Coronavirus: Auckland Council may lower rate rises and suspends hotel rate
Friday, 17 April 2020
Auckland Council may cut its proposed rate rise after a new round of public consultation on how to respond to the fiscal hit from Covid-19.
Aucklanders will be asked for views on whether to keep the proposed 3.5 per cent average rate rise, or lower it to 2.5 per cent.
The council has also suspended initially for three months, and perhaps a year, its controversial additional $14 million rate on hotel and motel properties - the Accommodation Providers Targeted Rate.
The measures are detailed in a statement to the stock exchange, and the council has told NZX that more detailed modelling on its emergency 2021 budget, continues.
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The council forecasts that even if it proceeds with a 3.5 per cent rates rise, with considerable disruption continuing to September, it would expect to take a revenue hit of $450 million.
Capital works would fall by $300 million, and its debt-to-revenue ratio would exceed the 270 per cent ceiling, due to lower revenue to support its borrowings.
That would also depend on the council not making substantial cuts to services and construction.
Councillors spent five hours yesterday behind closed doors, hearing the forecasts for next years budget which needs to be in place by July.
They have asked for more to be done on the impact of a rate rise restraint as low as 0 per cent.
The mayor Phil Goff said for an average ratepayers, the 3.5 per cent increase would mean an extra $1.83 a week, while 2.5 per cent would cost 48 cents a week less.
'Councillors were unanimous yesterday that the council needs to take decisive steps to reduce the pressure on residents and businesses facing economic hardship, while ensuring we can protect and maintain the essential services Aucklanders rely on,' said Goff.
Ratepayers facing immediate financial hardship will be able to apply to defer payment of their fourth-quarter instalments, due next month.
Council staff are continuing to work on an Emergency Budget, based on the most likely financial scenario.
This would retain essential council services and activities, but identify 'discretionary activities' that councillors could consider whether to continue.
The suspension of the APTR , will be welcomed by the hard-hit accommodation sector, although nine months of it is subject to public consultation.
The rate was introduced by the mayor Phil Goff, to cover half of the cost of the city's major events and tourism promotion, both of which are suspended.
A group of hotel owners has challenged the legality of the rate, losing in the High Court, but taking the case on to the Appeal Court.
The lobby group, the Auckland Ratepayers' Alliance which has called for no increase in average rates, said the decision to consult of a possible 2.5 per cent was a step in the right direction, but still 'feeble'.
'It suggests that the council is only tinkering with its old spending priorities, when it needs to wake up to the new economic reality,' said spokesperson Jo Holmes.
'ASK FOR HELP' NORTHLAND COUNCILS SAY
All four Northland councils are urging ratepayers to get in touch if they are unable to pay their rates.
As well as coronavirus, many Northlanders are also financially impacted by the ongoing drought.
Northland Regional and Far North, Kaipara and Whangārei District Councils released a joint statement on Friday, acknowledging some ratepayers may find it difficult to pay their full rates instalment at this time.
They asked people to pay their rates, to enable critical services to keep going, but urged anyone having financial difficulty to contact their local council to discuss options.
Far North District Council has gone one step further, announcing a rates deferment for up to six months, for any ratepayer facing economic hardship due to Covid-19 or the drought.
Mayor John Carter said the offer was an interim measure until the pandemic's full impact on the economy was known.
Those applying for the scheme would need to meet simple criteria to demonstrate financial hardship, such as loss of income, qualification for the Government's pandemic support package or qualification for a mortgage holiday from a bank.
Whangārei District Council is developing a 10-point economic recovery response, including offering rent relief for commercial and community tenants, and reviewing its planned rates increase.