Local Govt NZ says ratepayers may have to meet costs of new property developments once central government reins in council charges on new sections
Ratepayers may have to bear the brunt of Government moves to rein in council charges for property development, the body that represents local authorities says.
Commenting on the proposed changes under the Local Government Act announced by Cabinet Ministers Nick Smith and Chris Tremain, Local Government New Zealand president Lawrence Yule said LGNZ agreed with "transparent development contributions which fairly sit with developers".
It also agreed with providing a common methodology to calculate costs.
"However, LGNZ cautions the Government on its proposal to narrow the charges that councils can put on new sections as it may result in ratepayers having to meet the cost of new developments," he said.
"LGNZ also disputes Housing Minister Dr Nick Smith’s claims that development contributions are out of control, and notes the Minister has quoted examples which are well above the average."
Yule said that the development contributions – fees paid by property developers to help cover the costs of new services for developments, such as water and sealed roads – had increased "only in line with general costs of building".
He said that development contributions in New Zealand were "comparable" with other countries such as Canada and were "legitimate costs of private development".
Development contributions represented only about 4% of the total cost of building an average 145 square metre house in Auckland, while 36% of the cost was related to land and 49% for labour and materials, he said.
"Contributions are only a small component of the cost of development, and include council provision of infrastructure supplied directly to the home.
"While LGNZ supports developer agreements in order to share costs, it wants to be assured that costs are not passed on to ratepayers without a community’s agreement to do so."