Black box development charges should stop

‘Black box’ development charges in the Waikato need to stop if the region wants to grow, according to Property Council.

Waikato Branch President Rob Dol argues that Waikato District Council’s current models and methods for coming up with development contribution charges are based on dubious assumptions.

“What that means to businesses and new homeowners is inflated charges arising from opaque methodologies and accounting calculations.

“Clearly, councils need to be properly resourced and able to fund new and improved infrastructure but the upfront costs of development contributions are passed on to and paid by the end user. We need to make sure funding the infrastructure to serve new development is done fairly and that people are getting value for money.”

The Local Government Act 2002 Amendment Act 2014 attempted to address the issues of fairness and transparency, particularly in the methods councils use to calculate development contributions.

However, development contributions remain a very complicated form of funding.

“We’ve made several suggestions to bring this local policy more in line with legislative changes, including that the Council should use catchments and district-wide levies more sparingly.

“Otherwise, this completely undermines the causal nexus approach – which specifically links the fee with the Council spending necessary for a development. The Council should be able to justify grouping and introducing levies across catchments by demonstrating that it would (on average) provide a lower charge.”

The Property Council Waikato Branch also argues that the current methodology (NPV or net present value) potentially leads to excessive charges upfront as well as significantly reducing transparency about the assumptions on which these charges are based.

“This policy needs more rigour, so we can clearly see how projects funded by development contributions are defined, costed and prioritised. At the end of the day, this policy needs to explicitly recognise the benefits of growth,” says Mr Dol.

In Property Council’s national policy manifesto released last week, it argues that fees and charges are one of three key challenges for central and local government and industry to take forward; along with balanced, evidence-based decisions.

Development charges need to be fair and evidence-based, or development will be stymied.

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