How to fund booming rate of growth
Council poised to reintroduce development levy
Development contributions are back on the table as Horowhenua District Council looks at how to fund infrastructure needed to cope with massive growth forecasts.
But just how the development levy is rolled out again isn’t clear, with fears the new Tara-Ika subdivision tagged for Levin could stall if landowners and property developers there were lumped with larger development fees.
HDC is poised to reintroduced development contributions as a revenue tool to help fund growth and called on the public for submissions. While almost all were in favour of the levy, views varied on how it should be applied.
The initial funding model would levy Tara-Ika at $19,525, well above Levin ($13,308), Foxton ($3439), Foxton Beach ($4903), Shannon ($2504), Tokomaru ($2504), Waitarere Beach ($7511, Ohau ¯ ($6144) and rural ($2046).
With 2500 homes planned for Tara Ika, development contributions there could contribute almost $50 million at the proposed rate.
Developments contributions would be paid by a developer or landowner at the time of subdivision, land use consent, or building consent, although there were also calls for certainty by fixing a time during the development process fees were paid.
Fees were broken down and amounts ap- portioned to transport, community, stormwater, water supply and wastewater treatment costs relative to each suburb.
Council had previously charged development contributions between 2006 and 2015, but in 2015 replaced it with Financial Contributions Policy, as a way of attracting new developments and stimulating growth.
But now the goalposts had shifted again. The population had grown by 2 per cent every year since and the population was forecast to increase at 2.6 per cent in the next 10 years, and at 2.9 per cent for the decade following.
Now, with HDC predicting more than 400 new houses in Horowhenua every year for the next 20 years, it needed an equitable funding model that ensured infrastructure growth was funded fairly. It wasn’t helped that shortly after dropping development contributions in 2015, a government amendment to the Resource Management Act phased out council’s ability to charge financial contributions.
To not reinstate contributions as a funding tool would have an immediate financial impact on existing ratepayers. If HDC instead funded growth through rates, it could result in an average rates increase of
14 per cent, instead of the proposed 6.7 per cent.
It was accepted that a policy provided certainty to both council and developers while ensuring existing ratepayers weren’t unfairly burdened in funding new infrastructure. Development contributions were the most effective tool to “ensure those who benefit from growth-related capital expenditure are the ones that pay for it”, although subsidies and grants were considered as the first source of funding. In August last year the 400 hectare TaraIka subdivision got a $25 million government injection to fasttrack “shovel-ready” projects, which allowed infrastructure work to begin. Meanwhile, Levin based surveyor Roger Truebridge, who had 34 years experience in Horowhenua, said he supported the reintroduction of development contributions and felt they should have been brought back at least four years ago.
He said it was important to get the balance right and development contributions should be rolled out as one uniform charge across the district.
“Treat the district as one unit and share the load.”
Truebridge said transparency was also important and advocated regular reviews and reporting of the levy to account for where the money was being spent.
“It can’t just disappear down a black hole.”
It was important that any review panel should have input from independent members too, and not just be left to council.
Truebridge was in a unique position to see the effects of changing markets and recessions on housing, which only highlighted the need for regular reviews.
Former councillor Barry Judd, who was a sitting member when development contributions were first introduced in 2006, said he was concerned that the impost would be passed on to home and land buyers.
Judd said a land and housing shortage was affecting affordability and he was concerned it was another layer of cost and another barrier to home ownership.
Based on average income in the region, a house in Horowhenua should cost $295,000, whereas current values had that mark at more than $500,000.
He said the market suggested sections at Tara Ika could be priced as high as $320,000 “without even a peg in the ground”.
Judd also wanted assurance that contributions could not be applied retrospectively, and would only be charged from the date they were reintroduced.
Long-time councillor David Allan said he remembered a time of zero growth and something had to be done to reignite the district, as the original reason for shelving development contributions.
“We were going backwards.”