Charity shops in main urban centres now liable for rates
There is concern about the number of charity-centred premises in competition with other rate-paying businesses
Charity shops in the main urban centres of County Wexford will have to pay full commercial rates following a decision by the County Council to end a practice of striking off rates on properties occupied by registered charities.
Head of Finance, Annette O'Neill told last week's Wexford County Council meeting that the local authority operated a 100% rates exemption for charities and certain community groups for many years.
But in recent years, there has been concern about the increasing number of charity-centred premises being established, particularly in main retail centres and specifically those operating activities in direct competition with other rate-paying businesses.
Ms. O'Neill said council members requested a review in order to implement a fair and reasonable scheme and to strike a balance between addressing the concerns of other rate payers while recognising the value of the work being delivered by charitable organisations.
'The development of these guidelines will hopefully bring the balance required and will also provide certainty in terms of rating liability for such organisations considering occupation of a premises', she told councillors.
The process started in 2017 when charities occupying rateable properties were requested to apply to the Valuation Office for a revision of the valuation on their premises, to determine if the activity qualified for a Rates exemption under Schedule 4 of the Valuation Acts.
Some organisations engaged with this process but others resisted, stating that they found the application fee of €250 prohibitive.
In response, the County Council agreed to make the application and fund the fee on behalf of organisations which could prove that funding was a barrier. The local authority provided a total of €12,500 in support of 50 of these applications.
The Valuation Office recently completed their review of each application, applying exemptions only where they determined that there is no commercial enterprise taking place on the premises.
The result is that the majority of premises occupied by charities in County Wexford did not secure an exemption. A total of 16 premises, mostly where non-profit services are being carried out, obtained an exemption.
Following this, the Council has developed a Grant Relief scheme to address the concerns of councillors about organisations they feel are worthy of support with rates exemptions.
The Rates Relief Grant for Community Based Facilities Scheme will apply to training facilities for sporting groups but not bars or shops; community groups such as Men's Sheds; community facilities such as swimming pools; religious groups; chamber of commerce offices; non-charging counselling services and tourist sites without cafés or shops.
It will not apply to charities or community organisations running commercial enterprises such as charity shops in retail premises in town centres.
The level of grant available will be 100% of the annual rates bill but this is dependant on the type of enterprise and the trading location.
Following a VO evaluation, each organisation seeking rates relief will have to make an annual application, providing relevant information.
In relation to premises where a commercial enterprise is being carried out and the charity has not secured an exemption from the Valuation Office, a number of factors will be taken into account.
Charities and community-based facilities in rural locations will receive a 100% grant - this means any premises outside the town boundaries of Wexford, Enniscorthy, Gorey, Bunclody and New Ross will get full rates relief.
A business will be considered commercial if goods or services are sold or traded from the premises, including clothes shops, book shops, cafés, counselling services that charge a fee.
But any organisation occupying a premises in any of the main urban centres will be regarded as commercial regardless of the status of the facility and will have to pay rates.
Any new charity business choosing to locate in a town centre will have to pay full rates but existing charity shops affected by the changes, will be given time to secure an alternative premises away from the urban centre.
'We will work with them over the next year or so, to encourage them to move their premises to where the grants are. If they choose to remain in the urban centre, they will have to pay rates. It's not about the money, it's about being fair to other businesses and businesses competing against each other', said Ms. O'Neill.
Under the old system, the Council wrote off an estimated €313,208 per year in rates for charities and community organisations in the county and it is reckoned that under the new guidelines, about €209,394 will be granted in rates relief, leaving approximately €103,814 to be paid.
Based on the list of organisations that applied for VO assessment, there are 100 rates accounts, with 16 granted exemption and three eligible for 100% relief due to being in rural areas.
About 50 of the premises should expect to get 100% relief under the grant scheme, leaving about 30 commercial premises that will be required to pay 100% rates, although there may have been an increase in this figure during the two-year assessment process.
According to Ms. O'Neill, not all charity shops have received rates strike offs in the past as some organisations which own their premises are already choosing to pay commercial rates.
'We have a lot of rate paying charity organisations', she said.
The designated retail areas are, Wexford: the Main Street to Redmond Square with some of the side roads towards the North end also included; Gorey: Main Street, the Avenue and Esmonde Street; Enniscorthy, Market Square, Main Street, Cathedral Street, lower end of Weafer Street, Slaney Street, Rafter Street and the top of Castle Street; New Ross, Lower Mary Street, North Street, South Street, Charles Street and the R700 to John Street junction.
Independent councillor David Hynes said he welcomed the clarity provided by Ms. O'Neill's report but pointed out that one of the main Wexford charity shops, run by the WSPCA, had received a very large rates bill which is threatening to shut them down.
'Whether we like it or not, these charities would not be able to operate without the support of shops like these. There are people dependant on these charities'.
Ms. O'Neill said if charity shops are sited in a main retail area, they are occupying one of the larger rateable valuation properties and that is also where the rents are highest.
Fianna Fail councillor Malcolm Byrne said he hoped the document would achieve what it set out to do. 'That is not to undermine charitable organisations but if a charity decides to trade commercially against another business, it must pay rates'.
Gorey's Cllr. Diarmuid Devereux said the new system is 'fair and balanced' and strikes 'a balance between collecting rates for the county and allowing genuine charities to trade'.