Report to COUNCIL for decision

Transcription

1 13/345 Subject: Statement of Proposal Remission of selected rates 2013/2014 Prepared by: Fiona Scragg (Senior Rates Officer) Meeting Date: 5 September 2013 Report to COUNCIL for decision SUMMARY The rates strike for 2013/2014 has created some large swings in the rates incidence across the district for the three rates that also caused swings in the 2012/2013 rating year. Council approved a change to the Revenue and Financing Policy in 2013 which changed the basis of rating from land area to land value for these three rates (Pests and Plants, Rural Fires and Soil Conservation). This has changed the incidence of rates for some properties with high land value. The properties that are most affected are properties with smaller land area but higher land values when compared to like properties in the same DRA (differential rating area) especially so in Tolaga Bay and Tokomaru Bay. At the Council meeting on 27 June 2013 Council decided that a transitional rates remission policy should be considered that would assist ratepayers with these pockets of large increases. A workshop was held on 15 August This workshop was open to the public. This paper contains the proposed Remissions Policy covering these activities and is valid for the 2013/2014 rating year only. The proposed policy is very specific and will not give rates relief to ratepayers whose rates went up for any other reason. Approval of the Statement of Proposal for this Remissions Policy is necessary so the policy can go out for public consultation in accordance with the Local Government Act 2002(LGA). A penalty suppression has been applied to the rate accounts of ratepayers who have contacted council and consider that they are affected by this proposed rate remission policy. Approval is sought for the continuation of the penalty suppression until the end of this financial year. Page 1 of 13

2 RECOMMENDATIONS That the Council 1. receives the report 2. approves the Statement of Proposal in Appendix 1 for consultation setting the remission criteria as follows: a) an overall rates increase (after other remissions) of 6 % b) a minimum increase on each rate of $100 and 30% c) sets the remission for Pest and Plants at 30% d) sets the remission for Soil Conservation at 30% e) sets the remission for Rural Fires at 30% f) no remission will be made where the total remissions under the policy are less than $25 3. approves the continuation of penalty suppressions on affected properties for 2013/2014 Fiona Scragg Senior Rates Officer Judy Campbell Chief Executive Page 2 of 13

3 1. BACKGROUND The rates strike for 2013/2014 has created some large swings in the rates incidence across the district for the three rates (Pests and Plants, Rural Fires and Soil Conservation) that also caused swings in the 2012/2013 rating year. These three rates are targeted and when the incidence of rates was adjusted to be fairer it also created some pockets of large increases. The properties that are most affected are properties with smaller land area but higher land values when compared to like properties in the same DRA (differential rating area) especially so in Tolaga Bay and Tokomaru Bay. At the Council meeting on 27 June 2013 Council decided that a proposed transitional rates remission policy should be considered that would assist ratepayers with these pockets of large increases. Staffs modelled three scenarios and also considered the impact if the proposed remission policy was applied to all contiguous properties that were associated with a qualifying primary property. The options were discussed at a public workshop on 15 August 2013 and Council Officers were requested to prepare a Statement of Proposal for a Remission Policy. The proposed Rate Remission Relief Policy would be based only on the specific activities with the rates increases i.e. Pests and Plants, Rural Fires and Soil Conservation. The assessment criteria would have two components for eligibility eg (rate increase of 30% and $100) and for administrative efficiency a minimum level of $25. This approach gives immediate relief to the most severely affected by changes to the three rates. It will not give rates relief to ratepayers whose rates went up for any other reason. 2. DISCUSSION AND OPTIONS Staffs have modelled three options. The affect on contiguous properties has also been examined. The rate remission criteria has been compared to the rates struck at 1 July 2012 which looks at properties prior to the 2013 rate remission but includes properties that received the Rural Multi Uniform Annual General Charge remissions last year. Ratepayers reapplying for this remission will affect the level of remission if it drops their rate increase to less than 6% (remissions may reduce). The rate remission approved last year was paid as a lump sum amount to each property and was shown on the instalment three rate accounts. The overall increase in each scenario is set at 6%. The total increase in rates collected was 2.5%. The remission being considered is for outliers and also includes the rural township properties affected by large increases in these three rates. Initial estimates of properties affected and likely costs are: Option one This used the same criteria as the 2013 Rate remission Policy. One hundred and thirty seven (21%) of these properties are contiguous. a) an overall annual rates increase of 6 % b) a minimum increase on each rate of $100 and 30% c) no remission where the total remissions under the policy are less than $25 d) properties whose rates were zero last year have been excluded from this analysis. Page 3 of 13

4 Option Two Overall this picked up one additional property to option one but the amount of remission increased. One hundred and thirty eight (21%) of these properties are contiguous. a) an overall annual rates increase of 6 % b) a minimum increase on each rate of $100 and 20% c) no remission where the total remissions under the policy are less than $25 d) properties whose rates were zero last year have been excluded from this analysis. Option Three Overall this picked up two additional properties to option one but the amount of remission increased. One hundred and thirty eight (21%) of these properties are contiguous. a) an overall annual rates increase of 6 % b) a minimum increase on each rate of $100 and 15% c) no remission where the total remissions under the policy are less than $25 d) properties whose rates were zero last year have been excluded from this analysis. Option Four Council could also consider doing nothing. Summary of Options Specific Rates Option 1: Limit $100, 6% threshold, 30% Increase. Total properties to receive remission 640 Option 2: Limit $100, 6% threshold, 20% Increase. Total properties to receive remission 641 Option 3; Limit $100, 6% threshold, 15% increase. Total properties to receive remission 642 Pest and Plants Rate 470 properties 490 properties 493 properties Rural Fires rate 165 properties 182 properties 185 properties Soil Conservation rate Indicative total cost of Remission 230 properties 232 properties 233 properties $160,000 $166,000 $168,000 Contiguous Properties Some contiguous properties already qualify in the above scenarios and are included in the above information. There are 115 contiguous primary properties that qualify for the rates remission using the same rate remission criteria as last year (minimum increase in each rate of 30%). Attached to these are 870 secondary properties that would not qualify under the above criteria that would receive a remission if contiguous properties associated with a qualifying parent were also given remissions. It became apparent that allowing these contiguous properties a remission was unfair and discriminated against other ratepayers in rural areas and townships facing the same increases that did not qualify simply because they did not have contiguous properties. Page 4 of 13

5 Rate relief for contiguous properties is provided through reduction of uniform charges as per the Local Government (Rating) Act section 20 and also under some of Council s rates remission policies. All other rates based on capital value, land value, areas etc still apply in every other instance. Based on direction from the public workshop, a proposed remission policy is attached for approval to go out for public consultation. The focus of the Remissions Policy being proposed will be on the rating impact resulting from changes to the specific targeted rates of Pests and Plants, Rural Fires and Soil Conservation. Due to the adverse impact of uncertainty on affected ratepayers it is considered appropriate that the transitional Remissions Policy and Statement of Proposal be prepared in draft, approved, consulted on and implemented by 31 December Continued Penalty suppression Currently penalties are being suppressed for outstanding rates from known affected properties. This is blanket suppression and includes properties where the rates were short paid or not paid at all. The ongoing non-payment of rates may have both a cash flow and an interest cost to Council. It is considered appropriate under the circumstances to continue to suppress any penalties on the rates increase but in fairness to other ratepayers, rates at the 2012/2013 year level should be paid. Ratepayers must contact Council to be included on this list. Remission policies Rates remissions should not be used to reverse or minimise the effect of validly set rates in the absence of a special circumstance. In practice, rates remission policies must be specific to a circumstance so that they can be applied with certainty and avoid unintended consequences for Council. In setting the conditions and criteria specific to a circumstance, there is a balance to be achieved between clearly setting out the conditions and criteria in the policy, and avoiding any contention on Council s discretion to grant a remission on a case by case basis. Rates can only be remitted in accordance with the policy if the Council is satisfied that the conditions and criteria in the policy are met. It is advantageous to Council in this instance to be specific and explicit for this remission policy. Modelling has indicated that there will be 640 properties eligible. In these circumstances the remission should be applied automatically to the rating units that meet the conditions and criteria in the policy. This also means that the authority to apply the remission must be delegated to Council Officers. The proposed Remissions Policy contains a catch all statement to the effect that each case will be considered on its own merit. This is a protection for ratepayers, but is also part of the overall package of tools in the policy that allows Council to exercise its discretion to granting relief to those for whom the impacts of the rates are genuinely unpalatable to the Council. It allows ratepayers of rating units for whom the relief will not apply automatically to make an application and have it considered on its own merits. The Remission Policy will apply only to rates levied in the 2013/2014 rating year. Page 5 of 13

6 3 CONSULTATION TIMETABLE Key Date Action/Activity Decision Required 15 Aug 2013 Rates Workshop to discuss criteria for To provide staff with proposed Rates remission Policy. guidance on the possible criteria. 26 Aug to 30 Aug 2013 Draft Remissions Policy Prepare report and statement of proposal for draft remission policy. 5 Sep 2013 Council meeting- Statement of Proposal, draft Remission Policy and communication plan presented for adoption for consultation. 16 Sep -16 Oct 2013 Consultation on draft Remission Policy. 17 Oct 25 Oct 2013 Collate submissions and write hearings report. 29 Oct 2013 Leadership team to discuss hearings report 30 Oct 2013 Council hearings and decisions 21 Nov 2013 Council meeting subsequent to hearings 31 Dec 2013 Remissions applied to individual rate accounts in time for instalment three 4. SIGNIFICANCE Internal- no decision required. Adoption of Statement of Proposal for Annual Plan amendment. Report on proposed remission criteria. No decision required Internal No decision required Internal No decision required Adoption of annual plan amendment- Remission policy. Adoption of report on specific remission criteria Internal- no decision required. This matter is considered significant under the Council s Significance Policy. The process being undertaken complies with the decision-making sections of Part 6 of the Local Government Act COMMUNITY OUTCOMES Prosperous Tairawhiti: The proposed Remissions Policy will support a district that is prosperous and an economy that is supported to sustainably grow, develop and diversify. 6. STRATEGIC CHALLENGES The proposal supports the strategic challenge of financial sustainability. This challenge requires that current and future Council commitments are funded in a way that the community can afford and which meets the Council s obligations to the district. 7. POLICY The rates set by Council were validly set in accordance with the Council s Long Term Plan and Funding Impact Statement, however the policy changes have had unintended consequences which Council has chosen to address. This Remission Policy is only intended to manage a transition while funding for these activities receives a fuller review. Page 6 of 13

7 8. LEVELS OF SERVICE The approval of the proposed Rates Remission Policy for consultation will not have any immediate effect on levels of service. The application of the proposed remissions and overall review of the Revenue and Finance Policy in regards to these activities may impact negatively on future levels of service. 9. FINANCIAL The cost of these one off remissions will be met by the respective activity. This may result in deficits in these activities created by a new remission, which will be needed to be recovered in future years. This approach to funding has been incorporated into the proposed Rates Remissions Policy. Additional unbudgeted administration and legal costs may be incurred as part of the development and application of the proposed Remission Policy. 10. LEGAL Section 102(3)(a) of the Local Government Act 2002 (LGA) provided that a local authority may adopt a Rates Remission Policy. This is a discretion which Council may choose to exercise. A Remission Policy sits outside a Council s Revenue and Financing Policy, which a Council must adopt (section 102(2)(a) LGA). The discretion to establish a Remission Policy may be exercised at any time. The contents of a Rates Remission Policy are set out in section 109 LGA. Section 109 LGA Rates Remission Policy (1) A policy adopted under section 102(3)(a) must state (a) the objectives sought to be achieved by the remission of rates; and (b) the conditions and criteria to be met in order for rates to be remitted. (2) In determining a policy under section 102(3)(a), the local authority may consider the matters set out in Schedule 11. (2A) If a policy is adopted under section 102(3)(a), the policy (a) must be reviewed at least once every 6 years using the special consultative procedure; and (b) may be revoked following the review under paragraph (a). (3) For the purposes of this section, the term rates includes penalties payable on unpaid rates. Note Schedule 11 contains Matters relating to rates relief on Maori freehold land A rates remission policy must be adopted using the special consultative procedure (section 102(4)(a) LGA. Rates can only be remitted in accordance with the policy if the Council is satisfied that the conditions and criteria in the Policy are met (Section 85 of the Local Government (Rating) Act 2002). The legal aspects of consultation are covered under CONSULTATION below. Page 7 of 13

8 11. CONSULTATION A Rates Remission Policy must be adopted using the special consultative procedure (section 102(4)(a) LGA. The requirements of the special consultative procedure are set out in s.83. The procedure in s.83 requires the preparation of a Statement of Proposal (SOP) and a summary of the SOP for consultation purposes (s.83 (1)(a) LGA02). The SOP must be on the agenda of a Council meeting, made available for inspection, distributed as widely as is practical given the subject matter of the proposal and referred to in public notice of the proposal (s.83(1) and s.89(c) LGA02). The period of consultation must be for at least 1 month from the public notification (s.83(2) LGA02). Council intends to communicate with affected parties throughout this process and advise what the likely outcomes/proposal will be. It is intended that we would provide affected ratepayers with an estimate of the rates remission under the proposal, with the final decision to be made at the conclusion of the consultation process. 12. APPENDICES Statement of Proposal A Summary of the Statement of Proposal prepared in accordance with section 83 LGA 2002 Page 8 of 13

9 APPENDIX 1 Statement of Proposal Rates Remission Statement of Proposal 1. Introduction and reasons for the proposal The rates strike for 2013/2014 has created some large swings in the rates incidence across the district for the three rates that also caused swings in the 2012/2013 rating year. Council approved a change to the Revenue and Financing Policy in 2013 which changed the basis of rating from land area to land value for these three rates (Pests and Plants, Rural Fires and Soil Conservation). This has changed the incidence of rates for some properties with high land value. The properties that are most affected are properties with smaller land area but higher land values when compared to like properties in the same DRA (differential rating area) especially so in Tolaga Bay and Tokomaru Bay. At the Council meeting on 27 June 2013 Council decided that a proposed transitional rate remission policy should be considered that would assist ratepayers with these pockets of large increases. Staff modelled three options and also considered the impact if the proposed remission policy was applied to all contiguous properties that were associated with a qualifying primary property. The options were discussed at a public workshop on 15 August and Council Officers have prepared a Statement of Proposal for a Remission Policy based on the direction given at that workshop. The proposed Rate Remission Relief Policy would be based only on the specific activities with the rates increases i.e. Pests and Plants, Rural Fires and Soil Conservation. The assessment criteria would have two components for eligibility eg (rate increase of 30% and $100) and for administrative efficiency a minimum level of $25. This approach gives immediate relief to the most severely affected by changes to the three rates. It will not give rates relief to ratepayers whose rates went up for any other reason. 2. Proposed Remission Policy Remission of Rates Targeted Plants and Pests; Rural Fires; and Soil Conservation rates. Objectives of the policy To provide rates relief for the unwelcome impact of the 2013/2014 rates caused by changes to the Revenue and Financing Policy which lead to the targeted rates for Plants and Pests; Rural Fires; and Soil Conservation to be calculated based on land value and weighted to specific differential rating areas. Conditions and Criteria 1. The policy only applies to a rating unit where rates increases are caused by changes to the calculation of targeted rates for Plants and Pests; Rural Fires and Soil Conservation in the 2013/2014 rating year. 2. The policy only applies where there is a 6% or greater increase in the total rates payable for a rating unit after other remissions have been applied. 3. Each relevant targeted rate (Plants and Pests; Rural Fires; and Soil Conservation) will be assessed for remission individually. 4. To qualify for automatic remission each targeted rate must have a minimum increase of $100 and 30% of the total for that targeted rate on the 2012/2013 rating year. Page 9 of 13

10 5. The effect of qualifying for remission will be the write off of the balance of the targeted rate above the threshold 30%as a lump sum payment. The rate remission will be applied as a lump sum amount to each property. 6. No remission will granted where the total remission for all the relevant targeted rates combined (Plants and Pests; Rural Fires; and Soil Conservation) does not exceed $25 (GST inclusive). 7. Notwithstanding the above each case will be considered on its merits. 8. Application of the Policy may be delegated to Council Officers. Funding of Remissions Remissions granted under this policy will be funded from each of the related activities. This approach may result in deficits in these activities which will be recovered in future years. 3. Relevant Statutory and Policy Considerations Section 102(3)(a) of the Local Government Act 2002 (LGA) provides that a local authority may adopt a rates remission policy. A remission policy sits outside a councils Revenue and Financing Policy, which a council must adopt (section 102(2)(a) LGA). The discretion to establish a remission policy may be exercised at any time. Section 109(1) of the Local Government Act 2002 (LGA) sets out what a rates remission policy must cover, including the objectives sought to be achieved by the remission of rates and the objectives and criteria. The rates including those intended to be subject to the proposed remissions policy are calculated in accordance with the Revenue and Financing Policy prepared in accordance with s.102 LGA. Where a decision of a local authority is inconsistent with an existing policy s.80 of the LGA requires the local authority to clearly identify the inconsistency, the reasons for the inconsistency and the intention of the local authority to amend its policy or plan to accommodate the inconsistency. If following consultation Council passes the proposed remissions policy the Revenue and Financing Policy will be reviewed. 4. Summary of Statement of Proposal A Summary of the Proposal containing the information required by section 83(1)(a)(ii) of the LGA 2002 is included in Appendix 1 to this Statement of Proposal. 5. Distribution of Statement of Proposal a. Timetable for consultation The following dates represent the key times in the consultation programme: Thursday, 5 September 2013 Saturday, 7 September 2013 Council adopts proposal for consultation First advertisement in the Gisborne Herald Saturday, 14 September 2013 Second advertisement in the Gisborne Herald Wednesday 16 October 2013 Submissions close 4pm Thursday, 21 November 2013 Thursday, 21 November 2013 Saturday, 23 November 2013 Submissions heard by full Council Council makes a decision and adopts a policy Public notice of final decision. Page 10 of 13

11 b. Inspection of Documents and obtaining Copies Copies of this proposal and the supporting reports may be inspected and a copy obtained, at no cost, from: a) The Council offices at 15 Fitzherbert Street, Gisborne or the Te Puia Springs Service Centre, Main Road, Te Puia Springs. b) The HB Williams Memorial library, Peel Street, Gisborne. c) The Council website c. Right to make a submission and be heard Any person or organisation has a right to be heard in regard to this proposal and the Council would encourage everyone with an interest to do so. The Council prefer that all parties intending to make a submission set those submissions out in writing and submit them to the Gisborne District Council, PO Box 747, Gisborne, no later than 4pm on Wednesday 16 October The Council will then convene a hearing, which it intends to hold on 30 October 2013, at which any party who wishes to do so can present their submission in person. Equal weight will be given to written and oral submissions. The Council will consider oral submissions (without prior written material) or the making of a late submission, only where it considers that is appropriate having regard to the particular circumstances of the submitter. Every submission made to the Council will be acknowledged in accordance with the Act, will be copied and made available to the public, and every submission will be heard in a meeting which is open to the public. Section 82 of the Local Government Act sets out the obligations of the Council in regard to consultation and the Council will take all steps necessary to meet the spirit and intent of the legislation. d. Making an effective submission Written submissions can take any written form (e.g. , letter). An effective submission makes reference to the issue you have with the proposed Remissions Policy. It should state (if relevant) which clause(s) of the draft remissions policy you wish to submit on, states why the clause is supported or not supported and states what change to the clause is sought. Submissions on matters outside the scope of the proposed Remissions Policy cannot be considered by the Council. For example a submission that all rates in the district are too high is outside the scope of the Council to consider. Judy Campbell Chief Executive (Date) Page 11 of 13

12 APPENDIX 1 A Summary of the Statement of Proposal prepared in accordance with section 83 LGA 2002 Summary of Rates Remission Proposal Proposed Rates Remission Policy Remission of Rates Targeted Plants and Pests; Rural Fires; and Soil Conservation Rates. 3 TARGETED RATES FOR 2013/14 YEAR Council is proposing a Remissions Policy for some targeted rates in the current year. A number of properties in the district have had substantial rate increases. Changes to the basis for the following three rates have caused of some of the largest increases: Pests and Plants Rural Fires Soil Conservation The proposed rates remission would offer reductions to properties most affected by increases due to changes to these three rates. Rating basis The basis of these three rates has changed to a differential targeted rate based on land value weighted to specific Differential Rating Areas (DRA). The changes have impacted on small pockets of properties. The properties that are most affected are properties with smaller land area but higher land values when compared to like properties in the same DRA especially so in Tolaga Bay and Tokomaru Bay. Details of the remission The proposed remission will automatically apply to those with an increase of more than 30%, and $100 on each of the rates for - Pests and Plants, Rural Fires and Soil Conservation. Each of these three rates will be assessed for the remission individually. The remission will only apply to individual properties that have had an overall rate increase of more than 6% and where the remissions total $25 or more. It will not apply to properties where rates increased for other reasons. The rate remission will be paid as a lump sum amount to each property. Page 12 of 13

13 The Proposed Remissions Policy in Full Remission of Rates Targeted Plants and Pests; Rural Fires; and Soil Conservation rates. Objectives of the policy To provide rates relief for the unwelcome impact of the 2013/2014 rates caused by changes to the Revenue and Financing Policy for the targeted rates for Plants and Pests; Rural Fires; and Soil Conservation which were calculated based on land value and weighted to specific differential rating areas. Conditions and Criteria 1. The policy only applies to a rating unit where rates increases are caused by changes to calculation of targeted rates for Plants and Pests; Rural Fires and Soil Conservation in the 2013/2014 rating year. 2. The policy only applies where there is a 6% or greater increase in the total rates payable for a rating unit after other remissions have been applied. 3. Each relevant targeted rate (Plants and Pests; Rural Fires; and Soil Conservation) will be assessed for remission individually. 4. To qualify for automatic remission each targeted rate must have a minimum increase of $100 and 30% of the total for that targeted rate on the 2012/2013 rating year. 5. The effect of qualifying for remission will be the write off of the balance of the targeted rate above the threshold 30%. The rate remission will be applied as a lump sum amount to each property. 6. No remission will granted where the total remission for all the relevant targeted rates combined (Plants and Pests; Rural Fires; and Soil Conservation) does not exceed $25 (GST inclusive). 7. Notwithstanding the above each case will be considered on its merits. 8. Application of the policy may be delegated to Officers. Funding of Remissions Remissions granted under this policy will be funded from each of the related activities. This approach may result in deficits in these activities which will be recovered in future years. Submissions welcome Copies of the full proposal and the complete rates remission policy are available from Customer Services in Fitzherbert Street and Te Puia Springs, HB Williams Memorial Library, or on our website. Anyone may make a written submission on the proposed Rates Remission. Submissions must include your name, contact details and whether you wish to be heard at a Council hearing on 30 October Submissions must be received at the address below by 4pm on Friday 16 October Contact Fiona Scragg Senior Rates Officer for more information. Page 13 of 13