Government and National support Bill enabling government-approved infrastructure projects to be paid for using levies imposed on landowners - even those who didn't know they'd be levied when they bought their property

Government and National support Bill enabling government-approved infrastructure projects to be paid for using levies imposed on landowners - even those who didn't know they'd be levied when they bought their property
Urban Development Minister Phil Twyford

A Bill, which will enable the government to levy landowners to fund new infrastructure in their areas, has passed its first reading in Parliament.

Under the Infrastructure Funding and Financing Bill, government-approved infrastructure projects will be able to be ring-fenced, so the debt doesn’t appear on local or central governments’ books.

This debt will then be able to be repaid using revenue raised by levies imposed on the landowners who benefit from the infrastructure.

A web of contractual arrangements has enabled Crown Infrastructure Partners (a Crown-owned company) to fund infrastructure to service parts of Wainui, northern Auckland, using revenue raised from levies imposed on those who buy new sections at the Milldale development. Fulton Hogan is the developer.

Buyers of nearly 4000 mostly residential sections at Milldale will be levied every year for 30 years. The first-year cost will be $1000 in most cases, with this increasing by 2.5% a year.

The Bill aims to make it easier for this model to be replicated elsewhere.

However, it goes further by enabling levies to be applied to existing landowners - not just those who know what they’re signing up to when they buy property in a new development, as is the case in Milldale.

Under the proposed law, someone who’s owned a property for say 10 years, could one day be told they have to pay $1000 a year to cover the cost of upgrading the wastewater system they use.

Concept riskier when landowners don’t opt-in

Treasury, in a report it gave government ministers in April, warned there were risks associated with imposing levies on landowners who don’t choose to opt-in to a “project area”.

Landowners, particularly those on fixed incomes, might not be able to afford the levy. Landowners may also wilfully not pay, prompting “costly recovery actions”.

Treasury suggested the burden on existing landowners could be eased by phasing in the levy, or making it payable after a certain period of time or event, like the sale of a property.

Speaking to interest.co.nz, Urban Development Minister Phil Twyford made the same point.

He added: “It’s the Government’s clear intention, particularly in the early years, to use it in greenfield scenarios, which are less complicated when you have few existing landowners.”

Asked why he only intended to use the power in more established areas further down the track, he said it was a matter of bedding in something new and different, so people get used to it.

Twyford compared the targeted levy proposal to councils’ targeted rates, which can also be phased in or paid at a later date.  

Furthermore, he said councils have the tools to model the benefits of a particular piece of infrastructure on a landowner.

Twyford said the Bill was drafted for “maximum flexibility so it can be used in a number of different scenarios”.

National broadly supportive

National supports the Bill, with the Milldale development beginning when it was in government.

On the issue of the legislation enabling levies to be imposed on existing landowners, National’s housing spokesperson Judith Collins said, “That’s much harder…

“We’ll look at that, but I’m far more comfortable with people knowing what they’re buying, getting what they’re buying and then paying for it.”

Exactly how it would all work

Looking at the Bill more broadly, it stipulates the following process would need to be worked through for landowners to be levied:

- A developer or local council identifies an infrastructure project they believe could be funded using a levy. This could include water and transport projects, like roads, cycleways and public transport infrastructure, as well as community amenities such as parks, and environmental resilience infrastructure like flood protection.

- They seek approval from the local council, which will eventually collect the levy on their behalf.

- They seek approval from central government, which will enable a separate entity known as a Special Purpose Vehicle (SPV) to be created. Central government will also need to agree to a support package that could cover certain tail risks that can’t be managed by either the SPV or local authority.

- The SPV is established. It’s monitored by central government and has to make certain disclosures.

- The SPV borrows money to finance the infrastructure and uses the levy payments to repay the debt.

- The SPV oversees the construction of the infrastructure.

- The SPV transfers ownership of the completed asset to the appropriate public entity - usually a council.

Twyford said: “This tool will complement rather than replace existing normal council planning and decision-making processes...

“The first project funded through the new tool could start in late 2021.

“In the meantime, our Government is developing a pipeline of possible projects to use this tool, and is exploring other ways to give councils greater flexibility in funding and financing infrastructure.”

Twyford in November told interest.co.nz developments at Rotokauri in Hamilton and Tauriko in Tauranga could be well-suited.

In a separate piece, interest.co.nz's Jenée Tibshraeny looked at the costs associated with the Milldale set-up. She wrote an opinion piece, questioning the rationale of an SPV taking out a long-term loan with an interest rate of 5.37%, when the government could raise debt by issuing bonds at a much lower rate if it was willing to put this on its balance sheet. 

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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If any landowner doesn't want to 'opt in' then they don't get the improvements?
Town Water is progressively connected to areas that are on bores, tanks etc - same for town sewage systems, and it's not uncommon, even today, for Councils to exclude those services from any current landowner who doesn't' want them via an Opt In.

Try 'opting out' of a classic Public Good like street lighting.......

cynic!

Yes it creates the classic economic problem of how to solve the undet provision of public goods due to free riders

Yes but this legislation is a stealth localized tax so the GOVT can pay for a railway to the airport.
So you pay for something that you will never use because politicians know best.

BW that’s simply not my experience
You pay a fee if the town water service passes your gate even if you don’t connect to it
This is Auckland the article is talking about is it not ?
You also were required to connect to the sewer system once available & disconnect your septic tank system
There never has been an “Opt out” in my experience living on the green belt when services came you had to use them within a certain timeframe of about 2yrs for the sewer connection anyway
This extra taxation is what’s long overdue if Auckland is ever going to pay for new services
It’s property taxation has been far too low on the affluent suburbs for as long as the town has been called Auckland. Check out other world cities taxes on property purchase & ownership
Enjoy your new rail link to the airport it’s called infrastructure & is long overdue in Auckland

revenue raised by levies imposed on the landowners who benefit from the infrastructure.

Seems reasonable.

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It sounds reasonable, but Devil is in the details. If it ends up being just another levy for what should already being covered by existing rates I can see it being very unpopular. Ditto for the retired couple who gets another levy to pay for the new kids playground at the local park..

Rates seem to be being kept artificially low (less than what's needed to help fund - in addition to debt for future receivers of the benefit - required investment in infrastructure renewal). So the choices will be either more targeted levies or larger overall rates raises.

On the other hand...the older retired couple has received significant betterment (wealth) from Auckland City's growth and infrastructure), and rates have been kept very low and debt maximised in order to give current ratepayers as comfy a ride as possible.

Are some are wont to say on here, unfortunately it's never been cheap to own a house / land in a "global city".

Amongst all of that though is there not already a pro rata, but biased, apportionment of rates based on value. In other words the higher your property is valued the more rates you pay. Therefore is that not plain and simple, an asset tax, or to be blunter a wealth tax. For instance two houses neighbouring in the same street, each the same sized land, each the same sized structure. One is valued at $650,000.00 the other at $1,390,000.00. This is in Christchurch, the latter happens to be a EQ rebuild. The rates for the former $3900.00, the latter $8,000.00. Each household is afforded exactly the same utilities & services. Is this equitable.

There will likely be specific cases where it seems less equitable, but on a broad base I'd reckon it's pretty equitable and reasonable. It reflects both the value betterment the city gives to the property (the value increase due to the city around the property) and the ability to pay a share of the load based off that wealth.

Everyone takes betterment deadly seriously when the city does something that might reduce the value of one's land ("compensation!!!"), so it's pretty reasonable to capture some of that betterment via rates.

Noted, but candidly it would take a pretty broad brush and heavy hand to paint out all the anomalies that crop up on that score. If betterment is acknowledged as being good for the overall good of the district/community, then those paying greater sums towards it, should surely be entitled to better betterment in order to perpetuate the cause of the good of all. (Taken from the Junior Woodchuck Manual, section captioned bureaucracy.) Obviously the legislation that allows councils to levy rates based on property values is well seated. It ain’t ever going to go away. Perhaps then the council(s,) where applicable, should just front up and confirm that in fact, is the basic mechanism. Instead of the mealy mouthed obfuscation that the Christchurch City Council, for example, publishes.

Agree, it should be clear.

In Auckland, the council (vested interests) have minimised the land value factor in the rates to the smallest that is allowed, focusing instead of borrowing more and more to leave the paying of cost for future generations. Some of which is reasonable, but current ratepayers need to pay their fair share.

So the 4 Bed house in a desirable area worth $1 million occupied by a retired couple pays more than the $500,000 house occupied by a couple receiving WFF with 2 children, if that's fair then as next El Presidente I have similar fair schemes to level the playing field that will be equally unpopular with those disadvantaged.

Of course it’s an “Asset Tax” that’s used in 1st world cities like Boston
We pay a tax to purchase property & a higher % of annual property taxation than I ever paid in Auckland
The kick the can down the road & borrow leaving the future generation in Auckland to pay has finally reached the untenable.
Auckland City has high debt & yet must improve its infrastructure
It cannot do this without funding

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@PRAGMATIST ..........this legislation is BULLSHIT of the first order .......... we already pay something called a DEVELOPMENT CONTRIBUTION LEVY to council on ever single section , where the hell has all that money gone ?

As the name implies ................its a levy paid for development of support infrastructure

.

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Mr. Boatman, you shouldn’t be surprised. All of our government nationally, locally are hell bent on new methods to wring the sponge. The sponge being us, sitting duck, tax payers and ratepayers. Just wish that the same energy, cunning and resourcefulness, could be applied to cutting out the spendthrift and unaccountable expenditure on themselves and their vainglorious projects. There it is.

@Boatman this basically i a development contribution, but its for infrastructure being provided by the government rather than the Council. It also provides an option to keep significant borrowing off the books of Councils, which is necessary in places where debt levels are too high to take on board extra borrowing for expensive new growth infrastructure. Growth costs, so someone has to pay it. This is actually quite a clever way to finance growth and not put Councils under significant debt pressure.

Perhaps. Perhaps not. The problem is ratepayers are disillusioned as they have been downtrodden up and down the country by councils’ blatant squandering of public funds. It seems the more rates go up, the more it occurs. It is a spiral. Therefore there is a long established and painful suspicion that access to more net funds, or the equivalent relief from traditional infrastructure responsibilities, will just get p....d against the wall. Yes there may well be some merit in such a restructure, but first a considerable number of councils’ spending and accountability would need to f be overhauled and disciplines put in place.

The point is Mr Pragmatic
Auckland property owners in wealthy suburbs have never ever paid enough property taxation when compared to other urban 1st world cities
Or are you saying Auckland should never be compared to 1st world cities ?
I think it should be & taxation increased on the wealthiest suburbs in Auckland

I imagine a good chunk of rates and water bills go towards upgrading and maintaining infrastructure. If you have just paid for brand new infrastructure through a levy, shouldn’t you expect a rebate on that aspect of your rates? Why should your rates be paying for a new footpath or pipe or cycle way in Mt Eden when you just had to separately pay for your own?

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This is what happens when a bankrupt philosophy (economic growth can go forever, being the bankrupt philosophy in question) attempts the next 'doubling'.

So existing rights get squeezed dry. This will be what happened to Sumer, Rome, Tikal et al. At the end of the sequence, the ratepayers welcome the barbarians in as the better available option.

A standard 2% tax on all house sales should raise enough revenue for infrastructure development, right ?

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How about $100,000 levy on each new migrant, should cover it.

@ Doris dont be utterly stupid .............a skilled migrant on $70k to$150k will pay significant income tax and GST to the Government over his or her working career, and a make real contribution to GDP immediately WITHOUT us even having to spend a single cent on educating them ......they arrive with skills ...........and they will contribute way more than what you are suggesting .

Your idea is dead in the water

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@Boatman, you're dreaming.

I'd say 90% odd of the immigrants to NZ earn less than that. They're mostly low or unskilled.

Don't get sucked in by the rhetoric that they're all engineers, scientists, entrepreneurs etc. They're mostly baristas, bakers, cafe managers etc.

That depends on whether you are talking about the Permanent Residents, who do contribute at higher income levels, OR those on Temporary Visa's who are here to work for a short period, such as Baristas, some farm workers, the work experience types, etc.

Dav36 is right
Majority of immigrants are not highly skilled but most have something even better “Ambition”
The majority did not arrive in kiwiland to bludge
It’s up to NZ to provide the pathways to prosperity for its new immigrants
Alas it does not but neither do many countries who accept migrants & expect them to assimilate & do well regardless

Using the depreciated value of existing infrastructure, Reddell calculated a figure of $80,000 per migrant. In Australia it's been calculated that each 1% of population growth needs 7% of GDP spent to cater for it. (https://www.smh.com.au/opinion/the-huge-hidden-cost-of-population-growth...)

And the NZ Initiative (in 2013) found the average migrant contributed a whopping $2653 per year to government coffers, which to be sure is a little higher than existing NZers (because more of them are working age), but is hardly compensating for the infrastructure cost. Guess that's why Robertson is having to borrow 12 billion to do a bit of catching up.

In 2003 I applied for NZ permanent residency for myself and if successful to bring in my partner and her four children. I was told by an immigration lawyer that I would need $200,000 to meet the point count. I thought that reasonable so went ahead. I was surprised when they told me that I could keep the $200,000. Delighted but puzzled why NZ was so generous.
Note the recent sad cases where poor immigrants have died and we have discovered they had paid over $30,000 for the chance to be immigrants; there was the man who died on a North Auckland building site had paid $30,000 to get to NZ (but no IRD taxes) and the Vietnamese found suffocated in a truck in England had paid even more for the opportunity to be illegal immigrants in the UK.

And now with that fellow having gotten in fraudulently and not paid taxes, the family is still feeling entitled to ask for compensation from the taxpayer.

I am for such a migrant levy, though not 100k. May be 50k.

Make it retrospective to Nov 2017 and inability to pay - no visa or residence permit.

stamp duties hurt young/poor/mobile and worsen inefficiency in housing as people buy and live in oversized homes for longer and are less able to move for work/education/changing life circumstances. Rich people can hold onto homes inter-generationally to avoid stamp duties.

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Of course no new taxes as promised; this is a levy not a tax.

Ye olde Johnkeyism.

If Govt local or national impose a charge its a tax irrespective of what name you give it. Perhaps a levy on Councilors/MP's pensions and salaries would be appropriate to help pay for advice reports and working groups, limited to 50% of salary to make it fair.

“In the meantime, our Government is developing a pipeline of possible projects to use this tool, and is exploring other ways to give councils greater flexibility in funding and financing infrastructure.”

My money is on the Council and Government then re-visiting the capital gain from revaluation that occurs when land is re-zoned, the Auckland Council gave this item serious consideration as to how they could levy the re-zoned properties in Future urban Zones and clip the ticket, but shied away from it before.

"Give the Councils's greater Flexibility"
This is a huge weapon for Council to do the above again in relation to Future Urban Zones of Auckland, since having named it as "Future Urban" that is just half the job. When they come to zone it as "active" or "Live zoned urban" that will be the time to take the big tax without needing to call it a CGT, it is now "improved infrastructure" instead, giving them (going on the mentioned rates for the known development) up to a 50% Rates hike for those properties in a No-contest argument with the landholders and at the same time allowing development costs (borrowing/debt) that does not appear on the books because it is masked by the Government and private infrastructure deal.

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Sounds a very plausible scenario.

I see it also being considered as a likely vehicle for funding future coastal protection works. Targeted rates could of course have been used but the works would see many LAs exceed their debt ceilings.

As pdk points out above, this kind of off balance sheet accounting is a sign of the folly of endless growth.

Point is, if we can't afford growth - stop growing.

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They can go F()(# themselves .......what do we pay the DEVELOPMENT CONTRIBUTION LEVY for???????????

The DC levy is the precise tax already levied on new developments for the development of support infrastructure ...............instead it goes to paying inflated salaries to in-house Toewn Planners earning $200 k per annum .

Now this is a classic case of DOUBLE DIPPING

No.
If a developer wants to do a large Greenfield rezoning and development that will typically include significant extension of bulk infrastructure that is not normally covered by DCs. DCs are typically collected across lots of smaller developments to fund upgrades to infrastructure.
This will allow councils and developers more flexibility to consider out of sequence development. It's not a double up with DCs, rather it is complementary.
Note - National support.

Problem with DC levies is that the National government legislated to bring them down and/or exclude certain assets from DC charges ... no one wants to accept the full cost of the growth component of new development.

https://www.nbr.co.nz/article/change-development-contributions-legislati...

No amount of planner salaries would cost anywhere near the replacement costs of our aging infrastructure. Personnel costs at many LAs could be reigned in, but that kind of downsizing won't put any serious kind of dent in repayment of existing debt and/or payment of future infrastructure costs.

I SMELL THE DIRTY HANDS OF FLETCHER'S LOBBYISTS IN THIS WHOLE ILL-CONCEIVED SCHEME TO RORT THE SYSTEM

The Legal Eagles will benefit bigly: 'infrastructure' divides neatly into hard/necessary (3 waters, refuse, recycling, flood protection) and soft/social/cultural/welfare (e.g. cycleways, climate 'emergency', it's a potentially very long list). And these definitions, plus the 'defined benefits' to any given property, are gonna be argued over to the highest Court in the land. The crucial distinction is that the levies will apply to a Property (what else could be used?) but the Benefits depend wholely on the Person(s) and their Predilections.

And that's not even looking at the whole off-financial grid nature of the SPV's (BVI? Caymans? Panama?) and the likely interest rates, administration and other expenses associated with New Entities. It's a perfect recipe for boondoggles up the wazoo.....

I thought you like the Houston model? While not exactly the same, it has some similarities, and can better enable out of sequence Greenfield development.
So I am surprised by your allergic reaction.

Greenfields are by definition a ring-fenced Locality. No issue there. It's the extension to all and sundry that I would worry about. And TLA's are perpetually under the pump: the 'Rates Required' object in their financial models is always under scrutiny. But an SPV - pfft, doesn't exist in That model.....I must confess to having been a TLA Treasurer back in the pre-1989 age, and have consulted up till recently on the financial modelling inside a few TLA's. So I know, from an insider's perspective in both modes, just how their little minds work......

This is nothing like the Houston/Texas model, if you think that you have just be conned to the highest order.

The Texas model allows housing to be developed at 3x median multiple ie truly affordable housing. The scheme will allow nothing of the sort. That will be the measure of its success or not 3x median multiple. Never going to happen unless they over build and there is another international recession.

All it really is doing is having gouged all the up front non value added costs in the purchase price, moved other costs onto the operational side.

The original premise for this type funding was how they fund subdivision development in the likes of Texas (which works very well and makes housing so much more affordable), but in true 'give them an inch...' philosophy, they have expanded this to not only charge the customer for the subdivision infrastructure up front as per usual but also get them to fund infrastructure further afield and/or make them pay again for stuff they are already paying tax on.

Remembering that this investment is meant to help remove a capital upfront cost so to make the house more affordable, and noting they have said that purchasers would be given an opportunity to pay this upfront cost at time of purchase instead of a drip feed. This upfront cost should represent the discount off the today value of the property had it not been spread over time.

Therefore what you should be able to do, is take the present price, and add the once only payment option to equal the value of what this property is worth if had just been a status quo value/sale.

I bet it won't equal the status quo, because this figure they are trying to tack on is extra and not inclusive, ie the house price would have been the same regardless, effectively allowing everyone involved to make a this project work (read make money), except of course the purchaser who has paid extra, be it over a longer time frame.

Imagine being caught with this type of investment in a downturn when your capital value falls or stalls and your land service operational costs are about 50% greater than houses elsewhere.

Yep.

ditto

I could see it being applied to roads in the future, particularly coastal roads. Take Eastbourne, Lower Hutt. It has around 5000 residents of the more than 100000 residents in the whole of the Lower Hutt City catchment. A long coastal road services the suburb and waves already top it numerous times a year. Eastbourne residents are talking about the need for an alternate road access way - primary option being a tunnel through to Wainuiomata. That option, or heightening the existing coastal wall/protection are both very, very, very expensive projects.

A Road, like a lighthouse, a street lighting system or any other classic Public good, has two characteristics: its use cannot be denied to anyone, but the specific benefits are hard to quantify on an individual property basis. So emergency access alternative routes is a go-er. An extension to the local Stadium ain't.....

Rates are calculated based on property prices. Any increases in value result in a rate increase.

Uhhhhhhh.....?

So the average rates increase was 2.5%. mine was 22% as the area I live in because more expensive relative to the average. If the council invests in further improvements in the area, the same will happen again.

Oh god, not this BS again. suggest you look at how rates bills are actually calculated.

I know how rates are calculated. The council decide how much money they need and then set rates based on that. A significant portion of that is variable based on the capital value. If the council decide to turn the reserve next to my house into a rubbish dump, my capital value will go down and will result in me paying less as a percentage of the overall rates. The reverse is true if they provide something that makes the area more desirable.

If the council doesn't have enough money they should increase the rates (this is assuming they have stopped wasting what they currently have). The last thing we want is the council developing things that people don't want and then charging all the existing residents extra levies to fund it.

Sounds like another driver for higher rents !!

Quite the opposite. Land taxes have the effect of reducing rents. It pressurises landholders to be more productive with their holdings which means an increase in tenancy space supply, and more competition to get tenants, which actually has the impact of reducing both rents and land values. All infrastructure should have been funded with land taxes. You can see who got to write all the rules for the last few decades, the landholders, the banks, and the real estate industry.

Nope, there should be an infrastructure levy on immigrants, because they are why it needs doing.

Somewhere I read the value of NZ infrastructure divided by our population is $300,000 pp (does anyone have an authorative figure?). Not sure if that includes 'soft' infrastructure such as trained teachers, nurses, etc.

Isnt this what rates and dev contribution are for....?

The following is what I wrote about this in Jenee's earlier opinion piece, and her reply.

Jenee, have you managed to get any further information out of them.

by Dale Smith | 30th Nov 19, 11:45am
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And to be clear, what they are talking about is off site infrastructure like highway connections etc. which we are already pay taxes on.

As per other new developments, all internal public infrastructure is already paid by the purchaser in the price they pay when they buy in, and then this asset is handed over to local council to become part of their asset base.

Now they want the purchasers at Milldale to pay for other externalities that already pay a user pays tax on, plus benefit others that don't have to pay any contribution.

What would really be great to see is a breakdown on how they get to these external costs being $49 million, all the figure is missing is the .99 cents on the end to make it sound super cheap.

Read less
EDIT REPLY REPORT COMMENT
by Jenée Tibshraeny | 30th Nov 19, 12:01pm
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Yea sorry, I tried to get a better breakdown of that $49m +/- but couldn’t. Firstly, CIP doesn’t agree with my estimate that $159m will be collected in levies. I appreciate there are a number of variables, but can’t see how (using the available info) this isn’t the best estimate.

Some of the additional funds will be used to pay interest that will be added on to the loan in the initial stages when the company can’t cover this cost. Some will also be used to pay CIP for its equity investment and some will be used to cover defaults. CIP was hesitant to go in to detail due to commercial sensitivity...

Hi Dale,

No new information sorry. I think I squeezed as much as I could out of CIP. 

I did however, a few weeks ago, ask Treasury to provide me with all the advice it's given Coalition Government ministers on the Milldale development. The request is apparently too large for it to process in the standard 20-working-day Official Information Act timeframe, so it'll be some time before I get something back. 

With legislation introduced to Parliament, a lot more information has been released about the model the Government wants to use. You can find this here.

Hi Jenee - Thanks for your reply.

You may recall that I made this comment in your last opinion piece,

'Remembering that this investment is meant to help remove a capital upfront cost so to make the house more affordable, and noting they have said that purchasers would be given an opportunity to pay this upfront cost at time of purchase instead of a drip feed. This upfront cost should represent the discount off the today value of the property had it not been spread over time.

Therefore what you should be able to do, is take the present price, and add the once only payment option to equal the value of what this property is worth if had just been a status quo value/sale.'

The information you should be first seeking is from Fulton Hogan, ie what this extra payment $ value that you can pay in lieu? Secondly what are the sections valued at (ie how do independant valuers view this contribution?), with the payment option, and with the payment made up front?

The other question that needs to be asked is why those other people that will receive a benefit, (but not buying a section) are not paying something towards it.

Everytime a new cost (especially non value added costs) is added to new dwellings, this is obviously reflected in a high price at which they need to be sold to the new owner. This also raises all the prices of older similar dwellings that did not have that cost, so they in effect get free money.

The other point to consider, is that it is assumed that these new dwellings are being charged to increase the capacity of infrastructure, and that would not have to be added if that new development did not exist. This is mainly incorrect as the councils desperately need a reason and the money to UPGRADE existing infrastructure regardless of any new capacity, as that infrastructure is well past its use by date and capacity for the existing owners, let alone any new additions. In effect, the new owners pay for their extra capacity and the upgrade of all the existing.

The reason the existing is downgraded so much is councils have never adequately charged the true cost to existing owners in the past and the depreciation allowance they should have for the infrastructure replacement when and as needed is not there. Wonder where its gone?

So lets say sewerage. Can we all have a key for the public loos tied to the sewerage system our levies paid for and keep pesky out of towners and freedom campers locked out?

Where is the accountability going to land for the durability and suitability of these infrastructure projects?

I used to think the best solution would be to buy a yacht and live on it. Starting to daydream about this again.

Is this fraud?

Just ask'n.

Debt is an expectation that the future will do the paying - so debt is living beyond today's means. Not only are local and central governments at the debt limit, they are now advocating the forcing of more private debt.

Presumably to keep the unmaintainable system going just a little longer.

Are they aware that is what they're doing? And if so, is that not fraud vis-a-vis future generations? Time we had the discussion, NZ media. Just what would 'living within our means', mean?

True living within our means is unacceptable to the majority of the population or we would already be living within our means. The whole world now runs on debt and the live today pay for it tomorrow mentality.

So because previous Councils took a politically soft option and charged lower rates, and previous owners got the benefit of lower rates, and because the Government won't institute promised migration reforms to take pressure off infrastructure, people who have bought houses at record prices due to aforementioned population pressures are now going to be levied to pay for the infrastructure that Council didn't want to rate for and Central Govt doesn't want to fund?

Am I reading this correctly?

Yep, sounds like a pretty fair summary.

The legislation will have to be carefully worded. If the "landowners who benefit from the infrastructure" qualification isn't bounded, then it could be susceptible for some serious litigation. For example it would be hard to argue that the owner of an existing building "benefits" from a water/wastewater upgrade required to accommodate a new apartment block down the road.

I am somewhat mystified. A developer buys a block of land does the planning and subdivision and then sells the sections/homes at a huge profit. Does that same developer not pay for the costs of putting all the services including roads, water, sewage, power in? If not why not? If not isn't this a case of privatising profits while socialising the costs? And lets face it there are huge profits in this.

For the rest of us, we already pay rates to our local councils. Those rates are at least in part to maintain and upkeep the existing infrastructure. So I am NOT convinced this is good legislation, but just another way for the rich to get richer while everyone else pays.

There is a much easier way.

Over provision the costs of infrastructure to the land developers in the first instance, and refund them any surplus. More robust budgetting could help; including insurance to cover overruns could help also. This will keep these landbanksters from gaming the system of development contributions, where for the most part local government; including the balance of ratepayers, have been saddled with unbudgeted costs that should be the developers risk.

What makes these large land banksters so special they can't absorb user pays costs? Could it be political donations etc that keep their circus rolling?

This proposed government policy is effectively another tax on the poor middle class, when Labour is suppose to be supporting the working class. Collecting more from the land developers up front would also encourage more brownsfield development; which doesnt have the same control as the few landbanksters who have ring fenced growth cities, that government is trying to encourage more of in the first place.

Labour look like being a ship of fools. Yet another government pampering to the elite again.

It's a generally good idea. Reduces up-front cost of housing - bringing house costs down. Councils, and particularly central govt can borrow money at much lower cost than home owners. Give home owner option of how long a period they pay it off over, but perhaps insist on paying off debt when property is sold and cash is available. Allow interest debt to accumulate for those that can't afford to pay - get it back when eventually sold.

One important factor is that aside from things like water infrastructure people to be charged should be able to vote on whether 'nice but non-essential' projects proceed. If a majority do not want it then it shouldn't go ahead - stop fringe political groups forcing their hobby horses (like expensive low utilization cycleways) on population.

Can anyone answer this?

So here's the difficult part :-

Exactly how is the "DEBT" for infrastructure which is linked to the property going to be secured if the "borrower "/ landowner defaults ?

Is it going to be a Mortgage ?

If so is it a First Ranking Mortgage ?

If there is a Mortgage with a bank and the property owner defaults , how is the infrastucture debt going to be secured ?

And ..... most inportantly , will Banks give Mortgages over properties that are NOT FREE OF ENCUMBERANCES , that could lead to their mortgage having a lesser ranking

When a city grows (like Auckland) all of the existing landowners benefit by their property values increasing (significantly in Auckland's case). Why wouldn't existig property owners contribute to the new infrastructure as they are benefiting greatly and on a tax free basis, albeit indirectly. Existing property owners expect new house builders in places like Millwater to contribute through their rates to things as the waterfront revitalization and will benefit less from it due to their distance from it. Everyone wants the benefits of growth and none of the drawbacks......

No, I don't want to be the one lumped with the bill after decades of people feathering their own nest, rates being kept down due to political pressure and Central Govt not matching their desire to cram more people in with their desire to fund the stuff to support the growth they along are foisting on us. Rates inflation is already way ahead of the general inflation rate.

https://www.sarjeant.org.nz/government-confirms-sarjeant-gallery/

Or maybe the bureaucrats should stop wasting money on luxuries and spend on the things we actually need??

Don't get too excited. This is a minor tweak to get around (legally non-existent) council debt limits.

I haven't had a chance to look closely at the bill but it is basically an administratively unwieldy mechanism for keeping some debt off council books.

The bit about sheeting home costs to purchasers of new lots is basically bollocks because that is how the system already works. When you buy a section from a developer you are contributing capital to fund the construction of all the local infrastructure plus development and financial contributions to fund some stuff outside the development boundaries. The difference is that the current system capitalises the contribution into the section price and most people pay that off over time through a mortgage. The proposed method (which will only apply to a few developments) claws back that same money over many years with interest and profit margins added on.

In theory it could lower section prices by taking that up front contribution out. But I am not so sure the market will work that way when adjacent sections could be developed under two different systems. It's hard to imagine a developer who has been granted the financial powers of a council being magnanimous enough to forego easy profits.

I can think of many ways in which this will all end in tears not least of which because the decision on who gets granted the draconian financial (basically rating) powers of a council rests solely with the Minister of Urban Development.

We should remain woke to the duplicity and chicanery of Government and Big Business when it comes to this sort of thing

And no doubt they will be taxed on the tax like rates?

Why would one trust a government which took office with a mandate to (at least) moderate immigration but now approves record immigration...with attendant infrastructure pressures?
Why would one trust a government which promised "no new taxes" to come up with an innovative new scheme to raise more money from its citizens?
Why would one trust a minister to produce new law, so soon after his previous triumphs with Kiwibuild!
In the case of Auckland at least, why would one trust them to get ANY new financial charging regime right, when they managed to amalgamate 7 library systems, each with its own administration, into one system which continues to cost more than the previous, inefficient conglomeration?
In general why would any individual landowner trust an unholy syndicate of central & local government plus a few major developers previously renowned for connivance and even corruption, to the "right thing" this time?
And given the short and slippery slope of development levies from a justified charge to just another way to clip the ticket, why would we think that this proposal is likely to remain principled and disciplined?

1st World "Property Rates" should not be compared to "Council Rates". In Cities like Boston, Minneapolis, Chicago, and throughout the US "Property Rates" are used to fund: City Council, Local Schools, Fire & Police, Courts, County Government (think Regional Councils), and other government agencies like Metropolitan Planning Agencies, and a host of other specific local agencies. On my Minnesota house the "City" portion of the property rates constitute only 15%, while the Local Schools funding is 50%, and that would not be an uncommon breakdown.
Meanwhile "forever" council's have funded infrastructure improvements that cross the property frontage with "Special Purpose Vehicles', but in US called Municipal Bonds. When a foot path goes in or a sewer or water main is upgraded each property pays a "per linear foot" portion of the total. Few pay the bill in full the year it is assessed. Most pay 1/25 plus interest each year for 25 years.Superannuants can choose to have the assessment go unpaid and like a reverse mortgage will be paid when the property is sold either by the owners or the inheritors. Wise for Auckland to finally move to this sort of funding vehicle that assesses the properties that directly gain the new infrastructure.