Christchurch city councillors were briefed on Tuesday about options for possible ways to ease the rates burden as the economic downturn grips, they will make a decision in their meeting today.
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But the elderly could be left out, a confidential briefing shows.
In the briefing, city council staff recommended a rates remission policy which would allow for a six-month extension to payment deadlines with no added interest or penalties to businesses and individuals impacted by the virus.
But staff recommend against a rates postponements policy focusing on longer-term postponements for elderly.
The briefing states eligibility for the extension would align to the Government’s wage subsidy criteria.
It says individuals must have proof of a loss of employment due to Covid-19 and businesses must also show a 30 per cent decline in actual or predicted revenue over the period of a month when compared with the same month last year as a result of the virus to be deemed eligible.
The briefing forecasts a loss of $1 million in revenue due to late payment penalties being remitted under the policy as well as an estimated interest cost of $1.25m to the city council if all ratepayers apply. This would require a rates increase of up to 0.45 per cent in the 2020/2021 financial year to cover the two costs.
Within the briefing, it also states the city council’s investment arm Christchurch City Holdings Ltd has signalled that there is a risk its planned dividend of $26 million to the council may not proceed in June as planned which could have a further impact on rates rises.
“Of CCHL’s eight subsidiaries, the majority of the dividends are generated by Christchurch Airport and Orion. Christchurch Airport has been significantly impacted by Covid-19 and is not expected to fully recover for close to two years.”
Excluding the CCHL dividend and any form of rates relief, a $5.7 million loss is projected for this financial year from the four-week lockdown, which would result in about a 1.1 per cent rates rise.
A lockdown of two months would cost the city council $5.7 million and result in a 1.3 per cent rates increase, a three-month lockdown would result in a $6.9 million loss and 1.3 per cent impact according to the briefing.
The city council is proposing an average rates increase of 4.65 per cent across all ratepayers in this year’s Draft Annual Plan, which is currently under public consultation and will be finalised before July 1.
The 2018-2028 Long Term Plan also predicts a 50 per cent rates increase over 10 years.
