The Dunedin City Council has bowed to critics of contentious changes that would have introduced a $500 targeted rate for bed and breakfast operators and reclassified smaller rural sections as residential properties.
Councillors deliberating on the 2010-11 draft annual plan yesterday voted to withdraw the proposed $500 targeted rate for 2010-11, which aimed to raise $43,000 from 106 of the city's B&Bs.
Instead, the council's rates and funding working party would study the possible introduction of a rate for B&Bs in 2011-12, with a report to be presented to the next full council meeting on May 31.
The working party would also consider the possibility of phasing in commercial rates for five B&Bs reclassified as commercial operations - tripling their rates bill - following an assessment by Quotable Value, councillors decided yesterday.
And, in a victory for submitters who own small rural sections, councillors also voted to create a new lifestyle properties differential rating category for smaller sections already reclassified from farmland to residential by Quotable Value staff.
The moves came yesterday after councillors heard from a delegation of QV staff who explained their policy for reclassifying B&Bs to commercial, and smaller rural blocks to residential.
B&B owners addressing last week's annual plan hearing had objected to both the council's planned targeted rate and the change introduced by QV staff, while the owners of some rural sections argued they were operating as farms in all but name.
Yesterday, council finance and corporate support general manager Athol Stephens told councillors council rates were based on Quotable Value's classifications, and the organisation's assessments could not be changed.
However, the council - unlike QV - had no "halfway house" category between residential and commercial, for B&Bs, or farmland and residential, for lifestyle property owners.
The decision to investigate a phase-in period for B&Bs reclassified as commercial came despite Mayor Peter Chin's concerns the move could create a precedent and "open the gate" for other ratepayers whose rates were reclassified.
"You are going to be involved in judicial reviews and all sorts of things in terms of the equity of what you are doing," he said.
Others supported the move, including Cr Chris Staynes, who argued the five B&Bs advertised their own tariffs two years in advance and were unable to make up the financial loss of a sudden rates change.
The impact was not limited to an inflated rates bill, but also flowed on to financing through changes to bank loans, Cr Bill Acklin said.
"Their interest rates double, their term of loan halves and they need a lot more equity to make their business stack up."
Councillors also voted to rethink a $500 targeted rate for B&Bs, with Cr Staynes supporting a smaller amount or a rate that differentiated between small and large B&Bs.
Cr Paul Hudson opposed the charge, arguing B&Bs already spent "thousands and thousands of dollars" promoting the city through their own advertising, and charging them again would be unfair.
"We shouldn't be adding anything at all on to their rating."
Cr Acklin said larger commercial operators also invested in advertising that promoted the city, while paying commercial rates three times higher.
Cr Kate Wilson said the policy was "actually very sound", while Cr Andrew Noone said the intent was to find a fair system capturing those who benefited from tourism, but acknowledged the net had "caught some that probably shouldn't have been caught".
"We are not there yet but I support the idea of going back to do some more work to fine-tune it."
On smaller rural sections, Mr Stephens said it was clear from submissions some landowners fell between existing farmland and residential rates classifications.
If a change was to be made, he suggested QV's existing lifestyle category would offer the best way forward.
Following a debate, councillors voted to approve the new lifestyle differential rating category, which would be tied to 0.95 of the dollar for residential rates.
The decisions would be considered on May 31.
