We propose setting higher rates on some vacant land, initially in the central city’s commercial area, that has no active or consented use. A rates remission will be available where land is kept in an improved and maintained state.
Project status: Closed for feedback
Open for feedback: 11 March 2022 to 18 April 2022
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How we rate property now
General rates provide a large proportion of the Council’s funding – especially for services like roads and footpaths, recreation and sport, parks, libraries, art galleries and more. General rates are set on all land other than non-rateable land like schools, reserves, cemeteries and churches. The amount of general rates that a property pays depends on its rateable capital value (the value of the land and improvements). The higher the capital value, the more the property pays.
We set rates after considering how the benefits of our activities funded by the general rate are distributed across the community. We have determined that business properties tend to benefit relatively more than other properties, including residential properties. Consequently, we apply a differential multiplier of 1.697 to business properties. This means that a business property with a capital value of $1 million will pay general rates that are 1.697 times the general rates that a $1 million residential property would pay. This differential only applies to the value-based general rate, not to other rates.
Similarly, we have determined that remote rural properties benefit relatively less than standard properties, so a differential of 0.75 is applied to remote rural properties.
Note: There are in fact two general rates: a value-based general rate which is based on a property’s capital value, and a small uniform annual general charge (UAGC) which is based on the number of separate dwellings within the property. The differentials discussed in this paper are differentials on the value-based general rate. They do not apply to the UAGC.
As a result of the Canterbury Earthquakes, Christchurch has a large amount of vacant land – especially within the central city where more than 1,000 buildings were lost.
This vacant land benefits significantly from our general activities (being activities funded by the general rate). Well-maintained roads and footpaths, recreation and sports facilities, parks, libraries, art galleries, etc. enhance the attractiveness of the land for development. We plan that infrastructure to cope with potential developments on vacant land.
However, vacant land, by its nature, has a lower capital value, since no improvements have been made to the land. Consequently the general rates set on vacant land are low. We consider that the benefits that owners of vacant central city land receive from our general activities are substantially above the rates currently being assessed on that land.
A further problem is that vacant central city land is often being left in an untidy condition. Large gravel carparks and poorly maintained unused land can look uninviting to pedestrians, and can be considered dark and unsafe at night time. The visual appearance of vacant sites has a significant influence on negative perceptions of central Christchurch – and this perception is deterring people from the central city and discouraging new investment on nearby sites. We would like to see vacant sites developed, or at least presented in a way that supports a vibrant, lively inner-city environment.
Over the last 2 years we’ve reached out to owners through the Vacant Sites Programme(external link). The programme connects owners to sources of support for new development projects. But, reflecting that not all owners are ready to commit to a project, the programme also it provides guidance and project support to owners to deliver simple, cost effective vacant site improvement projects.
When we were developing our Long Term Plan 2021 –31, we indicated we were looking at “ways we can support owners of vacant land to bring forward development or, where development is still a long way off, to improve the visual appearance of land in the short term”. Submissions indicated strong support for action to improve the visual appearance of vacant central city land.
A new, higher differential on the general rate for vacant land.
We propose to:
- Introduce a new “City Vacant” differential for the general rate that would apply to vacant land from 1 July 2022.
- Apply this rate initially in the Central City Business Zone and the Central City Mixed Use (South Frame) Zone as defined in the map below. The application of the differential to these areas reflects the concentration of vacant land in this well-serviced area of the city. In future years the coverage of the proposed rate might be extended to other locations and zones with high concentrations of unimproved vacant land such as New Brighton, Sydenham, Linwood Village and Lyttelton.
- Set the new differential at four (4). This differential is a fairer approach that recognises that vacant central city properties benefit significantly from the Council’s general activities.
- Vacant land, for the purposes of this rating proposal, is defined as land being with no active or consented use. The definition excludes sites:
- that are under development, or
- in a temporary use that is a permitted activity under the District Plan (e.g. supporting adjacent construction) or has an approved and fully implemented resource consent.
These excluded uses – while not currently making best use of land – contribute to the economic wellbeing and functioning of the surroundings.
We would introduce a new rates remission for vacant land that pays the new City Vacant differential where the land is being kept in an improved and maintained state, consistent with our Vacant Sites Improvement Guide. Land maintained in this way will add to, rather than detract from, the city experience. The remission will be made at our discretion, based on our opinion of whether the site complies with the guidelines. We are happy to work with land owners to help them meet the expectations of those guidelines.
More information, and the contact details of staff who can advise you, is available on our Vacant Sites Improvement webpage.
The amount of rates remitted would be the amount that restores the land to the same rating position it would have been in if the City Vacant differential was not applied to the land.
The proposal would take the form of an amendment to our Rates Remission Policy. The changes to the text of the policy would be as follows:
Remission 8: Vacant Central City Land
Objective
To provide rates relief for vacant central city land that pays the City Vacant differential on the value-based general rate, where that land contributes to central city amenity.
Conditions and criteria
Rates may be remitted for vacant central city land where that land pays the City Vacant differential on the value-based general rate. The amount of rates remitted is at our discretion, but may be up to the amount that restores the land to the same rating position it would have been in if the City Vacant differential was not applied to the land.
Land qualifies for this remission if it is being kept in an improved and maintained state, consistent with our Vacant Sites Improvement Guide. This will be assessed at our discretion.
We will grant this remission based on the circumstances of the land as at the beginning of the rating year.
The table below considers an example central city vacant site with an area of 250 square metres and a capital value of $500,000. It shows rates if the property is assessed for the business differential, and compares that with the rates if it was assessed for the City Vacant differential.
| Rate ($ incl GST) | Business | City Vacant |
| Value-based general rate | 2,792 | 6,582 |
| Water, sewerage and land drainage | 1,054 | 1,054 |
| Other Council rates | 512 | 512 |
| Total | 4,359 | 8,148 |
The application of the new City Vacant differential would see the rates for this site increase by $3,789 (or $3,295 excluding GST). If the property was classified as City Vacant, it could potentially qualify for a remission of the same amount ($3,789 incl GST), which would mean its net rates (rates net of remissions) would be as shown in the “Business” column.
We can compare the potential remission of $3,295 excl. GST against estimates of the costs to improve a vacant site – as set out in the Vacant Sites Improvement Guide. A grassed option would cost around $13,500 excl. GST. A tidy gravelled option is estimated to be around $10,000 excl. GST. Setting these costs against the potential remission, tidying the site would pay for itself over a period of three to four years.
Land Value rating
We looked at whether we could set the general rate in the central city on land value while the general rate for the rest of the city would continue to be set on capital value. This would even out the contributions of ratepayers in the central city and ensure that they all pay a fair share.
However, the Local Government (Rating) Act 2002 only allows us to set the general rate using one type of rateable value (which must be the capital value of the land, or the land value of the land). There is no ability to use different methods of valuing land for the general rate for different parts of the city. This option was not legally possible.
Targeted rating
We could set a targeted rate on vacant central city land. A targeted rate would need to recover specific Council costs that have some connection to the community being charged. The costs covered by the targeted rate could be used to fund a grant programme for beautification of the central city, and specifically beautification of vacant sites. This is different from the proposal, because the proposed City Vacant differential on the general rate contributes to recovering our general costs rather than the cost of a specific beautification programme.
The advantage of the targeted rate option is that it would create positive outcomes for the central city both through the grant programme, and (potentially) through the incentive that vacant sites would have to use their site in a way that avoids the targeted rate.
The disadvantage with this option is that the administration of a grants regime would use considerable resources. The size of the targeted rate would be tied to the volume of grants issued, so a small grants programme would result in a low targeted rate that would have little impact on the incentives of vacant central city land owners to tidy their sites.
Supplemental option: Expanding to derelict buildings
We considered whether to include derelict buildings within the scope of the City Vacant differential. Derelict buildings continue to have negative impacts on the development and amenity of the central city.
Our analysis suggested that as the capital values of derelict buildings vary depending upon their state of repair, applying a differential of 4 to derelict buildings could see rates increases of more than $100,000 in some cases. This would be unreasonably severe and counterproductive to encouraging repair work.
It was also noted that “tidying” a derelict building is not as straightforward an option as it is for a vacant site, so owners would need to be given more lead-in time to have a realistic chance to commence permanent repair. The consultation questions below seek views from the community and affected property owners about the introduction of a financial mechanism to ensure that derelict buildings contribute fairly to rates, and to provide an incentive for owners to commence repair work. We are hopeful that solutions can be developed, and consulted on, for the rating year beginning 1 July 2023.