Property Council opposes 660% development contribution rise at Drury

The Property Council is opposing Auckland Council’s 660 per cent development contribution rise proposal at Drury and will today present its arguments against that.

Developers will have to pay that much more to create thousands of new homes, commercial and retail buildings and projects in the fast-expanding south Auckland corridor of greenfields development.

Natalia Tropotova, Property Council senior advocacy adviser, said the fee rise proposal was “of serious concern”, particularly the precedent for the rest of the Auckland region and her entity will today present against it.

Auckland Council has indicated Drury is first but other areas will follow and the steep rise is to fund infrastructure to allow development to occur.

Council financial policy manager Andrew Duncan says Drury developers now paid development contributions of $11,000 to $18,300 per new residence. But under a proposal, those could rise 360 per cent to 660 per cent to $84,500 per residence.

Tropotova said council staff had admitted that the proposed draft development contribution policy could force house prices up even further.

“Should the proposed up to 660 per cent fee rise for Drury developers to fund the infrastructure needed to go ahead, this is bound to materially affect house prices over time,” she told Property Council members today.

That was concerning given the current housing crisis and the Government’s strategy to provide affordable housing, she said.

“It also contradicts…the Auckland Plan which refers to the shift to a housing system that ensures secure and affordable homes for all. We question why the council has not provided enough data and the model they used to justify the proposed increases,” she said.

The council is today running a “have your say” event in the new fees. The Property Council will have its say there, presenting with independent economist Greg Akehurst.

He will point out highly concerning gaps in data the council is using and their choice to lack transparency with their assumptions, Tropotova said.

“Historic underinvestment in infrastructure should not be viewed as a growth cost. Council needs to make better use of alternative funding and financing tools,” she said, citing user charges like water charges and congestion charging, targeted rates, public-private partnerships and special purpose vehicles.

“Budget overruns should not lead to increases in development contribution fees,” she said.

The Property Council was concerned proposing to apportion costs to developers today for projects that were not going to be built in the medium term.

Auckland Council should also take into consideration significant increases of construction costs, land value, building materials costs, the impact of the latest lockdown in Auckland as well as the broader impact of key reforms, she said.

Finance and performance committee chair Desley Simpson said it was important to keep an open mind about the proposed fee rise.

“There is exponential housing growth in Auckland and we’ve seen the devastating impacts of failing to plan ahead for infrastructure in other regions across the country.

“Contributions are one of the ways the council recovers the cost of essentials like stormwater and transport infrastructure as well as parks and community facilities. This infrastructure needs to be funded one way or another – either by the developer, the ratepayer or the taxpayer. The question is, what is the appropriate share for developers to pay,” Simpson said last month.

Developers have also opposed the big fee rise.

Charles Ma of the new Auranga said his business was happy to pay its share of growth-related infrastructure costs in Drury West but the development contribution fee hike being put forward for finance and performance committee to examine this week was unfair and too selective.

“This is worrying as it lacks substance and is being forced on those of us who have already paid our fair share. It’s shocking and disappointing,” he said.

The new Auranga township had tens of millions of dollars invested in it by Ma’s company, MADE.

He said the 660 per cent Drury rise was wrong because it targeted only that area specifically yet costs should be spread right across the city.

Ma’s MADE had volunteered early investments as essential amenities for the new Auranga “and the promise we’ve made to our growing community”.

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