Council misses out on $29m

Developers building in Lower Hutt have cashed in on a stimulus scheme, which has wiped out up to $29.6 million in building charges, a councillor says.

Hutt City Council is being forced to redirect more than $19m to top up the budget for the Development Stimulus Package, which was introduced in 2012 to encourage building projects by not imposing resource consent and building consent fees, development contributions and reserves contributions.

The council had budgeted to forgo $8.9m in charges through the package between the 2012/2013 and 2021/2022 financial years. The council ceased offering the scheme at the end of last year, with the waived fees expected to total $29.6m should all accepted projects came to fruition.

Now, Wainuiomata ward councillor Campbell Barry says ratepayers have been left carrying the bill because Hutt City Council failed to adapt to changes in the housing market – continuing the remissions scheme while there was a ‘‘housing boom’’.

But Mayor Ray Wallace said the scheme had created ‘‘better results for the city’’.

Council figures showed that in the six months to December 31, 2018, there had been 106 accepted submissions. There had been 294 accepted applications through the lifetime of the policy from July 1, 2012 to December 31, 2018.

Barry said the scope of the scheme should have been narrowed when it became clear the council-funded stimulation was no longer critical.

‘‘What we’ve done is we’ve had an incentive policy that’s had its day and served its purpose. At the time [it was introduced] the Hutt building economy was stalled but as a council we’ve failed to adapt to the changing market. You don’t have to be an expert to see there’s a building boom.’’

With $19.3m to be reallocated from the Urban Growth Strategy fund to top up the original budget, ratepayers would lose out on infrastructure financing, he said.

Councillor Campbell Barry

The council had gifted developers bigger profits on their projects – many of which would have been built with or without the scheme, with nothing gained for ratepayers, Barry said.

But Wallace said money from the Urban Growth Strategy fund was available to be redirected because it had not been needed. Redirecting the funds to the scheme created ‘‘better results for the city’’.

The city ‘‘desperately’’ needed more housing and the council would have taken a risk in suddenly changing the rules on the people best able to provide it.

Council chief executive Tony Stallinger said the ‘‘modest investment’’ had been ‘‘successful in stimulating housing and population growth after decades of stagnation and potential decline of population’’.

‘‘Unlike the rest of the region, and many parts of New Zealand, Lower Hutt went for nearly 40 years from the mid-1970s with minimal growth in housing and population and risked losing future population growth to other cities and regions.’’

‘‘You don’t have to be an expert to see there’s a building boom.’’