Rates review

Background

Rates provide around half of Council’s budgeted income and are the key income source for Council. Council’s remaining revenue is generated from fees and charges, subsidies and grants, Council investments, and distributions from Council Controlled Organisations like WestReef Services Ltd.

This income pays for roads, stormwater and wastewater systems, water supplies, libraries, parks and reserves, and other infrastructure and services that Council supplies to the community.

The rates billed each financial year (1 July – 31 June) consist of three components.

• Uniform Annual General Charge (UAGC)—The UAGC is a fixed amount billed to all properties (regardless of their value). For the rating year starting 1 July 2024, this is $580. 

• Targeted rates—Each household is billed for certain services or facilities that are available to the property. These include wastewater, recycling collection, and drinking water. This share is user-based, and properties are only charged when they have this service available. 

• General rates—The General Rate, or General Differential Rate, is set by dividing the remaining amount required to supply the various services to the communities by the land value of the district's properties. Each property will pay its share based on its land value and certain attributes, called differentials, that apply to it based on where it is located and the use of the land.

The rates review aims to review and improve how general rates are calculated and charged. It is not intended to change how targeted rates are calculated. If a rates review is carried out and adopted, rates will be re-calculated and redistributed. This will impact every ratepayer’s rates, some more and some less. 

Currently, the general rates are calculated based on 42 differentials. Differentials are differences between areas applied to a property depending on its location and use. The general rate component is determined using these and the property's land value. This large number of factors applied across the district results in comparable properties not paying comparable general rates. In some cases, the variances are extreme.

The outcome is that under the current system, many properties with similar values don’t pay similar general rates, even though general rates pay for all services that benefit the whole community. 

What has been done to date?

Over the last eleven years, Buller District Council has made several attempts to review the rating system without resolution.

• 2014: Council launched its first attempt to review the rates system, but decided to extend the timeline to complete the rates overhaul to refine the draft model proposed.
   
• February 2018: Council went out for public consultation, proposing to move away from using land value to capital value as the base to set general rates. After community submissions and feedback, it was rejected.  
  
  
• February 2021: Council suggested cutting the number of categories used to calculate general rates from 42 differentials to nine. This new formula was targeted to ensure comparable properties paid similar amounts in rates.Considering the community’s feedback, Council rejected the proposal and tasked staff to seek legal advice on Buller District Council’s rating system, due to concerns raised regarding the integrity of the Council’s rates database. 
  
  
• March 2022: Council received advice from an external consultant on its internal rates database, systems, and processes. The key outcomes of the external review and resolution can be read here. Following the recommendations, Council committed to pursuing an overhaul of the rates system but postponed the next review attempt until after the local government elections in October 2022. 
  
  
• September 2022: Before the election, Councillors decided on an indicative timeline for the rating system review to be undertaken by the new Council. The proposed timeline indicated that the rates review would start in November 2022 and be finalised by June 2023. 
  
  
• April 2024: As part of the 2024-25 Enhanced Annual Plan, Council proposed changing the way ‘multi residential’ and ‘multi commercial’ differentials for water and wastewater targeted rates, as well as ’major users’ rates, are charged, and aligning the policy more closely with the methods for charging targeted rates as set out in the Local Government (Rating) Act 2022.
  
  
• June 2024: As part of the deliberation process for the Enhanced Annual Plan, Council decided to review the proposed rating system for water and wastewater services and the general rate differential system as part of the Long-Term Plan 2025 – 2034. 
  
  
• September 2024: Council revoked the decision made at the Enhanced Annual Plan 2024-2025 deliberations to review the general rate differential system and the proposed rating system for water and wastewater services included in the 2025-2034 Long-Term Plan. This decision enabled Council staff to concentrate and complete more urgent projects like the 2025-2034 Long Term Plan, Local Water Done Well and Annual Report audits.