Councils fear review may force rates up

Last updated 13:00 13/02/2013

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The region's councils hope a government review of the way councils charge for growth will not hit ratepayers.

The review comes as Tasman District prepares to sign off an industry-backed "once-paid, always-paid" method of collecting development contributions.

Tasman councillors are expected to approve the "once paid" system next Thursday.

Housing Minister and Nelson MP Nick Smith and Local Government Minister Chris Tremain announced the review of development contributions on Sunday. It follows Dr Smith's return-to-Cabinet speech where he targeted home affordability as his key goal.

Dr Smith this week said section prices have more than doubled in the past decade.

"A significant factor has been the sharp rise in the development contributions charged by councils. The average charge nationally has increased from $3000 per section to $14,000 per section over the past decade, an increase of 360 per cent, and can be as high as $64,000 per section. These costs need to be contained if more Kiwi families are going to be able to afford their own home."

Tasman's shift to a "once-paid" system follows a battle with industry stakeholders which was sparked by the council's revision of development contribution rules last year. That saw it remove a 67 per cent first dwelling discount without informing the industry.

At the time the council's "top-up" method of collecting development contributions at the time of subdivision, on the issuing of a building consent and again on the connection of services, was criticised as confusing, costing sales and unfairly taxing builders.

Tasman Mayor Richard Kempthorne said it was the council's view that a portion of the cost of new infrastructure should be paid by the sector which benefits from or drives the growth.

Developers would pay the new "once paid" contributions at the subdivision stage and pass the cost on to homeowners and section buyers.

New council infrastructure projects were carefully assessed to determine the portion of the cost which should be carried by new development.

If developers did not pay for a portion of the cost of new infrastructure it would fall to ratepayers, he said.

"And we have heard from Nick Smith that councils have to ensure they are not loading costs onto the general ratepayer," he said.

Nelson City Council's regulatory executive manager Richard Johnson said the Government's review of development contributions was all part of its examination of housing costs.

"I just hope that they do not only focus on development contributions," he said.

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"If a developer does not pay then who does? The only other payer in the community is the ratepayer."

Nelson City Council collected development and reserves contributions from developers on subdivision. However, activity which needed a resource or building consent would trigger an assessment of demand for extra services which could see an additional development contribution fee of some level levied, he said.

The councils are among 45 nationally which charge development contributions.

The Development Contributions Review Discussion Paper includes options for reform of the Local Government Act 2002 to cap the charges, tighten the criteria, reinstate appeals, provide discounts for types of housing, change the timing of charging, enable alternate provision of infrastructure and abolish the charges.

Submissions are due with the Department of Internal Affairs by mid-March.

- The Nelson Mail

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