Charles Ma express shock about the 660 per cent fee rise. Photo / Greg Bowker
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.
"That was upfront in bulk water and wastewater infrastructure, bridges and playgrounds, local roads and walkways, coastal paths and plantings and parks and coastal reserves and the regeneration of the Department of Conservation-owned eco islands," he said.
These are over and above the standard development contributions paid at an average of $15,000/section and infrastructure growth charges of an extra average of $13,000/section.
He said the 660 per cent Drury rise was wrong because it targeted only that area specifically yet costs should be spread right across the city.
Ma's MADE had volunteered early investments as essential amenities for the new Auranga "and the promise we've made to our growing community.
"Since we started here seven years ago, we've master-planned and with our construction partners have consents for the delivery of more than 3000 homes. To date, more than 200 homes have been built and 130 families are already living there. Also, 1000 sections have been completed, and all of those have been pre-sold.
"We're in the process of securing the necessary plan change to get underway with building a town centre that will accommodate 7000 jobs, and where sustainable transport connections and community wellbeing are the driving features," Ma said.
MADE had been asking council officers for a meaningful, good-faith dialogue about what extra costs and contributions will be required for future growth. We want to see real – not fanciful – numbers, get to a firm agreement with them and move on quickly with the development, he said.
"Our frustration is with the poor quality of analysis council seems to be relying on, not just on these extra infrastructure costs, but on other issues like siting of the Drury West railway station, which council officers say should be located well away from the town centre," he said.
That transport hub had always been a cornerstone of the Auranga development to provide the best quality of life for residents now and in the future.
"We will continue to urge the council to sit down with us, share their analysis with much greater transparency than we've seen to date and enter into true dialogue with a visionary focus so we can hopefully all come to a quick and wise resolution," he said.
Council planning committee chairman Chris Darby backed the fee rise on new buildings at Drury but an industry official says it will curtail new housing.
After the Herald revealed the plan to increase fees of up to 660 per cent from January, Darby said that move was long overdue and indicated the escalation was appropriate.
"For decades the beneficiaries of development - land speculators and developers - have been heavily subsidised by the existing ratepayers of Auckland, funding core and community infrastructure that delivers value uplift and private wealth. That's changing," Darby said.
Julien Leys, NZ Building Industry Federation chief executive, said the cost would be a huge handbrake on new residential development, right at the time Auckland needed more housing.
The comments follow an Auckland Council boss saying 360 per cent to 660 per cent fee rises were proposed for Drury developers to fund the infrastructure were needed in the greenfields area where a city the size of Napier is planned.
Oyster Capital, Fulton Hogan and Kiwi Property have land holdings in the area and big plans for those. For example, Kiwi has 51ha where it plans a new town centre. Charles Ma's business is developing Auranga, a new $2 billion 2500-residence community with a new town centre at west Drury.
Andrew Duncan, the council's financial policy manager, said last week: "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."
"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.
Developers now paid development contributions of $11,000 to $18,300 per new residence. But under a proposal due to be discussed this week, those could rise 360 per cent to 660 per cent to $84,500 per residence.
"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," Duncan said last week.
Jo Holmes of the Auckland Ratepayers' Alliance 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.
"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.
Demand for bonds may well stay strong, but there's a catch.