A statutory land charge on the titles of unsold sections at a Mangawhai subdivision will allow a Kaipara developer to defer making development contribution payments.
Last week the Kaipara District Council agreed Northcoast Development Limited would pay the costs, either on the sale of each individual lot (on a pro rata basis), upon issue of a building consent, or at the end of five years from the issue of titles, whichever was the sooner.
Stage 5A of the Sands subdivision comprises nine lots and is seen as a test case for helping developers progress with development during the current economic climate. The development contributions total $142,470, or $15,831 per section.
Due to the current economic situation some developments are not completed and have lapsed without contributions being paid, or are completed, but unsold leaving developers with cash flow problems.
The council acknowledges the need to encourage development in the district, especially at Mangawhai, where additional ratepayers will help pay for the heavily indebted Mangawhai community wastewater scheme which added $60m to Kaipara District's $80.2m debt. The policy for development contribution was introduced in 2006, but suspended in June 30, 2011 for roading development contributions in the Otamatea and Mangawhai area. Northcoast's development had begun earlier and the developer recently requested a contributions postponement.
In a report, regulatory manager Graham Pollard said KDC could have sought security by including an agreement to mortgage - which would have allowed a caveat on the land. This would enable the council to sell the land to recover contributions (part or all, depending on equity), but to register this security, prior mortgagees would also need to consent. This consent could be withdrawn in the case of a mortgagee sale. Since there was no guarantee of recovering the contributions, the council decided against this option.
The developed, but unpaid sections will still attract a general rate. The agreement in favour of Northcoast Development' is expected to set a precedent. Other developers may seek similar postponement. A council spokesperson said each request would be treated on a case by case basis.
The council proposes in it's yet to be adopted long term plan to re-introduce a policy on development contributions.
This has drawn concerns from developers, who say contributions, together with the proposed increased rate will stifle development in the Kaipara, particularly in Mangawhai.
Maungaturoto developer Ron Manderson said the deferred payment was a step forward in encouraging development and a "pro-development policy was needed for the district". He said currently there was some confusion and uncertainty as to what was required from developers which also impeded development.