Proposal to increase building fees may be for the chop

By Graham Skellern
Some of the proposed increases in development contribution fees are likely to be trimmed by the Tauranga City Council in the wake of strong opposition from builders and developers.
The council is taking a second look at the composition and calculations of the subdivision and building impact fees after the new charging regime was slammed by builders and developers at the recent Ten Year Plan hearings.
The planned rises for the 2006/07 financial year were as high as 65 per cent for new houses; more than 400 per cent for commercial/industrial buildings; and between 50-120 per cent for creating sections in different parts of the city.
The councillors, in their Ten Year plan deliberations this week, will be presented with some new options that would reduce the size of the impact fee increases.
Their chief executive Stephen Town said it was a little disappointing to hear criticism that council doesn't listen to submissions.
The detail of the work was not yet finished and there were still some issues to work through with the developers and builders, he said.
Tauranga Mayor Stuart Crosby indicated there would be changes to the proposed charging regime.
"The development sector has told us they are prepared to pay for growth but not catch-up plus growth. It's a fair request and we will work carefully through the formula (of the impact fees)."
Mr Crosby said the commercial/industrial building impact fee at the top end had to change. "It is simply too much, that's blatantly obvious, because the community relies on business growth and we need to make sure we don't stifle it."
Bob Clarkson, Tauranga MP and commercial developer/landlord, last week lodged plans with council for his biggest building - a 13,200 sq m storage facility for two tenants in Jean Batten Dr, alongside Bunnings Warehouse.
Under the proposed regime, Mr Clarkson would have to pay a building impact fee of $733,000 instead of the present $113,000 - an increase of nearly 700 per cent.
The new building, including a 2000 sq m canopy, will cost $4.5 million, and Mr Clarkson said he would be forced to charge extra rent of $73,000 a year if he had to pay the impact fee.
Instead, he has beaten the deadline of July 1 when the new development contributions kick in.
Mr Clarkson's latest building will have a maximum of six toilets and two kitchens and no more than 10 people working there.
"It's a pretty simple building that will have no real downstream effect (on existing infrastructure). These impact fees are going to kill industry in town unless they are brought down dramatically.
"Bob Clarkson is getting near to the end of his building career - but what about others who want to erect industrial buildings?" he said.
Mr Town said the council was not attempting to collect any more money from the commercial/industrial building impact fee over the next 10 years - it was attempting to introduce a charge that was easy to understand and attracted less argument.
He said the impact fee on smaller buildings would, in fact, be less but it was clear the proposed fee for bigger buildings was unreasonably high.
The council was proposing to make a calculation based on 100 sq m of gross floor area rather than household equivalent per hectare.
The councillors this week will also debate whether the building impact fee should help pay for city-wide roading and reserves - or if some of this should go in to general rates.
At present the council is planning to increase this fee from $5962 to $9856, an increase of 65 per cent.
Mr Town said council staff will present the developers and Master Builders representatives with the preferred charging regime on June 12, and they will be invited to give their response before June 22.