Policy review findings

Our review of the policy found that:

1. The existing rating framework remains fit for purpose.
2. No fundamental change to the rating base or structure is recommended at this time.

Technical amendments to reflect the transfer of water services to Tiaki Wai, and other minor editorial changes have been made to improve transparency and clarity and are reflected in the draft Policy.

A key change is the proposed creation of a new Water Utilities rating category. This would involve shifting five water utility properties from the current Utilities rating category into this new Water Utilities category, and fixing the share of general rates contributed by these water and non-water utilities at their 2025/26 levels.

This proposed change is driven by the general revaluation 2025 which resulted in significant valuation changes within the Utilities category, with flow on rating impacts. If Council makes no change to the Policy, then:

• Water utilities rates in 2026/27 would increase by around 37% on average
• Non-water utilities rates would decrease by around 57% on average

If the proposed change to the policy is made, then both water and non-water utilities properties would face rates increases broadly in line with the city-wide rates increase. This would avoid the large redistribution of rates liability within the Utilities category that would occur if the Policy remained unchanged.

The Council believes this change will result in a fairer 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 changes and improved information quality rather than market movements.

Background

The Utilities property category comprises 17 properties with an average capital value of around $140 million. Due to the small number of properties, relative valuation changes can have large impacts on the rates assessment for individual properties in this category.

The general revaluation 2025 resulted in significant valuation changes to the group of water network utility properties.

The capital value of water utility properties increased by 234% on average, while non-water utility properties increased by 6% on average.

The change in water utility property valuations was driven by a combination of factors including a change in valuer and valuation approach, changes in information quality, and changes in unit costs.

A significant component of the valuation changes is attributable to one-off methodological changes and changes in information quality that are unrelated to market price movements.