How Rates Are Calculated (including penalties)

Overview

Rates are a tax on property and form the major component of funding available for local authorities to finance their activities.  Rates are assessed on properties within the provisions of the Local Government (Rating) Act 2002.

Horowhenua District Council sets two sorts of rates: targeted rates, which fund specific activities, and general rates, which fund everything else.

General Rates

General rates are the largest single source of funding for expenditure.  They are used to fund both operating and capital expenditure for all activities other than those rates set using targeted rates below, including:

  • Regulatory services (health and safety licensing, building consents, resource consents, animal control, parking enforcement and general regulatory services)
  • Community Facilities and Services, except Library and Community Centres and Aquatic Centres (passive reserves, street beautification, sports grounds, cemeteries, halls and community buildings, and public toilets) 
  • Community support (emergency management, community engagement, visitor information, community development, grants, economic development)
  • Governance and Community leadership for the activities of Strategic Planning and District Plan development only
  • Treasury activities (investment and borrowing activities)
  • Property (commercial property, motor camps, general property).

General rates are to be set on a differential rate in the dollar on the Land Value (LV) of the land. Land Values are assessed every three years, and were last assessed in 2016. These values will form the basis of rating from 1 July 2018.

The General rates levied on LV are set differentially, so as to maintain the incidence of the rates between the categories of property. Council decided (as part of the Revenue and Financing Policy review for the 2009-2019 Long Term Plan) to dispense with all but the Rural Differential. However, in order to lessen the impact of such a change, Council agreed to phase out all other differentials over 10 years (2009/10 to 2018/19 inclusive.). Year 1 of this Long Term Plan is the last year of this 10 year period. 

Therefore in the 10th year (2018/19):

  • The Urban category will be phased out and contribute 0% (in comparison to 6.42% in 2017/18) of General rates, and formally applied to rating units in Levin, Shannon, and Foxton urban areas, as shown on the maps available defining those areas for rating purposes held at Council’s office in Levin.
  • The Township category will be phased out and contribute 0% (in comparison to 0.97% in 2017/18) of General rates, and formally applied to rating units in Waikawa Beach, Manakau, Ōhau, Hōkio Beach, Waitārere Beach, Foxton Beach, and Tokomaru urban areas, as shown on the maps available defining those areas for rating purposes held at Council’s office in Levin. 
  • The Rural Residential category will be phased out and contribute 0% (in comparison to 0.73% in 2017/18) of General rates, and formally applied to rating units classified as Lifestyle and Residential (other than those rating units identified as “vacant” or “bare”). These properties will be identified in the District Valuation Roll (DVR) using the “Property Category” codes from Appendix F of the Valuation Rules 2008, promulgated by the Valuer General.
  • The Rural category are those rating units that are located in areas outside the Urban and Township category boundaries but not those rating units classified as Rural Residential. These rating units will contribute 25.00% (25.00% 2017/18) of General rates.
  • A District wide differential (which now, at the end of the 10 year period, absorbs all but the Rural category) to apply to all rating units other than those in the Rural category, will contribute 75% (in comparison to 66.88% in 2017/18).

Council is not setting a Uniform Annual General Charge (under Section 15 of the Local Government (Rating) Act 2002 (LG(R)A)), preferring instead to set Targeted rates as fixed amounts for Library Services and Community Centres, Representation and Community Leadership, Solid Waste, Aquatic Centres, Water Supply and Wastewater.

Targeted Rates

Targeted rates are set to cover, in a transparent manner, the operating and capital expenditure of eight major activities that have significant rating requirements and relatively high degrees of private benefit:

  • solid waste management
  • water supply
  • wastewater disposal
  • land transport (roading)
  • stormwater
  • library services and Community Centres
  • representation and Community Leadership; and
  • Aquatic Centres (Swimming Pools).

Solid Waste Rate

This rate funds the Solid Waste Group of Activities including the provision of the Landfill, Waste Transfer Stations, waste minimisation initiatives, and recycling facilities.

This rate is set differentially as a fixed charge of a uniform amount on the basis of the number of SUIPs of each rating unit using the urban and rural differential categories.

Urban rating units pay a differential of 80% for the solid waste costs. Urban rating units are defined as those rating units within the towns of Levin, Foxton, Shannon, Tokomaru, Foxton Beach, Waitārere Beach, Hōkio Beach, Ōhau, Waikawa Beach and Manakau as shown on the maps available defining those areas for rating purposes held at Council’s office in Levin.

Rural rating units pay a differential of 20% for the solid waste costs. Rural areas are defined as all areas within the District that are outside the defined “urban” differential described above.

Water Rates

This rate funds the cost of operating, maintaining and improving the supply of reticulated drinkable water to various Communities within the District.

This rate is set differentially as a fixed charge of a uniform amount. Council also charges for metered supplies.

Connected Differential

Council sets a fixed charge rate on all rating units for which connection to a reticulated drinkable water supply is available. This does not include Moutoa, Waikawa, or Kuku schemes, which are not drinkable supplies. A reticulated potable water supply is available to a rating unit if a lateral/s exists for the purpose of delivering water from the trunk main to the rating unit, and there is a connection from the land within the rating unit to that lateral/s or trunk main.

Liability for the rate will be assessed on whichever is the greater of:

  • each rating unit; or
  • the number of SUIPs of each rating unit; or
  • the number of connections of each rating unit.

The Foxton Beach charge is reduced by an allowance to account for the universal metering of Foxton Beach.

Availability Differential

A fixed charge rate on any rating unit not connected to, but within 100 metres of a trunk main for a reticulated drinkable water supply that is available to the rating unit. A reticulated drinkable water supply is available to a rating unit if a lateral/s exists for the purpose of delivering water from the trunk main to the rating unit or, if no lateral exists, if Council will allow the rating unit to be connected. This rate is set at 50% of the fixed charge for a connected rating unit.

Water by meter

In all schemes (except Foxton Beach), the additional fees for metered supplies are subject to an allowance of 91 cubic metres (m3) per quarter. A charge per m3 will be made for water consumed in excess of 91m3 per quarter on any rating unit connected to any water supply; except Foxton Beach where a meter is used to measure consumption on the network.

The charge per m3 of water consumed in excess of 91m3 per day on any rating unit connected to the Shannon untreated bore water supply, where a meter is used to measure consumption on the network during the period, will be half that charged for treated water.

Foxton Beach water supply will be charged by cubic metre (in addition to the fixed charge described above) using a three step system:

  • Step 1 – A charge per m3 for the first 50m3 of water consumed per quarter on any rating unit or SUIP of a rating unit connected to the Foxton Beach water supply network during the period.
  • Step 2 – A charge per m3 for the second 50m3 of water consumed per quarter in excess of 50 m3 on any rating unit or SUIP of a rating unit connected to the Foxton Beach water supply network. This will be set at 200% of the rate set in step 1.
  • Step 3 – A charge per m3 for the balance of water consumed per quarter in excess of 100m3 on any rating unit or SUIP of a rating unit connected to the Foxton Beach water supply network. This will be set at 300% of the rate set in step 1.

Wastewater Rates

The Wastewater rate will fund the cost of providing reticulated wastewater disposal for various Communities in the District, according to whether a property is connected or serviceable.

This rate is set differentially as a fixed charge of a uniform amount.

Connected Differential

Council sets a fixed charge rate on all rating units across the District for which connection to a reticulated wastewater disposal system is available. A reticulated wastewater disposal system is available to a rating unit if a lateral/s exists for the purposes of accepting wastewater from the rating unit to the wastewater trunk main, where there is a connection from the land within the rating unit to that lateral/s or trunk main.

Availability Differential

A fixed charge rate on any rating unit that is not connected to a reticulated wastewater disposal system, but is within 30m of a trunk main that is available to take waste from the rating unit. A reticulated wastewater disposal system is available to a rating unit if a lateral/s exists for the purpose of accepting wastewater from the rating unit to the wastewater trunk main or, if no lateral exists, if Council will allow the rating unit to be connected. This rate is set at 50% of the fixed charge for a connected rating unit. 

Roading

This rate funds all Roading (Land Transport) costs (maintenance, renewals and minor capital improvements of roads, streets, roadside signage, road marking, bridges, footpaths, roadside drainage) covered by the Land Transport Group of Activities.

The Roading rate is to be set using Capital Value (CV) which are assessed every three years. These were last assessed in 2016, and it is those values that will form the basis of rating from 1 July 2018.

Therefore:

  • The Business Differential will contribute 35% of the Roading rate and applies to those rating units identified as Arable, Commercial (including all rest homes/retirement villages other than those that have separate title for the individual units or houses), Dairy, Forestry (except protected forestry), Horticultural, Industrial, Mining, Pastoral, Specialist Livestock, and Utilities using the “Property Category” codes from Appendix F of the Rating Valuation Rules 2008, promulgated by the Valuer-General.
  • A District wide Other Differential will contribute 65% of the Roading rate and applies to those rating units identified as Lifestyle, Residential (excluding all rest homes/retirement villages but including those that have separate title for the individual units or houses) and Other using the “Property Category” codes from Appendix F of the Rating Valuation Rules 2008, promulgated by the Valuer-General.

Stormwater

This rate funds all stormwater costs within the Stormwater Group of Activities.

This rate is to be set using CV of all urban rating units. Urban rating units are defined as those rating units within the towns of Levin, Foxton, Shannon, Tokomaru, Foxton Beach, Waitārere Beach, Hōkio Beach, Ōhau, Waikawa Beach, and Manakau as shown on the maps available defining those areas for rating purposes held at Council’s office in Levin.

Library Services and Community Centres

This rate is assessed as a fixed charge of a uniform amount on the basis of the number of SUIPs of each rating unit within the District.

Representation and Community Leadership

This is a Targeted rate to fund Representation and Community Leadership costs (Council and committees, consultation, advocacy, and elections).

This rate is assessed as a fixed charge of a uniform amount on the basis of the number of SUIPs of each rating unit within the District.

Aquatic Centres (Swimming Pools)

This is a Targeted rate to fund the cost of operating Council’s public Aquatic Centres (swimming pools).

This rate is assessed as a fixed charge of a uniform amount on the basis of the number of SUIPs of each rating unit within the District.

Liability for the fixed-sum rate will be assessed on whichever is greater:

  • each rating unit; or
  • the number of SUIPs of each rating unit; or
  • the number of connections of each rating unit.

Definition of Separately Used or Inhabited Parts (SUIP)

Several of the rates are assessed on the basis of the number of SUIPs there are in a rating unit.

SUIPs are listed in Schedule 3 of the Local Government (Rating) Act 2002 as one of the factors that may be used in calculating liability for Targeted rates. Section 15(1)(b) allows SUIPs to be used as the basis for Uniform Annual General Charges (UAGCs) as well.

Where rates are calculated on each SUIP of a rating unit, the following definitions will apply:

  • A SUIP of a rating unit includes any portion inhabited or used by the owner/a person other than the owner, and who has the right to use or inhabit that portion by virtue of a tenancy, lease, licence, or other agreement.
  • This definition includes separately used parts, whether or not actually occupied at any particular time, which are provided by the owner for rental (or other form of occupation) on an occasional or long-term basis by someone other than the owner.
  • Any part/s of a rating unit that is used or occupied by the ratepayer for more than one single use.
  • For the purpose of this definition, vacant land and vacant premises offered or intended for use or habitation by a person other than the owner and usually used as such are defined as 'used'.
  • For the avoidance of doubt, a rating unit that has a single use or occupation is treated as having one separately used or inhabited part.

For clarity, Separately Used or Inhabited Parts include:

  • On a residential property, each separately habitable unit, flat, house or apartment.
  • On a commercial property, each separate space intended to be used as a shop or other retail or wholesale outlet, other than that used by the owner.
  • In an office block, each space intended to be used as offices that is or would be used by a different business from the owner.

A separately used habitable unit, flat, house, or apartment is defined as having a separate entrance, cooking facilities, living facilities, and toilet/bathroom facilities.

Council has recognised that there are certain instances where the above situations will occur, but in circumstances that do not give rise to separate uses or inhabitations. For clarity, SUIP do not include:

  • A hotel room with or without kitchen facilities. A hotel room is defined as one or multiple rooms/units offered on an occasional basis for rental;
  • A motel room with or without kitchen facilities. A motel room is defined as one or multiple rooms/units offered for on an occasional basis for rental; and
  • A single residential unit in a non-residential property that is an integral part of the commercial operation and is used for the commercial operation, ie not separately tenanted (such as a single house in conjunction with a farm, a motel, or a dairy).

Penalties on Unpaid Rates

Horowhenua District Council Rates are payable in four equal instalments, due on the following dates:

Instalment Due Date 
First instalment 15 September
Second instalment 15 December
Third instalment 15 March
Fourth instalment 15 June

The due dates listed above are the last dates on which payment can be made without the imposition of a penalty. A first penalty of 10% shall be added to the any part of an instalment that remains unpaid at due date.

A second penalty of 10% will be added to any and all rates and penalties remaining unpaid as at the following 1 July.

Further penalties of 10% will be added to any rates and penalties for previous years remaining unpaid as at the following 1 January and 1 July.

(Penalties are not charged on water rates invoiced by way of quarterly accounts for metered water consumption.)