Robinson Report: Rates for developer costs

By Reihana Robinson, Geoffrey


You can't blame a hawk for making a meal of the Little Red Hen. And you can't blame developers for working overtime to lower their costs and boost profit margins. After all, it's simply their nature.

So it should have been no surprise when business-friendly Mayor Julie Hardaker recently hinted of possible changes to HCC's charging regime for commercial developments - changes that could only mean lowering expenses for developers and sending more of the bill for new city infrastructure to other ratepayers.

Hamiltonians recall the mayor's bombshell proposal in 2011 to radically change HCC's rating base from land value to capital value (CV). According to an internal HCC report at the time, the local business sector had been pressuring council to have its share of total rates reduced - and the council delivered.

Along with the quiet elimination of differential treatment of businesses and homeowners, the CV plan would have resulted in a massive shift in overall rates from the local commercial sector onto the backs of residential ratepayers. The portion of city rates paid by residential property owners would have jumped from about 63 per cent to a teetering 77 per cent, with an estimated $17m annual cash impact on households.

Public opposition from residential property owners stopped the CV rates robbery dead in its tracks. But business lobbyists don't give up - ever.

Last year, the Property Council of NZ (whose members collectively own and manage about $20 billion of commercial property) stepped up its campaign against development contributions paid to councils like HCC. In its manifesto "Fast Forward to Growth", the industry group advocated outright repeal of the development contributions section of the Local Government Act. The aggressive "all-business" document advocates a single national policy for contributions with new appeal rights in Environment Court for developers.

A few years earlier, the Property Council had made a presentation to a Commerce Commission inquiry into housing affordability in New Zealand. The Property Council questioned local council charges for growth-related community and network infrastructure necessitated by their residential and commercial projects. They suggested ratepayers might not be paying enough for their share of benefits from new development-related public works. Hamilton's cost-recovery policy was one of several highlighted.

Hamilton City Council has a finely detailed, 41-page Development and Financial Contributions Policy. It is as transparent as glass and spells out appropriate contributions for community facilities, reserves, roading and access, stormwater, wastewater and water infrastructure as they apply to any individual residential, commercial or industrial development project - infill or greenfield.

Under HCC policy, developers' share of growth-related capital works ranges from 59 per cent to 99 per cent in various works categories, with the rest borne by ratepayers. The idea behind any potential policy change is obvious - to pin more of the tail (new infrastructure costs) on the donkey (ratepayers).

In the hypothetical case of a new infill apartment block in the CBD, it's relatively easy to identify the infrastructure costs that should be paid by the developer. But in the case of a sprawling new industrial and logistics complex like the looming Tainui Group Holdings/Chedworth Properties plan for Ruakura, potential development related infrastructure costs are like a financial freight train barreling toward every ratepayer.

While TGH has claimed it would cover "initial" infrastructure costs for its proposed inland port and mixed-use development, it has cleverly avoided assuming responsibility for the rest of what might eventually be shown to be its true development-related infrastructure impact. Instead of easing its development contribution policy relating to outfits like TGH and Chedworth, HCC should realise it is in the driver's seat and stand its ground.

If TGH does not want to pay the entire, true costs of its growth-related infrastructure requirements, it should pick up its 300ha of land, move it to another region and build its freight hub there.

Meanwhile back at City Hall, it's no surprise the possibility of relaxing HCC's development contributions policy has lit a political fire.

Cr Roger Hennebry has drawn a populist line in the sand, promising a mayoral challenge if Hardaker pursues pro-developer concessions that could ultimately cost ratepayers tens of millions. For Hennebry, the issue would be a winning number come October.

HCC has tried to dampen the protest flames by quickly changing a draft article on the topic in its February City News. But with councillors and staff now scheduled to "workshop" development-related income issues early next week, it may become necessary to man the rates barricades again.

Growth at any cost is no bargain.

Developers and big business interests need to pay their full and fair share or take their toys elsewhere.

Geoffrey and Reihana Robinson are organic Coromandel farmers and ratepayers who take more than a passing interest in environmental issues and local politics. Their columns reflect their own opinions. To approve or disapprove of their opinions contact robinsonsreport@gmail.com


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