LGNZ says property development contributions should not impact on ratepayers

Local Government New Zealand, the peak body representing local authorities around New Zealand, has responded to proposed changes under the Local Government Act on council charges for property development.

LGNZ concurs with transparent development contributions which fairly sit with developers. It also agrees with providing a common methodology to calculate costs. However, LGNZ cautions the Government on its proposal to narrow the charges that councils can put on new sections as it may result in ratepayers having to meet the cost of new developments.

LGNZ also disputes Housing Minister Dr Nick Smith’s claims that development contributions are out of control, and notes the Minister has quoted examples which are well above the average.

“Development contributions – which are fees paid by property developers to help cover the costs of new services for developments, such as water and sealed roads – have increased only in line with general costs of building,” said LGNZ President, Lawrence Yule.

Development contributions represent around 4 per cent of the total cost of building an average 145 square metre house in Auckland, whilst 36 per cent of the cost is related to land and 49 per cent is for labour and materials.

“Contributions are only a small component of the cost of development, and include council provision of infrastructure supplied directly to the home.

“While LGNZ supports developer agreements in order to share costs, it wants to be assured that costs are not passed onto ratepayers without a community’s agreement to do so,” said Mr Yule.

LGNZ notes that development contributions in New Zealand are comparable with other countries such as Canada and are legitimate costs of private development.

*ENDS*

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