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Developers to help fund the city’s growth

MEDIA RELEASE
24 June 2005


Developers to help fund the city’s growth

Auckland City Council’s combined committees yesterday voted in favour of introducing the city’s first development contributions policy, which requires developers to help fund costs associated with growth.

This policy will generate an additional $5 million each year from developers to fund the cost of upgrading the stormwater network and the city’s community facilities to handle increased demand from growth.

Development contributions are a funding tool that was introduced in the Local Government Act (2002). Auckland City adopted a policy for consultation as part of its Draft Annual Plan for 2005/2006. Fifty-two submissions were received on the draft policy, with the majority offering general support.

Councillor Vern Walsh, chairperson of yesterday’s combined committees meeting, says development contributions will be used to expand or build new assets and facilities to meet the increased opportunities that growth brings to the city.

“Currently ratepayers bear a large share of the cost to provide new infrastructure to new residents or businesses in the city. Our current estimate of growth-related spending for the next 10 years is over $250 million and, in the past, we have only been able to fund the open space part of this cost.

“We plan to now share more of the costs of growth with those who create new developments. The extra funding from development contributions will allow us to meet the extra demands these developments place on our assets and services. This is one way the council can ensure we provide a great place to live, work and visit as the city grows,” he says.

“Our estimate of the costs of growth is likely to increase in future as we improve our knowledge about how growth creates these extra demands.”

Development contributions will fund three areas:

1. open space (enhancing existing parks and reserves and purchasing land for new parks)

2. community services and facilities (including new and upgraded community centres, libraries and swimming pools)

3. stormwater.

The new policy will typically add around $2,500 to the contributions that are required for each new household unit.

“Development contributions will only be used to fund growth-related capital projects. The distinction between development contributions and rates funding is that development contributions are only charged when a new development is undertaken and resource or building consents are granted, whereas rates apply to all rateable properties in Auckland city,” says Mr Walsh.

Development contributions policies have already been introduced by a number of local authorities in the Auckland region and around the country. Auckland City’s policy will come into force on 1 July 2005.

“We want to ensure the introduction of development contributions is as fair as possible. We have put transition arrangements in place to make it easier for developers to be aware of the impacts of this new policy.“

Developers will be given a six-month window to finish any developments that were started before 1 July 2005. Consents required for these developments that are lodged on or before 31 December 2005 will not be charged development contributions.

At this stage, the policy does not apply on the Hauraki Gulf Islands. It is likely that the policy will be reviewed in the coming years to include the islands, and to fund other activities, for example, traffic and roading. As a result, development contributions charges may increase in future to reflect extending the coverage of the policy, and better information about growth and how it creates extra demands on infrastructure.

Ends

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