Palmerston North considers hornet’s nest of capital value rating

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Palmerston North Councilor Lorna Johnson continues to push for the capital value rating system.

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Palmerston North Councilor Lorna Johnson continues to push for the capital value rating system.

Palmerston North could join the 70% of New Zealand councils that use a rating system based on capital value.

The majority of councilors at a finance and audit committee meeting agreed in principle to no longer use land values.

But Mayor Grant Smith and three other councilors oppose the move.

Smith said they were going to stir up a hornet’s nest and could expect to be stung.

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The review began when Labor Approved Councilor Lorna Johnson campaigned on a promise to push for a review of how the rate burden is shared in 2016.

The proposal was submitted to an advisors-only workshop in 2017, but did not progress. Now the council is preparing a detailed proposal to submit to the community in 2023.

Capital value includes the value of a property’s land as well as buildings or improvements, which Johnson says more accurately reflects homeowners’ ability to pay rates.

She said there would be winners and losers, but it was a simpler, more transparent and fairer system.

“Those who pay more will be better able to afford it, and those who have less will be relieved.”

But Cr Vaughan Dennison said he saw no need to stir a hornet’s nest when the way the council assessed residents was not a hot issue at the moment.

He said that with the way house prices had risen recently, values ​​were not a reliable reflection of homeowners’ ability to pay.

A change would likely shift the burden of rates from residential ratepayers to businesses that have invested heavily in buildings.

Councilors Leonie Hapeta and Bruno Petrenas also voted against the proposal and wanted council to continue using the land value system.

Chief financial strategist Steve Paterson said it had been difficult to submit a review of the system to advisers against the backdrop of ongoing local government and Three Waters reforms.

He said the most immediate issue was to understand in more detail how the revaluations released in December would affect the distribution of the rate load and whether the board should change fixed charges and differentials to moderate those effects.

He said the current system has served the city well for many years without generating significant criticism.

“It’s not a hot topic at the moment.”

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