Saturday, March 2, 2024

Grower hit by council rates punch

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A Gisborne kiwifruit grower is gobsmacked at the local council’s decision to support a policy that has doubled his rates bill in a year.
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Adding the SunGold licence value onto Tim Tietjen’s kiwifruit orchard would effectively increase its rated value from $2.8 million to $4.1m. Photo: Phil Yeo

A Gisborne kiwifruit grower is gobsmacked at the local council’s decision to support a policy that has doubled his rates bill in a year.

SunGold kiwifruit grower Tim Tietjen has found himself at the centre of a test case where his 3.11ha SunGold orchard’s valuation is now based on the additional value of the kiwifruit licence it holds. 

Zespri SunGold licences sold at the last tender round for about $500,000 a hectare.

In 2020 the Gisborne District Council (GDC) determined licences to grow the high-value fruit should be added onto the property’s land value and therefore justified a rating increase. 

Adding the licence value onto Tietjen’s property would effectively increase its rated value from $2.8 million to $4.1m.

With legal assistance from NZ Kiwifruit Growers Incorporated (NZKGI), Tietjen took his case to the Land Valuation Tribunal for a ruling.

“The tribunal came back with a ruling that was an emphatic decision against what the council wanted to do,” Tietjen said.

In its decision the tribunal concluded the kiwifruit licence was not an improvement to the land or a benefit to the land.

The most significant difference was whether the kiwifruit licence is part of the property’s capital value.

Ultimately, the tribunal determined the SunGold root stock was an improvement, while the value of the $500,000 a hectare licence was not.

The licence reflected a “right to grow” the cultivar and was effectively intellectual property, not an improvement to the property. 

Therefore, it was not eligible to be captured by a rating revaluation increase.

The decision to utilise the SunGold cultivar was ruled part of the business operation, and a cost of doing business, rather than ownership of the land itself.

Given the definitive nature of the tribunal’s ruling, the decision by GDC in February to now appeal it in the High Court has Tietjen querying the time and money it will take.

The impact of the higher valuation, which the council has already started to charge Tietjen, has been to push his rates from $4363 a year to $8220 a year.

“It seems to me this is more about a way for council to grab more money from the most productive sector of the region’s economy, targeting businesses that are doing well and give some other ratepayers a discount,” he said.

GDC chief executive Nedine Thatcher Swann would not comment beyond the council’s written statement on the reasons behind the council’s decision to appeal.

The council maintains the effect of the tribunal’s decision is to treat SunGold orchards the same as other kiwifruit orchards, despite the properties selling for far higher values.

But Tietjen said this ignores the risks inherent in taking on the crop and the high-value licence, even more pertinent when the industry has already come close to being wiped out previously by Psa infection.

“And there is a three-year period there where we are expected to pay those higher rates and we don’t even have a crop established that is generating income,” he said.

He said the wider implications could also include the likes of dairy farmers with shares in a dairy company selling milk at a premium, compared to those selling to a non-shared lower paying company.

The case is being closely watched across the country and particularly by the horticultural industry, given the array of apple types also requiring a licence to be grown.

Western Bay of Plenty District Council has the greatest density of kiwifruit orchardists in NZ as ratepayers.

Western Bay acting manager for finance and tech services James Graham said it was aware of the case and the pending appeal. It was working through the potential implications for the district.

“We will be working with QV, the council’s Valuation Service Provider, to undertake a District-wide revaluation as at July 1, 2022,” Graham said. 

“As with any revaluation process, we will communicate with our ratepayers the process once final wider revaluation methodology decisions are made.”

The case also represents something of a squaring off between the kiwifruit industry and government-rating czars. 

The Valuer General is backing the appeal costs faced by GDC, while NZKGI is providing legal assistance to Tietjen.

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