Recent discussions surrounding Raglan's commercial leases have highlighted a growing need for clarity and understanding about how harbour board properties operate. Council Strategic Property Team member Michelle Brown and Whāingaroa Ward Councillor Lisa Thomson are in the studio to shed light on this issue.
Back in 1873, the government endowed several parcels of land in what is now downtown Whāingaroa to the local authority as an endowment for ‘wharf and harbour purposes for the town of Raglan’.
These assets serve as crucial revenue generators, earmarked to sustain the harbour's future upkeep and development ranging from things like the walk bridge to Papahua Domain, the navigation beacons and the wharf. The income is ring-fenced and Council’s books are audited by the Office of the Auditor General to ensure that income is used for its intended purpose, in this case, harbour upkeep in Whāingaroa.
“There is just over a hectare at the bottom of Bow St and Wi Neera St that's divided up into 11 parcels and there are eight leases over those parcels. Two of those parcels that aren't leased out are reserved for council. That’s one Wi Neera St and the lower Bow Street property that's currently got a residential house on it,” said Michelle.
Michelle explains that the council administers the land only and this is leased out to other individuals or entities. The improvements on the properties are not Council-owned. Most of these leaseholders then sublet these properties to business owners at another rate. The property is leased in perpetuity and subject to renewal every 7 years and the person leasing can continue on the lease unless the council attempts to reacquire them through negotiation.
Council relies on independent, external valuers to determine market rates. Contrary to misconceptions, these rates are not only tied to land values but rather influenced by market dynamics and comparable rents in the area.
Lisa also adds that even if the council keeps their rents low on the ground, the cost of the property lease is determined by the individual or entity that is leasing the building or property to the business owner
“The ground lease rents haven't changed in the last seven years,” said Michelle, "The leases are due for renewal in 2024 and a review of the rents will be included as part of the renewal process.”
The narrative of escalating rents and strained relations between landlords and tenants perhaps underscores broader socio-economic challenges faced by the community. While council-administered leases aim for market-based fairness, the reality of local market distortions complicates this equilibrium with a number of local businesses unable to afford commercial rents.
Despite this, there are businesses in Raglan that have been able to afford their rents for the past 20-30 years, which indicates that there is a balancing act when it comes to relationships with landlords and financing a business in this town.
“I think what we're talking about is what the market is willing to pay. If a landlord put the rent sky high, nobody would lease that property. Because they couldn't make the money to make it viable,” says Michelle.
On the future of these leases, there are a number of Raglan's leasehold properties involved in Treaty of Waitangi claims, raising uncertainties about land ownership and funding for council projects. With negotiations ongoing, the timeline for resolution remains unclear, potentially spanning years or decades under a new government.
Proposed 13.75% Increase in General Rates
The council has been conducting a series of Drop-In Sessions across the district to discuss the proposed 13.75% rise in rates. Lisa notes that while attendance has been modest, residents are showing up to express concerns about issues such as road conditions, parks and reserves.
For Lisa, these sessions have provided a valuable opportunity to connect with other communities and understand the broader impact of decisions on the entire district, beyond just Raglan.
Te Hutewai Rd Concerns
Residents have raised concerns about the deteriorating conditions of Te Hutewai Rd, supported by recent images highlighting its poor state. Lisa mentions that the Waikato Roading Alliance conducted urgent maintenance work over the weekend to address the situation.
Reviewing Waste Minimisation
The council has initiated a comprehensive review of solid waste management, focusing on auditing household waste disposed of in landfills across the district. While Raglan seems to fare better than other areas, there's still scope for improvement.
Lisa emphasises the importance of ongoing education to remind people about recycling practices, food waste and what goes to landfill. The council is currently updating its Waste Minimisation Plan, tailored to address varying waste management needs in different towns.
Planning for the Future
Michelle, from the Strategic Property team, is actively involved in acquiring land for future infrastructure needs like roads to accommodate the district's growth. When planning roads and communities, councils consider practical factors like feasibility.
Some northern communities have structured plans outlining allocations for roads and vital infrastructure. However, Raglan currently relies on Raglan Naturally as its primary community planning document, indicating a need for more comprehensive planning.
Concerned about council issues? Don’t forget to submit on the 2024/25 Draft Annual Plan by heading to the Waikato District Council website.