Changes to property values shown in rates increases

Editorial submission from Mayor Helen Lash - FOR IMMEDIATE RELEASE

Late last year QV undertook their three-yearly revaluation of properties in Westland District, which has caused property values to increase. For some ratepayers this will have a big impact on their rates. Council bases the general rate on the capital value of the property as this is considered a fair way to spread the rate burden across properties. Properties with higher capital values pay more of the general rate.

The rates bill is made up of five factors: Capital value (the QV value that has been updated), the property category such as residential, what services your property receives such as Council water supply, where in the district you live, and the budget Council sets as part of the Annual or Long-term planning process.

This year Council advised that the main driving forces behind the budget increases were for three waters, particularly funding the depreciation for these assets and the increasing costs of testing implemented by Government policy, as well as small increases to the general rates, Uniform Annual General Charge (UAGC) and Community Rates.

In 2023/2024 Council stopped funding the depreciation on three waters assets because there was no expectation of any future spend once those assets were transferred to the new entity under the Three Waters Reform legislation. This reduced the expected average rate increase from about 16% to less than 1%. Now that the Government’s policy has changed and Council will retain the assets, the depreciation has been reinstated. Depreciation is collected where Council expects to replace assets, such as water pipes, at the end of their useful life. Without the collection of depreciation throughout the life of the asset Council would have to use other means to replace assets.

Since 2022 Council has been required to comply with the Drinking Water Quality Assurance Rules. We must now take samples from source water, which was not the case under previous rules, as well as increased sampling in the distribution zone for water. This has increased the sampling we do throughout the year by 4,263 samples, at an associated cost increase. The operational cost for sampling is 400% higher than before the 2022 Rules were imposed.

For a real-life example of what these changes will look like, we have taken a Residential Hokitika property. This property was valued at $205,000 between 2020/2021 and 2023/2024, and following the three-yearly revaluation it is now worth $330,000 – the value has increased 61% and this affects the amount of general rate paid.

The factors that affect this property are:

What does this look like to the ratepayer?

The impact of the reinstatement of three waters depreciation is the greatest increase for this ratepayer. However, the increase in their property value can be seen in the increase to their general rate.

If three waters depreciation was not being funded their rates would still increase, due to changes in the capital value and Council’s budget:

ENDS

Media enquiries to:

Emma Rae, Strategy and Communications Advisor

Emma.rae@westlanddc.govt.nz