'Grossly excessive' fees of $550,000 for city development slashed

A plan to develop 46 Trafalgar St (pictured) and 48 Trafalgar St has had special dispensation after being hit with "grossly excessive" fees.
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A plan to develop 46 Trafalgar St (pictured) and 48 Trafalgar St has had special dispensation after being hit with "grossly excessive" fees.

"Grossly excessive" council fees of more than half a million dollars for a planned city development have been cut after the charging policy was found wanting.

The properties at 46 and 48 Trafalgar St are intended for redevelopment into 13 smaller sections.

All developments must pay two sets of reserve contributions to the Nelson City Council: neighbourhood reserve contributions, for neighbourhood recreation space, and general reserve contributions toward shared facilities, like Saxton field.

Under the council's current policy, adopted in 2018, neighbourhood reserve contributions are calculated with a formula that uses the land value as a guide, with the assumption that the council would have to pay for land at a similar value within walking distance to provide a new park.

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This method of calculation would have required the Trafalgar St developers to front up with $557,427 just in neighbourhood reserve fees, plus a further $12,760 in general reserve contributions.

But after reconsidering the case the council approved a special dispensation to reduce those fees to an estimated $200,000, pending final valuation of the 11 new lots.

Team leader of city development Lisa Gibellini said at a council meeting last week the current method of calculation had lead to an "unanticipated outcome" for urban redevelopment projects, known as brownfield developments, like the Trafalgar St one.

"In a normal greenfield [new] subdividsion, council would seek to purchase a couple of sections in say a 50 or 100 lot development, and create a neighbourhood reserve to provide that level of service to that community," she said.

"Where it doesn't really fit well is to intensified or developments that are occurring in the existing urban area such as this one, where generally council doesn't generally purchase new land to provide reserves.

"What we seek to do is improve the existing reserves that we have, so really the gap that's missing in the parks and recreation asset management plan is we don't have a level of service for redevelopment or intensification based on improving existing reserves."

Councillor Tim Skinner was the only one to vote against the proposal, as he said "a cost is a cost ... and it's got to be borne by someone". (File photo)
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Councillor Tim Skinner was the only one to vote against the proposal, as he said "a cost is a cost ... and it's got to be borne by someone". (File photo)

She said this unintended consequence resulted in "quite a quantum of reserve contribution that ... isn't reflective of the levels of service that we [the council] actually provide".

The developers had applied for a special consideration to have their reserve contributions calculated under the previous policy, which would see them pay 5.5 per cent of the value of each additional lot (11 out of the intended 13 lots) and a flat $1,160 fee per lot for general reserve contribution.

Gibellini said council staff considered that "exceptional circumstances" had been demonstrated, and using the previous policy was "fair and reasonable".

The unintended side effect of the 2018 policy change was so severe that Gibellini said staff would be providing a new draft policy to the council for consideration in the Long Term Plan process, to avoid having future developments facing the same issue.

Mayor Rachel Reese said the "test of exceptional circumstances has been made and made clearly".

"The unintended consequences are not at the margin, but they're grossly excessive. It's not reflective of the level of service that we intended."

Councillor Tim Skinner was the only councillor to vote against the change, saying it was commendable to build more housing in the city, but "a cost is a cost ... and it's got to be borne by someone".

"If we want cycleways, pocket parks, reserves, community gardens, you need land outside of buildings and developments.

"We're being asked to subsidise [this development] and pass that cost on to someone else ... I don't think it's going to make it uneconomic, obviously it's going to change the profitability for the developer but they've gone into this with their eyes open."

Mayor Rachel Reese said the fees under current policy were "grossly excessive". (File photo)
Joe Lloyd/Stuff
Mayor Rachel Reese said the fees under current policy were "grossly excessive". (File photo)

Councillor Gaile Noonan removed herself from the meeting as she lives near the development and so had a conflict of interest.

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