SHIRE OF GINGIN. Objects and Reasons. for. Differential Rates

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1 SHIRE OF GINGIN Objects and Reasons for Differential Rates 2011/2012

2 1. Introduction For the purposes of determining rates each year, property valuations have been the standard basis for the calculation of rates, not only in Australia, but for many overseas countries as well. However, it is recognised that valuations alone do not always produce equitable results in all communities and therefore the Local Government Act provides several options, such as differential and specified area rates, to assist in achieving the desired rating outcome. The purpose of levying rates is to meet the Councils budget requirements each year in a manner that is deemed to be fair and equitable to the ratepayers of the community. 2. Gross Rental Valuations and Unimproved Valuations The Local Government Act specifies that where land is used predominantly for rural purposes, the rate levied shall be based upon its unimproved value (UV); and where land is used predominantly for non-rural purposes, the rate levied shall be on its gross rental value (GRV). A change in valuation methodology for a property must be made by the Council to the Department of Local Government. The Minister for Local Government must then approve a change of valuation methodology for a property, based on the recommendation by the Department. In accordance with the Local Government Act 1995 the Shire of Gingin uses a combination of Gross Rental Valuations (GRV) and Unimproved Valuations (UV) in the calculation of annual rates. Properties assigned a UV are revalued by the Valuer General s Office every year. Interim valuations are issued to Council by the VGO for properties where changes have occurred as a result of subdivisions, building construction/demolition, additions and/or property rezoning. In such instances Council must amend the rates for the properties concerned and issue an amended rate notice to the property owner. 3. Differential Rating Differential rating allows Council flexibility in the level of rates being raised from specifically identified properties or groups of properties within the community. It is common for Councils to base differential rating for properties on Town Planning Scheme zonings however other criteria such as land use may be used. The Shire of Gingin s aim is to ensure that rate revenue is collected on an equitable basis from all properties. For this reason the Council has decided to adopt differential rates for the 2011/12 financial year, which takes into account the level and range of services provided to different types of properties, to reflect the cost of provision of services to those different rating categories, as well as the need to encourage specific types of activities within the Shire. A summary of the rates to be used for the 2011/12 rating period are as follows:

However, it is recognised that valuations alone do not always produce equitable results in all communities and therefore the Local Government Act provides several options, such as differential and

3 Gross Rental Value Properties Properties within the Shire District are assigned a Gross Rental Valuation (GRV), due to their predominant non-rural purpose and are revalued by Landgate every 5 years. The last overall revaluation for GRV properties occurred in 2008/09, and these were effective from 1 July Notwithstanding, Landgate has provided a revaluation of GRV vacant properties, effective from 1 July It is proposed that the Shire of Gingin adopt a single Differential General Rate in the dollar for all categories of properties rated on the basis of Gross Rental Valuations. Gross Rental Value - Townsites The Differential General GRV - Townsites rate in the dollar is the rate in the dollar which is applied to all urban properties within townsites, including Residential, Commercial and Industrial properties. The GRV - Townsites rate in the dollar for 2011/2012 will move from to cents in the dollar, an increase of 7% plus a factoring up of the 2010/11 adopted rate in the dollar by 5.90% to counteract the reduction in vacant land valuations (from 5% to 3% of the Capital Value) for the 2011/12 valuation period as advised by Landgate. The Differential General Minimum GRV Townsites rate for 2011/2012 will move from $685 to $740, an effective increase of 8.03%. The increase has been applied on the basis that all ratepayers must make a reasonable contribution to the cost of Local Gross Rental Value - Other The Differential GRV - Other rate in the dollar is the rate in the dollar which is applied to all non rural use properties within the Shire of Gingin and outside of the townsites and include Rural Residential, Rural Industry and Spot and Split rated properties. The GRV - Other rate in the dollar for 2011/2012 will move from to cents in the dollar, an increase of 7% plus a factoring up of the 2010/11 adopted rate in the dollar by 5.90% to counteract the reduction in vacant land valuations (from 5% to 3% of the Capital Value) for the 2011/12 valuation period as advised by Landgate, effective 1 July The Differential Minimum GRV Other rate for 2011/2012 will move from $685 to $740, an effective increase of 8.03%. The increase has been applied on the basis that all ratepayers must make a reasonable contribution to the cost of Local

Notwithstanding, Landgate has provided a revaluation of GRV vacant properties, effective from 1 July 2011.

4 Unimproved Value Properties Properties within the Shire District are assigned a Unimproved Valuation (UV), due to their predominant rural purpose and are revalued by Landgate every year. The last overall revaluation for UV properties occurred in 2010/11, and these were effective from 1 July It is proposed that the Shire of Gingin adopt a single Differential General Rate in the dollar for all categories of properties excluding intensive use properties and mining tenements rated on the basis of Unimproved Valuations. Unimproved Value - Rural The Differential General UV - Rural rate in the dollar is the rate in the dollar which is applied to all non intensive rural properties or Mining tenements within the Shire of Gingin, including Rural, Rural Rates in Lieu and non GRV Rural Residential and Rural Industry properties. The UV Rural rate in the dollar for 2011/2012 will move from to cents in the dollar, an increase of 10% plus a factoring up of the 2010/11 adopted rate in the dollar by 5.55% to counteract the reduction in valuations for the 2011/12 valuation period as advised by Landgate, effective 1 July The Differential General Minimum UV - Rural rate for 2011/2012 will move from $705 to $855, an effective increase of 21.28%. The increase has been applied on the basis that all ratepayers must make a reasonable contribution to the cost of Local Unimproved Value - Rural Intensive & Mining The Differential General UV - Rural Intensive Use and Mining rate in the dollar is the rate in the dollar which is applied to all intensive rural properties and/or Mining tenements as classifed by Council within the Shire of Gingin. The UV Rural Intensive and Mining rate in the dollar for 2011/2012 will move from to cents in the dollar, an increase of 57.78%. The setting of this rate in the dollar ensures that all properties contribute an equitable rate amount to the annual Council Budget. The Differential General Minimum UV - Rural Intensive Use and Mining rate for 2011/2012 will move from $705 to $1,550, an effective increase of 120%. The increase has been applied on the basis that all ratepayers must make a reasonable contribution to the cost of Local

It is proposed that the Shire of Gingin adopt a single Differential General Rate in the dollar for all categories of properties excluding intensive use properties and mining tenements rated on the

5 PROPOSED DIFFERENTIAL RATES 2011/12 Differential Rate Category UV Rate in Cents GRV Rate in Cents Minimum Rate Income GRV Townsites $740 $2,391,879 GRV Rural Residential $740 1,298,814 GRV Rural Industry $740 51,833 GRV Non Rural Use $740 73,425 UV - Rural $855 1,168,170 UV Rural Rates in Lieu UV Rural Residential $855 1, $855 9,000 UV - Rural Industry $ UV Rural Intensive Other UV Rural Intensive UV Rural Mining $1, ,613 $1, ,102 $1,550 74,400 $5,727,801

9156 $740 73,425 UV - Rural 0.2296 $855 1,168,170 UV Rural Rates in Lieu UV Rural Residential 0.2296 $855 1,710 0.

16.3 DRAFT DIFFERENTIAL RATES MODEL 2014/15 FINANCIAL YEAR

16.3 DRAFT DIFFERENTIAL RATES MODEL 2014/15 FINANCIAL YEAR File No: Responsible Executive Officer: Reporting Author: RV.10 Director Corporate Services Manager Financial Services / CFO Date of Report: 14