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New Zealand law explained for everyone

Local Government Act 2002

Planning, decision-making, and accountability - Borrowing and security - Borrowing

115: Rates as security

You could also call this:

“Rates can be used to guarantee loans or agreements made by councils”

You need to know about rates being used as security for loans or agreements. This can happen when a local authority (like a council) uses the money it gets from rates to guarantee a loan or make a deal.

If the local authority can’t pay back the loan or keep up with the deal, someone called a receiver might be put in charge. This receiver can collect a special rate to get enough money to:

  1. Pay what the local authority owes for the loan or deal that year
  2. Cover the costs of managing and collecting this special rate

The receiver will charge this rate equally to everyone based on the value of their property. This might be for the whole area or just part of it, depending on what was decided when the loan or deal was made.

The property value used to work out this rate is the same one the local authority uses for its general rates.

There’s one exception: If you’ve already chosen to pay for a loan or some work separately, you won’t have to pay this special rate.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM172396.

Topics:
Government and voting > Local councils
Money and consumer rights > Banking and loans
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Part 6 Planning, decision-making, and accountability
Borrowing and security: Borrowing

115Rates as security

  1. This section applies if—

  2. a local authority has charged a rate or rates revenue as security for any loan or the performance of any obligations under an incidental arrangement; and
    1. a receiver has been appointed under section 40A or section 40B of the Receiverships Act 1993 in respect of that loan or arrangement.

      1. The receiver may, without further authority than this section, assess and collect in each financial year a rate under this section to recover sufficient funds to meet—

      2. the payment of the local authority's commitments in respect of the loan or incidental arrangement during that year; and
        1. the reasonable costs of administering, assessing, and collecting the rate.

          1. A rate under this section must be assessed as a uniform rate in the dollar on the rateable value of property—

          2. in the district; or
            1. if the local authority resolved, at the time when the loan was being raised or the incidental arrangement was being entered into, that it was for the benefit of only a specified part of the district or region, that part.

              1. For the purposes of this section, rateable value, in relation to any property, means its rateable value under the valuation system used by the local authority for its general rate.

              2. A rate under this section may not be assessed and collected on rateable property in respect of which an election under section 65 or section 77 of the Rating Powers Act 1988 has been exercised in respect of any repayment loan or the works for which any loan was borrowed.

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