Rates free perched over water

The Far North looks set to be lumbered for good with a Parliamentary error that has cost the area's council more than $100,000 a year in rates.

An oversight in the Marine and Coastal Area Act, passed in 2011 to replace the controversial Foreshore and Seabed Act, means councils can no longer charge rates on properties built over the water.

The 39 affected properties in the Far North include the marine buildings and a restaurant at Paihia, and the famous fish and chip shop and Mayor Wayne Brown's home at Mangonui. The council was forced to refund rates paid on those properties in 2011-12.

Prompted in part by the Far North District Council's protests, the Department of Internal Affairs, which administers the act, surveyed the country's councils to see if others were affected.

A department spokeswoman told the Advocate the survey of 52 local authorities with coastlines had been completed, but only 15 had chosen to respond. Of those it appeared only the Far North was seriously affected, she said.

Few other councils were charging rates on coastal structures and, for those that did, the revenue collected was small - so changing the law was not worthwhile, she said.

Some councils levied a coastal occupancy charge instead of rates, but that was thought to be an option for regional councils only. Owners of properties built over the water can still be charged for council services such as sewerage and water.

Earlier this year council staff put the lost rates at $110,942 a year. Some of those rates, however, are charged to council-owned company Far North Holdings for its properties in Paihia and Opua. With a smaller rates bill it is possible, though not guaranteed, the company will be able to pay a higher dividend to the council, offsetting some of the lost rates.

Deputy Mayor Ann Court said she found it "absolutely incredible" that other councils were not affected.

It was fundamentally wrong that someone could be exempt from paying for their share of council assets and infrastructure simply because they lived over water. They were effectively being subsidised by other ratepayers, she said.

Mr Brown, however, has always maintained that properties built over water should not pay rates, which are in essence a land tax.