Developers oppose new homes levy
Charge predicted to hamper home market
Adeveloper has warned a proposed $2500-a-year charge on 2000 new homes will drive the market out of Tauranga to “fringe” areas.
The city council, which is looking at the levy as part of a Government infrastructure loan scheme, has pitched it as an example of growth paying for growth.
But property developers say it would be “unaffordable” and “unsustainable”.
Tauranga City Council held its first day of hearings into the Long-term Plan Amendment and Annual Plan 2022/23 yesterday, with commissioners hearing verbal submissions on proposed changes.
A key issue was a funding mechanism being explored to help pay for transport and growth infrastructure, particularly at Tauriko West — an area expected to provide up to 4000 homes by 2025.
Classic Group director Peter Cooney raised concerns about the council’s potential use of the Government’s Infrastructure Funding and Financing Act.
The act introduced in 2020 allows high-growth area councils, including Tauranga, to invest in new, essential infrastructure — roads and water, wastewater, stormwater — without affecting their debt levels.
A Special Purpose Vehicle, owned and operated by the Crown, borrows money that is repaid by charging levies on properties that benefit from the infrastructure. These levies would be collected by the council in rates bills and passed on to the entity.
Commission chairwoman Anne Tolley said it would mean “growth pays for growth”.
But Cooney said the levies would be too much for most people.
“We as a development company are making big investments in Matamata, Katikati, Rotorua, Waih¯ı. We believe there’s a huge proportion of the market that is going to leave
Tauranga and go to fringes like these. You are already seeing it in Auckland right now and Hamilton (with) Morrinsville.” Cooney said there was “huge growth” in these areas for good reason.
“Our costs have got out of control. There will be a limit the market will hit before people move on.”
Grant Downing from real estate developer Element IMF said: “It’s all about infrastructure and funding. Infrastructure, that’s always been very big dollars but it seems it’s getting bigger and bigger.”
Downing said he was encouraged by some of the commission’s funding work.
“Please don’t slow down. We are just conscious of affordability and
apportionment of the wider funding package.”
Downing was wary of the impact the infrastructure levies could have on future homeowners.
If the council went through with the proposal, about 2000 Tauriko West homes would be expected to pay $2500 a year for the next 30 years to help pay off the Government loan.
Downing questioned what the other 2000 homeowners expected in the yet-to-be-built development would be expected to pay.
Tolley said there was “a lot more detail to come before we commit to using it”.
“Two and a half thousand dollars [a year] over 30 years is pretty expensive for future ratepayers.”
She said the commission was in the process of going out to the community for views on alternative methods of funding.
The council was also seeking money from the Infrastructure Acceleration Fund to help pay for $200m in transport projects.
Urban Task Force chairman Scott Adams said the proposed levies of up to $2500 “may prove to be unaffordable, not sustainable”.
He said central government had underinvested in infrastructure for decades while reaping “billions” from the region in tax and GST.
Submitter Doug Barnes said he supported the council’s use of the act because to ease the council’s debt load.
The council received nearly 1200 written submissions to its proposed Long-term Plan Amendment and Annual Plan 2022/23.
Hearings will continue tomorrow with deliberations are set down for May 24 to 26 and finalised plans to be adopted on June 27.