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Russell and Annette Berry bought the Waiotapu Tavern near Rotorua six months ago, but a controversial rates plan has left them wondering whether it is worth spending the million dollars they need to do it up.
The Rotorua District Council is proposing changes in the way it levies rates from a land-based system, which bases rates on land value only, to a capital value system that takes into account land, buildings - and improvements.
So far, 10,000 residents have signed a petition opposing the plan, and more than 1100 have done the same in submissions to the council.
Although half the councils around the country use capital value rating systems, the proposal has met stiff opposition from many sectors of the Rotorua community, including business owners, hoteliers, pensioners and farmers. Many believe it will take a grave toll on business growth and the area's vital tourism industry.
Of 1428 submissions received by the council, only 272 supported a change to the current rating system, and Mr and Mrs Berry were among 150 submitters who asked to be heard at a hearing this week.
Mr Berry told the council that the tavern had a low turnover but a high capital value and would be "hit very hard" by the proposed system.
"Capital value rates are [also] a great disincentive for us to spend the necessary million on the hotel to bring it up to what we need."
He had calculated that for every $1 million spent on a property, the rates bill would increase by $8000 a year under the proposed system.
He told the Herald that the bill for the 80-year-old hotel was already in the thousands, and under capital value rating it would increase by several thousand more even without renovations.
Mr Berry, who also owns three other properties in Waiotapu, has invested heavily in alternative energy sources for his businesses, and said it would be unfair to see people's rates increasing if, for example, they spent $20,000 installing solar panels in their homes.
"Why should a person who looks after his house have to pay more than a person who doesn't look after his house?"
The council says the proposal is a response to feedback from the community that the current system is unfair. It uses the example of major hotels paying the same rates as small motels because they occupy the same land areas.
The council promises to make no decision on changing the system until June, and said as many land owners would get decreases in rates as would get increases under the capital value proposal.
