Con­sents put $35m hole in city purse

Waikato Times - - Front Page - El­ton Smallman el­[email protected]

A de­vel­oper stam­pede at the eleventh hour has seen a spike in hous­ing con­sents and a $35 mil­lion fund­ing gap for Hamilton City Coun­cil.

Staff are now scram­bling to try to fig­ure out the best way to re­coup the cash and new ratepay­ers in two mas­sive city de­vel­op­ments look likely to foot the bill.

But chief ex­ec­u­tive Richard Briggs isn’t wor­ried.

He said the scale of the gap is a re­sult of the size of the Pea­cocke and Ro­tokauri de­vel­op­ments.

A higher than ex­pected num­ber of re­source con­sent ap­pli­ca­tions were lodged in June – be­tween the May 31 ap­proval of long term plan bud­gets and their June 28 adop­tion.

That means 906 res­i­den­tial lots in the Pea­cocke area and an­other 590 lots at Ro­tokauri were as­sessed un­der old pol­icy.

De­vel­op­ers were charged an av­er­age of $17,000 per lot com­pared to the $45,000 per lot in the new pol­icy.

‘‘We com­mu­ni­cate through the 10-year plan that the de­vel­op­ment con­tri­bu­tions are go­ing up and then they race to try and bring as much of their de­vel­op­ment in,’’ Briggs said.

‘‘For Pea­cockes, and to a lesser de­gree Ro­tokauri, we were aware that de­vel­op­ers will be putting some through. The ques­tion is how much and when and they came in just prior to the 30th of June when we had [the LTP] all baked.’’

Coun­cil’s growth fund­ing and an­a­lyt­ics unit man­ager Greg Carstens told the fi­nance com­mit­tee meet­ing this week the fund­ing gap is ex­pected to be as high as $25m for the Pea­cocke area and $10m for Ro­tokauri.

Staff have been look­ing at what can be done to re­cover the short­fall.

‘‘These mech­a­nisms that we are in­ves­ti­gat­ing, they are not like de­vel­op­ment con­tri­bu­tions where they are im­me­di­ate upon the sub­di­vi­sion,’’ Carstens said. ‘‘If there is a re­cov­ery mech­a­nism, it can be stretched over 10 or 15 years.’’

At­tempts at amend­ing pol­icy to ac­count for the ex­pected ap­pli­ca­tions were made last De­cem­ber but Carstens said the le­gal risk was too high.

‘‘We can’t ad­dress the fund­ing gap in the new pol­icy be­cause the law re­stricts us in terms of what we can charge,’’ Carstens said. ‘‘We are ac­tu­ally ham­strung by a clause in the Lo­cal Gov­ern­ment Act that says when some­one lodges a con­sent, that’s what they pay the de­vel­op­ment con­tri­bu­tions at.’’

Briggs said the fund­ing gap – which is yet to be re­alised – won’t af­fect coun­cil’s bal­ance sheet.

‘‘These things hap­pen over time,’’ Briggs said. ‘‘Even if de­vel­op­ers had put their re­source con­sents in un­der the old pol­icy, we know they are not go­ing to build for a while so that then gives us the op­por­tu­nity to con­sider, over a pe­riod of time, how we close any gap that has arisen.

‘‘And be­cause the in­fra­struc­ture we will be putting in will be done over a pe­riod of time, we have the abil­ity to work out what the best way of de­liv­er­ing that is as well.’’

Op­tions in­clude a tar­geted rate on the de­vel­op­ment area or an agree­ment with the de­vel­oper to cre­ate a com­mu­nity as­set for the city.

‘‘The whole thing is just busi­ness for us. We al­ways know they are hap­pen­ing and ev­ery year they hap­pen but this one is such a large de­vel­op­ment the gap is quite sig­nif­i­cant but it wasn’t a big sur­prise. We knew it was com­ing.’’

Mayor An­drew King said de­vel­op­ment con­tri­bu­tions were in­creased to cover new sub­di­vi­sions and the gap should be cov­ered by the de­vel­oper.

‘‘If the de­vel­oper doesn’t pay then rates have to go up higher in that area to cover it.

‘‘Some­one has got to pay. Ei­ther the home­owner or the fu­ture ratepayer of that prop­erty has to pay,’’ King said.

Cr Paula South­gate said the in­ves­ti­ga­tion should fac­tor in af­ford­able hous­ing, too.

‘‘The rea­son we felt we had to be ag­gres­sive about growth is be­cause home af­ford­abil­ity is the key is­sue,’’ South­gate said.

Fi­nance com­mit­tee chair­man Garry Mal­lett said ‘‘growth pays for growth’’.

‘‘We can make af­ford­able hous­ing but it means we have to take some of the util­ity out of those ar­eas.

‘‘Some­times it means that maybe there isn’t a park that we can af­ford be­cause of all these things. When we try to build all of these lovely com­mu­ni­ties, it costs money and some­one has to pay for it and the right per­son to pay for it is the per­son who ben­e­fits,’’ Mal­lett said.

Staff will re­port back to coun­cil with a pro­posal in Fe­bru­ary.

‘‘If the de­vel­oper doesn’t pay then rates have to go up higher in that area to cover it.’’

Mayor An­drew King

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