Councillors this week voted for a transition rate for B&B owners reclassified as commercial entities by Quotable Value staff, and requiring a switch to higher commercial rates by the council.
Under the new policy, owners would be required to pay 50% of the higher rating category's charges for the first year, followed by full commercial rates from the second year.
The move follows a decision by QV staff to change the classification of five B&B operations in Dunedin last year, meaning some faced a sudden tripling of their rates bill.
Fletcher Lodge owner Keith Rozecki-Pollard told the Otago Daily Times this week at least three B&Bs in Dunedin had closed as a result, while others - including his own - had reduced the size of their operations to retain residential ratings.
Mr Rozecki-Pollard said the council's transition rate would be useful for some, but did not get "anywhere near" addressing his main concern.
Instead, the council should create a new rating category falling somewhere between residential and commercial rates, he believed.
That would reflect the extra restrictions placed on his B&B, which operated in a residential zone under consent conditions that restricted his ability to make money from functions, a commercial kitchen or a liquor licence, he said.
Instead, the council's policy encouraged B&Bs like his to close or reduce their number of rooms, at a time when the upcoming Rugby World Cup and Elton John concert were about to drive extra visitors to Dunedin, he said.
"They have got to sit down at the table and try and understand what they are stopping us from doing. They are stifling business, and at a time when Dunedin should be looking to increase its capacity."
He planned to make a submission to the council's annual plan public hearings in May, but also wanted a meeting with deputy mayor Cr Chris Staynes - chairman of the council's rates and funding working party - to discuss his concerns.
Cr Staynes said when contacted the idea of a B&B rate falling between residential and commercial rates had been considered by the working party, but deemed unworkable.
That was because treating B&Bs with five or six bedrooms differently from motels, some of which could also have five or six rooms, raised "a fairness issue", he said.
However, it could be considered again if raised by Mr Rozecki-Pollard at this year's annual plan hearings, he said.
"We do have the motel association and motel owners watching very closely, because they see this as competition.
"We have to try and find a path through that recognises we have to be fair both ways."
Other initiatives were also being considered by the working party, such as rewarding B&B operators making use of heritage buildings with rates relief or a rates differential, he said.
That idea could be considered in time for next year's annual plan deliberations, he said.
In the meantime, the transition rate would be introduced subject to annual plan consultation, councillors decided at Monday's council meeting, and Cr Staynes would be happy to meet Mr Rozecki-Pollard.
