The Government's proposals to cut parts of council development charges could mean rates rises, Marlborough mayor Alistair Sowman says.
The Government has mooted changes to the Local Government Act to stop councils charging developers for community facilities and reserves as part of a suite of measures to lower the cost of building new houses.
However, the proposals would mean little change and would move the costs to ratepayers, the Marlborough District Council says.
Mr Sowman said most of the council charges on housing developments went towards roads, water supply, sewerage, and stormwater services for the new houses. There was another component for reserves and community facilities, which funded such items as parks and swimming pools. If councils could not fund the growth in the region's population using those activities from development charges, the costs would fall on existing ratepayers.
However, the amount would be small and not have the effect the Government was after, he said.
A council official estimated the charge to be dropped was about $2700 a section. For a typical house build in Marlborough, the full cost was between $350,000 to $400,000. If the whole charge was dropped, that would be a saving of less than 1 per cent, he said.
If it was just the community facilities part of the charge dropped, and not the reserves part, that would fall to about $1000 less a section. If those charges were added to the rates bill, it would add between 0.2 per cent and 0.5 per cent to the average rates bill.
Housing Minister Nick Smith and Local Government Minister Chris Tremain this month announced changes to the Local Government Act to rein in council development contributions to improve housing affordability.
"We are going to narrow the charges councils can put on new sections, provide an independent objections process and encourage direct provision of necessary infrastructure to get costs down."
Mr Tremain said development contributions needed to be set in a way that fairly balanced the costs that should rightly rest with a new development and those of community benefit that should be paid by general ratepayers.
"There will always be pressure on councils over rates and we need a check on development contributions to ensure the new home owner is not over-charged."
He said the changes would restrict what councils could charge for commercial and industrial developments.
"These charges, if applied beyond the costs of providing the necessary infrastructure, end up as a tax and discouragement on new investment and jobs. The changes mean that councils will only be able to charge for new infrastructure and not recreational facilities or reserves for developments that do not involve residential housing."
Councils would still be able to charge for infrastructure and resources directly associated with a new subdivision. The changes were about improving transparency, encouraging councils and developers to work on minimising costs through development agreements and ensuring funds collected for infrastructure in an area were spent as intended.
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