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Rotorua takes lead to scrap development contributions

News Release 

Tuesday 10 December 2013

Embargoed until 6pm 10/12/13

Rotorua takes lead to scrap development contributions

Rotorua District Council has become the first local authority in the country to scrap development contributions in their current form.

The decision is an initiative aimed at boosting economic growth and aligns with legislation signalled by the government changing how development contributions can be applied in the future.

At a Rotorua Chamber of Commerce BA5 (Business After 5) function at the council Civic Centre this evening [Tuesday 10 December 2013], new Rotorua Mayor Steve Chadwick announced that the Rotorua District Council would immediately stop collecting most development contributions and was proposing to formally scrap the existing  policy as part of its 2014/15 annual plan process.

In the meantime, with the exception of water and sewerage charges which would continue, Rotorua district development contributions would be remitted with immediate effect until the policy was officially revoked after public consultation in the New Year.

The move will mean reduced costs for new investment projects across the board, with the impact varying depending on the type of development. A typical new residential dwelling for example could expect development contribution related charges to reduce by an average of around 46%, or around nearly $8,000.

Mayor Chadwick said development contributions (DCs) had clearly become a disincentive to investment and a barrier to growth.

“In their current form they represent a failed framework that hasn’t achieved the revenue streams anticipated but has instead served only to drive new development away.  It’s time for DCs to be dumped and replaced by something more transparent that doesn’t discourage investment. 

“So I’m announcing that Rotorua District Council is dropping development contribution charges with immediate effect, with the exception of water and sewerage charges. This means development levies for transport, stormwater, land drainage and all public amenities are now history. And we’ll formalise that through the next annual plan process, assuming we get community support for this decisive action.”

The new arrangement will apply to building, resource and subdivision consent applications approved from 5 December. Earlier development contributions invoiced prior to that date could be eligible for remission application under the current policy.

Mrs Chadwick said that in the last four years the council had only achieved around half of the estimated revenue forecast in annual plan budgets.

For the balance of the current year the impact on revenue estimates would be approximately $250,000.

“Rotorua District Council is of the view that foregoing some revenue by ending development contributions will be more than compensated by the additional economic growth we would expect by creating a substantially more investment-friendly environment for our district.

“It’s a simple formula really. If we increase the number of businesses and residents in our district, then we have more people paying rates, and the cost of providing services to our community is shared over a larger population. That’s the goal we’re signalling in our draft Rotorua 2030 vision, and this is just one of a number of creative measures that will help get our local economy moving again,” said Mrs Chadwick.

“During the recent election campaign, we’ve been endlessly told how the existing development contributions policy was strangling potential investment and development opportunities. We heard that message loud and clear. And today, just 60 days since the election, we’ve acted decisively.”

ENDS

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