The Bay is facing a housing affordability crisis if councils do not remove an "artificial handbrake" on development, developers say.
And they are pushing for the council to consider allowing the private sector to deliver core infrastructure, such as sewerage, water and roading, in a bid to speed up housing development and make homes more affordable.
However, Tauranga City Council Mayor Stuart Crosby said it was about quality infrastructure that lasted 50 to 100 years and it tried to strike the balance between affordable and durable.
The end consumer faced the risk if cheaper infrastructure was put in, he said. Mr Crosby said infrastructure options needed to be explored - except privatisation as it was currently illegal in New Zealand for water.
The issue was raised at a Think Tank to explore alternative ways to fund and deliver core network infrastructure organised by SmartGrowth Partnership in conjunction with the NZ Property council
Carrus Group chairman Paul Adams said their SmartGrowth Strategy of well-planned development was being held back by council's inability to fund infrastructure.
"The council use that (lack of funds) as an artificial handbrake on opening up additional land for development. You can't even start talking about affordable housing when you have those kind of restraints keeping prices up."
It also threatened the Government's recently announced housing accord, which would see 1175 sections fast-tracked for new homes over the next two years. The accord aimed to improve affordability in the region, with a projected population growth of over 64,000 people over the next 20 years that would require an additional 1300 homes per year.
Mr Adams said developers needed to be able to put in core infrastructure themselves.
"If you can't afford this work yourself, don't let bureaucrats get in the way of a free market.
"There are smarter ways of dealing with infrastructure than we have at the moment ... that could increase supply and affordability."
CBC Construction director Peter Cooney said privatisation would make land more affordable.
The cost of developing a section that included infrastructure, roading, sewage and water and council fees was up to $70,000 with land costs on top of that, Mr Cooney said.
Potential savings could be made but council wanted it "gold plated", he said.
"If you have 2000 sections you can create your own sewage and water holding areas, waste water plants and manage it internally and you'd rate your customers so much money for retaining all those services in that area.
"Therefore, you put in your own infrastructure and run it as a company. It's a cheaper way of doing it."
Carrus Group general manager Scott Adams said the Government was pushing affordable housing. However, the cost of infrastructure and developers' contributions added to the section price that "Mr and Mrs Smith" had to pay, which was making land unaffordable.
One option discussed at the meeting was the possibility of Tauranga retaining a percentage of the GST on houses built and sold in the city.
Another was the Bay of Plenty Regional Council's commercial arm, Quayside Holdings, funding a Regional Infrastructure Bank that had a return.
Quayside Holdings chief executive Scott Hamilton said it delivered a $200 million Regional Infrastructure Fund, in conjunction with the Bay of Plenty Regional Council. It was already looking at ways that it could support the territorial authorities across the wider region and a Regional Infrastructure Bank might be an option in this regard, he said.
The Roost Home Loan Affordability June 2014 index report for Tauranga said it took 64.7 per cent of one median income to pay the mortgage on a median-priced house. The median price for a home in Tauranga was $405,000, up 14.1 per cent from $355,00 the month before.
