Nelson motel owner 'devastated' after 50 percent rate increase

5:00 pm on 10 August 2022

By Max Frethey, Local Democracy Reporter

Nelson moteliers feel "blindsided" after receiving significant increases in their commercial rates.

From left: Dean Brunell from Chelsea Park Motor Lodge, Phil Neal from Greens Motel, Hospitality New Zealand regional manager Kim Odendaal, Rick and Stacie Warren from Century Park Motor Lodge; Andy Millener from Arcadia Motel, Shaun Jones from Tudor Lodge; and David Hale from Arrow Motel are angry with their significant commercial rates increases.

From left: Dean Brunell from Chelsea Park Motor Lodge, Phil Neal from Greens Motel, Hospitality New Zealand regional manager Kim Odendaal, Rick and Stacie Warren from Century Park Motor Lodge, Andy Millener from Arcadia Motel, Shaun Jones from Tudor Lodge and David Hale from Arrow Motel. Photo: Max Frethey/Nelson Weekly

Greens Motel owner Phil Neal said he was "devastated" after seeing his commercial rates increase by 52.44 per cent.

Neal paid about $13,500 in commercial rates last year. That figure has increased to over $20,600.

"I can't understand where they [council] come from … it just doesn't seem fair."

Shaun Jones from Tudor Lodge said that except for a holiday home unit in his motel that had its rates climb only 8.5 per cent, his business's rates increased by 23.5 per cent. He now pays almost $346 a week for his rates.

"Who's made these price increases and how are they justifiable?" he asked.

Nelson City Council sets rates based solely on the latest land valuation figures with capital value not taken into account.

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Revaluations must occur every three years and Quotable Value (QV) revaluated Nelson's properties in 2021 which saw commercial land value increase by 31 per cent.

The changes in property valuations following the revaluations are not under council's control.

"The majority of value increases has stemmed from pressure on land with Nelson's geography making it difficult to develop land at scale," QV Nelson/Marlborough manager Craig Russell said.

The updated valuations were posted to property owners who had a right to object before 10 March 2022, but many accommodation businesses lease their land.

Thirty-four per cent of Nelson's 1462 commercial ratepayers saw increases greater than the 5.4 per cent average while 11.3 per cent had an increase of less than the average. A total of 54.7 per cent of commercial ratepayers saw their rates decrease.

Under the rating legislation, it is not possible to have a uniform rates increase across the district.

Council has only gained an extra 5.4 per cent income from the rates increase, which is under inflation. The revaluations have only changed the proportion of council's income paid by each ratepayer.

However, motels tend to occupy larger lots which means a greater than average increase in land value and therefore greater rates increases.

"We feel blindsided, we feel like the council has hit us hard," said Stacie Warren from Century Park Motor Lodge. She expected a 5.4 per cent increase instead of the 37.1 per cent one she got.

"I don't know where the money's meant to come from when you're talking just small mum-and-dad businesses. We're not big corporations."

Warren added that paying the higher rates is even more difficult given new measures enacted by central government such as the Matariki public holiday, wage increases, and the doubling of sick leave days which all have an impact on business revenue.

"I don't think council or government understand the accommodation sector," her husband Rick Warren said. "We have an imbalance because room rates haven't gone up to the extreme."

Dean Brunell from Chelsea Park Motor Lodge saw his business get a rates rise from almost $10,600 to just over $14,500 a year, an increase of 37.25 per cent.

He thinks more needs to be done for Nelson's accommodation businesses.

"Nelson has a really high-end product for accommodation, and it's not looked after by the council," he said. "I think they just need to get in behind business owners a bit better."

"Council recognises the disruption caused by Covid-19 has impacted many Nelson businesses, especially those in the hospitality and accommodation sectors," Nelson City Council group manager corporate services, Nikki Harrison said.

She said a range of measures have been employed by council to assist local businesses over the past few years including a zero per cent rates increase for the 2020/2021 financial year, as well as the temporary suspension of parking fees in the city centre and a three-month rent holiday for council tenants.

"Between 2020 and 2022, Nelson City Council also offered over $100,000 in rent relief for outdoor dining, street stallholders and concession holders," she added.

Nelson has maintained a commercial rating differential that is higher than the residential rates for some time.

"This recognises the additional level of service provided to support the city's commercial ratepayers," Harrison said.

Some examples of that extra service are inner-city enhancement of public spaces, events, subsidised public parking, funding for Uniquely Nelson, and additional services such as public rubbish bin collection and economic development funding.

However, it was accepted by council that businesses paid too great a proportion of the city's rates and so the commercial differential, through the Long Term Plan, is being reduced by 0.5 per cent a year for the first three years of the Plan starting in 2021.

But these measures have had little impact on the city's moteliers who are wondering how they will pay for their rates.

David Hale from the Arrow Motel saw a rates increase of 24.7 per cent.

"Where's that money coming from?" he asked. "We can only put a certain rate out on the market… so it's coming straight out of our pockets."

Tudor Lodge's Jones agreed and said that raising the price of rooms would be "ridiculous" as that would dissuade travellers from visiting Nelson.

Nelson City Council will consider its rating policy in its next Long Term Plan which is scheduled for development next year with a view for adoption in 2024.

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