‘Early Adopter’ Councils Waive Property Rates for Community Housing

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Eight local councils in Victoria have taken a leadership role in supporting the development of healthy and strong communities by creating a precedent in waiving land rates on community housing developments that fall within their municipality.

After amendments to the Local Government Act in December 2009, local councils are now permitted to grant a rebate or concession in relation to any rate that is connected with the ‘proper’ development of the municipal district. This specifically includes community housing by granting a concession or rebate to a registered housing agency.

The Cities of Bayside, Cardinia, East Gippsland, Glenelg, Latrobe, Melbourne, South Gippsland, and Yarra have all agreed to waive rates.

Jacqui Watt, the CEO of Community Housing Federation of Victoria (CHFV) is encouraging Councils to take a holistic view of waiving rates as an investment in the community that results in better social outcomes for the community. She therefore stresses that this is a social policy decision and not solely a decision for the finance department.

"We have already heard the argument from certain councils that waiving these rates will be an added burden to other rate payers, but this is a furphy. The reality is that a commitment to invest in the community through waiving rates will bring additional income and employment into the local economy not just through the construction but through the tenants themselves having a higher disposable income" she says.

"When a council waives its land rates, the saving is used as financial leverage to create additional affordable housing, which helps make communities around the State more affordable for low income locals who are living under housing stress," says Ms. Watt.

"We believe there is a moral obligation to waive these rates, particularly because the financial impact on overall council revenues will be minimal."

Ms. Watt is very clear about acknowledging how far local councils have come in supporting community housing.

 

"CHFV and its members have time and again appreciated the foresight and vision that so many councils have demonstrated in standing behind community housing. Despite the protests of small but vocal minorities who have no desire to support social justice, these council members know how important addressing housing affordability is for the health of their municipalities," she says. "We're now asking councils across Victoria to take the next step in fighting the housing affordability crisis."

In the City of Manningham, for example, waiving the rates on 125 community housing properties would result in a 0.2% reduction in rates revenue. With rates contributing approximately 70% of total council revenues, would mean an overall revenue reduction of around 0.14%.

CHFV is asking every council to waive rates for community housing properties. It's a simple and affordable way for councils to make an enormous difference in the lives of their low income constituents.

The rates debate is shaping up as a vital issue for future development. Ms. Watt makes the point that councils who do waive rates have made their municipality more attractive for CHFV’s eight Housing Associations who typically run their projects on very tight margins.

"The waiving of rates can be a deal-maker for the winning municipality, it’s that tight for many of these projects," she says.

Councils that have categorically said no to waiving rates are: Alpine, Boroondara, Colac Otway, Glen Eira, Hobsons Bay, Hume, Knox, Maroondah, Melton, Northern Grampians, Wangaratta and Wyndham.

"The Boroondara response was unexpected as the council there has previously agreed to waive rates on a number of community homes, and still does, so there appears to be a communications issue between departments," says Ms. Watt. "Melton was also a surprise – 18 community housing properties that were previously exempt are now rateable from July 2011. That drives costs up."

To calculate the approximate financial impact of a given council waiving rates in total dollar terms and as a percentage of total income, use the following equations:

Find total number of community housing properties by local government area
A general guideline for the number of community housing-owned properties being considered for such an initiative can be found on pp 42-43 in the DHS published ‘Summary of Housing Assistance’ report, which provides data as of 30 June 2009. The number of community-owned properties per local government area is shown in the last column:http://www.housing.vic.gov.au/__data/assets/pdf_file/0005/412988/Summary-of-Housing-Assistance.pdf

Find average rates charge by local government area
A listing of the average rates charges per property by local government area for 2009-10 can be found at: http://www.mav.asn.au/CA256C320013CB4B/Lookup/RatesPackage2010/$file/Rates%20Package%202010.pdf

Find total revenue by local government area
To see total revenues by council, and rates as a percentage of total revenue, click on the below link and then select the council of interest. These figures are shown at the bottom of the page:http://www.dpcd.vic.gov.au/localgovernment/find-your-local-council#councils

Note: the latest data for all the above figures is 30 June 2009. Estimates are therefore based on what has been recorded as of this date.

Community Housing Federation of Victoria (CHFV) represents 73 community housing organisations, from the industry’s largest organisations that own and/or operate thousands of properties housing many thousands of tenants, to the smallest one or two dwelling operations. The larger organisations (eight Housing Associations and 31 Registered Housing Providers) are partially funded by the Federal and State Governments and have taken on responsibility for proactively growing the State’s stock of community homes.

For more information, contact:
Steve Casey
0419 206 373