KEY POINTS:
The days of cheap "chicken coop" apartments in central Auckland appear to be over with Auckland City Council moving to charge developers at least $32,000 in levies for every new apartment.
After keeping levies low to encourage developers to erect apartment towers and boost the inner-city population, the council now wants to put a greater focus on quality and provide parks and other facilities to make city life more enjoyable.
Inner-city apartments are hardest hit by a plan to increase development contributions from $357 million to $733 million over the next 10 years. Inner-city charges of $3400 for a one-bedroom apartment to $7462 for a three- to-four-bedroom apartment will increase to between $32,000 and $41,222.
Council chief executive David Rankin said money was needed to cope with an expected population boom of 63,000 people in the next decade and the negative impacts of growth.
The money will be spent on parks, community facilities such as libraries, stormwater and $200 million of transport costs associated with the council's $834 million share of the eastern highway between Auckland and Manukau cities. Higher levies will also apply to the Tank Farm waterfront development to partly cover the cost of transport and cleaning up the toxic site.
Higher development contributions are one tool the council is using to boost revenue and keep rates increases low. Councillors voted at a budget meeting yesterday to borrow $23.3 million to offer some rates relief.
Instead of the projected 8 per cent increase this year, the overall rates increase will be 3.6 per cent. Household rates will go up 5.4 per cent, business rates 1.9 per cent and central city business rates 1.6 per cent.
The council also decided to raise $1.5 million by increasing a raft of fees. Some fees, such as building consents and dog registration will go up 4.9 per cent. Others, such as land use and resource consent monitoring, will go up 7.8 per cent.
Property Council chief executive Conal Townsend said the council was "behaving like a kid in a candy store" and the new development contributions would drive up the price of apartments and drive people from the inner city.
Developers have already started shunning Auckland's inner-city apartment market. After building about 2000 units last year, they are planning only 150 this year. At last count, the city had about 14,200 apartments.
Developer Robert Holden, who has built more than 1800 apartments on Hobson and Nelson Sts, said he had shelved a 200-unit block because of an extra $7 million in development contributions.
Councillors yesterday generally supported the new development levies, although Citizens & Ratepayers Now leader Scott Milne wondered if "we have gone too far. I don't know".
His colleague, Doug Armstrong, said development contributions of $10,000 on a modest family home were only one factor affecting the affordability of homes, particularly in Auckland. Other factors were "draconian" costs as a result of the leaky building crisis and tighter building code requirements for things such as double glazing.
Labour councillor Richard Northey said the affordability of housing was a big issue and the economic development committee he chairs had asked Local Government New Zealand and the Government to look into it.
Mr Rankin defended officers' support for changing from a zero net-debt policy to borrowing $1.35 billion over the next decade. The previous policy had been supported by the sale of assets and capital spending was now much higher, he said.
Taking on more debt to fund big projects is one of the issues on the table for the independent inquiry into rates, set up by the Government and New Zealand First last August when debate about hefty rates rises hit fever pitch.
Mayor Dick Hubbard and the City Vision-Labour-controlled council have argued that borrowing will spread the cost of big projects more fairly across generations, while the C&R Now opposition has called it a "cunning plan" to reduce rates in election year.
The council has been condemned for increasing the rates burden on households by 24 per cent in two years.
Big Contributors
Development contributions - what is proposed:
* Charging developers $239 million over 10 years to pay for parks and new facilities in central Auckland
* Charging developers $200 million over 20 years towards the council's $834 million share of the revised eastern highway
* Higher development contributions for the Tank Farm waterfront development
* Increasing revenue from development contributions - from $357 million to $733 million over 10 years
