Development contributions to be debated

Government moves to make new houses more affordable by reining in council powers to levy developers for growth costs will be considered today by the Hamilton City Council.

A discussion paper released on Sunday looks at changes to the way councils charge for new sections and other developments as part of the second phase of its local government reforms.

Among the ideas it floats is abolishing development contributions [DCs], which help pay for new infrastructure needed for growth, an option which may see ratepayers pay more than now.

Newly-appointed Housing Minister Nick Smith, releasing the discussion paper, said development contributions charged by councils have been a significant factor in escalating section costs.

"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, he said.

Hamilton charges more than double the national average at $32,000 per housing unit.

City performance general manager Blair Bowcott said the levies reflected sharp growth in the past decade and were similar to other fast-growing areas such as Queenstown and Tauranga.

The government discussion paper has been added to an already scheduled council briefing on its development contributions policy review, which it is part-way through, Mr Bowcott said.

While the paper suggested abolishing DCs, it was silent on who should pay instead, he said.

However, a prominent city developer says the Government itself takes a big cut of house prices.

Ian Patton, whose Glaisdale subdivision is under way in Rototuna, said that if the Government was serious about encouraging "affordable housing" it would look at GST costs.

About $100,000 of a typical $500,000 new home in the city was clipped by the council's $32,000 charge per section and the Government's 15 per cent GST levy, Mr Patton said.

He welcomed the review and the idea of abolishing development charges.

"Cities manage without them. Wellington does, and is accountable under the RMA for those charges.

With DCs they're accountable to nobody and they can charge what they like," he said.

Waikato Times