KEY POINTS:
Auckland is a splendidly sprawling city. Considering its natural blessings, it could hardly be otherwise. With gentle terrain and sheltered bays stretching in every direction, it is no wonder the city has expanded as it has. But local authorities hold further expansion to be thoroughly undesirable. When asked why, civic designers cite the servicing costs.
It is more expensive, they say, to extend water, roads, public transport, sewerage and drainage further from the city centre than it is to use the roads and reticulation of existing areas to serve the same increase in population. It is not obvious why this should be, unless the existing underground services were laid with farsighted surplus capacity. It is certainly not obvious on the surface where roads within existing city boundaries are at capacity.
But even if they are right, infrastructural cost is not a reason to prohibit sprawl. It is a cost that can be fairly built into the price of expansive development. "Fairly" is the operative word. Councils need no second bidding to charge developers the estimated cost of servicing their subdivisions. But a High Court judgment against the North Shore City Council suggests councils have been setting development levies with a vengeance.
Justice Judith Potter finds the council wrong in trying to load developers with a portion of the costs of the city's overall future development, rather than the costs of services to their particular development. She finds also that the council has charged future ratepayers, through development contributions, for costs that have been incurred by present ratepayers, and ignored the benefits that present ratepayers will derive from development.
The North Shore busway, now being built, is a case in point. The project is jointly funded with the Auckland Regional Council and Transit New Zealand. North Shore City is meeting the cost of the busway transfer stations and, incredibly, it wants about 94 per cent of its contribution to come from development contributions that will fall on future ratepayers. It ignored the fact that the busway is largely a response to traffic congestion generated by present ratepayers and they stand to benefit as much as future residents from a reduced congestion and faster public transport.
The Property Council says Justice Potter's ruling has "blown the whistle on widespread abuse" of the power to charge developers for growth-driven capital spending. It is fair and economically efficient that the price of property in new subdivisions should reflect the full cost of servicing it, and no more. To burden them with the bulk of the costs of meeting growing demand from existing residents adds to the affordability gap already faced by first home seekers with average incomes now only one sixth of the average house price.
An excessive development contribution is not only unfair to those without a foot on the housing ladder, it also subsidises existing property owning ratepayers who already enjoy the tax benefits that bias investment towards property in this country.
Existing property owners are ratepayers and voters. Contributions charged to developments for future ratepayers seem to have been seen as an alternative source of finance, but they are not. They simply add to the cost of new property, which will be reflected in the property's rateable value.
Excessive development levies have been a symptom of an attitude in councils and some communities that is antagonistic to urban expansion. The High Court ruling restores fairness and reason to the essential task of catering for growth.
