Hotel and motel operators in Auckland must now decide if they take legal action to block Mayor Phil Goff’s new rate which could cost some businesses hundreds of thousands of dollars this year.
And homeowners who offer ‘informal’ accommodation through services like Airbnb may also be caught in having to pay such a rate in future years.
The targeted rate on about 300 owners of properties housing accommodation providers was approved yesterday by the full Auckland Council after its finance committee wrestled with the fairness and effectiveness of raising $13.5 million to cover costs of tourism marketing and events for the city. Originally Goff had sought double that amount, $27 million, to cover all those costs until now funded from general city rates.
The measure was one, relatively small part of the 2017/18 budget for the council, which will see rates rise on average 2.5 percent, matching Goff’s pledge last year on the campaign trail for the mayoralty. The budget also included a further $160 million for transport ‘investment’ and a decision to begin paying Auckland Council staff the living wage, costing under $2 million initially but rising to $7 million annually after three years.
But the accommodation rate, passed by 11-8 at the committee and 10-7 by the council, was an important victory for Goff as he attempts to stamp his mark on his first mayoral term and prove to Aucklanders and the government that he can find answers to the region’s lack of funding for infrastructure.
The measure was fought tooth and nail by the accommodation industry, with a high profile lobbying effort by Tourism Industry Aotearoa being criticised several times by Goff during the hours of debate. There were allegations of ‘bullying’ of councillors and attempts to have councillor Dick Quax join Linda Cooper and Penny Hulse recusing themselves due to a conflict of interest because he had email contact with a lobbyist the previous day when a confidential council workshop was held.
A council report, cited by those in favour of the rate yesterday, claims the targeted rate should end up being passed onto tourists staying at the hotels at $3-6 a night and motels at $1-3 a night.
But one councillor John Watson said those small figures masked extra rates bills of hundreds of thousands of dollars for larger hotels and up to $30,000 for some motels in ‘tier two’ areas outside the city centre.
The accommodation providers are considering legal challenges, having signalled they would not accept the blunt instrument of a rate on their properties as a way of funding half of the activities in tourism of ATEED, the Auckland Tourism, Events and Economic Development agency.
Yesterday’s finance committee debate would give a legal challenge plenty of material to use back against the Council, which says it is watertight legally on its right to levy the targeted rate and on the form of consultation and changes it has undertaken.
While many councillors agreed that those benefiting from Auckland’s booming tourism, partly a result of ATEED’s success, should pay the costs, the targeted rate was labelled unfair. Councillor Greg Sayers said it was completely unrelated to the numbers of people who might be staying at a hotel or motel and businesses would have to pay whether they had clients or not. It would impact on their ability to keep staff. Wayne Walker said some would go out of business. The targeted rate was ‘incredibly messy’.
Others questioned how the rate would be applied across the region – Christine Fletcher pointing out that Franklin hotels and motels would not face the charge despite Franklin hosting the V8 motor racing, an event stimulated by the ATEED agency’s work. Daniel Newman, the councillor for Manurewa, said the rate would hit a motel in his area which offered emergency accommodation. “It’s a nonsense”.
Mike Lee said Goff’s claim the low total of $13.5 million would help fund mass transit to the airport was “risible, absolutely risible” and predicted legal problems ahead for the Council.
Denise Lee, who had separately pushed a case for the overall rate rise to be 2 percent rather than 2.5 percent, said she supported the targeted rate as a means of taking the burden off ratepayers directly. Desley Simpson said the industry could pass the costs on to customers at an extra amount for motels of “less than a cup of coffee” and for hotels at “less than the cost of a Big Mac”.
Goff was confident the measure would survive a court challenge: “Have we done it properly? Have we consulted? Have we listened? Yes.” He and others cited ratepayer feedback that put support for the targeted accommodation rate at close to 70 percent – but some councillors felt it was obvious ratepayers would favour anyone other than themselves carrying some costs.
