End of Transitional Rates Grants
We have been contacted by an RSO concerned about a rates increase which has the potential to impact on sport and recreation clubs that are located on private land in Auckland.
While the vast majority of our sports and recreation clubs are located on public land and should not be affected by this issue, there is a concern that those located on private land will be negatively impacted.
We understand that in 2017/2018 some community properties could apply for property rates relief under legacy (“previous councils” such as Auckland City Council) rates remission or postponement schemes. Simply put, it seems some previous councils, acknowledging the community value of sport and recreation clubs on private land, were not requiring such facilities to pay the full rating valuation of their properties through the above schemes.
Auckland Council instituted “transitional property rates grants” to replace many of these previous property rates remission or postponement schemes. To minimise the financial impact on the existing recipients (the clubs) of these schemes and to allow for organisations to prepare for the removal of rates assistance, Auckland Council provided a transitional property rates grant for three years.
The transitional grants programme ended on 30 June 2021.
The outcome of the expiration of this rates grant is that sport and recreation facilities on private land will now be required to pay the full rateable value of the property. Subject to the underlying land zoning and location, this could potentially result in a significant increase in the rates bill facing clubs.
This situation could impact the fees clubs on private land will have to charge their members and the consequential barrier that may create to maintaining and growing membership and keeping people active. The worst case is that some clubs may not be in a position to cover the costs of the additional rates which will detrimentally impact on their long-term financial viability.
Auckland Council is suggesting that funding assistance can be sought through community grants which are provided by Local Boards. This is a contestable process and does not provide any certainty funding will be granted.
You are also entitled to speak directly to the relevant elected decision makers (likely a Council Governing Body Committee) should you wish to do so, however given the three-year transition approach it would seem that this decision is unlikely to be reviewed.
It is important that any clubs located on private land are aware of this issue and understand the likely outcome of this process to enable them appropriately plan their operational budgets for the years ahead.
Other points to consider
There is also a possibility that some clubs/ organisations may have had their underlying zoning changed during the Unitary Plan process which will impact on the total rateable value of the site.
A zoning change under the Unitary Plan may affect the rateable value if it changes the way a property can be developed, such as housing intensification or how it is used, such as a change from Open Space – Sports and Active Recreation Zone to a residential zone.
General rates increase
In addition to the above, as part of the 10-year Budget 2021-2031 (Our Recovery Budget) Auckland Council agreed a one-off average rate increase of five per cent will be introduced to existing ratepayers for 2021/2022 as an interim measure due to revenue pressures from COVID-19. This will also impact on the rate bill facing clubs on private land.
Finally, all councils are legally required to revalue properties within their boundaries every three years. The last revaluation in Auckland took place in 2017. The next revaluation was due to take place in 2020, but because of COVID-19 and the uncertainty of the impact it would have on the property market, the Valuer-General granted Council a 12-month deferral. The revaluation is now taking place in 2021 and the new valuations will be available online from October 2021 and sent to all ratepayers after that date.
Assistance and advice
Aktive and our partners CLM Community Sport, Harbour Sport, Sport Auckland and Sport Waitākere can provide assistance and advice around this process and also support around engaging with Local Boards.