A new road encroachment and sale policy, recommended by the Strategy and Policy Committee, will be considered at Wednesday's (20 April) full Council meeting.
Under existing policy, homeowners pay the same amount for road reserve land that has encroachments, or structures, for private use regardless of big differences in land values between suburbs.
Some people are gaining financial benefits from encroachments - for example they may have a garage built on road reserve that increases the value of their property when it is sold. In other cases people are fencing off public land and paying nothing for its use.
The Council began a review of its road encroachment and sale policy in 2009. A draft policy was released for public comment in June 2010. The Council received 182 written and 25 oral submissions, mostly from holders of encroachment licences.
Many submitters were concerned about what the review might mean for the cost of renting road reserve land. Other concerns were that the Council could change the rules leaving property owners with few choices but to accept whatever the Council decided.
The main concern of councillors on the Strategy and Policy Committee was that any changes to the policy should be fair and reasonable.
As a result the Committee has recommend a new policy with three key changes:
- a rental fee structure based on differentiated fees across suburbs
- changes to the policy dealing with land that is fenced or hedged
- transitional measures for the introduction of these changes.
In essence this would mean fees would be set in proportion to land values in a given suburb. The rate also would be set at a discount to estimated market rental rates for land in the relevant suburb, recognising that road reserve is generally less valuable than normal freehold land.
The chair of the Strategy and Policy Committee, Councillor Andy Foster, says under the proposed changes, some rental rates will fall while others will increase depending on the value of land in each suburb.
"This approach is fairer to encroachment holders across the city," says Cr Foster.
"At the moment encroachment holders pay the same per square metre whether they are at Makara Beach or Oriental Bay despite massive differences in land value."
The committee has also recommended that a maximum and minimum rental rate apply. The maximum rate, proposed as $30 per square metre, aims to alleviate concerns about large or unaffordable rental increases in some suburbs where land values are the highest. A minimum rate, proposed to be $5 per square metre, would mean significant drops in fees where land values are the lowest.
Overall, it is expected that total Council income would increase under the differentiated fee structure, though the magnitude of any increase would depend on the schedule of rental fee rates ultimately agreed by the Council.
"The focus of the current work has been on the policy and principles. Actual fee levels will be consulted on as part of next year's Long Term Plan and would apply from 1 July 2012," says Cr Foster.
In the meantime the existing fee rate policy - $11.48 a square metre (excluding GST) and adjusted by the consumer price index from July 2011 - will apply for the 2011/12 financial year.
For those ratepayers with existing licences involving land that is fenced or hedged, the committee has recommended that existing licence holders continue to receive the first 50 square metres of land without incurring rental fees. New and re-issued licences for land that is fenced or hedged will not receive the first 50 square metres of land free.
"This approach recognises that fencing and hedging land creates exclusive private use of land, while also recognising the position of those owners who made decisions to fence land based on the existing policy," says Cr Foster.