City council in New Zealand given green light to use modified method to conduct revaluation following quakes

Christchurch City Council (CCC) in New Zealand is finally moving forward with a revaluation of more than 160,000 city properties, a long-awaited review that was delayed as a result of the Canterbury earthquakes in 2010 and 2011.

The city-wide revaluation was scheduled for 2010, but the New Zealand government recently provided CCC permission to continue basing rates on 2007 property valuations, notes a council statement issued Tuesday.

“This year’s revaluation method was adopted by Cabinet on the recommendation of Land Information New Zealand (LINZ) and will treat Christchurch properties as if any earthquake damage has been repaired,” the statement says.

“It assumes insurance and EQC (Earthquake Commission) payments will return affected properties to their pre-quake state, and reflects the current practice of assigning insurance entitlements to buyers when properties are sold.”

As of about mid-September, insurers in New Zealand had injected $8.33 billion into the Canterbury recovery in the wake of the severe quake-related damage. The insurable costs are made up of $5.41 billion in commercial claims and $2.92 billion in residential claims settled, the Insurance Council of New Zealand (ICNZ) reported at the time. All figures are in New Zealand dollars.

Extended use of the 2007 valuations was an emergency measure adopted following the earthquakes, says Diane Brandish, CCC acting general manager of corporate services. “With considerable changes in property values across the city since 2007, valuations need to more accurately reflect current circumstances. The Rating Valuations Act says rating valuation systems must be equitable.” 

Although changes in valuations do not affect the total amount of rates collected, Brandish points out, the changes will have an effect on how the rates burden is distributed between property owners.

“Values will be assessed from sales data, including where EQC and private insurance entitlements were assigned, and will not recognize the effects of physical earthquake damage on individual properties,” land minister Maurice Williamson says in a statement. “With a large number of unrepaired residential properties still existing in Christchurch, it is impractical and too costly for the council to conduct a normal general revaluation this year,” Williamson notes.

“The implementation of a practical and robust rating valuation system will allow the council to conduct a general revaluation that reflects the value changes that we know of and will improve some of the current inequities between Christchurch ratepayers,” the minister adds.

CCC has contracted an independent valuer to carry out the reassessment of property values, with ratepayers expected to receive new valuations next March. Rates will not be affected until July 1, 2014.