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Rural Advisory Panel
04 May 2018
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Feedback on Rates Remission and
Postponement Policy
File No.: CP2018/06112
Te take mō te pūrongo / Purpose of the report
1. To provide analysis of public feedback on the review of the Rates
Remission and Postponement Policy and to seek the views of the panel on the
proposed policy.
Whakarāpopototanga matua / Executive summary
Replacement of legacy schemes for natural heritage and community
and sporting organisations with grants
2. The
Rates Remission and Postponement Policy proposal provides for:
· transfer of current
budget for legacy remission schemes to the operating group with relevant
expertise (e.g. remissions budget for Natural Heritage will transfer to
Environmental Services while those for local community facilities will transfer
to the relevant local board as asset based service funding)
· current recipient
receives same support (exc GST) as a grant guaranteed for three years
· development of an
integrated approach to supporting outcomes for natural heritage, and community
and sporting activities across the region.
3. 112
submitters opposed the proposal and 28 supported it. 91 submitters, including
the Queen Elizabeth the Second Trust (QEII) and Royal Forest and Bird
Protection Society of New Zealand, wanted remissions retained for land with a
QEII covenant. 27 responses cited the uncertainty of on-going support. 24 thought
grants would require more administration. 9 respondents stated they would be
worse off as they were not GST registered.
4. Currently
there is significant regional variation in the level of support available and
how it is provided (for example, remissions, grants, subsidised rentals.) .
Depending on location, some properties are receiving multiple forms of council
funding. This leads to inequity and a lack of transparency in the use of
council funding.
5. This
proposal aligns this legacy funding with council’s broader funding for
these activities. The proposal is a transitional step that enables the relevant
council groups to integrate this legacy funding into regionally consistent
support schemes.
6. Officers
recommend that the proposal be adopted with the following amendments:
· budget increased by
$10,000 to cover the cost of GST for recipients not GST registered
· direct officers to
work with sector groups on the development of an integrated approach to council
support for these activities.
Introduction of a remission for the accommodation provider
targeted rate (APTR)
7. The
proposed remission provided for owners of no more than two serviced apartments
with long term fixed rental leases to hotel operators to receive a remission of
the APTR. The remission would be reduced in equal steps over ten years.
39 submitters supported and 30 were opposed to the proposal. 13 thought the
APTR should not be charged while 11 wanted the remission scheme to be more
generous.
8. Officers
recommend adoption of the APTR remission scheme as proposed.
Amendments to regional remissions
9. Six
submitters were supportive of aspects of the regional schemes, and none were
opposed. Officers recommend adoption as proposed.
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Ngā tūtohunga / Recommendation/s
That the Rural Advisory Panel:
a) endorses the proposal to:
i) transfer
current budget for legacy remissions schemes for natural heritage and
community and sports organisations to the operating group with relevant
expertise
ii) transfer
current budget for postponements for Great Barrier Island businesses to Great
Barrier Island Local Board
iii) grant
the current recipient the same support guaranteed for three years
iv) develop an integrated approach to supporting outcomes for natural
heritage, and community and sporting activities across the region
b) endorse
the Rates Remission and Postponement Policy in Attachment B to this report,
which includes the following amendments to the existing policy:
i) introduction of a remission scheme for the Accommodation Provider
Targeted rate.
ii) amendments to the remission for residents of residents of licence
to occupy retirement villages and Papakāinga housing to remove
references to retirement villages and the Interim Transport Levy
iii) amendments to simplify the remission for rates penalties
iv) removal of the legacy remissions schemes for natural heritage and
community and sports organisations and postponement for Great Barrier Island
v) amendments to the postponement for Manukau Sport Clubs to restrict
the scheme to current applicants and to close off the scheme after three
years.
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Horopaki / Context
10. Council
is required to review and consult on its Rates Remission and Postponement
Policy every six years. The policy was last reviewed in 2012.
11. The
policy offers eleven legacy remissions and postponement schemes that were
carried over from the previous councils. These schemes only apply in the
district of the originating council. They providing varying levels of support
for:
· community and
sporting organisations
· rating units
protected for natural or historic or cultural conservation purposes
· commercial
properties on Great Barrier Island.
12. A
summary of the level of funding provided by these remission schemes by local
board is in Attachment C.
13. The
policy also includes seven regional schemes that provide financial assistance
or address anomalies in how rates are applied.
14. When
the APTR was adopted in 2017 the council asked officers to consider
applications for remissions for properties with long term fixed rental
agreements with hotel operators and forward contracts that didn’t include
provision for price adjustments. These were considered under the
Remission of Rates for Miscellaneous Purposes scheme.
15. A
review of the Rates Remission and Postponement Policy was undertaken by
officers. Local Boards provided feedback on the draft Rates Remission and
Postponement Policy at their December meetings. The draft policy for
consultation was agreed by the 27 February meeting of the Finance and
Performance Committee.
16. Consultation
was open to the public from 13 March to 13 April. Notification of the
consultation was targeted to:
· current recipients
of legacy remission and postponement schemes
· ratepayers currently
charged the Accommodation Provider Targeted Rate
· administrators for
retirement villages currently receiving the remission for licence to occupy
retirement villages and Papakāinga.
· relevant key
stakeholders including the Queen Elizabeth II Trust and Forest and Bird.
Tātaritanga me ngā tohutohu / Analysis and advice
17. Analysis
of feedback and officers responses has been separated into the key issues on
which feedback was received. A summary of feedback by Local Board is in
Attachment A.
Legacy remission and postponement schemes
Proposal
18. The
proposal retained the current budget for each legacy scheme and transferred
administration and budget to the operating group with the relevant
expertise. Decision making for regional activities would fall under the
relevant operating group delegation and local asset based services with local
boards.
19. Support
would be provided in the form of a grant rather than a remission. Current
recipients would receive a grant (exc GST) at the same level as the existing
remission for a period of three years adjusted for any changes in their rates.
20. Officers
would report back on the integration of these grants with a wider approach to
supporting these activities, developed with sector groups, within the three
year transition.
21. The
draft policy retained the postponement of rates for two Manukau golf clubs for
a period three years after which it would expire. At the end of the three
years any postponed rates would remain as a liability on the property, to be
paid on sale or transfer of the property.
Feedback
22. 153
submitters provided feedback on the proposal for legacy schemes for natural
hertage and community and sports organisations. Responses are summarised in the
table below:
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Feedback on Legacy Remission
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Number of submitters who:
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Responded
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Commented
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Hold a remission
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Supports proposal
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28
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13
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15
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Opposes proposal
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112
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105
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58
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Other comment
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13
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13
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10
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Total
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153
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131
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83
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Feedback related to remissions for
natural heritage
23. 105
submitters commented on legacy remissions for natural heritage, with 91 opposed
to the proposal. Key themes from feedback and officers comments are set out in
the table below.
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Theme
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Feedback
Points
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Officers
Comments
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QEII covenanted land should be
non-rateable
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37
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Land is only non-rateable if owned or
used by (for example under a lease) the QEII trust. The QEII Trust is
empowered by its establishing legislation to pay the rates on land that has a
covenant to the Trust
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Will be worse off because not GST
registered
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9
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Officers recommend funding the GST
component which would leave recipients in the same position as currently.
This will cost $10,000.
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Ongoing support (after three
years) is uncertain
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27
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Neither grants nor remissions
guarantee on-going support, as policies can be changed. All support should be
subject to regular review to ensure value for ratepayers in terms of outcomes
achieved.
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Grants require more administration
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24
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Grants can provide long-term support
with same administration requirements as current schemes. Properties in
Waitakere already receive grants for rates
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Grants will not encourage people
to covenant land in future
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29
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The incentive value of remissions is
minimal compared to the opportunity cost of covenanting land. Council offers
grants that can be used for costs associated with covenanting land.
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Remissions recognise value to
environment of QEII covenants
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49
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Grants offer flexibility to increase
recognition of the beneficial outcomes achieved.
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Remissions recognise the cost of
maintaining covenanted land
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50
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Amount of remission is limited to the
amount of rates charged to the land and is not related to the costs of
maintenance. Grants provide more flexibility in level of support offered.
This issue can be considered when options for future support are developed.
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Costs of maintaining QE2 land as
identified in Waikato study[1]
which put the cost to owners for establishing a covenant at $64,000, and the
annual cost of maintain the land at $6000.
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12
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Figures in the study were derived
from a sample of properties with QE2 covenants, of which 11 were in Auckland.
For the Auckland sample, the study records an average cost for establishment
as $8,457 in cash and $2,818 in non-cash costs. Annual maintenance costs were
$319 cash and $1,062 non-cash.
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Removing remissions is
inconsistent with RMA and/or Unitary Plan
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22
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Council uses a variety of mechanisms
to meet its obligations under the RMA and Unitary Plan.
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Extend remissions to SEAs
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9
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Significant Ecological Area status
does not guarantee enduring protection for native habitats
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Feedback related to remissions for
community and sporting organisations
24. 36
submitters commented on legacy remissions for community and sporting
organisations, of which 15 represented organisations receiving a remission. The
following table sets out the key themes from submitters commenting on
remissions for community groups.
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Theme
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Feedback
Points
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Officers
Comments
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Ongoing support
is uncertain
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14
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Neither grants nor remissions
guarantee on-going support, as policies can be changed.
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Grants require
more administration
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11
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Grants can provide long-term support
with same administration requirements as current schemes.
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Support should be
continue because of the benefit the organisation provides to the community
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13
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Feedback reflects concerns for continuation
of support rather than the form in which it is received.
It is proposed that options for
future support be developed with input from relevant sectors within the three
years.
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Removing support
will have significant financial impact on organisation
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12
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Supports grants
or remissions so long as support maintained
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2
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Rates cost will
need to be met through existing funding agreement with council
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1
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Harmonising
funding mechanisms will reduce administration for some organisations
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25. No
feedback was received on the proposals for postponements for Manukau Sports
Clubs that are provided to two golf clubs. One submitter opposed the transfer
of rates postponements to Great Barrier Island businesses to grants as they
thought any future loss of support may make essential services financially
unviable.
Key Stakeholder Feedback
26. The
Queen Elizabeth the Second Trust and Forest and Bird, opposed the proposal to
replace legacy remissions with grants for QEII covenanted land. The feedback of
the QE II Trust and Forest and Bird reflect the key feedback points above.
Federated Farmers considered that transitioning legacy remissions for natural
heritage and community and sporting organisations to grants would signal a lack
of committment by council to these activities. Both the QE II Trust and
Federated Farmers supported consideration by the council of grants in addition
to remissions for QEII covenanted land.
Remission for the Accommodation provider targeted rate
Proposal
27. The
draft policy proposed a new remission scheme to remit APTR for the following:
· properties used as emergency accommodation, in proportion to the
amount of time and the part of the property that is put to this use
· ratepayers
who own no more than two serviced apartments, who are paid a fixed rent by a
hotel operator (with no profit sharing), and who are unable to pass on the cost
of the rate and unable to exit the contract before the start of rating year. (A
partial remission will apply where the lease to the accommodation operator
expires during the rating year.) This remission will be phased out over
10 years, with the amount of remission available declining by a tenth each
year.
28. Remissions
under this scheme are expected to cost ratepayers $1.2 million in 2018/2019,
with this amount declining over the next ten years.
29. 73
submitters provided feedback with 39 in support of the proposal and 30 opposed.
Of those opposed, 5 thought the remission should be more generous. The key
themes from feedback are shown in the table below:
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Response to
Remissions
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Feedback
Points
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Officers
Comments
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Remission assists
those who most need it
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2
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This feedback reflects the key issues for and against
adoption of an APTR remission
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Remission
supported because can't pass on rate to operator
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12
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Remission
shouldn't be offered - everyone should pay
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4
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No APTR should be
charged
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13
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6 supported and 6 opposed the proposal
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Remission should
be available to more properties
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8
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3 supported, 4 opposed proposal
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Full remission
should be granted until lease ends
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3
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1 supported proposal
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Should use bed
tax or similar charge rather than APTR
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7
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2 supported, 1 opposed proposal
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30. None
of the key stakeholder organisations notified of the consultation opted to make
a submission.
Amendment to regional schemes
Proposal
31. The
proposed changes are:
· rates
penalties – simplifying the scheme for easier administration
· license
to occupy retirement villages and Papakāinga housing – removes references
to:
o retirement
villages as residents now qualify for central government rates rebates
o Interim
Transport Levy (should this levy not be continued.)
· remission
for rates transition management policy change properties – this scheme is
redundant.
Feedback
32. Two
submitters supported the proposed change to the Remission for licence to occupy
retirement villages and Papakāinga scheme. Grey
Power requested that the scheme remain unchanged until the rates rebate process
has been established. 4 submitters broadly supported the policy. Grey Power and
4 other submitters wanted greater support for older/retired residents in
general.
33. One
submitter supported the changes to the penalty scheme.
Conclusions and Recommendations
34. Officers
recommend that for the legacy remissions schemes:
· transfer
of the current budget to the operating group with relevant expertise
· current
recipient receives same support (exc GST) as a grant guaranteed for three years
· development
of a standardised approach to support of these outcomes across the region
· an
increase in the budget of $10,000 to cover GST cost for recipients not
registered for GST.
35. The
proposal:
· maintains
supports for existing recipients with a three year transition
· aligns
responsibility for these grants with relevant areas of council
· allows
this support to be considered alongside other sources of funding as regionally
consistent support mechanisms are developed
· remove
the current legacy remissions schemes.
36. Grants
are recommended over remissions as they offer greater transparency and
oversight for rates expenditure. The proposal provides a first step in
transitioning the issue of equitable council support for natural heritage and
community and sporting organisations and recognises that support is currently
inconsistent across the region. Currently, some areas may be able access
remissions while others receive grants, subsidised rents or are directly
supported to deliver services for council. For example, two sports facilities
receive remissions and community access grants, while 16 of the 42 recipients
of the Green Network Grants for rates also claim the rates remission.
37. Officers
also recommend the changes to the regional schemes in the Rates remission and
postponement policy and the introduction of a scheme for the Remission of the
accommodation provider targeted rate be adopted as proposed.
Alternative Options
38. Officers
considered the following alternatives but do not recommend them. The council
could choose to:
· retain the existing
schemes - this will continue the current inequities in regional support.
· remove the schemes
without a transition -potential for significant impact for current
recipients particularly as other forms of council support are not always
consistently available across the region.
· extend the remission
schemes to cover the entire region - would require further policy work to
develop appropriate options and have substantially increased cost. Does not
align support with other council funding mechanisms. Level of support
determined by rates (driven by property values) rather than outcomes achieved.
Ngā whakaaweawe ā-rohe me ngā tirohanga a te
poari ā-rohe /
Local impacts and local board views
39. Implications for local boards are set out in the report. Under the
proposal boards will be provided with additional asset based service funding to
maintain the existing level of support for local community and sports groups in
their board area that currently receive remissions (or postponements in the
case of Great Barrier Island).
40. The
amount of support provided by the rates remission and postponement policy
varies significantly by local board area. (A summary of the amount of
remissions, and the individual schemes by board area is in Attachment C.) In
other areas, support may be provided to through grants, discounted rentals, and
the direct provision of facilities and services by council. Within the three
year transition period, officers will report back on options for integrating
funding mechanisms across the region.
41. Analysis
of feedback by local board area is Attachment A to the report
Tauākī whakaaweawe Māori / Māori impact
statement
42. No significant feedback was received
from Māori or Māori organisations. Māori land is eligible for
support under the Rates remission for Māori freehold land policy.
This policy is not under review.
Ngā ritenga ā-pūtea / Financial implications
43. The financial implications are set out in the report.
Ngā raru tūpono / Risks
44. There are no identified risks.
Ngā koringa ā-muri / Next steps
45. Local
board feedback will reported to the 30 May meeting of the Finance and
Performance Committee for the consideration and adoption of the Rates Remission
and Postponement Policy.
Ngā
tāpirihanga / Attachments
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No.
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Title
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Page
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a⇩
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Feedback on the Draft Rates Remission and Postponement
Policy summarised by Local Board
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35
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b⇩
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Attachment E: Draft Rates remission and postponement
policy
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37
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c⇩
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Remission Data for the Rural Advisory Panel
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47
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Ngā kaihaina / Signatories
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Author
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Beth Sullivan - Principal Advisor Policy
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Authorisers
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Matthew Walker - Acting Group Chief Financial Officer
Andrew Chin, Healthy Waters and Resilience Manager
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