Wednesday, August 18, 2010

Simple rating fix for CBD = wishful thinking

   The Waikato Times (18-8-10) has suggested that Hamilton City faces a choice of a residential ratepayer $300 'subsidy' of CBD commercial properties in order to reduce CBD rates.
   The truth is that the issue is far  more complex than suggested by the Times... they have proposed reduced rates for the CBD would come about by introducing a capital value rating system (rating on the value of both land and buildings, as opposed to the current land value-only rating system) - a number of Councillors have jumped on this bandwagon, including Mayoral candidate Roger Hennebry, who should have known better.
   And it is interesting to see Gordon Chesterman calling the current Council 'gutless' for shieing away from the issue - I don't recall him putting any sort of alternative rating proposition forward during the whole of his 6 years on Council, but then its election time!
   The facts (although you shouldn't let them get in the way of a good story!) show that if you introduced capital value rating, many CBD commercial premises would actually face massive rate increases - so that would be no solution for them, would it?
   In 2000 a previous Council actually proposed a partial introduction of capital rating, with the balance remaining on land value - even under that cut-down version, I recall one small CBD cafe/lunchbar facing a rates increase of several hundred percent; clearly not sustainable. That suggested change involved about 8-10,000 ratepayers getting an increase in rates, and about the same number getting a rates cut....of course most of the 8-10,000 in line for an increase vigorously opposed the change, and almost none of those getting a cut submitted in support - so it died a quick death.
   The same would happen again if any Council was foolish enough to try and bring in capital value rating.
   What I suggested to the Times, but they didn't report, was that Council look at reducing the 'commercial differential' (the percentage loading that is put on all commercial prioperties when compared with residential ones) for CBD properties -rates income lost on this should be spread across other commercial properties outside the CBD as there is currently an uneven playing field with most non-CBD commercial property having significantly lower land values (and therefore rates) than CBD commercial properties.
   Under this scenario, The Base and Westfield Chartwell (who pay miniscule rates compared with similar developments elesewhere) would pay a slightly larger share, while CBD properties would pay less.
   There need be no increase on residential rates in order to do this - this and other alternatives also ought to be canvassed by the Times.
   Of course, this suggestion is by no means the complete answer - parking, promotion, CBD activities and sprucing up the CBD shops will also all need to play their part.

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