Proposed Rates Remission & Postponement Policy

Consultation has concluded

The Proposed Rates Remission and Postponement Policy aims to provide ratepayers in Horowhenua with some financial assistance, where they might otherwise have difficulty meeting their obligations to pay rates. It also addresses circumstances where the way we have decided to rate (the rating system) results in anomalies.

During the Long Term Plan 2021-2041 Amendment (LTPA), we reviewed the way that we share rates across the district. Through conversations with the community, we were asked to look at additional options for supporting those that are struggling to pay rates.

Because this policy is a significant part of our funding and financial policies, it's important that we ask for feedback from our community.

What we're proposing

We're proposing to introduce the following changes to our Rates Remission Policy:

The option for rates postponement – A rates postponement is a way of delaying the payment of your rates. Rates postponement can help you if you're on a fixed income and cannot afford to pay your rates, or if you have a financial hardship that makes it difficult for you to pay your rates.
However, rates postponement doesn't mean that you can avoid paying your rates. You'll still have to pay them eventually, and the amount will increase over time due to interest and administration costs.
Special circumstances remission to allow ratepayers to apply for a one-off reduction (up to 100%) in rates for that financial year if they meet certain criteria. This relates to exceptional situations that affect the ratepayer’s ability to pay rates.
Remission for second dwellings on a property to reduce the level of fixed charges that properties may need to pay if they have a second dwelling (separately used or inhabitable part) on the property that is used for family purposes and doesn't generate any income.
Remission for Buildings Requiring Earthquake Strengthening to provide rates relief for properties temporarily not fit for purpose due to the property undergoing development or earthquake strengthening by reducing the level of general rates.
Provide more flexibility for remissions in the case of properties affected by natural hazard disasters and emergency events. This provides options for the Council to be more flexible when such events occur.

How could this impact our community and who would be affected?

The proposed changes to the Rates Remission Policy provide opportunities to reduce the immediate burden of rates for some members of our community who are struggling.

The remission provided would however require funding from existing ratepayers.

What's the cost, impact on rates and impact on debt?

It's difficult to estimate the full amount required for remissions, but the table below provides some scenarios:

	Impact on expenses for Council	Impact on Income for Council	Net Impact on our operating position	Impact on Council’s debt	Impact on Council's assets
Rates postponement (Assume rates of $3k per year and 50 people take up the opportunity in a given year)	+$6,750	+$6,750		+$156,750	$156,750
Rates Remission for second dwelling (Assume 25% of those with two SUIP¹ apply and qualify)	+$208,000	-	+$208,000	-	-
Rates Remission for second dwelling (Assume 25% of those with two or more SUIP apply and qualify)	+$263,000	-	+$263,000	-	-
Rates Remission for second dwelling (Assume 100% of those with two or more SUIP apply and qualify)	+$1,053,000	-	+$1,053,000	-	-

¹ Separately used or inhabited part of a rating unit (SUIP)

There are currently around 513 rating units with two separately used or inhabited part of a rating unit (SUIP). Not all rating units will be eligible for the remission for second dwellings as a number of them will be earning some form of income.

There's an option for the Council to set an upper limit cap of $50,000 on the total level of remissions available for the following proposed remissions:

Remission for buildings requiring earthquake strengthening
Special circumstances remission
Remission for second dwellings on a property

For the Proposed Rates Postponement Policy, a limit could be applied to the level of remissions granted so that it doesn't significantly impact on the Council’s level of borrowings and ability to borrow in the future.

Preferred option, options considered and pros and cons of each

Our preferred option is to allow for the following additional rates remission options with a combined limit of $50,000 on rates remissions granted each year for:

Remission for buildings requiring earthquake strengthening
Special circumstances remission
Remission for second dwellings on a property

These rates remissions would need to be applied for by 1 September of each year. If there are more than $50,000 of eligible applications, the Council could provide for a pro rata share of the $50,000 to be remitted.

We're proposing that the policy be applicable from 1 July 2024, to allow for the Council to budget appropriately for the additional funding for this remission.

In addition to the remission categories above, we're proposing to introduce the option for ratepayers who are struggling to afford to pay their rates to apply for a rates postponement. To ensure that the level of postponed rates does not impact significantly impact on the Council's borrowings level and ability to borrow in the future, we're planning to limit the cumulative level of rates postponed to 0.5% of operating income. For the 2023/24 financial year this limit is planned to be a cumulative total of rates postponements of approximately $360,000.

Submissions closed

Submissions closed at 5pm on Monday 20 November 2023.

A hearing is scheduled to take place on Wednesday, 29 November 2023.