Attachments of Special Meeting

Item 6.3.1 - NOTICE OF INTENTION TO IMPOSE 2015/2016 DIFFERENTIAL RATES

Advice from Department of Local Government and Communities

Extract/Summary of Email Advice received from the Department of Local Government and Communities (11 April 2013 and 13 March 2013)

11 April 2013

Subject: RE: Differential Rating

Thank you for providing the objects and reasons background to the UV based differential general rates imposed in 2012/13. The information provided indicates that the Shire has imposed unlawful UV based rates in 2012/13 and these can be challenged in SAT under s 6.82 of the Act.

As you would be aware, differential general rates can only be imposed on the basis of:

· Land zoning

· Land use

· Whether the land is vacant or not or

· A combination of the 3 criteria above

The Dampier Coconut Wells and Dampier Twelve Mile categories appear to both have a ‘rural living’ zone. If there is no ‘use’ distinction between these then they have to be rated on the same general rate and all properties in the Shire with a ‘rural living’ zone have to be on the same rate.

The Dampier Skulthorpe rates may be OK as it has a ‘rural agriculture’ zoning. However, if there are other properties in the Shire with a ‘rural agriculture’ zone, then they all have to be rated on the same general rate unless they can be further distinguished by ‘use’ or ‘vacant land’ status. You can’t differentiate between ‘rural agriculture’ in Shulthorpe and ‘rural agriculture’ in Twelve Mile (for example).

If the Council wishes to make some differentiation among these 3 categories, it should impose the same UV general rate and then use s 6.47 of the Act to grant concessions so that the rates ‘objectives’ are met through the concessions rather than an ‘unlawful’ rate differentiation.

Happy to clarify any aspect of this further. However, if the Shire imposes rates on a similar basis in 2013/14 it is likely that these will be referred to SAT under s 6.82 to quash the rates.

Regards

13 March 2013

Subject: RE: Differential Rating

...As you would be aware, s 6.33(1) of the Act allows differential general rates to be based on:

· The zoning of land

· The purpose for which the land is held or used

· Whether the land is vacant or not

· Any characteristics prescribed [the only characteristics prescribed in r 52A will not apply], or

· A combination of these

Broome has several UV differential rates with descriptions that do not enable us to determine whether they are based on any of the above characteristics, or on some other basis that might not be permitted. These are:

· Dampier Coconut Wells

· Dampier Twelve Mile

· Dampier Commercial Operations & Pearling Leases

· Dampier Horticulture & Wattle Downs

· Dampier Skuthorpe

What is the basis of the differentiation between these?

What is different about Coconut Wells, Twelve Mile and Skuthorpe? Is it their zoning? Do they have a different use and if so what is that different use?

I look forward to you advice regarding these.

Item 6.3.1 - NOTICE OF INTENTION TO IMPOSE 2015/2016 DIFFERENTIAL RATES

Background Information - Establishment of UV Rural Category

Background Introduction of Formal Concessions

Section 6.33 of the Local Government Act 1995 prescribes the basis of imposing differential general rates which allows local governments to apply differential general rates based on land use, zoning, vacant land or a combination of all of these characteristics.

In preparation for the adoption of the 2013/2014 annual budget, correspondence from the Department of Local Government and Communities (Department) identified an anomaly in the Shire of Broome’s basis to imposing differential general rates for the Unimproved Value Rural rating categories. This anomaly was in regards to the rates in the dollar that had historically been applied to certain properties, dependant on their locality. As a result, officers conducted a review and made amendments to the rating categories to ensure compliance with the Department’s advice. To alleviate the financial impact on those persons affected, Council sought in 2013, to introduce a level of concession (under Section 6.47 of the Local Government Act 1995) and have since indicated an intention to gradually bring the rate in the dollar back to the base UV-Rural rate.

The following changes occurred as part of the 2013/14 Budget process to Unimproved Value (UV) rating categories from 2012/13, resulting in two new categories being established through the combining of a number of former categories:

13/14 Categories	12/13 Categories	12/13 Rate in the Dollar
UV - Rural	UV-Dampier Coconut Well	0.2523
	UV-Dampier Twelve Mile	0.3547
	UV-Horticulture/Wattle Downs	0.4308
	UV-Skuthorpe	0.4866

UV – Commercial Rural	UV-Dampier Short Stay Accommodation	2.1976
	UV-Dampier Commercial Operations & Pearling	2.2443
	UV-Dampier Pastoral	2.5130

It is noted that UV – Mining was proposed to remain but, without reference to Dampier.

Concessions were established across certain properties within the new UV-Rural Rating Category to ensure minimal changes in the rates in the dollar from the previous year. Concessions included:

· Coconut Well 48%

· 12 Mile 27%

· Horticultural Land Use 11%

Section 6.47 of the Local Government Act 1995 enables Council to grant a concession on rates. There is no prescribed limit on the amount of a concession, however based on the rating principles of fairness and equity, there should be sound justification to provide concessions to some ratepayers and not others. Research indicates that there is no substantiated justification to provide ratepayers in 12 Mile, Coconut Well or properties with a Horticulture land use, a varied rate in the dollar compared to each other or other ratepayers within the UV-Rural Rating Category. The concept of using differential rating to offset valuation impacts does not fulfil the principle of ‘consistency’ where all properties being used for a similar purpose or within the same zone, must be rated in the same way. If for example, a uniform rating approach was applied, rather than differential rating, the valuation in itself would provide the fundamental differential, which would directly impact the amount of rates to be paid.

As requested through a Council Workshop and to provide some relativity, the following table shows a comparison of rates levied in 2014/2015 across different properties throughout the town site to properties in Coconut Well and 12 Mile:

TOWNSITE PROPERTIES - GRV - SINGLE HOUSES
Description	Suburb	GRV Valuation	2014/15 rates			Comment
GRV - RESIDENTIAL	BROOME	56,680	$4,845.57			Double storey dwelling with pool
GRV - RESIDENTIAL	BROOME	49,920	$4,267.66			Double storey dwelling with pool
GRV - RESIDENTIAL	BROOME	50,440	$4,312.12			Double storey dwelling with pool with additional alterations
GRV - RESIDENTIAL	CABLE BEACH	45,760	$3,912.02			Double storey dwelling with pool
GRV - RESIDENTIAL	BROOME	44,720	$3,823.11			Double storey dwelling with pool
GRV - RESIDENTIAL	BROOME	43,160	$3,689.75			Double storey dwelling with pool
GRV - RESIDENTIAL	DJUGUN	29,120	$2,489.47			Average GRV - Roebuck Estate
GRV - RESIDENTIAL	CABLE BEACH	28,600	$2,445.01			Average GRV - Six Seasons
GRV - RESIDENTIAL	BROOME	21,840	$1,867.10			Average GRV - Old Broome
GRV - RESIDENTIAL	CABLE BEACH	33,280	$2,845.11			Average GRV - Sunset Park
GRV - RESIDENTIAL	CABLE BEACH	36,400	$3,111.84			Average GRV - Lullfitz Dr / Sands St
RURAL LIVING - UV - SINGLE HOUSES
Description	Suburb	UV Valuation	2014/15 Rates	Concession	Nett Rates	Comment
UV - RURAL-48% CONCESSION	WATERBANK	864,000	$4,708.80	$2,260.22	$2,448.58	Average UV-Rural value with dwelling and pool
UV - RURAL-48% CONCESSION	WATERBANK	1,157,000	$6,305.65	$3,026.71	$3,278.94	Average UV-Rural value with dwelling and pool
UV - RURAL-48% CONCESSION	WATERBANK	1,063,050	$5,793.62	$2,780.94	$3,012.68	Average UV-Rural value with dwelling and pool
UV - RURAL-27% CONCESSION	ROEBUCK	368,000	$2,005.60	$541.51	$1,464.09	Average UV-Rural value with dwelling
UV - RURAL-27% CONCESSION	ROEBUCK	432,000	$2,354.40	$635.69	$1,718.71	Average UV-Rural value with dwelling and pool
UV - RURAL-27% CONCESSION	ROEBUCK	679,000	$3,700.55	$999.15	$2,701.40	Dwelling on larger lot

The table includes sample properties taken from the categories under review, providing the rates before and after the concession, against the rates levied on other similar properties with single residences within the town site. It should be noted that this information is general in nature and that there are fundamental points of difference between properties under UV and GRV valuation methodologies.

Properties located in Coconut Well generally have on average, ‘pre-concession’ rates ‘comparable’ to similarly developed residential properties located in the town site. This being said, it must be recognised however, that properties with a higher UV value are properties with larger lot sizes which results in higher rates payable. Properties located in 12 Mile are on average levied ‘pre-concession’ rates that are ‘lower’ than those of median properties in town. This information indicates that with the concessions remaining in place as per the 2014/2015 financial year, these properties have historically been paying less rates than similar properties in town.

As stated above, Section 6.33(1) of the Local Government Act 1995, a Local Government may impose differential general rates according to the purpose for which the land is zoned under a local planning scheme, a purpose for which the land is being used or a combination of the two. The possibility of rating 12 Mile and Coconut Well properties by zone was explored. As 12 Mile and Coconut Well localities share the same planning zone which is “Rural Residential”, this would mean that properties would still be in the same rating group. There are also other additional properties besides Coconut Well and 12 Mile which fall within this zoning that would be impacted by such an option. This included properties on Wattle Drive and Billingurr (Cable Beach North). This was not deemed appropriate as some of these properties within the Zone are GRV rated as opposed to UV.

Item 6.3.1 - NOTICE OF INTENTION TO IMPOSE 2015/2016 DIFFERENTIAL RATES

Comparative Property Analysis

Note: Information has been sourced from REIWA website which is publically available.

Williams Road, Waterbank (COCONUT WELL) – 8 Bedroom, 5 Bathrooms

UV: $1,227,000

RATES LEVIED 14/15: $6,687

NET RATES WITH CONCESSION: $3477.32

SELLING: OFFERS FROM $3,600,000

LAND AREA: 4.48ha

CURRENTLY LEASED FOR $1700 P/week (excluding the caretakers residence)

INDICATIVE RATES WITH GRV ESTIMATE: 1700 x 52 = $88,400 x 0.08549 = $7557.32

Lawrence Road, Waterbank (COCONUT WELL) – 4 Bedroom, 4 Bathrooms

UV: $1,097,000

RATES LEVIED 14/15: $5,978.65

NET RATES WITH CONCESSION: $3108.90

SELLING: OFFERS FROM $3,000,000

LAND AREA: 3.3ha

Local Real Estate Agent estimates this property could reach $1200p/w

INDICATIVE RATES WITH GRV ESTIMATE: 1200 x 52 = $62,400 x 0.08549 = $5334.57

Fong Street, Roebuck (TWELVE MILE) – 4 Bedroom, 2 Bathrooms

UV: $363,000

RATES LEVIED 14/15: $1,978.35

NET RATES WITH CONCESSION: $1444.20

SELLING: OFFERS FROM $850,000

LAND AREA: 1.9ha

Local Real Estate Agent estimates rental of $700 p/week

INDICATIVE RATES WITH GRV ESTIMATE: $700 x 52 = $36,400 x 0.08549 = $3111.85

153 Fong Street, Roebuck, WA 6725

Yamashita Street, Roebuck (TWELVE MILE) – 3 Bedroom, 1 Bathrooms

UV: $371,000

RATES LEVIED 14/15: $2,021.95

NET RATES WITH CONCESSION: $1476.02

SELLING: $780,000

LAND AREA: 2.00ha

Local Real Estate Agent estimates rental of $750 p/week

RATES WITH GRV ESTIMATE: $750 x 52 = $39,000 x 0.08549 = $3334.11

95 Yamashita Street, Roebuck, WA 6725 __________________________________________________________________________________

Demco Drive, Broome – 3 Bedroom, 1 Bathrooms

GRV: $38,480

RATES LEVIED 14/15: $3,289.70

SELLING: $950,000

33 Demco Drive, Broome, WA 6725 LAND AREA: 700m2

33 Demco Drive, Broome, WA 6725 Kapang Drive, Cable Beach – 4 Bedroom, 2 Bathrooms

GRV: $36,400

RATES LEVIED 14/15: $3,111.84

SELLING: $1,095,000

54 Kapang Drive, Cable Beach, WA 6726 LAND AREA: 774m2

Item 6.3.1 - NOTICE OF INTENTION TO IMPOSE 2015/2016 DIFFERENTIAL RATES

Option 1 - Objects and Reasons

Objectives and Reasons for Proposed Differential Rates and Minimum Payments for the 2015/16 Financial Year

In accordance with Section 6.36 of the Local Government Act 1995, the Shire of Broome is required to publish its Objects and Reasons for implementing Differential Rates.

Overall Objective

The purpose of the levying of rates is to meet Council’s budget requirements in each financial year in order to deliver services and community infrastructure. Property valuations provided by the Valuer General are used as the basis for the calculation of rates each year. Section 6.33 of the Local Government Act 1995 provides the ability to differentially rate properties based on zoning and/or land use as determined by the Shire of Broome. The application of differential rating maintains equity in the rating of properties across the Shire, enabling the Council to provide facilities, infrastructure and services to the entire community and visitors.

Below is a summary of the proposed minimum payments and rates in the dollar for 2015/16

Differential Rate Category	Minimum Payment Proposed	Rate in the $ (Cents) Proposed
GRV – Residential	$1224	9.399
GRV – Residential Vacant	$1224	15.22
GRV – Commercial	$1224	10.38
GRV – Tourism	$1224	14.715
UV – Rural	$1224	0.5836
UV – Mining	$1224	12.225
UV – Commercial Rural	$1224	2.9656

Gross Rental Value (GRV)

The Local Government Act 1995 determines that properties of a Non-Rural purpose be rated using the Gross Rental Valuation (GRV) as the basis for the calculation of annual rates. The Valuer General determines the GRV for all properties within the Shire of Broome every three years and assigns a GRV. The current valuation is effective from 1July 2015. Interim valuations are provided monthly to Council by the Valuer General for properties where changes have occurred (i.e. subdivisions or strata title of property, amalgamations, building constructions, demolition, additions and/or property rezoning). In such instances Council recalculates the rates for the affected properties and issues interim rates notices.

GRV – Residential (The Base Rate for Gross Rental Value)

This rating category consists of properties located within the townsite boundaries which have a predominantly residential use. The object of the rate for this category is to be the base rate by which all other GRV rated properties are assessed. The reason is that the other GRV rating categories have a higher demand on Shire resources and vacant land is encouraged to be developed.

GRV – Residential Vacant

This rating category consists of vacant properties located within the townsite boundaries, excepting land zoned as Tourist, Commercial or Industrial. The object of the rate for this category is to encourage land owners to develop residential vacant land and to reflect the different method used for the valuation of vacant residential land as compared to the GRV-Residential rate category. The reason is that excessive vacant land leaves subdivisions appearing barren and unsightly, to the detriment of the aesthetics of the area. The rate in the dollar for this category is 62% higher than the GRV –Residential base rate.

GRV – Commercial

This rating category consists of properties used for Commercial, Town Centre or Industrial purposes and non residential vacant land, excluding properties with a tourism use. The object of the rate for this category is to raise additional revenue to fund the costs associated with the higher level of service provided to properties in this category. The reason is that the Shire incurs higher costs to service these areas including car park infrastructure, landscaping and other amenities. In addition, extra costs are also associated with tourism and economic development activities that have a benefit to these ratepayers. The rate in the dollar for this category is 10% higher than the GRV –Residential base rate.

GRV – Tourism

This rating category consists of properties with a tourism use within the townsite. The object of the rate for this category is to raise additional revenue to fund the costs associated with the higher reliance on Shire resources and the higher level of service provided to properties in this category. The reason this category is rated higher than the base rate for GRV is to fund costs associated with the heavier use of infrastructure and other Council assets and services in addition to contribution toward tourism promotion activities. The rate in the dollar for this category is 56% higher than the GRV –Residential base rate.

Unimproved Value (UV)

Properties that are predominantly of a rural purpose are assigned an Unimproved Value that is supplied and updated by the Valuer General on an annual basis. The rate in the dollar set for the UV-Rural category forms the basis for calculating all other UV differential rates.

UV - Rural (The Base Rate for Unimproved Value)

This rating category consists of properties that are exclusively for rural use. The object of the rate for this category is to be the base rate by which all other UV rated properties are assessed. The reason is that the other UV rating categories have a higher demand on Shire resources.

UV - Commercial Rural

This rating category consists of properties that are outside of the townsite that have a commercial use inclusive of:

o Pearling Leases;

o Pastoral leases or Pastoral use;

o Caravan Parks; and

o Short Stay Accommodation

The object of the rate for this category is to raise additional revenue to fund the additional cost impacts attributed to the servicing of these properties. The reason is that the Shire incurs higher costs in infrastructure maintenance as a result of extra vehicle movements on the shire’s road network due to the activities associated with these properties.

UV – Mining

This rating category consists of properties that are used for mining, exploration or prospecting purposes. The object of the rate for this category is to raise additional revenue to fund the additional cost impacts to the Shire. The reason this category is rated higher than UV-Commercial is to reflect the higher road infrastructure maintenance costs to Council as a result of frequent heavy vehicle use over extensive lengths of shire roads throughout the year.

Minimum Payments

The proposed minimum payment of $1,224 has been applied to all rating categories.

The object and reason for this minimum payment is to ensure that all property owners in the Shire of Broome are levied a unified and equitable minimum amount. It is also recognition that every property receives some minimum level of benefit of the works and services provided by the Shire.

Submissions

Submissions are invited from any Elector or Ratepayer with respect to the proposed differential general rates and minimum payments within 21 days of the date of the notice of intent. All submissions in writing must be clearly marked Submission regarding Differential Rating and forwarded to:

Chief Executive Officer

Shire of Broome

PO Box 44

Broome WA 6725

All Submissions must be received by the Shire of Broome no later than close of business on ___________.

Yours Faithfully,

K R Donohoe

Chief Executive Officer

Item 6.3.1 - NOTICE OF INTENTION TO IMPOSE 2015/2016 DIFFERENTIAL RATES

Option 2 - Objects and Reasons

Objectives and Reasons for Proposed Differential Rates and Minimum Payments for the 2015/16 Financial Year

In accordance with Section 6.36 of the Local Government Act 1995, the Shire of Broome is required to publish its Objects and Reasons for implementing Differential Rates.

Overall Objective

Below is a summary of the proposed minimum payments and rates in the dollar for 2015/16

Differential Rate Category	Minimum Payment Proposed	Rate in the $ (Cents) Proposed
GRV – Residential	$1224	9.399
GRV – Residential Vacant	$1224	15.22
GRV – Commercial	$1224	10.38
GRV – Tourism	$1224	14.715
UV – Rural	$1224	0.5836
UV – Mining	$1224	12.225
UV – Commercial Rural	$1224	2.9656

Gross Rental Value (GRV)

GRV – Residential (The Base Rate for Gross Rental Value)

GRV – Residential Vacant

GRV – Commercial

GRV – Tourism

Unimproved Value (UV)

UV - Rural (The Base Rate for Unimproved Value)

UV - Commercial Rural

This rating category consists of properties that are outside of the townsite that have a commercial use inclusive of:

o Pearling Leases;

o Pastoral leases or Pastoral use;

o Caravan Parks; and

o Short Stay Accommodation

UV – Mining

Minimum Payments

The proposed minimum payment of $1,224 has been applied to all rating categories.

Submissions

Chief Executive Officer

Shire of Broome

PO Box 44

Broome WA 6725

All Submissions must be received by the Shire of Broome no later than close of business on ___________.

Yours Faithfully,

K R Donohoe

Chief Executive Officer

Item 6.3.1 - NOTICE OF INTENTION TO IMPOSE 2015/2016 DIFFERENTIAL RATES

Option 3 - Objects and Reasons

Objectives and Reasons for Proposed Differential Rates and Minimum Payments for the 2015/16 Financial Year

In accordance with Section 6.36 of the Local Government Act 1995, the Shire of Broome is required to publish its Objects and Reasons for implementing Differential Rates.

Overall Objective

Below is a summary of the proposed minimum payments and rates in the dollar for 2015/16

Differential Rate Category	Minimum Payment Proposed	Rate in the $ (Cents) Proposed
GRV – Residential	$1224	9.3359
GRV – Residential Vacant	$1224	15.22
GRV – Commercial	$1224	10.3103
GRV – Tourism	$1224	14.715
UV – Rural	$1224	0.5797
UV – Mining	$1224	12.1429
UV – Commercial Rural	$1224	2.9457

Gross Rental Value (GRV)

GRV – Residential (The Base Rate for Gross Rental Value)

GRV – Residential Vacant

GRV – Commercial

GRV – Tourism

Unimproved Value (UV)

UV - Rural (The Base Rate for Unimproved Value)

UV - Commercial Rural

This rating category consists of properties that are outside of the townsite that have a commercial use inclusive of:

o Pearling Leases;

o Pastoral leases or Pastoral use;

o Caravan Parks; and

o Short Stay Accommodation

UV – Mining

Minimum Payments

The proposed minimum payment of $1,224 has been applied to all rating categories.

Submissions

Chief Executive Officer

Shire of Broome

PO Box 44

Broome WA 6725

All Submissions must be received by the Shire of Broome no later than close of business on ___________.

Yours Faithfully,

K R Donohoe

Chief Executive Officer