Local Government (Rates) Bill 2018: Committee Stage

I propose we deal with some housekeeping matters. In order to ensure the smooth running of the meeting, any member acting in substitution for a member of the committee should formally notify the clerk to the committee if they have not already done so. Deputy Cassells has already informed the committee that he is substituting for Deputy Darragh O'Brien. I propose that after a period of two hours that we take a break for approximately ten minutes, if required. Is that agreed? Agreed.

I welcome the Minister of State at the Department of Housing, Planning and Local Government with special responsibility for local government and electoral reform, Deputy Phelan, and his officials to the meeting.

At the request of broadcasting and recording services, members are requested that for the duration of the meeting, mobile phones are to be turned off completely or switched to airplane mode. It is not sufficient to put phones on silent mode, as it maintains a level of interference with the broadcasting system.

Chairman, I wish to signal at this point that it is my intention to bring forward amendments on Report Stage. It may have been discussed earlier but I wish to outline the provisions of those amendments. Section 10 is about notification procedures and the amendment will enhance the existing provisions of the section to ensure there is an obligation on ratepayers to register with the local authority and to notify it of any material changes in respect of rateable properties. A difficulty in obtaining such information, for example, concerning a change of occupier or a change in the legal name of the business, has proven to be a barrier to the effective levying and collection of rates for many local authorities, placing a clear statutory obligation on the occupier-ratepayer and this amendment will mitigate that.

The amendment to section 4 relates to the making of the rate process and the provision for additions and amendments to the valuation lists and changes to occupation to be immediately effective for rating purposes. Currently rates are levied on properties that exist on the valuation list on the date of the making of the local authority budget. This means that additions of new properties or amendments to the valuation lists during the year are not effective for rates until the following financial year and the following budget year. It is, therefore, proposed to amend section 4 to allow for additions and amendments to the valuation lists to become immediately effective for rating purposes.

A further amendment to section 4 provides that where a person becomes the occupier or enters into an agreement which entitles him or her to occupy the relevant property on a date after 1 January in any year, a local authority should charge that person a charge adjusted to reflect the remaining period of the year. Currently the person in occupation on the date of the making of the rate is liable for the entire year. This is an anomaly which the amendment seeks to address. It is now proposed that the local authority should adjust the charge or demand issue to the person who was in occupation on 1 January or after 1 January where there were more than one previous occupier in that year, so that the charge for the full year is apportioned between the different occupiers during the year on a pro rata basis.

The introduction of a rates compliant certificate will mean that if a ratepayer seeking a certain licence from a particular local authority, he or she may be required to demonstrate to that same authority that the rates bill has either been paid or is subject to a payment plan. This measure is intended to facilitate a more joined up approach within individual local authorities without being overly burdensome and as a measure to encourage business to meet their rates obligations and to engage with local authorities. Subject to the drafting being finalised this amendment will introduce the concept of this rates compliance certificate for the first time and can be kept under review in terms of its effectiveness.


Amendments Nos. 1 and 15 are related and will be discussed together.

I move amendment No. 1:

In page 5, between lines 14 and 15, to insert the following:

“ “Act of 2015” means the Valuation (Amendment) Act 2015;”.

Amendment No. 1 is a technical amendment and is included to cater for an amendment to section 20. Section 20 is being expanded to include two separate references to the Valuation (Amendment) Act 2015.

I will now turn to amendment No. 15. Currently, rates are levied on properties on the valuation that exists on the date of the making of the local authority budget. This means that the addition of new properties - this refers in part to what I said earlier - or amendments to the valuation list during the year are not effective for rates until the financial year following the making of the budget. Amendment No. 15, as set out in the proposed expanded section 20, subsection (a), provides that additions and amendments to the valuation list become immediately effective for rating purposes.

As for the proposed sections 20(b) and 20(c), currently there are differences in the timeframes allowed to public utilities undertakings and other ratepayers as set out in the Valuation Act. There are no objectively justifiable reasons that different or more generous time periods should be given to public utility companies, as opposed to private citizens or to citizens with businesses. The current provisions in this regard appear to give rise to different treatment for different categories of ratepayers. The proposed amendments to sections 53 and 54 address this and ensure an equitable and more efficient streamlined process for all ratepayers.

The proposed section 20(d) is about rate limitation orders, which was also discussed earlier. It concerns section 56 of the Valuation Act and amends the formula on which rate limitation orders are based. There are two elements to the formula. First, the rate limitation order is introduced for local authorities following a revaluation process to ensure the revaluation is revenue neutral. Revaluation results in a redistribution of commercial rates liability between ratepayers depending on the relative shift in the rental value of the properties in relation to one another. In practice, however, local authorities lose out on income from successful appeals to the Valuation Tribunal, which means the revaluation exercise is not revenue neutral as intended. To mitigate this, it is intended to amend the rate limitation order formula to allow for the inclusion of a factor that takes account of the level of appeals. It is proposed to add this factor in order that the upper limit of rates income in the year following revaluation is raised slightly to take account of leakage on the appeal following revaluation. The factor would be agreed annually by the Minister and by the Commissioner of Valuation.

The second part, which is a further amendment to the formula for calculating rates limitation orders, is also proposed. As it is currently worded, section 56 has the unintended consequence of linking the standard revaluation programme, which is carried out on a cyclical basis, with the valuation cycle for global utility companies. This has a particularly acute impact for any county or local authority undergoing a standard revaluation that coincides with a new valuation of a global utility. It means that the mandatory rate limitation order will limit the rates income from that utility. The global utilities are network based operators with a national presence and include telecommunications operators, ESB, EirGrid and Irish Rail. Irish Water will become a global utility in the coming months and is currently being revalued for this purpose. Authorities being revalued currently stand to lose out from any additional rates income from Irish Water at a potential cost of significant sums. Included in the revaluation process at the moment are Fingal, Tipperary, Meath, Wicklow, Wexford, Louth, Cavan and Monaghan. The addition of the second portion of the formula for the rates limitation order calculation will ensure the buoyancy achieved for new or revised global utility evaluations can be accounted for in the formula, which sets the upper limit for rates income in the following year. In other words, it will accrue to the local authority and they will not have to balance it out with other existing ratepayers, and therefore will potentially see a rate reduction for some of the utility companies. That is an unintended consequence of the current system.

We had a fairly detailed conservation on amendment No. 15. There is no point in going through half the alphabet and discussing it all over again. We are willing to support this amendment today with a view to having a closer look at it when the staff have agreed to send us on the details of that formula and how the amendment around the A to K formula is actually worked out practically.

We had a detailed discussion on Irish Water - I do not know if the Minister of State was listening in on that - and on the revaluation that is taking place. With regard to Irish Water and how it is distributed further down the line, Wicklow had all of its water assets valued and had them rateable - unlike some local authorities that did not have theirs - and at this stage it looks like Wicklow will be at a significant loss if it is done on a population basis compared with how it is currently calculated. In fairness to the staff, they have given us a clear indication of how that can be sorted out in the longer term. In the last session I said that the buoyancy generated by EirGrid and by ESB could potentially be used by the Minister to sort out the discrepancies with regard to Irish Water. I want to have this on the record again but at the moment I can say that we may want to bring forward amendments to this section on Report Stage.

I thank the Minister of State. I have no difficulty with the thrust of anything he has said but I have two questions for clarification on amendment No 15, specifically on the proposed section 20(d). Even though the title is "Power to limit rates income" can I take it to mean this is really to ensure that local authorities do not lose out financially either from losing appeals or from the global revaluations of the utility companies? Is this essentially the nub of it?

We had a discussion earlier about the length of time appeals are taking, and if there was a significant number of appeals in one local authority area that were lost - and if those appeals take six or 12 months - clearly there would be a net impact on other ratepayers. In order for the local authority to not lose out from losing those appeals and for the overall rates income to be revenue neutral, it means that somebody else will have to pay more. Perhaps the Minister of State will clarify how that will operate and how it will impact on the local authority, given that many of the people who appeal the rate increase through a revaluation do not necessarily pay the rates until the appeal is concluded. What happens if other people who did not get a rates increase then get hit with a rates increase in order to meet the revenue neutrality that is set out in this? Does this make sense?

I think so. I must admit that the formula-----

I am not so concerned about the formula, it is more the principle behind the formula that I am trying to get my head around.

I am aware there are other questions but I will start with that question while it is fresh in my head. The idea behind the proposed section 20(d) is as the Deputy has said. The legislation as currently worded would allow for that situation to occur every number of years where a revaluation of utilities coincides with a revaluation of X number of local authorities. This would see any potential increase - or buoyancy - from revenue received in rates from the utilities offset against other existing rates received from existing businesses in their local area. The main purpose of section 20(d), as proposed in amendment No. 15, is to ensure that this loophole is covered off.

The Deputy also referred to the appeals process and he makes a valid point. Talk is ongoing between departmental officials and the Valuation Office to ensure staffing levels will be sufficient to allow for valuations to occur and for appeals to be heard in a timely fashion. When the revaluation process was introduced originally, as everybody is aware, it was intended to be a revenue-neutral change and that any increases would be offset by decreases to other ratepayers in the local authority area.

On the length of time for appeals to be heard, members who deal with local authority members will know that when rates are agreed at budget meetings in the local authority, sometimes - even with the best of intentions by members and officials - if there are a number of appeals outstanding and if there are appeals that have been successful, it has led to a situation where the cost has not always been neutral with a resulting loss or reduction on the books of the local authority in terms of the potential income it thought it was going to accrue from commercial rates.

Part of amendment No. 15 is designed as an attempt to ensure that such revenue neutrality will occur into the future. It does not fully occur at present but varies from local authority to local authority. Amendment No. 15 refers to the change that will allow for another figure or factor to be used in respect of the volume of appeals and the difference between what was agreed by the local authority at budget time and what it can sometimes turn out to be. The purpose of that particular section of the amendment is to ensure that this shortfall is as small as possible and may be fully eliminated. I hope that answers some of what Deputy Ó Broin has asked.

As to Deputy Casey's point, the process of valuation for Irish Water has not been completed yet. Off the top of my head, Wicklow has significant water infrastructure, which serves a far greater region than Wicklow alone and that obviously would be a reason for Wicklow to have a greater commercial rate potential from Irish Water than most other local authorities.

I fully agree with the Deputy, and it is his entitlement, to bring forward an amendment on Report Stage that Wicklow would see a commensurate benefit from that Irish Water revaluations process when it is completed. As to whether it will be offset, there is a further job to be done in the local government section as to how the Local Government Fund is administered in future. I believe everyone present has been a member of the local authority at some stage and understands the number of movable parts that currently exist in the local authority fund, many of which are grossly outdated at this stage. We need a more simplified, streamlined method of allocating local authority funding that is more easily explicable to the public. That might well mean that a situation like the Deputy has outlined as to some of the buoyancy that is obtained from utility companies in the future would be distributed in a different manner. I do not want to pre-empt whatever the ultimate outcome would be by completely agreeing with Deputy Casey.

Amendment agreed to.
Section 1, as amended, agreed to.
Sections 2 and 3 agreed to.

Amendments Nos. 2 to 7, inclusive, are related and may be discussed together.

I move amendment No. 2:

In page 6, line 32, to delete “who owns” and substitute “who is for the time being entitled to occupy”.

Amendment No. 2 is again a technical amendment to amend the definition of "owner" to link it with the established definition in rating practice. An earlier definition of "owner" already exists in rating law exists in section 14 of the Local Government Act 1946 which defines the owner as the person for the time being entitled to occupy a vacant hereditament at the time of the making of the rate, which is old rates wordage.

Amendment No. 3 is another technical amendment and relates to deleting in page 6 line 34, "Notice of" and substituting "A rates bill stating". It is preferable to describe the notice that is being issued seeking payment of the rates as a rates bill. The phrase, "rates bill" is the term already used in current rating legislation. In Article 25 of the Local Government (Financial Procedures and Audit) Regulations 2014 "rates bill" is distinctive, self-explanatory and stands from out other statutory notices served by local authorities. The number of rates bills that are issued also vastly exceeds any other statutory notice and are therefore worthy of a distinct title.

Amendment No. 4 is effectively the same amendment, which is to delete "the notice" and substitute "the rates bill" for exactly the same reasons that I have just outlined.

Amendment No. 5 is the same amendment, which is, in page 7, line 6, to delete “A notice” and substitute “A rates bill”, with the very same explanation.

Amendment No. 6 proposes, on page 7, line 11, to delete “in a prepaid registered letter”. The number of rates bills served by local authorities is considerable. It is some 5,000 to 6,000 in the case of Dún Laoghaire-Rathdown Council and multiples of this in the case of Dublin City Council. In the event that a rates bill could not be served by ordinary post, the efficiency of the current rates recovery process would be affected to a major extent. This would result in significant delay in the recovery of rates and the need for local authorities to apply further resources for the purpose of serving rates bills upon occupiers of rated properties who have refused to accept the service of a rates bill by registered post.

Amendment No. 7 is also a technical amendment to allow for a rates bill to be addressed to the owner or occupier, if the name of the liable person is not known. Addressing a rates bill to the owner or occupier is likely to arise in only exceptional circumstances, but the existing ability of a rating authority to address a rates bill to an owner or occupier, which is in Regulation No. 42 of SI 508 of 2002, which is superseded by Regulation 28 of SI 226 of 2014, should be retained in the new Local Government (Rates) Bill 2018, notwithstanding that it is not possible to issue legal proceedings for recovery of rates without identifying the name of the occupier.

I oppose amendment No. 2. It seems to me that the majority of those amendments are fine and are basically technical amendments. The exception to that is amendment No. 2. Before I register that position, I seek clarity and have a question. My understanding of amendment No. 2 is that it changes the provision of the vacant property charge, in the case of a vacant property, from the owner being charged to whosoever is entitled to occupy it at that point in time. Is that correct?

What would the Minister of State say to the assertion that this would tend to benefit landlords over occupiers at any one time? Is there any compelling logic as to why that change is needed in his view?

On amendment No. 6, my heart goes out to these local authorities which have so many commercial bills to send out, that it is causing financial constraints to send them in prepaid envelopes. I wish we had that many to send out in Wicklow.

I am not 100% sure what is the purpose of amendment No. 7. Is it to take liability away from the person who was using the property and putting it back on the owner or occupier? My understanding is that if the owner or occupier of the property informs the local authority with the name and address of the person who is renting the property, the liability then stays with that person and does not revert back to the owner-occupier. If that is the case, why is this amendment needed, if the liability is not transferable to the owner-occupier?

I apologise to Deputy Casey but I missed the start of his question, can he repeat it please?

My understanding of the regulation at the moment is that if I own a property and I rent it out, once I give that information as to who that person is, their address and details to the local authority, my liability then ceases.

If so, why is this amendment needed? If the liability on the owner-occupier ceases, why is it the case that, where "the name of the liable person concerned cannot be ascertained by reasonable inquiry, a rates bill under this section may be addressed to "the occupier" or "the owner"" of the property?

Regarding Deputy Barry's points, the compelling case is that commercial rates are due from occupiers of commercial premises, not owners. It is often the case - in fact, I would say it is the case in most examples - that the owner is the occupier, particularly where it is a small operation paying the rates. The compelling case for this change is that, if an owner rents a premises to a person who runs a business in it and the latter decides to cease trading for whatever reason, rates legislation has always operated to the effect that the latter is the person on whom the liability falls. Rates are not a property tax or anything else other than a charge on commercial activity in order to fund local authority activities in the area.

Amendment No. 7 is necessary to meet those very rare cases where people have not registered. Deputy Casey is right about the legal validity of a rates bill issued to the owner. Currently, if an operator cannot be ascertained, the next logical fallback is generally for the rates authority to engage with the arms of the State that operators register their properties with, for example, the Property Registration Authority, and determine where the bill should be served. The Deputy is right to point out that this would not occur often, but we are trying to ensure that there is a specific process that a rateable authority can go through in order to ascertain who the occupier of the premises is.

I seek clarification. While I understand the logic presented by the Minister of State, this amendment seems to read that, even though I as the owner have provided the local authority with all of the necessary information, I will be next in line if the occupier absconds. Does the amendment place the liability back on me? I am concerned. Given the way this is worded, it looks like the liability owed ends up-----

That is not the intention, nor is it the effect, of this change. It will not place the onus of payment where it should not lie. Rather, this is about ensuring a process whereby a local authority can try to get to the bottom of who the occupier is.

I am concerned that it exposes an owner to that charge. What the Minister of State has set out is not actually mentioned in the amendment.

The liability does not change. It still rests with the occupier, which relates to Deputy Barry's first question. This is just a method of trying to ensure that the rates bill is served. A local authority does not always have accurate information as to who the occupier is. It is another attempt to get that information in a small number of cases. It does not reverse in any way the liability that is currently placed on occupiers over owners.

Amendment agreed to.

I move amendment No. 3:

In page 6, line 34, to delete “Notice of” and substitute “A rates bill stating”.

Amendment agreed to.

I move amendment No. 4:

In page 6, line 35, to delete “the notice” and substitute “the rates bill”.

Amendment agreed to.

I move amendment No. 5:

In page 7, line 6, to delete “A notice” and substitute “A rates bill”.

Amendment agreed to.

I move amendment No. 6:

In page 7, line 11, to delete “in a prepaid registered letter”.

Amendment agreed to.

I move amendment No. 7:

In page 7, between lines 18 and 19, to insert the following:

“(7) Where the name of the liable person concerned cannot be ascertained by reasonable inquiry, a rates bill under this section may be addressed to “the occupier” or “the owner” as the case may be.”.

Amendment agreed to.
Section 4, as amended, agreed to.

Amendment No. 8 is in the name of Deputy Darragh O'Brien, but he is being substituted for by Deputy Cassells.

I move amendment No. 8:

In page 8, between lines 6 and 7, to insert the following:

“(6) (a) The Minister may allow for a multi-annual increase in a rate payment and multiannual decrease in a rate payment following a re-valuation if requested by a local authority.

(b) The Minister may by direction in writing amend or revoke a direction under this section (including a direction under this subsection).”.

We have discussed the impact on businesses of revaluations and the significant increases in the bills associated with same. As Mr. Quinlan told us, appeals by businesses have increased in recent years from just a couple of hundred to thousands. There are 1,000 appeals on the books as we speak. The Minister of State well knows that the impact on a business of a revaluation and significant increase, a situation caused by the Valuation Office not having kept pace with the process in recent years, is massive and can be very detrimental to a small business. The thrust of this amendment allows for the staggered payment of rates so that a business is allowed to meet a significant increase over a period of time instead of being hit with it in one go.

Deputy Cassells is right. There is not a Member of the House, be he or she in government or anywhere else, who does not get many queries from constituents on this issue, particularly in local authority areas that have undergone the revaluation process. The Deputy is right to point out the number of appeals and the delays in same. We have a responsibility to ensure that commercial rates bring €1.4 billion into the local authority sector. Were that figure adjusted downward significantly, it would have serious consequences for our local government system.

It is my intention in the autumn to deal specifically with the valuation side of this process. As practitioners, we all know that rates and valuations are two sides of the same coin. The Commissioner of Valuation operates independently of the Government and every elected politician, local and national. That is important, as the job the commissioner must do should be completely independent of politics. Equally, however, the Oireachtas has a responsibility to review from time to time the legislation underpinning the valuations process. That is why I am determined to do so in the autumn of this year. I will not use the word "anomalies", but there are a number of pinch points in certain sectors of the economy, particularly in small rural communities and villages where there is only a business or two that, in effect, can often act as a social service as much as commercial operations.

Other arms of Government - for example, the Minister, Deputy Ring's Department and the local government section - are constantly trying to do their utmost to improve the quality of life for people in these communities throughout the country and sometimes it can seem that commercial rate provisions do not have the same interests at heart, and they do not. There is a conflict there. The rating system is designed to ensure a level playing field or an even system is operated across the country in the way we collect commercial rates. Equally, with respect not only to isolated rural areas but to some of the more deprived urban centres in towns and cities across the country where smaller business premises have closed in recent years, there is a desire, politically, across all sides for those local businesses to be retained and to ensure that valuation rules or anything around them would not be a contributory factor to the closure of such business. In the autumn of this year it is very much my intention that we would bring forward legislation on valuations.

To answer specifically the amendment in the name of Deputy Darragh O'Brien proposed by Deputy Cassells, the Valuation Acts provide for the revaluation of all rateable property within a rating authority area so as to reflect changes in value due to economic factors such as business turnover, differential movements in property values or other external factors and changes in the local business environment. The Department has been informed that the general outcome of the revaluations conducted to date by the Valuation Office is that approximately 60% of ratepayers have had their liability reduced following a revaluation and 40% have had their liability increased, which is expected to be replicated elsewhere as the national programme advances.

With respect to reported cases where the rates liability has increased by multiples of the original bill, the Department has been informed that while such increases may have occurred in some isolated cases, increases of this level would be a rarity. Possible reasons for significant increases where they occur would be that the valuation of some of these properties had not been revised to take account of improvement, extensions, etc., for some considerable time or where the valuations were historically low in comparison to the general level of valuations on the valuation list.

Additionally, some properties may have undergone extensive refurbishment and this was not reflected in the valuation immediately before the revaluation that is now in train. It is not the purpose of a revaluation to increase the total amount of commercial rates collected by the local authorities. Section 56 of the Valuation Acts 2001 to 2015 provides that the Minister for Housing, Planning and Local Government having obtained the consent of the Minister for Public Expenditure and Reform is obliged to make an order directing a rating authority to limit the overall amount of income it could raise through rates in the year following a revaluation to the total amount of rates liable to be paid in the previous year, plus buoyancy arising from valuations determined in the year of a revaluation of newly constructed property and adjusted for inflation as measured by the consumer price index, CPI.

Rate limitation orders have been made in each local authority that has undergone a revaluation to date and further orders will be made in respect of future revaluations as they arise. Ultimately, any undue or contrived delay in achieving up to date valuations in line with current property rental values would result in unfairness in the levelling of rates. A proposal to phase in increases in valuations over a number of years would either see the shortfall in rates income being made up by other ratepayers in the form of higher rates bills or would be absorbed by the local authorities. In light of that, it is not my intention to accept this amendment.

We will have to examine in some detail the valuations system in the fall of this year. There is already a review of some of the exemptions that currently exist under the Valuation Acts under way, to which I would have referred in a few of my responses to parliamentary questions. We, as an Oireachtas, should ensure we have legislation in place to take on board that review. I believe we can do that in the fall of this year. It need not necessarily be major legislation but it could deal some of the issues Deputy Darragh O'Brien's amendment seeks to address, which is to avoid a situation where there can be severe increases on individuals. Sometimes there can be a significant delay in the hearing of appeals and the process of revaluation is a little slower than we would like. In that proposed legislation we should be able to address some of those concerns.

I will briefly speak to the amendment. I put on the record that I am a commercial ratepayer so that everybody knows that. Wicklow went through it is revaluation process this year and March was an exceptionally busy month in my office. The purpose of this amendment to take the shock out of a revaluation system. As the Minister of Sate said, 40% of properties received an increase.

Those owners of those properties were not the ones who telephoned the Deputy's office.

It was the 40% who received an increase who contacted my office not the 60% who did not receive an increase. While the Minister of State mentioned that properties could have had improvements carried out and extensions added, the critical factor is that a revaluation had not been carried out in Wicklow during the past 30 years. The fundamental problem is that revaluations do not take place often enough. I have been contacted by owners of several properties facing a 300% to 400% increase in their rates liability for no reason other than they are located on a street that has seen much improvement in that period while they have not made any improvements to their properties. It is hard for a small business to take that hit and to be asked to do so in one year. This amendment seeks to harmonise that liability over a period of time. In the absence of the legislation the Minister of State proposes to the Valuation Office, a harmonisation measure such as that proposed in the amendment is required. I speak from my experience in Wicklow when we had to harmonise the town council rate with the local authority rates and we had a similar situation with properties decreasing in value and other properties increasing in value. Therefore, it is possible to harmonise rates over a period of time when we can examine the figure with which we are dealing at the end of the day. I went into family businesses that were on their knees when they got their revaluations. It is not acceptable to say there is nothing in place to assist small businesses to deal with the shock of the impact of a revaluation that is not of their own making. This is the State’s fault. It does not have a proper revaluation system. It was nearly 40 years since Wicklow had a revaluation carried out. My business suffered a 100% increase as result of its revaluation. We had not had a revaluation in more than 20 years. We, as a party, will be pushing this amendment. In the absence of the legislation the Minister of State is proposing there is nothing in place to assist the small and medium sector to deal with the shock they face on foot of a revaluation.

To pick up on Deputy Casey's point, the Minister said the general outcome of previous revaluations has resulted in a 60% reduction for rate payers and 40% of businesses had experienced an increase. He said there were only isolated cases where there were significant increases and that they were a rarity. Meath had a revaluation this year, as had Wicklow, and Westmeath and Longford had revaluations last year. I kept all the local newspapers from that period. Individual businesses had significant increases and they were certainly not rarities. If the Minister of State has been told they were rarities he has been wrongly advised. Certain businesses such as public houses and so forth were hit with multiple increases which have the potential to close those businesses. That is what this amendment seeks to address. People want to pay the charges being levied on them but the issue the way they can do so. The Minister of State admitted in his response to me that a phasing arrangement should be examined. That is what we are pushing for in this amendment. As Deputy Casey said, this scenario is developing because of the tardiness of the Valuation Office. I tackled its representatives when they appeared before the Committee of Public Accounts on this matter. The sheer lack of pace in the manner in which they are doing their job has caused this situation in the first place in the context of the timeframes involved.

That has already been admitted and accepted this morning. The Minister of State agreed that the appeals process and delays in that regard are adding to the problem. As I said, I will press the amendment.

I acknowledge what Deputy Cassells said about the issues with vintners. I understand the Commissioner of Valuation engaged in a process with vintners groups whereby some of those difficulties were ironed out or an agreement was reached that was more acceptable to the vintners. Following a number of requests to the Commissioner of Valuation in recent months, he indicated regarding the fuel retail sector that consultation and engagement were ongoing between the Valuation Office and the representative group of the fuel retail sector, the Irish Petrol Retailers Association, IPRA. The commissioner has agreed to consider adjustments to the valuation scheme for service stations, including changes that would result in reductions in valuations based on detailed evidence to be provided by the IPRA. That process is under way.

More broadly, the Valuation Office engages in ongoing consultation with other sectoral groups on the methodology used in the revaluation programme. In that context, the commissioner has committed to fully examining any additional detailed information provided by sporting or equestrian bodies. A number of Members of both Houses were made aware of issues among sporting and equestrian bodies caused by significant increases arising from the revaluation process. The Commissioner of Valuation has indicated that in sectors where significant community and voluntary services are provided along with commercial activities, he is open to considering adjustments to the valuation scheme, including changes that would result in reductions in valuations based on detailed evidence to be provided by the sectoral representative bodies.

I welcome the Commissioner of Valuation's engagement with the vintners' representatives, service station representative groups and sporting bodies to try to iron out some of the significant issues that have emerged in the revaluation process. I always felt that it was crazy that voluntary bodies were levied with commercial rates when certain exemptions from rates are provided under the valuation legislation for activities which, on the face of it, appear to be commercial in nature. To return to my earlier point, that is the reason we will need legislation on valuation in the autumn. The commissioner's engagement has the potential to deal with some of the issues raised in the amendment.

I reiterate that a full review of staffing is under way to identify additional numbers that may be needed to ensure the revaluation process is speeded up. Deputy Casey is correct. I do not know the exact figure for Wicklow but it could well be 30 or 40 years since the previous revaluation in the county. The target is to try to have a revaluation process approximately every seven years. That would avoid the emergence of significant spikes in rates, such as those with which every Member of the Oireachtas has been presented. In light of that, I am not in a position to accept the amendment, although I accept many of the issues that gave rise to it. Some of these matters are being addressed, while others will be addressed in legislation in the autumn.

Amendment put:
The Committee divided: Tá, 2; Níl, 2.

  • Casey, Pat.
  • Cassells, Shane.


  • Bailey, Maria.
  • Phelan, John Paul.
Amendment declared .
Staon: Deputies Mick Barry and Eoin Ó Broin.

Standing Order 97(1) negatives a question when there is an equality of votes.

Amendment declared lost.
Section 5 agreed to.
Sections 6 and 7 agreed to.

I move amendment No. 9:

In page 9, line 35, to delete “therefor” and substitute “at a reasonable rent therefor”.

This technical amendment adds "at a reasonable rent" to the definition of "vacant property" in this section. Section 14 of the Local Government Act 1946 includes "at a reasonable rent" as a condition for the refunding of rates on vacant properties. This definition is part of established rates practice.

Amendment agreed to.

I move amendment No. 10:

In page 9, between lines 35 and 36, to insert the following:

“(13) The Minister may make regulations with regard to the abatement of rates in respect of vacant properties and those regulations may, in particular and without prejudice to the generality of the foregoing, include provision for the public consultation process that must be followed by a local authority before the scheme for the abatement of rates in respect of vacant properties is approved.”.

This provides for something similar to the public consultation process in respect of the local property tax, LPT, and so forth. Where there is an abatement of rates, this would allow for transparency.

I am divided in where I stand on this. I understand the motivation behind it, but the budgetary process that a local authority undergoes takes place in a tight time period. It is also the case that, where local elected representatives are given a mandate to make decisions, they often complain - I receive such complaints - that their hands are tied too much on issues. They have a free hand in how they operate and vote and in the decisions they take in the formation of budgets.

Under the legislation governing rates currently, a local authority may provide up to 100% relief on rates where a premises is vacant due to renovation, repairs or the owner being unable to find a tenant. Outside the city councils of Dublin, Cork and Limerick, which historically had separate legal provisions enabling a refund of 50% on vacant properties, the practice has generally been for elected members to give 100% relief. The introduction of the Local Government Reform Act 2014 gave discretion to the elected members of an authority to vary the rate refund levels applicable to individual areas within the authority's administrative area. The lack of any charge on vacant premises may act as a disincentive for the property to be put to its best use. Vacancy refunds also introduce a level of uncertainty regarding the revenue that a local authority can collect.

Section 8 provides that a local authority may provide for a temporary abatement for vacant properties subject to any maximum relief, which may be specified by the Minister, to ensure that all property owners other than those whose rates liability would be below the de minimis threshold may make some level of payment to the local authority. The section allows the Minister to prescribe that the maximum level of relief can be further reduced by individual local authorities. To incentivise the elected members, it is proposed that the revenue accruing from further reduction in the vacancy refund beyond this level would be added to the general allocations of the municipal districts in the local authorities.

A public consultation provision as envisaged by the amendment would be similar to the one in place in advance of the annual setting by a local authority of the local adjustment factor in respect of the LPT. The public consultation on the LPT adjustment factor enhances the strength of the relationship between local authorities and local electorates. I accept that public consultation during the development of a scheme for the abatement of rates on vacant properties can similarly strengthen the process, but the amendment as drafted inserts a new regulation-making power for the Minister under the proposed section 8(13). Section 8(3) provides regulation-making power for the Minister for the purposes of this section and it would appear that this amendment would be more properly located in that subsection. I am happy to accept the thinking behind the amendment, but it should be redrafted for insertion into section 8(3) on Report Stage.

Notwithstanding the Minister of State's comments, the amendment is eminently sensible. There are pros and cons to an abatement decision.

One of the pros is the benefit to the local businesses or the ratepayers but one of the negatives is the potential loss of revenue to the local authority and the resultant impact. Having a consultation process would allow some of those issues to be teased out. When I was on South Dublin County Council we found a way to have an abatement, effectively, even though that was not what it was called. We operated a kind of survey for small and medium-sized businesses and that worked well. We found, however, that the level of take-up from small and medium-sized businesses was low. It was difficult for us to get the injection of cash back out to those small and medium-sized enterprises. If we had public consultation that might have increased the take-up in the first and second years. It was not a great deal of money for some businesses but it was certainly better than nothing. I am, therefore, minded to support this amendment or one from officials that might be better drafted. The principle is a good one.

The Minister of State accepts the thrust of what we are trying to do. We are prepared to work with him on Report Stage so he can accept this amendment and insert it into the Bill.

We will be seeking to reword the amendment and insert it into a different subsection but I accept the intention of this amendment.

Once it has been raised here it can also be raised on Report Stage. Is Deputy Cassells withdrawing the amendment?

There is a grand coalition now.

Yes, that is fine. We will withdraw the amendment on the basis of what we have discussed.

Is that agreed? Agreed.

Amendment, by leave, withdrawn.
Section 8, as amended, agreed to.
Sections 9 and 10 agreed to.

I move amendment No. 11:

In page 11, between lines 29 and 30, to insert the following:

“(4) The Minister shall make regulations with regard to an inability to pay clause for rateable premises.”.

I will press this amendment. It seeks to make regulations regarding an inability to pay clause for rateable premises. In our earlier discussions the Minister of State spoke about the money being brought in from rates as amounting to €1.5 billion. That is funding 34% of the total local government budget. It is a significant amount of money and that has increased by some 14% over the last decade alone. I have consistently stated, in the Chamber and different committees, my fear that that money from rates is becoming a significant crutch for local authorities in how they source their funding. In that context, every year the Minister requests the councils to show restraint regarding increases, apply that restraint and ensure that they are fair on businesses. Some councils, however, in seeking to do imaginative works beyond the norm, will seek the only source of funding available and that is rates. As a result some people are unable to pay the rates and this is at a time when we are trying to promote local businesses outside of the main city centres. We have seen the impact on small towns and villages throughout Ireland. Anyone canvassing during the local and European elections would have seen that major impact.

The Minister of State mentioned earlier what the Minister for Rural and Community Development, Deputy Ring, is trying to do. The nuts and bolts of the situation, however, are that people do not have the cash to open their businesses because of debts and that is killing town centres. Certain towns are doing well and powering along but there are also many that are not. The imbalance and disparity between the bigger and the smaller ones is growing. In that context, this inability to pay clause should be inserted into the Bill. I pay tribute to directors of finances throughout the country who are trying, on an ad hoc basis, to work with premises experiencing difficulties. There are councils, chief executives and directors of finance trying their best to ensure that those experiencing difficulties are given a fair shake. We should put those efforts on a statutory footing and acknowledge the impact. An inability to pay clause should be inserted into the Bill.

I argue, in a sense, that the provisions in this legislation will allow for those discussions. The inability to pay clause is, effectively, being inserted into the Bill, albeit by a different mechanism, to some extent where a ratepayer has entered into an agreed payment plan. The provisions under section 11 of the Bill are based on the provisions of the Taxes Consolidation Act 1997 which provide for the addition of interest to unpaid taxes to the Revenue Commissioners and in this respect aims to see rates treated on a similar basis. This measure is proposed as a further incentive to promote compliance with the payment of rates. There is no current legal provision for the imposition of a penalty for the late payment of rates.

The non-availability of a sanction, such as the charging of interest on late payments of rates, is regarded by rating authorities as a major weakness in rating law. It is considered that the charging of interest on the late payments of rates would be an effective method of accelerating collection within the current year and improving cash flow. The interest would accrue from 1 January of the following year and would only apply where a ratepayer refuses to enter into an agreed payment plan with the local authority. As such the introduction of interest on unpaid rates is focussed on incentivising engagement with the local authority rather than increasing the income of local authorities.

Local authorities have a long-standing record, as the Deputy has outlined, of working closely with businesses experiencing difficulty in the payment of commercial rates. I reiterate that one of the main provisions in this legislation is that the penalty will only apply where people do not enter into that agreed payment plan with local authorities. Generally speaking, local authority officials do use discretion with regard to genuine cases of people and businesses with an inability to pay. I have reservations about the creation of a statutory position whereby an inability to pay is put on the books in the manner proposed by this particular amendment. The current level of discretion should continue to be operated by the council officials. That is particularly the case in respect of agreements reached with businesses that may be in difficulty but that have agreed a plan to pay their commercial rates over a period of time.

The last few comments by the Minister of State give us the essence of this matter. I agree that in many cases chief executives and directors of finance are showing that discretion around the country. It is not always the case, however. In my own county we have a chief executive who is a former head of finance and our head of finance works closely in that regard as well. That works well but it is not the experience nationwide, however. This process needs to be established on a formal footing. That is because, outside of the greater Dublin area which is experiencing growth and doing well, there is whole different area that needs to be examined. Putting this process on a statutory footing would focus the mind regarding the severe pressures that some people are under.

Is the amendment being pressed?

I will make two brief comments. I have sympathy with the intent of the amendment but I do not support the mechanism by which this is being done. We must keep in mind that any such exemption could potentially have a significant impact on the revenue coming into a local authority or, more important, it could have a significant impact on local authorities during an economic downturn for example. Part of the difficulty with our rates system is that its value is that it gives local authorities a consistent source of revenue regardless of the economic cycle. The difficulty is that that creates a challenge for businesses.

Nobody has yet found a way to marry those two things, though many people have tried. I would prefer a mechanism whereby local authorities at particular times could use the abatement process to make democratic decisions about particular problems in particular sectors or locations and they can do that in the full knowledge of the revenue consequences for them. I would prefer that they have some mechanism to do that. It would then be possible, at least, to make those local decisions. I would worry that, even with the best will in the world, if the Minister were to make such regulations it might not be possible to apply them sensibly in each local authority area.

I get the Deputy’s intention but I do not think his amendment solves this particular problem. During the depth of the recession, local rates officers and managers in a significant number of local authorities took pragmatic decisions to keep businesses alive. They were in fact beaten up by some politicians in this House because rates collection levels fell significantly. Deputy Cassells is correct, however, that this did not happen everywhere. Anything which potentially reduces the revenue of a local authority without it having some control over it, particularly its elected members, is a matter we should caution against. It is on this basis I will not support the amendment.

The value of this debate and Deputy Ó Broin’s comments highlight the impact of the wider problem of the growing dependency of local authorities on rates as their main source of income. In the autumn, local authority members, especially newly-elected councillors, would be seeking to push the boundaries of what local authorities can do. It is then that they suddenly realise local authority revenue fundraising is very dependent on the commercial rates system. That is the essence of the problem.

Amendment put and declared lost.
Section 11 agreed to.

Amendments Nos. 12 and 13 are related and may be discussed together.

I move amendment No. 12:

In page 12, lines 2 and 3, to delete “the local authority concerned may decide” and substitute “may be prescribed”.

Amendments Nos. 12 and 13 are technical amendments. Amendment No. 12 allows the Minister to prescribe the form of the confirmation of paid or unpaid rates in, for example, a certificate. This is to ensure consistency across the sector and that all local authorities use the same form of confirmation.

Amendment No. 13 deletes the definition of “sale” in this section as it is already defined in section 12 and is not referenced in section 13.

Amendment agreed to.
Section 12, as amended, agreed to.

I move amendment No. 13:

In page 12, to delete lines 26 to 33.

Amendment agreed to.
Section 13, as amended, agreed to.
Sections 14 to 16, inclusive, agreed to.

I move amendment No. 14:

In page 15, line 4, to delete “section” and substitute “Act”.

This is a technical grammatical amendment.

Amendment agreed to.
Section 17, as amended, agreed to.
Sections 18 and 19 agreed to.

I move amendment No. 15:

In page 15, between lines 21 and 22, to insert the following:

“Amendment of Valuation Act 2001

20. The Valuation Act 2001 is amended—

(a) in section 28 (amended by section 13 of the Act of 2015) by the substitution of the following for subsection (14):

“(14) An amendment of a valuation list made under subsection (10), (11) or (12) shall have full force, from the date of its making, for the purposes of the rating authority concerned making a rate in relation to the property concerned by reference to that list as so amended.

(15) Where—

(a) an amount of monies is paid on account of a rate made in respect of a property, and

(b) it appears, consequent on an amendment of the value of the property made pursuant to an exercise of the powers under this section, that that payment involved an overpayment or an underpayment of the amount due in respect of such a rate,

then the balance owing or owed, as the case may be, to or by the person concerned may be paid or recovered, as appropriate—

(i) in the case of an overpayment, by making a refund to the person concerned of an amount equal to that balance or allowing an amount equal to that balance as a credit against the amount owed by the person concerned on account of a rate made in respect of that or any other property, and

(ii) in the case of an underpayment, by recovering from the person concerned an amount equal to that balance as arrears of the rate concerned (and, accordingly, any of the means provided under any enactment for the recovery of a rate may be employed for that purpose),

(b) in section 53 (amended by section 29 of the Act of 2015)—

(i) in subsection (9), by the substitution of “2 months” for “4 months”,

(ii) by the substitution of the following subsection for subsection (11):

“(11) The Commissioner shall, on a date that is not less than 3 months before the date on which he or she issues, in its final terms, under subsection (10), a global valuation certificate, issue a copy of that certificate, in the terms he or she proposes to so issue it under that subsection, to the undertaking concerned, relevant rating authorities and the Minister for Housing, Planning and Local Government and the Commissioner shall issue the notice referred to in subsection (12) to the undertaking concerned and that Minister of the Government.”,

(iii) in subsection (12), by the substitution of “40 days” for “28 days”,

(c) in section 54, by the substitution of “28 days” for “3 months”,

(d) by the substitution of the following section for section 56:

“Power to limit rates income

56. (1) In this section—

‘appropriate year’ means the financial year immediately following the effective date in relation to the valuation list that, for the time being, stands published in respect of the area of the rating authority concerned;

‘consumer price index number’ means the All Items Consumer Price Index Number compiled by the Central Statistics Office;

‘consumer price index number relevant to the appropriate year’ means the consumer price index number most recently published by the Central Statistics Office before the effective date mentioned in the definition of ‘appropriate year’ in this subsection;

‘consumer price index number relevant to the preceding year’ means the consumer price index number lastly published by the Central Statistics Office before the day that falls 12 months before the day on which the consumer price index number referred to in the preceding definition is published;

‘preceding year’ means the financial year that immediately precedes the financial year mentioned in the definition of ‘appropriate year’ in this subsection.

(2) The Minister for Housing, Planning and Local Government shall, with the consent of the Minister for Finance, make an order requiring a rating authority to exercise its powers to make rates in such a manner as to secure that the total amount liable to be paid to it in respect of rates made by it in the appropriate year does not exceed an amount determined by the formula

(A x (B + C) +G) + (A x (H+I))


A is the figure specified in subsection (3),

B is the total amount liable to be paid to the rating authority in respect of rates levied by it in respect of relevant property on the existing valuation list (but excluding relevant property on the Central Valuation List in the preceding year), and

C is an amount determined by the formula

D x (E + F)


D is the annual rate on valuation that was levied by the rating authority for the preceding year pursuant to section 3 of the Local Government (Rates) Act 2019,

E is the aggregate valuation of relevant properties in the area that, pursuant to the exercise of a revision officer’s powers under section 28(4)(b) of this Act, were included on the valuation list for the preceding year, as that list was amended for that area in relation to those properties under section 28(10),

F is the aggregate of the increases, if any, in valuations for relevant properties in the area that occurred during the preceding year pursuant to the exercise of a revision officer’s powers under section 28(4)(a) and which exercise resulted in amendments to the valuation list for that preceding year in accordance with section 28(10),

G is an amount to be decided by the Minister in consultation with the Commissioner to represent, in so far as is reasonably practicable, the estimated reduction in the total amount liable to be paid to the rating authority in respect of rates in the appropriate year pursuant to the exercise of the Commissioner’s powers under section 38 so that any amendment of the valuation list pursuant to the Commissioner’s powers under section 38, does not affect the total amount liable to be paid to the rating authority in respect of rates in the appropriate year,

H is the total amount liable to be paid to the rating authority in respect of rates levied by it, in respect of relevant property on the Central Valuation List in the preceding year,

I is an amount determined by the formula

D x (J + K)


D is the annual rate on valuation that was levied by the rating authority for the preceding year pursuant to section 3 of the Local Government (Rates) Act 2019,

J is the aggregate of all global valuation amounts that have been apportioned to the relevant rating authority in accordance with section 53(8), and entered on the Central Valuation List pursuant to the exercise of the Commissioner’s powers under section 53(1) of this Act, during the preceding year, and which exercise resulted in amendments to the Central Valuation List for that preceding year in accordance with section 55,

K is the aggregate of the increases, if any, of the global valuation amounts that have been apportioned to the relevant rating authority in accordance with section 53(8), and entered on the Central Valuation List during the preceding year pursuant to the exercise of the Commissioner’s powers under section 53(6) and which exercise resulted in amendments to the central valuation list for that preceding year in accordance with section 55.

(3) The figure mentioned in subsection (2) is the quotient, rounded up to 3 decimal places, obtained by dividing the consumer price index number relevant to the appropriate year by the consumer price index number relevant to the preceding year.”.”.

Amendment agreed to.
Section 20 deleted.
Sections 21 to 24, inclusive, agreed to.
Schedule agreed to.
Question proposed: "That the Title be the Title to the Bill."

I am proposing to bring forward additional amendments through this Bill to the Residential Tenancies Act 2004 and Residential Tenancies (Amendment) Act 2019. The changes relating to the recently enacted section 37 of the Residential Tenancies (Amendment) Act 2019 are primarily technical but also to close off a potential means of circumventing the application of aspects of the 2004 Act, such as registration, dispute resolution and rent increase restrictions in rent pressure zones to student-specific accommodation occupied under licence. Technical amendments are also proposed to clarify that the student-specific accommodation provisions and the provisions requiring annual registration can come into force separately. The student-specific accommodation provisions are intended to commence in mid-July, prior to the late commencement of the provisions requiring annual registration that are expected to commence in the first quarter of 2020. That explains the urgency to address this issue before the summer recess.

The 2019 Act also amended section 19 of the 2004 Act to specify the types of substantial refurbishment works warranting a higher rent level which could qualify for exemption from the rent increase restrictions that operate in rent pressure zones as protected structures are unable to qualify for exemptions on the basis of works to approving their building energy renting. It is proposed to further amend section 19(5A) of the 2004 Act to allow the first rent set under the tenancy of the protected structure dwelling not rented in the previous 12 months to be the market rent.

It is also proposed to make a small technical amendment for consistency in the wording of section 3(1) of the 2004 Act by replacing “include” with “applied to”.

I also intend to bring forward amendments to the Planning and Development Acts 2000 to 2018 at the next Stage with amendment to section 31A and consequential amendments to sections 31AQ and 31AR of the regional spatial and economic strategies. This is a time-critical amendment which arises in the context of the establishment of the new Office of the Planning Regulator on 23 April 2019. Section 31A of the Planning and Development Act 2000, as amended, provides for ministerial directions regarding regional spatial and economic strategies. As currently enacted, section 31A provides only that the Minister can issue a direction on foot of a recommendation made to him or her by the Office of the Planning Regulator. This cannot be satisfied in the three regional spatial and economic strategy processes currently under way, given that each commenced prior to the establishment of the Office of the Planning Regulator. This amendment provides for transitional arrangements to ensure the Minister has a robust legal basis to issue a direction to a regional assembly, if necessary. The proposed amendments will apply only in respect of the three current regional spatial and economic strategies which commenced prior to the establishment of the Office of the Planning Regulator. Section 31A, and related sections 31AQ and 31AR, will remain valid in the cases of the regional spatial and economic strategies made in the future.

I also want to flag a further minor technical amendment that is proposed to section 11(1)(b) of the Planning and Development Act 2000 to 2018. Section 11(1)(a) requires a planning authority to give notice of its intention to review its existing development plan not later than four years after it is made and to prepare a new development for its area. Sections 11(1)(aa) and 11(1)(ab) allow for an alternate notification period for Cork City and County Councils whereby they may extend the notification period to review their existing development plan from four years to a maximum of five years by way of ministerial order. This is to facilitate the significant workload and range of complex issues arising from the revisions to the local government arrangements in Cork. However, the special provisions of Cork City and County Councils were not included in section 11(1)(b) for the purposes of enabling the incorporation of the national planning framework and the regional spatial economic strategy into the development plan.

For legal certainty, this technical amendment inserts the special provisions for Cork in paragraphs (aa) and (ab) and section 11, subsection (1)(b)(i), (ii) and (iii). This ensures consistency in section 11(1)(a) and section 11(1)(b) provisions.

Are there any comments for the Minister of State? No. I thank the Minister of State and his officials. I thank the officials for the briefing earlier. They always provide us with fantastic information.

Question put and agreed to.
Bill reported with amendments.