Part D: ​Financial information

Funding Impact Statement – Rating Mechanisms

Rates

Rates are a property tax to fund local government activities. Rates are assessed under the Local Government (Rating) Act 2002 (the Act) on rating units in the Rating Information Database. Where rates requirements are allocated based on property value, the capital value of the property as assessed by the Council’s valuation services provider will apply. The latest city-wide revaluation was carried out as at 1 September 2012. This revaluation remains effective for the 2015/16 rating year, except where subsequent maintenance valuations have been required under valuation rules or the Council’s rating policies.

City-wide revaluations are performed every three years. The next city-wide revaluation will be carried out as at 1 September 2015 and will be effective for the 2016/17 rating year and the two consecutive rating years (subject again to subsequent maintenance valuations).

Policy objective:

General RatesTop

General rates are set under section 13 of the Act on all rateable rating units in the City of Wellington.

The Council proposes to set a general rate based on the capital value of each rating unit within the city.

The general rate will be set on a differential basis, based on land use. All rating units (or part thereof) will be classified for the purposes of general rates within one of the following rating differentials.

Differential Rating CategoriesTop

Base Differential

This includes:

a. Separately rateable land used solely for one or more household units; excluding those properties that provide short stay (28 days or less) commercial accommodation for which a tariff is charged
b. Vacant land zoned residential
c. Rural land (including farmland and lifestyle blocks) under the District Plan that is administered by the Council, but excluding any rating unit that is used for rural industrial purposes
d. ​​Separately-rateable land occupied by a charitable organisation which is deemed by the Council to be used exclusively or principally for sporting, recreation or community purposes and that does not generate any private pecuniary profit.

This category has a general rate differential rating factor of 1.0.

Commercial, Industrial and Business Differential

This includes:

a. Separately-rateable land used for a commercial or industrial purpose
b. Vacant land zoned commercial, industrial or rural industrial under the District Plan administered by the Council
c. Land used for offices, administrative and/or associated functions
d. Land used for commercial accommodation for which a tariff is charged and where the principal purpose is the provision of short stay (28 days or less) accommodation
e. Business-related premises used principally for private pecuniary benefit
f. Utility networks
​g. Any property not otherwise categorised within the Base Differential.

This category has a general rate differential rating factor of 2.8.

Differential Rating Category Conditions

Differential rating 2.8:1 Commercial: Base

a) The total capital value of the rating unit is above $800,000 or
b) Minority use(s) account for more than 30 percent of the total capital value of the rating unit.

In any other case, the General rate differential is determined by principal use.

a) The time at which the Council gives final approval of the completed works, or
b) The property is deemed (by the Council) to be available for its intended use.

Uniform Annual General Charge

The Council does not assess a uniform annual general charge.

NON-RATEABLE LANDTop

Non-Rateable

Includes any land referred to in Part 1, Schedule 1 of the Act. This land is non-rateable with the exception of targeted rates solely for sewerage and water where the service is provided.

50 Percent Non-Rateable

Includes all land referred to in Part 2, Schedule 1 of the Act. This land is 50 percent non-rateable in respect of the rates that apply, with the exception of targeted rates for sewerage and water for which the land is fully rateable if the service is provided.

Targeted RatesTop

Targeted rates are set under section 16 of the Act.

The Council has not adopted any lump sum contribution schemes under part 4A of the Act in respect of its targeted rates, and will not accept lump sum contributions in respect of any targeted rate.

Sewerage Rate

Targeted sewerage rates are to be apportioned 60 percent:40 percent of rates between properties incorporated under the Base differential and the Commercial, Industrial and Business differential in accordance with the Revenue and Financing Policy. This rate pays for the cost of the provision of the sewerage treatment facilities for the city.

For the purposes of these rates the sewerage collection and disposal service is treated as being provided if the rating unit is connected to a public sewerage drain (either directly or indirectly), irrespective of whether the property is considered fully rateable or is mandatory non-rateable or 50 percent non-rateable under Schedule 1 of the Act.

The targeted Sewerage rate is calculated as follows:

For rating units incorporated in the Commercial, Industrial and Business differential:

A rate per dollar of capital value on all rating units connected to a public sewerage drain, to collect 40 percent of the required rates funding, after having deducted the total dollar amount budgeted to be collected through Trade Waste Charges (excluding consent fees).

For rating units incorporated in the Base differential:

A fixed amount per annum per rating unit for administration, plus a rate per dollar of capital value on all rating units connected to a public sewerage drain, to collect 60 percent of the required rate funding.

Water Rate

A targeted rate for water is to be apportioned with the aim of achieving a 60 percent:40 percent split between properties incorporated under the Base differential and the Commercial, Industrial and Business differential in accordance with the Revenue and Financing Policy.

This rate pays for water collection and treatment facilities, the water distribution network and water conservation for the city.

This rate is set on all rating units serviced by a water connection.

For the purposes of these rates, the water service is treated as being provided if the rating unit is connected to the public water supply (either directly or indirectly), irrespective of whether the property is considered fully rateable or is mandatorily non-rateable or 50 percent non-rateable under Schedule 1 or 2 of the Act.

The targeted Water rate is calculated as follows:

For rating units incorporated in the Commercial, Industrial and Business differential, either:

a) A consumption unit rate per cubic metre of water used for all rating units connected to the public water supply with a water meter installed, plus a fixed amount per annum per rating unit for administration.
Or
b) A rate per dollar of capital value on all rating units connected to the public water supply, without a water meter installed.

For rating units rated incorporated in the Base differential, either:

a) A consumption unit rate per cubic metre of water used for all rating units connected to the public water supply with a water meter installed, plus a fixed amount per annum per rating unit for administration.
Or
b) A fixed amount per annum per rating unit for administration, plus a rate per dollar of capital value on all rating units connected to the public water supply without a water meter installed, to collect the required Base differential contribution.

Stormwater Network Rate

A targeted stormwater rate is to be apportioned 77.5 percent to the non-rural rating units incorporated under the Base differential and 22.5 percent to the non-rural rating units incorporated under the Commercial, Industrial and Business differential in accordance with the Revenue and Financing Policy.

This rate pays for the cost of the provision of the stormwater collection/disposal network for the city.

Properties classified as rural under the Council’s District Plan are excluded from the liability of this rate.

The targeted Stormwater network rate is calculated as follows:

For non-rural rating units incorporated in the Commercial, Industrial and Business differential:

A rate per dollar of capital value to collect 22.5 percent of the required rates funding.

For non-rural rating units incorporated in the Base differential:

A rate per dollar of capital value to collect 77.5 percent of the required rates funding.

Commercial, Industrial and Business Sector Targeted Rate

This rate pays for activities where the Council’s Revenue and Financing Policy identifies that the benefit can be attributed to the commercial, industrial and business sector and where the activity is not incorporated in other service related targeted rates. This incorporates the following:

This rate is assessed on all properties incorporated in the commercial, industrial and business sector and is calculated on a rate per dollar of rateable capital value.

Base Sector Targeted Rate

This rate pays for activities where the Council’s Revenue and Financing Policy identifies that the benefit can be attributed to properties incorporated under the Base differential rating category (incorporating residential ratepayers). This incorporates the following activities:

This rate is assessed on all properties incorporated under the Base differential rating category and is calculated on a rate per dollar of rateable capital value.

Downtown Targeted Rate

This rate pays for tourism promotion and retail support (free weekend parking). It also pays for:

This rate is assessed on all commercial, industrial and business properties in the downtown area and is calculated on a rate per dollar of rateable capital value. For the purposes of this rate, the downtown area refers to the area as described by the Downtown Area map as follows:

Downtown Levy Area map.

Tawa Driveways Targeted Rate

This rate pays for the maintenance of a specified group of residential access driveways in the suburb of Tawa, overseen by the Council. This rate is assessed on a specific group of rating units that have shared access driveway that are maintained by Council in the former Tawa Borough at a fixed amount per annum per rating unit.

Marsden Village Targeted Rate

This rate is collected by the Council on behalf of the Marsden Village Association on all commercial, industrial and business properties in the Marsden shopping village (see map below) and is calculated on a rate per dollar of capital value to fund the maintenance of the area.

Karori map.

Miramar Business Improvement District Targeted Rate

This rate is set by Council to fund the Business Improvement District activities of Enterprise Miramar Peninsula Incorporated.

The category of land for which this rate is set is on all rating units within the Miramar Business Improvement District (see map) which are subject to the “commercial, industrial and business” differential, but excluding any rating unit that is a substation or used by local or central government for a non-business purpose.

Liability for this rate is calculated as a fixed amount per rating unit, plus a rate per dollar of capital value for any capital value over $1 million per rating unit.

Miramar map.

Khandallah Business Improvement District Targeted Rate

This rate is set by Council to fund the Business Improvement District activities of the Khandallah Business Association Incorporated.

The category of land for which this rate is set is on all rating units within the Khandallah Business Improvement District (see map) which are subject to the “commercial, industrial and business” differential, but excluding any rating unit that is a substation.

Liability for this rate is calculated as a rate per dollar of rateable capital value.

Khandallah map.

Indicative RatesTop

The following table shows the indicative residential and commercial property rates inclusive of GST for a selection of billing categories for 2015–16:

Indicative residential property rates (for properties without a water meter)   Indicative suburban commercial property rates (for properties with a water meter). This excludes water by consumption which is charged on actual usage.   Indicative downtown commercial property rates (for properties with a water meter). This excludes water by consumption which is charged on actual usage.
Capital Values

$
2015/16 Rates

$
Increase over
2014/15
%
  Capital Values

$
2015/16 Rates

$
Increase over
2014/15
%
  Capital Values

$
2015/16 Rates

$
Increase over
2014/15
%
200,000 1,122 4.13%   1,000,000 9,995 6.67%   1,000,000 12,204 5.43%
300,000 1,542 4.53%   1,250,000 12,462 6.69%   1,250,000 15,222 5.44%
400,000 1,963 4.75%   1,500,000 14,928 6.70%   1,500,000 18,241 5.45%
500,000 2,383 4.90%   1,750,000 17,395 6.71%   1,750,000 21,260 5.45%
600,000 2,804 5.00%   2,000,000 19,862 6.72%   2,000,000 24,279 5.46%
700,000 3,224 5.08%   2,250,000 22,328 6.72%   2,250,000 27,297 5.46%
800,000 3,645 5.14%   2,500,000 24,795 6.73%   2,500,000 30,316 5.46%
900,000 4,065 5.18%   2,750,000 27,261 6.73%   2,750,000 33,335 5.47%
1,000,000 4,486 5.22%   3,000,000 29,728 6.73%   3,000,000 36,354 5.47%
1,100,000 4,906 5.25%   3,250,000 32,195 6.74%   3,250,000 39,372 5.47%
1,200,000 5,326 5.28%   3,500,000 34,661 6.74%   3,500,000 42,391 5.47%
1,300,000 5,747 5.30%   3,750,000 37,128 6.74%   3,750,000 45,410 5.47%
1,400,000 6,167 5.32%   4,000,000 39,594 6.74%   4,000,000 48,429 5.47%
1,500,000 6,588 5.34%   4,250,000 42,061 6.74%   4,250,000 51,447 5.47%
1,600,000 7,008 5.35%   4,500,000 44,528 6.74%   4,500,000 54,466 5.48%
1,700,000 7,429 5.37%   4,750,000 46,994 6.74%   4,750,000 57,485 5.48%
1,800,000 7,849 5.38%   5,000,000 49,461 6.75%   5,000,000 60,504 5.48%

Rating Unit ProjectionTop

The following table shows the projected residential and commercial rating units over the period of the Long-term Plan:

Rating Sector 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25
Base (Residential) 71,512 72,370 73,456 74,558 75,900 76,810 77,578 78,354 78,981 79,613
Commercial, Industrial & Business 5,376 5,441 5,522 5,605 5,706 5,774 5,832 5,890 5,937 5,985
Total Rateable Units 76,888 77,811 78,978 80,162 81,605 82,585 83,411 84,245 84,919 85,598

Funding Impact Statement (excluding GST)Top

Rate Category Factor Differential Charge Type Total Value of Factor Rate/Charge Rates Yield GST exclusive $000
General Rate Base (Residential) Capital Value Base differential use $36,978,901,000 c0.223675 $82,713
Commercial, Industrial & Business Capital Value Commercial, industrial & business use $10,917,500,000 c0.625510 $68,290
Total         $151,003
Sewerage targeted rate Base (Residential) Fixed amount / rating unit Base differential use per connection status 67261 properties $106.60 $7,170
Capital Value Base differential use per connection status $39,305,293,000 c0.042882 $16,855
Commercial, Industrial & Business Capital Value Commercial, industrial and business use per connection status $9,278,961,000 c0.144413 $13,400
Total         $37,425
Water targeted rate Base (Residential) (without water meter) Fixed amount / rating unit Base differential use per connection status without a water meter 59317 properties $137.70 $8,168
Capital Value Base differential use per connection status without a water meter $31,725,203,000 c0.045198 $14,339
Base (Residential) (with water meter) Consumption unit charge Base differential use per connection status with a water meter n/a $1.944 / m3 $392
Fixed amount / rating unit Base differential use per connection status with a water meter n/a $111.90 $76
Commercial, Industrial & Business (without water meter) Capital Value Commercial, industrial and business use per connection status without a water meter $562,304,000 c0.405475 $2,280
Commercial, Industrial & Business (with water meter) Consumption unit charge Commercial, industrial and business use per connection status with a water meter n/a $1.944 / m3 $12,684
Fixed amount / rating unit Commercial, industrial and business use per connection status with a water meter n/a $111.90 $352
Total         $38,291
Stormwater targeted rate Base (Residential excluding rural) Capital Value Base differential use (excluding rural) $36,458,694,000 c0.037078 $13,518
Commercial, Industrial & Business (excluding rural) Capital Value Commercial, industrial and business use (excluding rural) $9,654,642,000 c0.040644 $3,924
Total         $17,442
Base sector targeted rate Base (Residential) Capital Value Residential use $36,923,649,000 c0.016781 $6,196
Commercial sector targeted rate Commercial, Industrial & Business Capital Value Commercial, industrial & business use $10,887,500,000 c0.047385 $5,159
Downtown targeted rate Commercial, Industrial & Business Capital Value Commercial, industrial & business use located in the downtown area $7,416,843,000 c0.192049 $14,244
Tawa driveways targeted rate Base (Residential) Fixed amount / rating unit Shared residential access driveways maintained by Council in the suburb of Tawa (extent of provision of service) 251 properties $133.33 $33
Marsden Village targeted rate Commercial, Industrial & Business Capital Value Commercial, industrial & business use located in Marsden shopping village area $11,905,000 c0.121538 $14
Khandallah Business Improvement District targeted rate Commercial, Industrial & Business Capital Value Commercial, industrial & business use located in the Khandallah Business Improvement District area $13,215,000 c0.151343 $20
Mirarmar Business Improvement District targeted rate Commercial, Industrial & Business Fixed amount / rating unit Commercial, industrial & business use located in the Mirarmar Business Improvement District area 128 properties $365.00 $47
Capital Value over $1,000,000 per rating unit Commercial, industrial & business use located in the Mirarmar Business Improvement District area for all capital value over $1,000,000 CV per rating unit $84,170,000 c0.039539 $33
Total         $80
Total Rates Requirement (excluding GST) $269,908

NOTE: When rates for 2015/16 are assessed, GST will be applied to the final rates. The total rates requirment includes rates remissions but excludes rates penalties which are budgeted separately

Rates Remission and Postponement PoliciesTop

Refer to the Council Rates Remission and Postponement Policies. Changes to the rates remission policy are described in Volume 2, pages 117 and 127.