Councillors hit back over development levy claims

City politicians have savaged government claims councils are to blame for higher section prices.

And it can expect an earful when Hamilton City Council responds formally to a discussion paper sheeting the blame for unaffordable housing significantly home to councils' development levies.

Deputy mayor Gordon Chesterman accused the government of "trying to spread the blame across the whole of New Zealand" and of turning a blind eye to developers profit margins.

"The difficulty I have with the whole paper is the assumption that local government is responsible for the lack of affordable housing in New Zealand, which simply isn't true. This is an Auckland problem that they're trying to solve. I challenge the governments sincerity on this whole issue." Roger Hennebry pointed out the government's cut of house costs: "In a Rototuna dwelling at $480k there's $72,000 in GST. That's our submission, we've got to hit back, and push back."

Martin Gallagher also reacted strongly.

"The government is saying local government is to blame for the housing shortage. Well, here's the news: we've been kind in the past with our rates bills, lets detail all the central government services that's we're required to rate ratepayers for, thanks to decisions made in Wellington."

Senior council management weighed in too, describing the government's claim that development contributions are a significant reason for increasingly unaffordable housing as "not valid".

The discussion paper, released on Sunday by Housing Minister Nick Smith, floats a range of ideas to rein in the fees, which nationally have climbed from an average $3000 to $14,000 over the past decade.

Hamilton charges $32,000 per section and $10,000 for infill subdivisions.

A council workshop yesterday was told the new paper largely aligned with proposed changes to its development contribution policy review, which includes development levy discounts of 33 per cent for high density housing, and potentially discounts for ancillary dwellings and social housing.

The draft policy, which was deferred by council last year after a significant threat of legal action by Tainui Group Holdings and strong criticism from other developers, proposes some radical changes.

Catchment-based charging would see the cost of development levies differ across the city, and new council modelling to justify the contributions is regarded as sector leading.

Indicative residential charges shown to council yesterday would make Ruakura ($20,000 per section) and Rototuna ($29,000) the cheapest greenfield areas to develop, although for the TGH-dominated Ruakura growth cell council will only provide infrastructure "to the gate".

Indicative levies were also provided for Temple View ($58,000), Peacockes ($32,000) and Rotokauri ($36,000). The council modelling shows infill could legitimately be charged up to $24,000.

However council showed some intent to significantly reduce that levy, particularly in areas where it could demonstrate development would create less costs due to existing infrastructure capacity.