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
Dunedin developers contacted yesterday were not happy about
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
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
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
''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.