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Changes on development contributions will lead to rate rises

Proposed changes on development contributions will lead to rate rises

Queenstown Lakes District Mayor, Vanessa Van Uden, today warned of the adverse impact that proposed Government changes could have on ratepayers.

“The Local Government Amendment (No. 3) Bill which has just been introduced to Parliament proposes to remove a long-standing source of revenue for Councils. This could result in significant rates increases for some parts of the District to offset loss of revenue.”

Under the Bill, Councils will no longer be able to levy development contributions for community infrastructure, other than public toilets, playgrounds, and community halls.

Other forms of community infrastructure, such as libraries, parks and sporting facilities, will have to be funded from alternative sources, which will primarily be rates.

“In a high growth community like ours, developers have quite reasonably been required to make contributions to offset the financial impact their development has on the District. For example, a 250 house subdivision has infrastructure impacts such as new footpaths; increased water and sewerage capacity; and increased maintenance of roads. But population growth also means we have to invest in additional community infrastructure such as increased library capacity, new parks, sports fields and other recreational needs.”

The Mayor said it made no sense to say the cost of new playgrounds could be funded from development contributions, but sports facilities could not.

“The reality is that, while we welcome development and the growth that it generates, existing ratepayers should not have to foot the bill for new costs created by developers.”

In the past five years, rates have comprised only 55-60% of the District’s total revenue, and development contributions have comprised 10-20% of total revenue.

QLDC has assessed that without any change to Council’s expenditure, the impact of the proposed legislative changes could be an average rates increase of 5.7%.

“It is frustrating for us as a local authority having made such significant progress in managing our costs in recent years.”

The Mayor said that the greatest impact would be on key pieces of community infrastructure, in particular the Queenstown Events Centre (QEC) and the proposed Wanaka Sports Facility.

“We developed our budgets for these facilities on the basis that development contributions would form part of the funding, but this will not be the case under the proposed changes. As a consequence, ratepayers will have to pay more to continue to enjoy the same services, in the case of QEC, or to have a new facility, in the case of the Wanaka Sports Facility.”

Council could only hope the consequences had not been anticipated and would be addressed in Council’s favour by the select committee.

The Mayor said that QLDC would be supporting a submission from Local Government NZ against the changes, as well as making its own submission, and encouraged ratepayers to raise concern by submitting to the select committee themselves.

“Our message is simple – if you don’t want to pay more as a ratepayer for existing or future community infrastructure, then you need to make your views known.”

Explanatory note:

What is a development contribution?

Under the Local Government Act, a council may levy a contribution on any person seeking a building or resource consent, if the effect of the development is to require the council to spend additional money for new assets or increased capacity on its existing assets. The assets for which contributions may be required are: (a) parks/reserves; (b) community infrastructure; and (c) network infrastructure (i.e. roads, footpaths, water, stormwater, or wastewater.)

Over recent years, revenue from development contributions in Queenstown has ranged from approximately $4-7M p.a. with the levels of revenue being highest when there is the greatest development activity.

Click here to make a submission on the Local Government Act 2002 Amendment Bill (No 3)
The Select Committee requires two copies of each written submissions. Submissions close on 14 February 2014.

ENDS

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