Councillors approve ground-breaking 30-year developer levy

The extensive contribution policy will cost developers upwards of $70,000 per house.

Auckland City Councillors have voted 13 to four in favour of a controversial proposal to allocate a share of three decades of infrastructure needs, rather than the standard 10 years, onto Drury developers.

The council’s share of infrastructure works at Drury, including transport and community facilities to service Drury is expected to cost $2.9 billion over the next 30 years as the development potentially grows to the size of Napier, though Mayor Wayne Brown said despite developer optimism there was “zero chance” it would grow that big.

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The original proposal for Drury was for a levy of $80,000 on average per household, compared to $22,564 per household in other parts of Auckland.

In the proposal put before councillors this morning following 60 submissions on the proposal (half of which were against), Auckland Council made changes that drop the average contribution price to $74,142 per household – though some areas will pay more.

Those changes include assessing transport property acquisition costs on a property-by-property basis (rather than by average values) reducing costs for Drury transport projects by $497m and making changes to the timing of projects.

Another change was to shrink the community facility funding areas, which actually added a further $5,042 per household.

The result will see developers pay $91,494 per house in Drury East, $70,758 in Drury West 1, $59,604 in Drury West 2 and $67,144 in Ōpaheke.

Drury East is to the east of State Highway 1 and includes the Drury Town Centre project, while Drury West is to the west of the motorway. Ōpaheke is to the north of Drury East.

Ōpaheke’s contribution rate saw a significant decline from the second highest at $98,618 to $67,144, while Drury West 2’s contribution rate rose by $4,200.

Three options

Councillors had three options; endorse the 30-year policy, continue with the standard 10-year planning approach for Drury or to defer endorsing the 30-year programme.

Continuing to operate on a 10-year model would reduce the risk of over- or underestimating the cost of investment but would continue the current uncertainty around infrastructure provision and limit the ability to average costs from beneficiaries.

The status quo could also lead to underinvestment resulting in lost productivity, higher congestion and poor climate and safety outcomes.

The deferral option would also impact the ability to average developer contributions, which would need to be covered by ratepayers; however, it would allow for greater certainty of project costing.

Mayor Wayne Brown warned opting to defer the policy, which some councillors appeared to be favouring during the meeting, would see developers pile-in under the current regime.

Councillors Andy Baker, Mike Lee, Ken Turner and Wayne Walker voted against endorsing the proposal for a series of reasons, including a copy-and-paste error in financial documents offered to  councillors, a lack of consideration for stormwater in the proposal (which will be handled at a later date), and support for a deferral.

The risk of a judicial review being sought by large-scale Drury developers such as Kiwi Property, Fulton Hogan and Oyster Capital was also a topic of discussion.

Councillor in Fletcher, who ultimately abstained from voting, said she had concerns that the methodology had to be “utterly waterproof” before it was introduced.

Fletcher said the proposal reminded her of the introduction of targeted bed rates and the long-running legal action out the other end, which has seen Auckland Council in the Supreme Court trying to reverse a Court of Appeal judgment against the rate.

The council’s chief financial officer Peter Gudsell said the council had a “very defensible” position in adopting the policy, calling any future legal action unwarranted and unpleasant.






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