Watercare defends development fees

Revenue from charges and developer contributions was $22.7 million for the 2013 financial year.

Watercare Services has hit back at a developer who accused it of charging too much for Auckland residential subdivisions.

John Redwood, Watercare spokesman, said the charges were fair and helped fund the network which faced huge costs.

"Watercare's asset management plan forecasts $5 billion in capital investment over the next 10 years. Capital investment has three main drivers: investment to renew or replace existing assets, investment to improve service levels, and investment to service expected growth in demand.

"Watercare has three sources of funding for this investment: charges on existing customers, new borrowings - essentially a charge on future customers - and infrastructure growth charges."

The organisation's financial strategy sought to balance the contribution from each of these sources so the costs were aligned with the benefits, he said.

Redwood was responding to land developer Mark Hackshaw, who complained of being charged $15,000 for water charges and a further $15,000 minimum fee to Auckland Council for development contributions for each new residential lot.

Redwood said that before the super city was formed, individual councils and water companies charged development contributions or growth charges to help pay for water and wastewater infrastructure, but that in 2011, Watercare replaced the urban water and wastewater growth charges and development contributions with a standardised metropolitan charge - the infrastructure growth charge.

Those charges are calculated on the basis of expected demand.

"For domestic customers, this is based on average household water use - which is currently 600 litres a day, calculated according to relevant population and average water use data," Redwood said.

Revenue from charges and developer contributions was $22.7 million for the 2013 financial year.

Auckland was not alone in infrastructure growth charges for water, he said.

"Unlike some councils," Redwood said, "Watercare charges infrastructure growth charges at the time of connection, rather than at the time of subdivision. While that helps the developer, it does create the impression that the charges are a connection fee, rather than a contribution to the capital costs associated with servicing new growth and has on occasion led to new house owners facing a charge they assumed the developer had met."