A New Rates Structure - Community Consultation

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Following the amalgamation of the former Bombala Council, Cooma Monaro Shire Council and Snowy River Shire Councils in May 2016, IPART imposed a Rate Path Freeze for newly-merged Councils. Ratepayers in new councils had their rates protected against future increases during the rate path freeze period, meaning they paid no more for their rates than they would have in their pre-merger council area.

The NSW State Government legislation requires all merged Councils to implement a harmonised rating structure by 1 July 2021. This is a process where Council reviews the existing rates being charged and develops a single rating structure that distributes the rates burden fairly across the whole Snowy Monaro Regional Council local government area.

This process will not change the overall level of rates raised by the Council. The introduction of a new rating structure will lead to changes in an individual's rates.

The Local Government Act 1993 requires each property to be categorised as either Farmland, Residential, Business or Mining according to use. These categories may be divided into sub-categories in accordance with Section 529 of the Act. All rates within a category or subcategory must be rated the same, so if your property is categorised as farmland, and it is valued by the NSW Valuer General at $800,000 you will pay the same rates no matter where your farm is located in the SMRC local government area. While Council aims to achieve a fair and equitable outcome, there will be significant increases and decreases in rates levied on individual properties whichever rates structure is chosen.

Rates harmonisation refers to the General rate only. Other charges such as Waste collection, Water and Sewer charges are charged on a user pays basis and are not part of this process or paid for from general rates.

NSW Councils have three options with the way that rates are structured. Under each option, the total amount of rates collected by Council is the same, however, the rates are shared differently among property owners:

Ad Valorem only (rate in the dollar) - Land value multiplied by a rate of cents in the dollar.

Base Rate plus Ad Valorem - Combination of a part Base (fixed) amount plus land value multiplied by an ad valorem rate (currently used in the former Cooma area)

Ad Valorem with a Minimum Rate - Land value multiplied by an ad valorem rate, but properties under a certain land value threshold pay the minimum rate. (currently used in the former Bombala and Snowy areas).

What is a fair and equitable rate structure varies depending on your views?

To allow the community to consider the options a number of models have been developed. These are set out in the documents on this page. There is also information on the rule that apply to how the rates are set up. These may be changing, but for now, the Council needs to start discussing what principles the community feels should be used in distributing the rates across our 14,000 landowners.

Check the impact of the models with this online tool: Rate models check

NEW:

  • Rate model spreadsheet updated to include new model - Simplified approach to rating.
  • Model 6 fact sheet added to show outcomes from a community developed proposal.
  • Fact Sheet 11 - Detailed Comparisons updated for Model 6
  • Fact Sheet 12 - Rate Tables updated to include Model 6.

Once you have read up the information you can complete a survey, ask questions or make a comment in the forum. Please take the time to give your views on what you consider the factors that should drive how we share the cost of providing services to the community.

Following the amalgamation of the former Bombala Council, Cooma Monaro Shire Council and Snowy River Shire Councils in May 2016, IPART imposed a Rate Path Freeze for newly-merged Councils. Ratepayers in new councils had their rates protected against future increases during the rate path freeze period, meaning they paid no more for their rates than they would have in their pre-merger council area.

The NSW State Government legislation requires all merged Councils to implement a harmonised rating structure by 1 July 2021. This is a process where Council reviews the existing rates being charged and develops a single rating structure that distributes the rates burden fairly across the whole Snowy Monaro Regional Council local government area.

This process will not change the overall level of rates raised by the Council. The introduction of a new rating structure will lead to changes in an individual's rates.

The Local Government Act 1993 requires each property to be categorised as either Farmland, Residential, Business or Mining according to use. These categories may be divided into sub-categories in accordance with Section 529 of the Act. All rates within a category or subcategory must be rated the same, so if your property is categorised as farmland, and it is valued by the NSW Valuer General at $800,000 you will pay the same rates no matter where your farm is located in the SMRC local government area. While Council aims to achieve a fair and equitable outcome, there will be significant increases and decreases in rates levied on individual properties whichever rates structure is chosen.

Rates harmonisation refers to the General rate only. Other charges such as Waste collection, Water and Sewer charges are charged on a user pays basis and are not part of this process or paid for from general rates.

NSW Councils have three options with the way that rates are structured. Under each option, the total amount of rates collected by Council is the same, however, the rates are shared differently among property owners:

Ad Valorem only (rate in the dollar) - Land value multiplied by a rate of cents in the dollar.

Base Rate plus Ad Valorem - Combination of a part Base (fixed) amount plus land value multiplied by an ad valorem rate (currently used in the former Cooma area)

Ad Valorem with a Minimum Rate - Land value multiplied by an ad valorem rate, but properties under a certain land value threshold pay the minimum rate. (currently used in the former Bombala and Snowy areas).

What is a fair and equitable rate structure varies depending on your views?

To allow the community to consider the options a number of models have been developed. These are set out in the documents on this page. There is also information on the rule that apply to how the rates are set up. These may be changing, but for now, the Council needs to start discussing what principles the community feels should be used in distributing the rates across our 14,000 landowners.

Check the impact of the models with this online tool: Rate models check

NEW:

  • Rate model spreadsheet updated to include new model - Simplified approach to rating.
  • Model 6 fact sheet added to show outcomes from a community developed proposal.
  • Fact Sheet 11 - Detailed Comparisons updated for Model 6
  • Fact Sheet 12 - Rate Tables updated to include Model 6.

Once you have read up the information you can complete a survey, ask questions or make a comment in the forum. Please take the time to give your views on what you consider the factors that should drive how we share the cost of providing services to the community.

Frequently Asked Questions (FAQs)

Why is Council doing this?

Because we have to. Our current rate structures do not comply with the legislation. Even minimising the change as much as possible leads to a lot of change. We have looked at options to minimise the change within the options under consideration.  


Will this mean rates will go up?

Whichever rates structure is used, there will be significant Increases for some landowners and decreases for others. Harmonisation will have the same sort of impacts as rate revaluations. One of the few things you cannot do is keep everyone’s rates at the same level. There will be winners and losers. Overall the Council will receive the same amount of income as if harmonisation was not undertaken.

 

Why is there no mention of water, sewer or garbage rates?

Harmonisation only applies to the general rates. Those areas a funded by special rates and charges, which are raised under separate parts of the Local Government Act. General rates do not cover the costs of any of those services.


Do Snowy Hydro or NPWS pay rates on their properties?

Snowy Hydro, as a Commonwealth Government owned corporation does pay rates. NPWS, who are owned by the Crown (NSW Government) are generally exempt from rates.


Can we set different rates on dual occupancy sites than the single dwellings, as the dual occupancy creates more demand for services?

No. These are both residential category land and as such we can only separate them based on centers of population.


Can we set different rates for properties used as tourist rentals?

No. Under the legislation tourist rental properties are classed as residential for rating purposes, so we can only differentiate based on the centre of population, not the use. Hotels and motels are treated as business.


Why is Council doing this so late? the other Councils have already done this.

Earlier in the year the Council was in the middle of introducing a new computer system. This was a complex process and took up the same people's time as would have been involved in this process. Rather than hire in a consultant we deferred this process to undertake it in the lead up to the development of the rates. This also means that less people will have forgotten the conversations around the need for the change when they get their rates account.


How is land valued?

Below is a link the NSW Valuer General website for further information regarding land values:

https://www.valuergeneral.nsw.gov.au/land_values/how_do_we_value_land/valuation_assumptions_and_considerations


What about the new legislation that is coming in?

When the legislation is enacted we will look to see what options it provides. We are aware of the legislation and are ensuring that we can respond to any changes that are legislated. Some aspects Council will not be in a position to act on as the lead time to consider the matters (For example introducing and environmental category) may take longer than what we will have available.

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    I don't receive any council/government benefits (Live off grid) what changes will be made for each/all models?

    .... asked 11 days ago

    You still have access to benefits such as a road network when you travel anywhere or need things brought in. Council's also pay for part of the costs of the Rural Fire Service, another service provided to your class of property. Then there are services that Council is required under the legislation to provide to the community. These have been included as being shared by the entire community, as they have to be funded irrespective of whether they are desired by the community. The other aspect to consider is that this is a tax to cover community services, not a user pays system.

    Model 1 and 2 are the models that reflect where the costs of Council link back to the various rate categories. 

    The expectation is that a costs/benefit models will lead to lower rates outside the main townships. The models indicate that this is overall not the case. In the rural areas this is not because a higher level of service is provided, but due to the fact that the cost of the service needs to be spread over a much smaller number of landowners. As the largest cost of Council is roads, the impact of maintaining the road lengths in the rural areas well outweighs the cost per ratepayer of services such as pool, libraries, halls, parks, etc.

    The difference between the two models is that in Model 1 the costs are separated out for smaller village centres. This led to relatively high average rates in those centres. The average household income in those centres is lower than average, so Council does not see that outcome as fair and equitable. It also did not appear to align with the capacity to pay. This led to Model 2 being developed. In that model the cost of services to the villages is spread across all rural residential and farmland landowners. This cross subsidisation lowers the average rates in the villages and increases the average in the categories for those outside the villages.

    The legislation under which rates are calculated do not allow for variations based on whether land owners receive government benefits or whether they are connected to an electricity provider. There are separate rebates that are provide to certain pension recipients, but those are provide separately from the rate structure.

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    Should council wait until after the Local Government Act 1993 (NSW) Ammendment legislation is passed in its final form BEOFRE pushing on with this rates harmonisation agenda, becasue there is always a risk that the legislation might not be passed now that the goverment is likely to lose its majority in the house of reps? Surely we would be better informed to make a decision on this imprtant issue when we know the detail odf the ammended legislation? Andrew (of) THALER

    Andrew THALER asked 24 days ago

    Council has to meet the current legislation and this requires the Council to have in place a Operational Plan that includes a Revenue Policy, which has to include the rate structure, by 30 June 2021. The Office of Local Government has indicated that the plans are not required to be in place until 31 July, but the current regulation only provided that exemption for an Operational Plan commencing 1 July 2020. Our current rate structure does not meet the legislation as it stands. If the proposed changes do not go through, the Council will still need to change the rate structure.

    The earliest that the proposed bill can be passed is in May. This would not provide much time to develop models and undertake the required consultation. Council wants to consult on the general principles that it should apply and this will lead to a decision on the rate structure. That rate structure then needs to be placed on public exhibition.

    The proposed legislation will be closely monitored and may provide other options if passed. If it does the Council will consider how it can use those options to achieve the best outcomes for the community along with the feedback already received.

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    How do I find the Model Data Spreadsheet?? Bill.

    Bill Stephens asked 23 days ago

    If you look on the right hand side there is a section called documents. Scroll down until you find the one called model data.