2020 Rates Remission and Postponement Policy

Covid-19 has impacted significantly on all sectors within the Porirua community. Operating in a lockdown environment has seen most businesses either closed or with significant financial challenges. It is clear that the economy over the next 24 months will be challenging for all with flow-on effects into our community.

The Council would like the business sector to recover as quickly as possible because a vibrant and strong business community creates employment and other benefits for all residents in Porirua City. The Council recognises that the economics over the next 12 months will be challenging for all, with particular stresses on our business sectors.

The rates burden will come just when they are looking to rebuild their business revenues from what, for most, will be a non-trading position as a result of the lockdown.

For Porirua it is critical that the business sector recovers as quickly as possible. If the business sector shrinks, its overall capital value will reduce, and it is inevitable that a greater share of the rate burden will shift to the residential and rural sectors. This would mean larger rates increases for residential and rural ratepayers, as happened with the last two revaluation cycles.

The Council’s recovery plan covers both the economy and community welfare and wellbeing and a draft is being prepared and will be presented to the Council in May. The Council is actively working on a number of fronts with the business sector as part of this. The proposed commercial rates deferral for 2020/21 is one of a broader suite of initiatives being explored, developed or implemented as part of this. 

Council has been working with individual ratepayers on payment options to assist those in financial hardship and encourages anyone who is struggling to pay their rates to contact us to see how we can help.

In addition, through the Emergency Operations Centre which has been activated throughout the Covid-19 response, Council has been proving welfare packs and other assistance to our most vulnerable communities and those without support networks.

As the policy is user pays and self-contained there is no impact  on any other ratepayers, including businesses who choose not to take advantage of the rates deferral. The businesses that are eligible and do apply will have their rates postponed for the financial year beginning 1 July 2020/21 elect to will be expected to repay the full rates amount over the subsequent three years to 2023/24. This would include associated interest costs and a one-off administrative charge.

For those who elect into the scheme, a charge will be placed over the title of the rating unit to ensure full payment is received and no burden is placed on residential or rural ratepayers.

As the business sector provides the backbone for economic stimulus and employs many people within the community this proposal aims to provide support where it is needed most. Most are experiencing a customer and revenue collapse while their fixed costs remain the same. Revenue streams will take some time to return to pre-Covid-19 levels and a number of businesses may not survive.

It’s not possible to defer rates for all ratepayers as this income is essential to keep our city running. We are looking at how we can contain costs where possible, while still supporting essential services and critical infrastructure investment.

The proposal aims to support our local economy and the livelihoods of our people and those who choose to work here. There is an expectation that business owners who take advantage of the deferral will pass this relief onto tenants to ensure employers and employees remain in work in our community. This proposal will aid somewhat in our recovery and ultimately limit hardship the city faces

The proposed commercial rates deferral is open to all business sector rating units. This includes 13 Business, 15 Motels, and 16 Shopping Plazas . For more information on the different sectors you can view our funding impact statement here.

Those ratepayers that own or pay the rates on commercial property can be immediate beneficiaries of this scheme. In those cases where the landlord pays rates directly we are hoping to create more leniency between the landlord and tenant if there are business survival issues.

The current proposal only includes the Porirua City Council’s rates. We are working with Greater Wellington Regional Council (GWRC) on whether the rates deferral will include its 2020/21 rates. If this is not achievable, businesses electing to defer the Council rates will still be invoiced and expected to pay the GWRC rates every quarter – as is presently the case.

This example outlines the relief provided to an individual rating unit who elects to defer 12 months of rates, 2020/21 rating year, and the timings of repayment over the proposal. A rating unit with a 2020/21 rate notice of $120,000 has been used as an example only.

Rate increases for the 2021/22, 2022/23 and 2023/24 financial years have been projected at 4.98%, 4.98% and 2.75% respectively as set out in Porirua City’s current Long Term Plan 2018-38. The LTP is required to be reviewed, updated and adopted by 30 June 2021 so these increases are subject to change.

This example outlines the relief provided to an individual rating unit who elects to defer 6 months of rates, 2020/21 rating year, and the timings of repayment over the proposal. A rating unit with a 2020/21 rate notice of $120,000 has been used as an example only.

Rate increases for the 2021/22, 2022/23 and 2023/24 financial years have been projected at 4.98%, 4.98% and 2.75% respectively as set out in Porirua City’s current Long Term Plan 2018-38. The LTP is required to be reviewed, updated and adopted by 30 June 2021 so these increases are subject to change.