FAQs

It's been a long time since we reviewed whether our rating system still reflects our district. A lot has changed -- how people live, how land is used, what's expected of local government. This review is about making sure rates are equitable, flexible, and fit for the future. 

1. A general rate – charged to properties. This can be set using: 
   1. A fixed charge that is the same across properties (e.g. a uniform annual general charge)
   2. A variable rate – based on property land value, capital value, or some combination of both. Currently, we use a system that is mostly based on property land value.
2. Targeted rates – charged to the users of that service (e.g. wheelie bin collection) or where the ratepayer is located.

Your rates include a fixed charge and a variable rate based on the value of the land you own, referred to as land value. This does not include any buildings or commercial crops that may be on the land that you own. Targeted rates may also be applied depending on which services you receive.

Equity

• Some rates have been set at ward level, creating complexity and inconsistency across the district
• We heard in our LTP feedback that vulnerable residents need to be considered
• We want a system that feels fair and makes sense to ratepayers

 Flexibility

• Local government is facing its biggest changes in decades – water reform, potential rates capping, central government restructuring
• The way we live and use land is shifting fast
• We need a rating system that can adapt without having to be rebuilt every time something changes. 

 Bigger picture

• We want to function as one district, not a collection of wards
• Capital value rating is becoming standard – only 11 councils still use land value
• A fairer system builds trust in how we fund what the district needs.    

Some of our rates are currently based on the value of the land you own, referred to as land value. However, most other councils nationwide and in the Otago region, calculate rates based on capital value. Capital value considers both the land and any buildings or commercial crops that may be on the land. 

Other parts of our rates are collected on the basis of fixed charges such as our library rate, and community facilities rate.

We are exploring the possibility of changing from land value to capital value and removing most fixed targeted rates because it is more equitable, flexible and sustainable for the whole district. 

Other changes may include applying a differential to commercial properties, who often use more council services. This includes utilities who will be required to contribute more than they have in the past to the overall rates total.  

We’re exploring a shift from Land Value to Capital Value for the General Rate. Land Value is what QV assesses the land is worth, while Capital Value takes into consideration improvements such as buildings and commercially produced crops (fruit trees, grapevines). Capital Value is much closer to market value. 

 Different rating models will have different effects on property types – and we’re encouraging our residents to get involved / find out more. Let’s Talk on our website will be the best place to get information. 

There are many factors that determine how much rates you will pay. One factor is your property’s value when compared to others. Another factor, and a key one we’re considering, is the size of the rating base. With a shift to capital value, our rating base will expand because properties that had little to no land value, such as utilities, will now contribute more. As a result, most residential ratepayers will see a reduction, while others, such as utilities will pay more.

Proposals for rates review shifts the focus from fixed rates, which has a disproportionate impact on those with lower incomes, to calculating rates based on ability to pay, based on capital value.

Property values are set by Quotable Value Limited (QV). This three-yearly process is independent from council and is audited by the Valuer- General.

Not necessarily. There are three segments in the hydro-electricity supply chain:

1. Electricity generators (e.g. Contact). The generation of electricity into the grid happens here, generally at a price set by the wholesale market. 
2. Network provider (e.g. Transpower and the National Grid and local; networks such as Aurora). This sector transports electricity across the country and around the district. 
3. Retailers (e.g.  Pulse). They sell electricity to households and businesses across the country.      

While the same company might generate power, and then sell it to users in our region, the way the sector is regulated means they can’t be in control of the entire supply chain. The retail price is determined by the wholesale market, for which there are multiple generators up and down the country.

Yes. Commercially grown fruit trees and grapevines are calculated in capital value. Trees on forestry blocks are not included in the calculation of capital value.

Right now, Central Otago District Council primarily calculates rates based on land value (value of the land, without considering buildings/fruit trees/vines) and fixed charges. But a larger number of councils use a system that considers capital value (value of the land plus any buildings, fruit trees/vines). Changing to capital value will align CODC with many other councils, if amalgamation is chosen as the path forward.