Rates Remissions

Published on October 20, 2023

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 Amendment 2021-2041, 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 is important that we ask for feedback from our community.

We are 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 are 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 does not mean that you can avoid paying your rates. You will 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 does not 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 this 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 is the cost, impact on rates and impact on debt?

It is difficult to estimate the full amount required for remissions, but the following table provides some scenarios.

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.

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

There is 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 rates postponement policy, a limit could be applied to the level of remissions granted so that it does not 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 are 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 are 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 significantly impact on the Council's borrowings level and ability to borrow in the future, we are 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 approximately $360,000.

We'd love to hear your feedback

You can make a submission in the following ways:

Complete your submission form online on the Proposed Rates Remission Let's Korero page or print, complete and email it to recordsprocessing@horowhenua.govt.nz

Submit your feedback online

Submission Form - Proposed Rates Remission & Postponement Policy 2023 - Printable version ^129kb

Pick up, complete and return a submission form at one of Council’s service centres or post to Horowhenua District Council, Private Bag 4002, Levin 5540.