Tauranga City Council have approved a rating change for the commercial and industrial sector as a further step towards ensuring the sector pays a fair share of the city’s operating and infrastructure investment costs. The proposal was consulted upon as part of the 2022/23 Annual Plan.
Excluding water charges, the commercial sector is currently contributing 23% of total rates revenue. This is significantly less than most New Zealand metropolitan local centres, where the commercial and industrial sector contributes an average of 30% of total rates.
A review of the rating system was requested by commissioners when they approved the 2021-31 Long Term Plan, to explore options for sharing the cost of investment in infrastructure, particularly transport, more equitably.
Commission Chair Anne Tolley said the council had worked with the sector through the annual plan consultation process to find and implement a more equitable solution.
“We met with commercial and industrial property-owners, as well as businesses, earlier this year to talk to them about the proposed changes. Even though many are facing economic headwinds, at the moment, the vast majority were in support of the change, because they understand that we have to continue investing in our infrastructure.”
The consultation came on the back of independent research which showed just over half of the daily trips on the city’s transport network related to commercial and industrial activities, but the sector contributed less than a quarter of transport rates revenue.
Commissioners resolved to change both the general rate differential and the existing targeted transport rate, which would see the commercial and industrial sector contribute half of the funding for the transport activity.
A two-year phase-in period was approved, so the commercial and industrial sector’s general rate differential will move to 1.9 and their transportation targeted rate differential will move to 3.33 in 2022/23. The second phase, planned for the 2023/24 Annual Plan process, will be to move the commercial and industrial sectors’ general rate differential to 2.13 and their transportation targeted rate differential to 5.
The Commissioners also requested at the 2022/23 Annual Plan deliberations meeting on 24 May that staff continue to look at further options for appropriate rating within the commercial and industrial sectors.
“Previously, residential ratepayers were paying more than they should, compared to the benefits they received from the transport network, and that anomaly needed to be addressed. This change ensures our rating system is fairer for all ratepayers,” Anne said.
The decision comes as the council budgets to invest $90 million in the transportation network projects in 2022/23, rising to nearly $300 million by 2030/31, to reflect the increasingly significant transport investment needed. Over $2 billion is budgeted for the transport activity over the next 10 years.
Following the adoption of the 2021-31 Long Term Plan Amendment and 2022/23 Annual Plan budget, ratepayers will receive a rates assessment and first invoice in August.
Property owners will continue to be able to see the impact of the proposed changes on their rates via the rates calculator which is available on the Tauranga City Council website.