21 September 2009

Development contributions decision delay could prove costly for ratepayers

Local Government Minister Rodney Hide has confirmed that the uncertainty over the future of development contributions used to fund vital North Shore infrastructure growth projects, such as Busway stations and the Rosedale wastewater tunnel and outfall, will not be cleared up until early next year, raising the spectre of higher than anticipated rates rises in future, North Shore City Mayor Andrew Williams said today.

“Rodney Hide has written to me confirming that the final third piece of his ‘super city’ legislation, now delayed until November and not due to be passed until early next year, will deal with the future of development contributions to fund vital infrastructure investment under the new Auckland Council,”Mayor Andrew Williams said today.

“North Shore ratepayers have expressed concern that the removal of the development contribution under the ‘super city’would mean the cost of funding infrastructure projects would be dumped onto their rates bills, which prompted me to write to Rodney Hide to clear the matter up. We now know we will have to wait until perhaps March next year to get a final answer.”

“We also have the further complication of Rodney Hide’s last minute change to his second ‘super city’ bill, passed only last week, which now requires existing Councils to set the rates for the 2010/2011 financial year, spanning the last four months of the existing councils and the first eight months of the new Auckland Council.”

“With transport, water and wastewater being split off into Council Controlled organisations, serious doubts are being raised in many circles as to how the Auckland Council will in future derive significant important revenue from development contributions. If this is not answered by the Minister, and very soon, this opens the possibility that North Shore ratepayers will face a rates rise next year higher than the 5.5 percent approved and signed off by the Auckland Transition Authority if the Council is forced to replace the millions of dollars the development contribution raises each year with funds raised from rates.”

“I am sure that ratepayers will not be pleased if Rodney Hide fails to appreciate the importance of development contributions to the overall equation and dumps the cost onto their rates,” Mayor Andrew Williams said.

Mayor Andrew Williams said that North Shore City expects to raise $23 million next year and over $500million over the next 15 year from development contributions under the city’s long term council community plan approved and signed off by the Auckland Transition Authority back in June.

“Development contributions fund around a third of our vital infrastructure and community projects, so it is naive to leave such a vital component of the restructure in ‘no man’s land’ from the time of my 19 June letter until the end of the year. This should have been thought through long ago, and clearly shows up yet another major flaw in the Super City thinking,” Mayor Andrew Williams said.

“In his letter to me Rodney Hide said he is unable to meet with the Council to discuss this matter but invited the Council to make a submission on the future of the development contribution when his third ‘super city’ bill hits Parliament in November, and we will most certainly be accepting his invitation to do so. In the meantime, it would be helpful to ratepayers and to the Council if Rodney Hide were to give a clear indication as to how development contributions will fit into the new Auckland Council structure,” Mayor Andrew Williams said. “However, if the truth be known, I suspect the Minister has no idea how this will be solved as it took him two months in the first place from 19 June to 13 August to reply to my first letter on behalf of North Shore City Council on this important subject. I challenge the Minister to make public now what he knows about development contributions and how they will be addressed under the Auckland Council and the two Council Controlled Organisations.

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9 June Mayor’s letter to Rodney Hide

Rodney Hide DC Response Letter (pdf)

ENDS

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