SunLive – Commission approves proposed commercial pricing change

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The Tauranga board has approved a proposed rating change for the commercial and industrial sector.

In a statement following Monday’s board meeting, a spokesperson said the proposal is “a further step towards ensuring the industry pays a fair share of operating and capital costs in city ​​infrastructure.

The proposal will be consulted as part of the 2022/23 annual plan.

Excluding water charges, the commercial sector currently contributes 23% of total tariff revenues.

This is less than most New Zealand metropolitan local centres, where the commercial and industrial sector contributes an average of 30% of total tariffs.

A review of the scoring system was requested by commissioners last year when they approved the 2021/31 long-term plan, to explore options for more evenly sharing the cost of infrastructure investments, in particular transportation.

Commission Chair Anne Tolley said independent research shows that just over half of daily trips on the city’s transport network were related to commercial and industrial activities, but the sector contributed to less a quarter of revenue from transport tariffs.

“This means that residential ratepayers are paying more than they should, relative to the benefits they are receiving, and this anomaly needs to be corrected.”

Commissioners decided to propose a change to both the general rate differential and the existing target transmission rate, which would see the commercial and industrial sector contribute half of the funding for transmission activity.

The existing general rate differential of 1.6 (meaning a business pays $1.60 in rate for every dollar paid by a residential ratepayer, for property of the same value) is significantly lower than other councils in metro and the proposed change will bring Tauranga more online. with other centers.

Anne says the commission understands that many companies are currently facing economic headwinds, but the council would work with the sector through the annual plan consultation process to find and implement an equitable solution.

“The options available to us are to increase the general commercial rate differential from July 1, 2022, or to spread the change over two or three years, to smooth the impact on commercial ratepayers. Our preferred option is to spread the change over two years, but we are very keen to hear commercial and community views on this. »

Monday’s decision comes as the council’s latest budgets are $61 million for transmission network projects in 2022/23, rising to more than $300 million by 2030/31 to reflect investment from increasingly important needed in the transport network.

Over $2 billion is budgeted for transportation activity over the next 10 years.

Landlords will be able to see the impact of the proposed changes on their rates via a rate calculator available on the Tauranga City Council website once consultation of the annual plan begins on March 25.

The latest revaluation of commercial properties across the city reflects the impact of Covid-19 on the hospitality and retail sector, in particular.

Below-average land value increases for downtown properties mean that around 29% of commercial properties in the CBD will have no rate increase or even a rate drop in 2022/23.

Nearly two-thirds (63%) of commercial properties in the CBD will see similar or lower increases than residential areas where assessments have risen significantly.

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