While new Dunedin commercial property values may take up to two years to appear in the system, several building owners expect earthquake-proofing to slash building values between 30% and 40%.
That capital valuation decline would subsequently be reflected in a decline from commercial rates paid to the council.
Council staff have confirmed a commercial values decline would mean all the other six rateable property categories would have to pay more. They estimate a $50 million value decline would subsequently cost each residential ratepayer an extra $5 a year.
While Dunedin has 3900 commercial buildings built before 1976, which will require earthquake reports, the historic building stock in the city requiring earthquake proofing could climb from national estimate of around 10%, up to 15% of the ageing Dunedin stock.
One owner of a multi-storey Princes St building, who declined to be identified, said his late-1800s building was redeveloped in the mid-2000s at a cost of about $350,000. At that time, it was regarded as being fully compliant with DCC's building regulations. However, he said that due to recent earthquake strengthening requirements, the goal posts had been shifted and he estimated his freehold building, which carries a current DCC rating value of $1.2 million had fallen 40% in value, due to the uncertainty surrounding the DCC's earthquake-strengthening requirements.
''The Dunedin City Council is sitting on a potential time-bomb when their property revaluation cycle catches up with the possibility of an estimated 3900 buildings whose values have dropped by up to 40%, or are indeed unsaleable.
''The commercial hearts of historic cities like Oamaru, Timaru, Wanganui, Napier and Dunedin are sitting on a similar time-bomb,'' the owner said of earthquake costs and rates take decline.
As proof of this decline in value, he said his $1.2 million building was recently marketed for sale ''as is''. He received no firm offers and little interest, above ''market valuations'' around $700,000.
''This lack of interest and low valuation was primarily caused by the uncertainty surrounding earthquake-strengthening requirements,'' he said. Despite the drop in market value of his property he is still paying full council rates, based on the $1.2 million valuation.
Dunedin City Council financial planner Carolyn Howard noted the proposed rate paid by non-residential properties for the 2013-14 year is more than 2.5 times more than the rate paid by residential properties.
''If there was a significant reduction in the capital value of one category of properties, and the council wished to maintain the general rate factors, then all properties would pay more general rates,'' Ms Howard said.
As an example to demonstrate the impact, she estimated a drop in the capital value in the non-residential category of properties of $50 million meant the average residential property, with $274,000 capital value, would pay an extra $5.
However, other ratings changes could yet influence the 2014-15 year, such as change of property use, new properties, reductions for non-residential and farm properties, increases for non-residential Strath Taieri properties and any rates increase from the annual plan, she said.
The Princes St owner said that ''to some extent'' the council was insulated by a three-year commercial property valuation cycle.
''However, their current financial accounts need to be signalling some possibility, or potential loss of value, due to this matter.
''This problem is not just for the property owners. It is one that affects the whole community . . . [and] the possibility of abandoned buildings is another risk,'' he said.
A George St owner, with a building valued at more than $1 million, has warned about potentially having to demolish his property, while saving the historic facade.
''If we're expected to spend $600,000, then we won't ever get any money out of it,'' he said.
The building owner, who has held the property for several decades, also highlighted that an initial estimate for earthquake strengthening was above $600,000, but subsequent tenders came in at around $300,000.
