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Balance Struck For Development Charges

Developers facing large increases to development contribution (DC) charges in the next financial year have had the impacts eased at a meeting of Hamilton City Council on 4 June. 

Councillors deliberated on a raft of changes to the draft 2024/25 Development Contributions Policy following public submissions, which strongly opposed the level of DC charges mooted in the draft document.

DCs are calculated using an input-output model. Proposed DC charge increases are driven by the more than billion dollar increase in the growth-related capital programme across the 2024-34 Long-Term Plan period, unprecedented capital cost inflation and significant interest rate increases.

Hamilton Mayor Paula Southgate said it was important Council found the right balance between supporting the development community to build much needed homes, commercial and industrial space, that our city so desperately needs, while minimising the burden on ratepayers.

“The last thing we need for our city right now is developers leaving or holding back on very important housing or commercial developments.

“We also must ensure that development continues in the right places, at the right times, in a financially sustainable manner.”

Major changes include phasing the increased charges over three years to help ease the financial burden on developers and further capping how much DCs will be paid in up-and-coming greenfield growth areas in Peacocke and Rotokauri.

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“But outside of this DC Policy, we need to get creative and find new ways to fund growth, including partnering with government and the private sector, and embracing new funding and financing tools, if we’re ever going to see better outcomes for our growing community. This is why I’ve proposed working more closely with the development community,” Southgate said.

“We have also made some strides by making the consenting process more efficient, but we must continue to reduce the red tape to make it easier for developers.”

The changes also clarified the point at which DCs are charged, responding to submitter concerns about the lack of certainty for financial planning.

Mayor Southgate said priority development areas include the central city, Peacocke, Enderley and Rotokauri, where Council has partnered with the development community to achieve mutual cost savings.

“We have $150 million grant from the Government to support our investment in the central city to provide more homes, but we need developers to contribute too. I believe our central city must be vibrant and accessible, in line with our status as the fastest growing metro in New Zealand.”

The central city remission will continue for a further three years to 30 June 2027 at 50%, up from 33% proposed in submissions but still less than the 100% remission available to developers in the current policy.

“We acknowledge that incentives like DC remissions are helpful to support development in this key area, but we also need to recoup more of the costs of the infrastructure to service development in these areas.”

Minor tweaks were also made to the community housing remission to extend it to include registered charities delivering community housing.

Council also considered the proposed Growth Funding Policy. The policy remains unchanged from the version proposed during public consultation. Both the Growth Funding and revised Development Contribution policies are set to be adopted by Council on 4 July.

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