Thousands of Auckland properties face 35 per cent rates rise in council cash-raising plan

Thursday, 5 November 2020

Mayor Phil Goff delivers the Auckland Council's emergency budget (July 2020).

More than 15,000 properties could face a rates rise of at least 35 per cent under Auckland Council plans to boost revenue.

The biggest boost of $28 million would come from a higher rating on land zoned as residential, commercial or industrial which is either vacant or undeveloped.

Council officials estimated 15,500 homes could see their rates rise at least 35 per cent under the plan, with 1,400 business properties facing rises starting at 82 per cent.

On one underdeveloped downtown property alone, rates would jump from $604,000, to just over $1 million.

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Zoned but undeveloped urban land is being eyed as a possible source of additional rates.

The proposal is part of a range of potential tweaks, including a new rate to fund investments to tackle climate change and one to help affordable housing initiatives.

They were canvassed in a late October closed-door workshop of councillors as they start work on the next 10-year budget, but are not settled on, and some or all may not advance.

In a presentation obtained by Stuff, officials described the increased rates as having “a small impact on holding costs and incentive” (to develop).

The notion of higher rates for undeveloped urban land, has been criticised by local government consultants McGredy Winder, which worked with hoteliers opposing the APTR.

“It is a revenue grab, lacking in any public policy merit on the basis of the principles of revenue policy. It will have no impact on the problem it purports to address and will inevitably be applied in an arbitrary way,” said consultant James Bews-Hair.

Thousands of homes just outside the Metropolitan urban limit might face higher rates under a new urban boundary.

“It continues the very unfortunate hunt for the magic money tree that has bedevilled local government for years. There is no tree and it [is] simply a distraction from quality and meaningful policy making.”

A spokesman for the mayor’s office said a targeted rate on vacant land was simply one of a range of options, and would apply only to vacant land with households not impacted.

“It would create greater fairness in the rating system* while providing additional revenue to invest in the city’s infrastructure,” said the statement from the mayor’s office.

An additional rate on Auckland hotels may be suspended longer as tourists are replaced by visitors in isolation

Auckland Council has plenty of grounds to beef-up revenue, with a $450 million revenue hit forecast this year due to Covid-19, and the possibility that slump may extend into subsequent years.

Another cash booster looked at was to re-define the area liable for higher, urban rates to include more rural areas.

The council estimates 9,900 currently rural residential or business properties would be hit with increases of around 10 per cent, bringing in an extra $2.3 million.

A targeted rate is being considered to help mitigate climate change.

On the minus side, the council is weighing up extending the suspension of a $14 million additional rate imposed in 2017 on hotels, motels and short-term holiday rentals.

The Accommodation Provider Targeted Rate (APTR) was an initiative of the mayor Phil Goff, but was this year suspended until March 2021 due to the impact of Covid-19 on the tourism sector.

One option being considered for public consultation, is extending the suspension until the end of 2021.

A targeted rate for climate change measures is being considered with one suggestion of $46 or more per residential property.

Officials spoke against a possible rate on unoccupied homes, arguing the number of properties is little changed over 14 years, and there is no legislative grounds to support the idea.

The workshop noted, but didn’t detail the arguments for, a targeted rate to accelerate the building of genuinely affordable homes.

However, a report to Thursday’s planning committee shed more light on how the scheme might work.

“Council would need to work with Community Housing Providers (CHPs) to set in place a framework for investing revenue from any targeted rate into an affordable housing programme that delivers a pool of affordable housing across Auckland,” said the report.

Officials saw significant costs and risks in introducing such a rate.

“There would be an additional rates burden impacting all households, a shift in terms of Auckland Council’s role in affordable housing activity, and any scheme would require a clear and costed business case and delivery framework,” said the report.

October’s closed-door workshop is understood to have made no firm decisions, and work continues leading up to the budget proposal by Mayor Phil Goff in December, which precedes public consultation.