Big business could benefit at the expense of residential ratepayers if the Dunedin City Council today opts for a change in its differential rating system.
A council working party spent last year looking for a "fairer, more equitable and transparent" system and has come up with two options to shift the balance towards businesses.
Today's council budget meeting will consider changing the "general rate differential" and introducing "special purpose targeted rates" for some council activities - combined these are identified as Option 7.
The most dramatic effects, both good and bad, would be felt by owners of non-residential property (i.e. commercial), excluding retail and accommodation.
In "sample rate accounts" provided by the working party:
• Rates on a commercial "non-residential property", with a capital value (CV) of $10.5 million, would reduce by $1471 to $90,211 (-1.6%).
• Rates on a non-residential property, with a CV of $100,000, would rise $256 to $1645 (+18.4%).
• Rates on the average non-residential property, with a CV of $968,000, would rise $112 to $9036 (+1.3%).
• Rates on the average residential property, with a CV of $291,000, would rise $101 to $1570 (+6.9%).
Working party chairman Richard Walls said in a memorandum to today's meeting that the change would add, on average, $4.90 per year over 10 years to residential rates.
"The working party considered this outcome to be reasonable."
However, the effect on ratepayers will vary.
While all residential ratepayers can expect a rate increase, the combination of the changed differential and the "targeted rate" would mean bigger increases for some than others.
While the average residential property of $291,000 would have a 4.5% decrease in its general rate, it would pay a new $60 targeted rate.
Properties worth up to $175,000 would pay $45 and those over $340,000 would pay $120.
In the memorandum, Mr Walls said the targeted rate was designed to cover the costs of city promotion, the visitor centre, Tourism Dunedin, events and other economic development initiatives.
"The working party was of the view that those who benefit most should contribute proportionately more and that the accommodation, hospitality and retail sectors inside the central activity area benefit the most."
That will mean the targeted rate for commercial accommodation inside the central activity area of the city will be $750 and for retailers inside the area, $600. Commercial accommodation outside the area will pay $375 and retailers $300.
The $4.1 million income from the targeted rate will mean a reduction of that amount in the general rate.
The working party had reviewed commercial differentials in other cities in its efforts to find a way to "constrain" increasingly high rates on non-residential property.
