DCC asset value lifts fixed rates

A significant increase in the capital value of council-owned water, wastewater and sewerage infrastructure - in one case more than 50% - will result in a 1.1% increase in rates for those services, the Dunedin City Council says.

The increase for the utilities will be offset by a reduction in the general rate, but more expensive homes will benefit more from that than cheaper homes.

The increase was included in the council's draft annual plan, and resulted in differing interpretations of the city's draft rates increase for the next financial year, so both 6.4% and 7.5% figures were given at meetings last week.

Asked to explain the issue, council financial planner Carolyn Howard said it related to a Quotable Value revaluation of property.

The rates for properties are based on the property valuation.

A report she wrote for the council's draft annual plan meeting said the council had been rating its own utilities since legal advice confirmed that was required in 2002.

The increase in the infrastructure value reflected the increase in their replacement costs, and the outcome was an increase in the rates paid by the council water and wastewater departments of $1.4 million.

That meant an increase in rates for those services.

Because the council was effectively paying itself extra, the increase in utility rates was offset by a decrease in general rates.

Rates are split into general rates, the amount of which depends on the value of the home, and fixed rates for utilities, which are the same price for all homeowners.

Ms Howard said the decrease in the general rate did "neutralise" the increase in fixed rates, but not equally for all households.

The increase in fixed rates would be the same for all, but the decrease in general rates would be lower for cheaper homes because they paid a lower general rate, and the percentage of the decrease would be lower.

david.loughrey@odt.co.nz

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