As the Government considers urging councils to free up land for development, a group of Napier residents who have land available say development levies imposed by the council have priced them out of the market.
But the council says the levies reflect the true cost of developing the area and ratepayers should not have to subsidise developers.
Landowners at Te Awa, about 3.5 kilometres south of Napier's CBD, had their zoning changed under a Napier City Council plan change, heard by independent commissioners, earlier this year.
The council had identified the mostly rural area as ideal for meeting the city's growing need for housing and the area was rezoned from rural to "main residential".
The area included a 125-hectare site that was expected to provide for 1500 new houses and meet anticipated demand for the next 20 years.
But some landowners who welcomed the plan change have since discovered that council levies range between $55,000 and $90,000 per lot.
Lyndon Pedlow, who has 18 hectares of orchards and cropping land in the area, said the council's charges flew in the face of the Government's response to a Productivity Commission housing affordability inquiry.
The Government said it could legislate to force councils to rezone land outside city limits for new housing as it tries to ease pressure on low-income families struggling to get on the property ladder.
"Here we have land that's been rezoned and is ready to go and the council has stifled its development," Mr Pedlow said.
Cheryl Sullivan, who lives in the rezoned area and was looking to subdivide, said she had called numerous councils around the country for their connections charges and had concluded Napier's were the highest.
"It will price the land off the market for developers for many years."
She said developers worked on the principle of one-third to buy land, one-third to develop land and one-third profit. "Here, with the council's charges on top of all other associated costs, there's no way that can work. At best they might break even. It's ridiculous."
Council chief executive Neil Taylor said the levies had not been set by the council, and the nature of the area - specifically drainage issues - had an effect on costs.
"The council followed the Resource Management Act procedures and brought in independent commissioners to hear it [the zone change]. The costs were all in front of the commissioners during the hearing."
- The Dominion Post
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