.5 per cent this year but there won't be the big shifts that would have come with a change of rating system.

If the plan had gone ahead, east coast farmers, for example, would have been hit with rates rises of 30 per cent or more, while some property owners in the west and north would have seen their rates bills drop.

By law, councils have to charge rates based on property value but they can choose whether to do so according to land value only, or land plus buildings and other improvements (capital value).

The switch to capital value was touted as making rates fairer by shifting a greater proportion of the cost on to property owners who could best afford it.

However, the proposal was rejected by councillors during a marathon eight-hour Long Term Plan meeting on May 13.

The vote was tied five-all, forcing Mayor John Carter to use his casting vote to retain the status quo.

Some elected members said the council had tried to change too much too fast.

When ratepayers saw their future rates jump in the council's online rates calculator, they had no way of knowing whether the increase was due to the switch to capital-value rating, the scrapping of a flat rate called the Uniform Annual General Charge, a drop in commercial rates or other proposed changes.

Far North Mayor John Carter had to use his casting vote to break a 5-5 deadlock over the future of the district's rating system. Photo / Supplied

Councillor David Clendon said capital value had pros and cons but most feedback, in a ratio of about three to one, was strongly opposed.

Capital value was a blunt instrument that didn't accurately capture the wealth in a property or a person's ability to pay. It also overlooked the large number of Far North households that were asset-rich but cash-poor.

Clendon was also concerned about the effect on horticulture, with those properties facing an 11-fold rates increase over 10 years.

That was a serious disincentive to anyone planning to convert pastoral land to high-value, job-rich horticulture, he said.

Rachel Smith said she didn't support the change because the submissions made it clear the council had gone ''too hard, too fast''.

She did, however, successfully add an amendment that council staff continue to investigate improvements to the rating system.

John Vujcich supported the change, saying staff had put a lot of work into the proposal.
He was disappointed that the released figures were ''confusing and put a lot of people off''.

Some of the biggest rates rises would have been shouldered by large corporates, reducing the burden on ordinary ratepayer.

Vujcich said he was concerned for elderly residents who would have ended up paying 30 per cent of their income on rates but there were avenues of rates relief available to them.

Felicity Foy said the changes were much less dramatic when the proposal was later tweaked to retain the Uniform Annual General Charge.

''In hindsight we shouldn't have gone out with it all at once,'' she said.

Moko Tepania said he was in favour of capital value rating, which was already used by more than 70 per cent of New Zealand councils because it was generally fairer and more equitable.

Introducing it over 10 years would have given time to ''tutu'' with the system and correct any anomalies. Councillors also rejected a proposal to reduce the commercial differential — long a bugbear of commercial property owners — from the current 2.75 to 1.75.

They retained scheme-based targeted rates for water and wastewater rather than introduce a flat fee for all ratepayers.

Waipapa beef farmer Murray Wright, who submitted against the capital-value proposal, was grateful councillors had listened to farmers' concerns and taken time to think through the side effects of such a dramatic change.

He looked forward to more dialogue with the council in future.

During his first term in 2007-10, former mayor Wayne Brown also proposed switching from land-value to capital-value rating. The proposal was, as Brown put it, ''howled down''.