Auckland malls join forces to condemn rates plans

WestCity mall faces a 360 per cent rates rise. Picture / Martin Sykes

Auckland's biggest shopping centre operators have joined forces to attack the rating plans of the Waitakere, North Shore and Manukau city councils as bad news for the cities' malls.

The councils are debating proposals to change from rating on land value as part of their long-term budget reviews.

Manukau is looking at switching to the annual value system used by the Auckland City Council, while North Shore and Waitakere lean towards the capital value system, which combines both land and buildings, as used by the Auckland Regional Council.

But the proposals have provoked an unprecedented show of unity by rivals Westfield New Zealand, AMP Capital Shopping Centres and Progressive Enterprises.

The companies say the proposed changes will discourage investment in good buildings and squeeze shopkeepers who cannot pass on higher rents.

All have large buildings with high values so will pay more than if their rates were based on the land value.

Yesterday, they scolded the Waitakere City Council for not doing enough homework to show a change was warranted or that the present system unfairly favoured business ratepayers.

Auckland University associate economics professor Basil Sharp said a shift to capital value would have flow-on effects that would adversely affect businesses, consumers and residents.

Professor Sharp said capital value was a tax on the value of improvements and would discourage them.

Progressive Enterprises executive Adrian Walker said that in the competitive supermarket industry it could be difficult to pass increased operating costs on to customers.

There was a point at which firms could no longer absorb these and they would have to be passed on.

AMP property manager Matthew Maloney said that because of the investment in revamping Auckland's oldest shopping centre - LynnMall - the co-owners and the tenants would be penalised by a proposed rates increase of 225 per cent or $1.13 million.

The total rates cost to tenants would rise from $505,000 a year to $1.64 million.

Economics consultant James Fairgray said the capital value system unevenly unloaded costs on to some parts of the business sector in relation to the benefits they received from councils.

He said the WestCity mall faced a 360 per cent rise in rates $2.36 million.

The mall turnover for 2005 was $162 million so the new rates would be 1.46 per cent of gross turnover, which Mr Fairgray said was a very high level of rating compared with other businesses.

At the Manukau City Council, the companies - joined by Auckland International Airport - said the annual value system proposed was inflationary and could be expected to discourage investment in improvements by up to 25 per cent.

It would also cause the closure or relocation of tenants to avoid the increased costs.

Westfield centres at Manukau City and Pakuranga faced increases of about in their rates bill from nearly $1 million to $1.8 million a year. That is nearly twice what they pay now.

AMP's Botany Town Centre faces a rates rise from $839,162 a year to $1.23 million - a 47 per cent increase.

Waitakere City's finance chairwoman, Janet Clews, said the businesses' views on the impact of the rises would be taken into account when a decision on which rating system to use was made next month.

But Mrs Clews said capital value rating could see a reduction in rates for more than a third of the properties in Waitakere City.

Under a land value system, almost all properties would have a rates increase.

In addition, under capital value, almost 20 per cent will have a rates raise of less than 5 per cent, which is below the 6.5 per cent average rates rise that the council is expecting.

Manukau has decided on the proportion of rates required from business (32 per cent), residential (64.5 per cent and rural (3 per cent.)