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Proposed Changes to Development Contributions Policy

Proposed Changes to Development Contributions Policy

Dunedin (Wednesday, 19 February 2014) – Proposed changes to the Dunedin City Council’s Development Contributions Policy will be consulted on as part of the Draft 2014/15 Annual Plan.

The proposed changes aim to ensure developers pay more of the costs associated with creating subdivisions and constructing new buildings, rather than general ratepayers.

For many years the cost of supplying services such as water, wastewater, stormwater, roads and community infrastructure to new residential areas has been met mainly through rates or rate-financed debt. In most of the country, developers meet a reasonable share of these costs.

DCC Chief Executive Officer Dr Sue Bidrose says the DCC has been aware for some time that its development contributions are much lower than most other large local authorities.

Aside from some areas of Mosgiel, the current policy only charges a development contribution for reserves, of just $250 per section.

In contrast, research for the Department of Internal Affairs shows the average development contribution charge in New Zealand is about $14,000 per section and the median is about $12,000.

The latest Draft Development Contributions Policy proposes a charge of $5,300 per equivalent household unit – for example a new three-bedroom house on a newly subdivided section – in the Dunedin city area.

The proposed charge of up to $5,300 is significantly lower than the $20,455 charge suggested in a draft policy released in 2011. Different charges will apply to different types of development in different areas and new provisions are proposed for credits, deferrals and objections.

A full review of the policy began in 2009 and a draft policy was released in 2011. After public consultation, in which almost 200 submissions were received, a special Council committee has been considering the detailed issues around changing the policy.

Most submitters wanted developers to pay a fair proportion of the DCC’s increased costs associated with development, but there was a strong message that $20,000 per section was too high for Dunedin.

Dr Bidrose says, “Councillors listened to that feedback, considered the options and decided on what feels like an equitable apportionment of development-related costs between ratepayers and developers.”

If adopted, the revised Draft Development Contributions Policy is expected to contribute a total of between $6.3 million and $19.2 million over 10 years, compared with $4.2 million to $9.3 million under the current policy.

The actual revenue collected will depend on issues such as how much development occurs and where it occurs. As happens at the moment, any revenue must be spent in the area of the city from which it is collected, eg in the Karitane area. The money must also be spent on the activity for which it is collected, such as wastewater collection and disposal, or reserves.

The draft policy takes into account proposed amendments to the Local Government Act currently before Parliament. In particular, this relates to limiting the types of community infrastructure for which development contributions can be charged. Under the proposed amendments, contributions can be charged for services such as public toilets and town halls, but not for libraries, museums and swimming pools.

In some areas of Mosgiel, where much of Dunedin’s development occurs, development contributions have been at a higher level since 2008.

The Revised Draft Development Contributions Policy has been released now as the proposed changes reflect the capital expenditure budget for 2014/15 and beyond, which will also be consulted on through the Annual Plan. More information on the policy can be found at www.dunedin.govt.nz/draft-development-contributions.

Residents are encouraged to have their say on the proposed changes once the Draft Annual Plan has been discussed and approved by the Council on Monday.

If adopted, the policy changes will apply to applications for resource consent, building consent or service connection lodged from 1 July 2014.

ENDS

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