Ratepayers carry development costs

JANINE RANKIN
Last updated 08:00 17/11/2012

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Palmerston North ratepayers still carry more than their share of the costs of growth, eight years after the controversial development contributions policy was introduced.

City council senior policy planner Jonathan Ferguson-Pye calculates it has cost $23.6 million to provide infrastructure and service capacity to support growth during that time.

But only $12.2 million has been received from developers, including $4.6m this year from the north east industrial park near the airport.

Mr Ferguson-Pye said the policy had been slow to start bringing in income because there had been a boom in subdivision work just before the policy came into force in 2004.

The goal of the policy is to ensure those who create demand for extra city services - water, sewerage, roading and reserves - pay their share of the costs.

Designed to relieve the burden on existing ratepayers, the policy is unpopular with developers, particularly those in the fast food industry who are charged for the extra demand they place on roading.

The owners of the new Wendy's on Rangitikei St have asked the council's hearings committee to review the amount of the contribution they have been asked pay.

Mr Ferguson-Pye said an increasing number of challenges and requests for remissions was keeping council staff, "fairly busy".

"Council officers have to play a very straight bat.

"If we don't get the contribution, then essentially ratepayers will be picking up the cost."

He said the council had only one chance to collect a contribution, and to get it right, and had to take care it did not make decisions that would set a precedent that would undermine its chances of recovering the full costs of infrastructure extensions.

Some of the policy's shortfall, about $6.4m, is caused by delays in development, including the lag of up to eight years between granting of a subdivision consent and final sign off.

About $4.8m may never be clawed back, although that was an improvement since 2009, when it was estimated the shortfall could be as high as $6.7m.

Some subdivisions would never go ahead, leaving council with "sunk costs" if it had installed services ahead of time.

COST SHARING

The costs of providing for growth: Water $3.9m Wastewater $2.6m Roading $11.2m City reserves $4.3 Local reserves $1.5m

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