Development Contributions
Horowhenua District Council is set to pull the handbrake and do a U-turn on development contributions as a tool to fund infrastructure needed to service a forecasted housing tsunami.
HDC shelved development contributions in 2015 in an effort to encourage property development on the back of stagnant economic and population growth predictions.
But those forecasts were askew. Horowhenua’s population is now forecast to almost double in the next 20 years.
Development contributions were now back on the table and could bring in an estimated $95 million in revenue.
HDC would use the levy to help fund infrastructure needed to sustain growth by investing in new water, stormwater and wastewater schemes, and parks and reserves.
Work on infrastructure for a new suburb called Tara Ika east of Levin was already under way, with 2500 new homes planned in the next 10 years, although it had been helped along by a $25 million grant from the Government’s Provincial Growth Fund.
Development contributions were paid by developers or landowners early on in the process at the time of subdivision, or when land use consent or building consent was issued.
HDC was now looking for public feedback as it looks to adopt a Long Term Plan for the year.
HDC chief financial officer Doug Law said there were many tools available to council to fund infrastructure, like development contributions.
There was a need to ensure existing ratepayers were not unfairly burdened by the costs of growth, but did contribute to any growth infrastructure that was of clear benefit to them through improved services.
Law said to put it as simply as he could, it was about finding the balance between rate and debt funding.
There was a fear among ratepayers that they would be unfairly lumped with further rating increases as a result of new development.
Deputy Mayor Jo Mason said several people within in the community she had spoken to wanted Development Contributions reinstated.
“Residents have been asking for this, though there is a whole suite of tools available to help fund growth,” she said.
“But I am concerned what will happen to rates and debt levels if we do not bring these contributions back.”
Cr David Allan said developers that were creating the growth should help fund the infrastructure needed to sustain it.
“We are assuming the population will double in twenty years,” he said.
“We must identify who will pay for the growth. It should be those who create the growth. We must keep in mind that we are one of the poorest districts in the country.”
Development Contributions provided the most certainty of recovering the costs, but it was not always the best tool, he said.
But he was concerned what would happen if Development Contributions weren’t reintroduced.
“Development Contributions appear to be the fairest and most practicable tool we have available,” he said.
Cr Ross Brannigan said the original decision to do away with Development Contributions was made in an effort to stimulate growth.
“Now we have a different situation with unprecedented growth,” he said.
He said existing rate payers should not have to pay for growth. He said several developers he had spoken to were not against them.
Cr Robert Ketu also supported the reinstatement of Development Contributions while admitting that growth is a challenge for the council.
Cr Mitchell endorsed Development Contributions but wondered whether $95m would be enough.
“Are all catchments harmonised and is past spending to be included?” she asked.
Cr Victoria Kaye-Simmons said she was mindful of the effect on low income people.
Council adopted a Development Contributions Policy as part of its Long Term Plan in 2006. It reviewed the policy in 2009, and again in 2012.
When HDC did away with its Development Contributions policy in 2015, it was replaced with a Financial Contributions Policy.
But that same year Central Government made changed to the Resource Management Act with the aim of phasing out the ability of local authorities to charge financial contributions. As a result, HDC had not collected any financial contributions since 2015. Any new policy would be operative from July this year.