Auckland Council committee backs 660% Drury fee rise proposal, Kiwi Property disappointed

Auranga: a residential subdivision in the new West Drury town. Photo / Chris Tarpey

A south Auckland development fee rise proposal that could see contributions escalate by as much as 660 per cent got complete support from an Auckland Council committee today.

The finance and performance committee unanimously approved the change to development contributions for Drury to go out for consultation.

Developers now pay $11,000 to $18,300 per new residence.

But under a proposal passed this morning, those could rise 360 per cent to 660 per cent to $84,500 per residence.

Next, the council will examine growth in other parts of Auckland with a view to setting big development contribution fee rises there too. The committee heard how detailed work on other areas was under development with a 12-month target.

Listed real estate giant Kiwi Property has 51ha at Drury where it wants to create a multi-billion dollar mixed-use community.

Last Friday, a Kiwi spokesman said the company was disappointed about the proposal.

"Drury is set to deliver around 20,00 homes and create thousands of jobs in the process. We're disappointed by the council's proposal to significantly increase development costs, which will only raise the price of houses and keep more Aucklanders out of the market," a Kiwi spokesperson said last week.

"We are committed to paying our fair share and have already proposed to mitigate the effects of our development at Drury, including funding the necessary roading and infrastructure improvements. Unfortunately, the suggested 600 per cent increase in development contributions goes too far and is counterproductive at a time when there is a desperate need for houses," the spokesman said.

Andrew Duncan, the council's financial policy manager, presented to the committee today.

"If we add the projects we've committed to for 10 years, that will take the price to about $34,500/residence. But if we add the $2.1 billion of investment the council intends to make in Drury for transport, parks and community beyond 2031, the price will go to $84,500/residence," he told the Herald earlier.

"For Drury, we're looking at an additional 22,000 houses being added over the next 30 years, a city the size of Napier.

"We're looking at the investments we need for cumulative growth. Drury is the one that's the first to look at all investment required in the long term," Duncan said.

Charles Ma, founder and developer of Auranga, is shocked at the fee rise. Photo / Greg Bowker

Finance and Performance Committee Chair Desley Simpson said it was important to keep an open mind.

"There is exponential housing growth in Auckland and we've seen the devastating impacts of failing to plan ahead for infrastructure in other regions across the country.

"Contributions are one of the ways the council recovers the cost of essentials like stormwater and transport infrastructure as well as parks and community facilities. This infrastructure needs to be funded one way or another - either by the developer, the ratepayer or the taxpayer. The question is, what is the appropriate share for developers to pay," she said.

Deputy Mayor Bill Cashmore who represents the Franklin Ward also voted for the proposal.

Councillor Chris Darby said: "This paper went through unanimously. Bill Cashmore and I worked up an amendment directing staff to commence work on other investment priority areas of Auckland as well. From there, we will extend to the balance of Auckland."

The council will now begin a wider consultation with developers and those in communities on the new policy.

The proposed policy has met opposition.

The developer of a new $10 billion new town centre for 40,000 people at Drury in south Auckland says Auckland Council's proposed 660 per cent development fee rise is "shocking and disappointing".

Charles Ma said his business was happy to pay its share of growth-related infrastructure costs in Drury West but the development contribution fee hike being put forward for finance and performance committee to examine this week was unfair and too selective.

"This is worrying as it lacks substance and is being forced on those of us who have already paid our fair share. It's shocking and disappointing," he said.

The new Auranga township had tens of millions of dollars invested in it by Ma's company, MADE.

Jo Holmes of the Auckland Ratepayers' Alliance also criticised the plan, saying it would make it harder for first home buyers.

"Normally councils use debt to spread the cost of infrastructure over time," says Jo Holmes. "But Len Brown and Phil Goff have maxed the credit card, and with the council unable to borrow more costs are now having to be paid upfront.

"This means first-home buyers need to pay twice. They'll be whacked by these higher costs for developers to build homes, as well as higher rates in decades to come," Holmes said.

Too often development contributions were misused by the council, Holmes said.

"The council say they are needed to build new infrastructure, but they conveniently don't acknowledge that for every new house built the council gets a new ratepayer - effectively a risk-free annuity income for the council. The double charging serves to make it harder for first-home owners, and adds fuel to the fire of our city's housing crisis," Holmes said