A fired-up building and housing industry has forced the Tasman District Council to rethink rules around the way in which it collects building development levies, which some firms say is "killing the industry".

Tasman Mayor Richard Kempthorne said after last night's audibly hostile meeting, which the media was locked out of, that the council accepted there were gaps in communication around the revised policy.

About 80 people packed out a room in the Richmond library and grilled Mr Kempthorne and senior council staff over the consequences of the council's decision to change the way property development levies are collected.

The council calculated the cost of infrastructure growth and set its development contribution regime as part of the long-term plan, which was just signed off. The fees support building of infrastructure such as roading, water and stormwater services.

Under revised rules the council has decreased the general levy, but has removed a discount that applies to a "first dwelling" on a site.

In some cases that has left owners of sections who have yet to build having to pay anything up to and beyond $10,000 more in levies to build their homes in subdivisions for which development levies have already been paid.

There has been widespread criticism from the industry over the lack of consultation on the complex subject and its consequences, which some say they were given no warning of.

A staff recommendation will now be going to the council to consider reconsulting aspects of the development contribution policy.

The district council's chief executive, Lindsay McKenzie, said the scope of the review would be the "narrow focus" on the issue that has emerged from dropping the discount. "I would anticipate a focus on the council practice of assessing development contributions on both subdivision and building consent phase. That's the source of concern for people," Mr McKenzie said.

The council also planned to temporarily allow people who were about to build to apply for building consent under the former development contribution policy.

Mr Kempthorne said the council would now seek to remedy issues around removal of the subsidy and lack of engagement with interested parties.

"It was a problem of omission but it wasn't intentional," he said.

Nelson MP Nick Smith, who attended the meeting, believed the council was working within a flawed law. He would be pushing for a review within the Government's nationwide local government reform package.

Dr Smith said errors existed in that councils were allowed to take levies at the time of a resource consent application, again on application for a building and consent and a third time when services were connected.

Dr Smith was encouraged that the mayor and senior council staff had agreed to take a fresh look at the issue.

"It's worrying that landowners and developers are so aggrieved by this that they have signalled they will attempt a legal challenge."

Several at last night's meeting were not satisfied their concerns had been answered.

Dave Flowerday, of Skyline Homes, left the meeting with the view the council was immovable.

"They reckon they're going to relook at it and have told us we have to get our thinking caps on and submit an opinion, but policy is policy."

Richmond real estate agent Ben Cooper, said last night it appeared the council was willing to discuss it further.

"There's a proposed resolution that will help short term, but it's a long-term solution we're seeking."

Rhys Horncastle, of Stonewood Homes, who lost two contracts in a week to build new homes because of the changes, including one client who has decided instead to build in Blenheim, felt the council evaded a lot of questions.

"The argument is not about development contributions but the catchup payments that have caught us out.

"The fees structure is complicated enough – trying to find out how much we have to pay. It's killing the industry," Mr Horncastle said.

The staff recommendation is due to be brought to the council on July 19.

- © Fairfax NZ News

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