Development fee increase proposed

Sue Bidrose.
Sue Bidrose.
Dunedin developers will pay increased contributions to the Dunedin City Council but ratepayers will not immediately see a reduction in rates increases, under a proposed new allocation of development-related costs.

Council chief executive Dr Sue Bidrose says ratepayers have clearly stated they wanted developers to pay a fair proportion of the council's increased costs for water, wastewater, transport services, reserves and community facilities associated with new developments.

But developers say the charges are unfair, will increase the price of sections and discourage development at a time when Dunedin does not need any deterrent to growth.

The policy has been under review since 2009, with the public sending a clear message in 2011 that a proposed hike to $20,455 per section was too high.

The new proposed charge of up to $5300 per section is significantly higher than the existing $250 charge for most areas of Dunedin, and significantly lower than the national average per-section charge of $14,000.

In parts of Mosgiel, where much of the city's development occurs and contributions have been at a higher level since 2008, the existing charge of about $10,300 per section is proposed to increase by about $400.

Dr Bidrose said, if adopted, the revised policy was expected to contribute between about $6.3 million and $19.2 million to the council over 10 years.

That compared with about $4.2 million and $9.3 million under the current policy.

However, the increase in income from developers would not translate immediately into a decrease in rates increases.

Because the revenue was unpredictable, it would instead be tallied at the end of each year and used to repay debt in the area for which it was collected.

That would translate into a rates reduction over time.

Any revenue collected from developers has to be spent in the area of the city from which it is collected and on the activity for which it is collected, such as water services, roads or reserves.

Under amendments to the Local Government Act before Parliament, development contributions can be collected for community infrastructure such as public toilets and town halls, but not libraries, museums and swimming pools.

The council's draft policy took into account the proposed amendments.

Dunedin developers contacted yesterday were not happy about the proposal.

Tom Richardson, who set up the Construction Industry and Developers Association in 2011 to take on the council over the then proposed increases in development contributions, said no increase, of any size, would be welcome.

''It just makes developers less reluctant to develop, I guess.''

It also went against general Government direction, which was to lower costs to try to stimulate growth.

''There's not that much growth [in Dunedin], and certainly [it] could do with all the growth it can get.''

The developer of the 17-lot Rotary Park Close subdivision in Waverley, Pat Cummings, said an increase would be short-sighted when the Dunedin market was already so fragile.

It was also unfair because developers already paid to install the infrastructure in new subdivisions anyway, and handed it to the council for no cost.

''This is another case of stadium-itis. It's just revenue-gathering.''

City developer Allan Dippie said development contributions could sometimes make development unviable, so the council had to take care in setting its fees that it did not discourage development.

''It's a fairly fine balance, particularly in Dunedin. If the council get that balance point wrong, the effect that it could have might be a bit unforeseen.''

There also needed to be more transparency around what the council used the contribution for.

All three would make a submission on the proposal, which would be consulted on in March and April as part of the council's annual plan process.

debbie.porteous@odt.co.nz

Being good corporate citizens

Claret: I don't have a problem with a city subsidising low income housing - we do it today with pensioner housing don't we, just as we subsidise the rates of the elderly on low incomes so that they can afford the stadium rates. But the city should do it as an upfront subsidy of all/any low income housing, not just of developers - we need to get away from all this hiding of real costs by fiddling with rates and fees. It's dishonest and open to exploitation.

And I'm sure you know (if you've read the Local Government Act) that I'm not suggesting that we tax developers "to the hilt" (the city just plain can't do this, they are limited by the law). All I'm suggesting is that the city recover its real costs incurred by new development. Developers should be good citizens and pay their own way in the world rather than making their money on the backs of the rest of us.

National average

You also need to put into perspective Slapheid that development in Dunedin is probably less than 1/3 the national average.  Moves like this will only add to Dunedin's woes as a city with a reputation of being non-developer friendly.

Personal

Wow, what a crass personal attack Claret! I thought Mike's comment was quite realistic, given that the proposed charge is still only a 1/3 of the national average.

Catering to your people

Tell me this Mike. Would you be so anti-developer if that developer built affordable new homes which were within reach of low income buyers? What if that developer still made a healthy profit? Still tax them to the hilt so that the development wasn't viable? 

Finally, some user pays

I'm all for it. Put it up to cover the costs for sure. Let's face it, there's no shortage of vacant housing in the city. Most new development for housing is in the Mosgiel area anyway and there seems no shortage of cash over the hill, so charge them accordingly. I don't see why myself or any other ratepayer shoud subsidise them.

Greed

No, I understand it completely. I don't think ratepayers should be forced to subsidise for-profit developers any more than I think they should be forced to subsidise for-profit entertainment franchises. Developers should pay their own way in the world, just as professional rugby players should.

I am all for development but it needs to be built on a solid financial base. Building new houses doesn't bring new wealth into our economy, just like opening a cafe doesn't either - mostly these sorts of economic activities just stir existing wealth around the local economy with some drag like GST that take it out in the process. 

What we're missing in Dunedin are those real sorts of businesses that create and export new things and bring new wealth into the economy - for every F&P that moves north and off shore we should be starting 10 more with the hope that one or two will survive and expand. If we're going to spend our hard won treasure on economic growth let's do it on businesses that are locally owned and will keep the resulting economic benefits here rather than going offshore.

The thing is if we build a real, solid economic engine to underpin our economy things like house building, retail, cafes will happen on their own, all those service and secondary industries  will just happen without any public subsidies.

It's not the DCC's purpose in life to make developers rich. As the article points out, other councils in the country understand this and charge new construction for the capital infrastructure costs that the impose on their neighbours. There's nothing special about Dunedin here except apparently for the extra greed and self-entitlement we seem to see far too often in our business (and sports) community. People need to learn how to be real entrepreneurs, to take risks and to create real wealth rather than trying to simply take that belonging to others.

Here we go again

Oh brilliant. Yet something else that MikeStK has an opinion on but doesn't understand. How did I know you'd be anti-developer?

Legacy from previous councils

This council is suffering from to need to raise money to pay for previous councils' bad spending habbits and the ongoing costs of the white elephants they produced. All well predicted - maybe developers are just next in the line of ongoing cost increases.

There is no accountablity from those responsible.

Sarcastic thought.

Dunedin is such a developer's dream.

Anti-development

Mike: What I have deduced after years of reading your regular posts is that you are completely against any development in Dunedin, and your most recent post appears to prove this.
Fortunately a lot of people don't think like you, and want to see Dunedin move with the times.
Dunedin has a reputation as a city that developers struggle with, and its people holding views like yours and decisions like this from our council that reinforce this.

No sense

macfod: what you say makes no sense. If there is a exodus of homeowners then there should be no shortage of homes. We shouldn't even need to be building more. If you are correct this will not be an issue.

I think it's only fair that new homes  include their share of the capital costs of new infrastructure required for them to exist - parks, water, roads. As the article points, out most communities in NZ do this - in some countries they even levy new homes for their share of schools, police and fire stations. These costs should certainly be passed on to the new owners.

The alternative is of course that you tax ratepayers to subsidise these homes - in that case the ratepayers (the city) should end up owning a portion of these new homes.

Crazy crazy

Why we are still doing this when we need to be encouraging building of homes- especially affordable homes.

As an agent I am saddened by the current exodus from Dunedin of residents, as we as a city appear to be going nowhere fast ..

but homeowners are...

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