'Nail in the coffin': Wellington's Penthouse Cinema could face closure if council rates change

A family-run cinema in Wellington says potential council rating changes could be the "nail in the coffin" for the movie theatre, if it was forced to pay an extra $77,000 per year in rates.

And a hospitality business owner is alarmed that paying an extra $100,000 in rates could also force him to shut the doors in a struggling inner-city.

Wellington City Council is consulting on a possible shift to the way it calculates rates - from a capital value to land value based rating system with feedback sought by 15 November.

The council had put out a calculator tool for people to figure out their rates under the potential new system, but hadn't included the impact of a separate proposal to reduce commercial rates - a business owner says that'd caused shock in the community due to the apparent size of the increases.

Capital value rating calculates the bill based on the value of someone's land and buildings, whereas land-based value assesses just the value of the land. The move was underpinned by a drive among some councillors to incentivise growth, and target land-banking in the city.

Penthouse Brooklyn Cinema general manager Fergus Kisby-Macleod said rates for the cinema and adjoining carpark could increase by over $77,000 under a land value system - according to the council's calculator.

"I couldn't believe it, I thought it was fake," Kisby-Macleod said.

The cinema and cafe were 1729 square metres, and the carpark was 435 square metres, Kisby-Macleod said. He said the cinema and carpark were both on a relatively big piece of land, not far from the centre city.

He said the possible increase could be the "final nail in the coffin" for the business, forcing it to close - or lead to an increase in ticket prices or shortening of opening hours.

"We've never really wanted to change operating hours because we're trying to be a community venue and stay open seven days a week, but with these bottom line costs going up - just to open the doors in the morning before you've even started - to get another setback it makes it very hard to justify certain costs of opening for the day."

Kisby-Macleod said the movie theatre had been family-run for 51 years, with his grandfather opening it in 1975. He said the business tried to keep ticket prices lower than other cinemas for the community, but this would have to change if the rating estimates eventuated.

Jeremy Smith, director of Trinity Group hospitality company, said his bar Lulu on Courtenay Place - which was 1080 square metres, could face an increase of $102,000 in rates under a shift to a land-value system according to the calculator, from $68,000 to $170,000 per year.

"We definitely are not going to revitalise [Courtenay Place] ... if people can't pay their bills they're going to shut the doors ... we just recently had Dakota's shut their doors, I know there's quite a few others hanging on by their fingernails."

The council was considering reducing commercial rates from 3.7 times residential rates to 3 times residential rates over a number of years. This hadn't been included in the council's calculator tool.

Smith, who was also on the board of Hospitality NZ, said if the council was considering lowering commercial rates, it should have "absolutely" factored that into the calculator for the change - but he expected many residents wouldn't want an increase to their rates so businesses could lower theirs.

He said the calculator showed high-rise office buildings, like the Majestic Centre - which could have over $700,000 in savings, and the Deloitte high-rise, which could have over $1 million in savings - had large decreases in rates under the system, compared to smaller businesses.

"Whereas the smaller property owners, and the tenants in the buildings are going to be heavily penalised," Smith said.

Greens councillor for Wharangi/Onslow-Western ward, Rebecca Matthews, who'd been pushing for the change for six years, said the council wanted to hear from people about their concerns.

"Productive businesses, don't have nearly as much to be concerned about as unproductive major commercial land-holdings where nothing has happened."

Matthews said land-value based rates was about driving affordable housing development in the inner-city.

"Other cities, for example throughout Australia, have land value rates and have more thriving hospitality sectors than we currently have in Wellington. It's not like in Wellington we don't have an issue now with empty shops and businesses that are not active, so this is an attempt to revitalise the city."

Mayor Andrew Little said the council was consulting because it wanted to hear people's views on an issue that'd been hanging around the city for some years.

Work Auckland Council did some years ago showed roughly 60 percent of property owners would have a reduction, 40 percent would have an increase, Little said, but the extent of increases and decreases wasn't clear.

"It would be good to hear from anybody affected by it, good or bad, so that we get a picture of what the impact could be, so that we then know what to do next."

Little did not state his preference on either system saying he wanted a rating system that was "fair", and did not create disincentives for the development the city needed.

He said the proposal to decrease the commercial differential for businesses was quite a separate proposal the council was looking at, with different views around the council table.

Consultation closes 15 November.