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Comment on collection of rates where a Property contains two or more different and separate uses.

6 Dec 2012, 11:49 AM

I want to make comment on some of the matters raised, in recent editions of the Waitomo News, on Council’s Policy for the collection of rates where a property contains two or more different and separate uses.

The underlying objective of our Policy is to treat all ratepayers fairly. A ratepayer might operate one business property in say Rora Street, Te Kuiti and reside in another separate property in say, Ward Street, Te Kuiti.  However another ratepayer might operate a similar type of business but unlike the first ratepayer reside at the same property location as that of the business.

The first ratepayer would be liable for two lots of property rates, while the other would pay only one.  That outcome, if not addressed, results in an unfair sharing of the rate funding obligation.

The legislation governing the setting of rates recognises that problem and allows for the setting of Uniform Annual General Charges (UAGC), or a Targeted Uniform Annual Charge (TUAC) on a Separately Used or Inhabited Parts (SUIP) basis.  In other words the law allows the application of the charge on the basis of how a property is used, rather than only on the basis of its legal boundary.

That separate use approach is widely used by many Councils. The intent being to achieve fairness and equity in the way the rate is shared amongst ratepayers.  It is also important to understand that the uniform annual type charge is used where the Council considers all ratepayers benefit equally from the work funded in that way.

Our UAGC is defined as being “ …, levied on each separately used or inhabited part of a rating unit …. to part fund the activities of Leadership, Community Development, Community Facilities, Regulation and Safety, Resource Management, Land Transport, and Solid Waste Management.”

Why did we introduce SUIP’s in 2007?

In 2002, the Council of the day made a fundamental change to our local rate funding system. We changed from the old system, where rates were calculated on the basis of a property’s Land value to one calculated on Capital value. Again this change was made across a large number of different Councils at about that time.

Also at that time, all the old WDC arrangements to differentiate the rate between different categories of rates, whereby commercial properties paid 1.2 times the rate fixed for a residential property, were removed.

Over time it became clear that some real issues of unfairness existed and had to be addressed. Namely, a person living on their own in a residential property was paying the same annual uniform charges for services such as water and sewage, as the owner of a property that contained a number of separately used dwellings (e.g a block of flats) or a property that housed both a residential dwelling and a commercial business.

This was considered fundamentally unfair, and so Council turned its mind to finding a fairer way.  In simple terms, that meant Council settled on a system, where if a property had multiple separate residential uses or a combination of a private residential use and a business use then multiple annual uniform rates were charged accordingly.

However at the same time, Council also recognised that situations might exist where a SUIP approach was not appropriate.

Some examples of that situation are:-

  • Where a small business is used in conjunction with a residential use and the uses are “co-dependant”. I.e. one would not exist without the other; the business is small in nature, and operated on a sole charge basis by the same person who resides in the dwelling.
  • Bed and Breakfast operators. Each residential unit must be capable of separate habitation. I.E. a residential dwelling that also operates a B&B within that dwelling will be rated as one use.
  • Remission can apply to a vacant part of a rating unit, and where it is occupied by a small scale business council may deem that the nature or scale of the business is such that it does not constitute a separate part.

Rating Information Database (RID)

A RID is maintained by the WDC and it contains all the required information about rateable property.  WDC makes every effort to keep its Rating database as up to date as possible.  That is an on going challenge, as the way property is used often changes over time. However, as in the instance published in the Waitomo News, the ongoing audit of accuracy does not pick up those changes in use immediately. 

Conclusion

Council keeps all matters of rating allocation fairness under ongoing review and where necessary will look to further fine tune its Policy.  However, we believe we need to have a robust policy in place, and apply the Policy for the remission of rates to deal with genuine exceptions on a case by case basis.

If any ratepayer feels that the application of a Council Policy to their particular circumstances has an unfair outcome, then please make contact so that we can understand the problem and address it if necessary.

BRIAN HANNA

MAYOR