Options analysis

Council considered a broad range of alternative options including retaining the current policy (Status Quo), merging utilities and commercial property categories, and creating a new water utilities property category.

After applying its judgment about the overall effect of how costs are shared on the current and future wellbeing of the community, the Council is proposing to:

• create a new Water Utilities rating category
• shift five water utility properties from the current Utilities property category to the new Water Utilities category, and
• fix the share of general rates contributed by water and non-water utility properties at their 2025/26 levels.

If the proposed change to the Policy is adopted, then both water and non-water utilities properties would face rates increases in line with the city-wide rates increase, avoiding the large redistribution of rates liability that would otherwise result under the current policy.

The Council believes this change would result in a fairer allocation of rates because water and non-water utilities properties receive similar levels of service and because a significant component of the valuation changes is attributable to one-off methodological changes and improved information quality rather than market movements.

Option 1 - Status quo

Under the current policy:

• The Utilities sector will continue to contribute 5.6% of general rates because of the “fixed percentage allocation” method in the current RFP.
• There would be a significant redistribution of rates liability within the utilities category:

1. Water utilities would face an increase in general rates of 37% on average between 2025-26 and 2026-27
2. Non-water utilities would see their general rates reduce by 57% on average over the same period.

The Council considers this outcome would not result in a fair allocation of rates because both categories of utility property receive similar levels of service and because a significant component of the valuation changes is attributable to one-off methodological and data quality changes rather than market price movements.

Option 2 – Preferred- Create a Separate Water Utilities Category

Creation of a separate “Water Utilities” category while fixing the relative contribution of water and non-water utilities properties to general rates at 2025/26 levels.

Impacts

• Moderates rating impacts within Utilities property category.
• Avoids large redistribution of rates liability resulting from one-off changes to valuation methodology and information quality.
• Keeps water vs non-water contributions to general rates at 2025/26 levels.
• Rating category remains exposed to valuation changes over time due to the small number of properties.

Why this option is recommended

• It addresses the distortion created by 'one off' aspects of the 2025 revaluation.
• It maintains the integrity of the capital value system.
• It avoids significant cross-sector redistribution.
• It provides a balanced and fair response.
  
  

Average rates impacts across rating categories of options:

We encourage you to read the draft policy to see the proposed changes in context.

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