Whanganui construction sector unhappy with council’s developer contribution policy

The new policy covers the whole of Whanganui instead of selected small areas. Photo / Bevan Conley

Whanganui District Council’s new developer contribution policy proposal has drawn the ire of parts of Whanganui’s construction sector.

The current policy applies to the Springvale and Northwest growth areas but if the updated version is signed off, all district areas will be covered.

Contributions go towards extra infrastructure the developments require, such as new roads, pathways, parks and pipes.

During public hearings on the council’s draft long-term plan (LTP), developer Jamie O’Leary said the draft policy was “a bit of a ram raid”.

“In my experience, I don’t think council has fast-tracked or attempted to fast-track anything in their life,” he said.

“The policy needs to be well thought out and all stakeholders must be engaged with to create a robust and workable outcome.”

Consultation on the policy ran alongside that for the LTP - from April 2 to May 2 - and industry members were invited to a council-led forum.

The new policy moves from a site-based measure to an occupancy-based measure, meaning larger dwellings able to accommodate more people will pay higher development contributions.

Residential developments will be charged per household equivalent unit (HEU) - the unit of demand equivalent to the demand of one average detached residential unit.

One to two bedrooms equates to 0.5 HEU, three to four bedrooms is 1 HEU and five-plus bedrooms is 0.25 HEU per bedroom.

In the Springvale urban expansion area, contributions will range between $6068 and $16,711 per HEU, with the Northwest area ranging from $8832 to $12,033 per HEU.

Whanganui urban infill is $5859 per HEU and the district’s rural areas are $395 per HEU.

Council chief executive David Langford. Photo / Bevan Conley

Developer Anthony O’Leary told councillors the construction sector was on a downturn nationally and the policy changes were likely to negatively impact growth.

He said the current and previous governments advocated for cheaper housing and the new policy would work against that.

“The number of bedrooms doesn’t necessarily equate to occupancy,” O’Leary said.

“You could have an eight-bedroom home with three people living in it or a three-bedroom home with eight people living in it.

“The council’s document doesn’t really take this into account, to the best of my knowledge.”

Trident Homes Whanganui’s Matt Perks proposed a $10,000 flat fee per new unit - charged at the building consent stage - which would provide a clearer and more predictable cost to developers and home buyers.

Under both the old and new policies, developers must pay most of the contributions at the subdivision stage.

Perks said at the subdivision stage, it was often unclear what kind of dwelling would be built.

Speaking to the Chronicle last week, chief executive David Langford said the council often had to build the infrastructure before the houses and used bridging loans.

“The longer this takes, the more interest is incurred. We want development contributions paid as soon as possible to avoid those extra costs which would have to be passed on to the ratepayer.

“This is because the council often has to build the infrastructure before the houses and use loans to bridge the time until the developers pay the development contribution.”

Jamie O’Leary said the sector was in favour of development contributions but not how the council was choosing to implement them.

Like Perks, he suggested a single flat fee.

“There will be overs and unders but I think it’s the only serious consideration we could work through.

“We can’t try and clip the ticket every step of the way. This is ludicrous.”

Last year, Langford said the council collected $18,000 in development contributions in the previous 12 months and about $100,000 the year before.

He said a lot of other councils charged in the range of $15,000 to $25,000 per new section.

Jamie O'Leary says the new policy is "a bit of a ram raid". Photo / Bevan Conley

Langford told the Chronicle that council staff had researched other councils’ development contributions policies and Whanganui’s was similar to what happened in other parts of the country.

“It would also change the way we calculate what is paid for to make sure what’s charged is fair and developers are only paying for what they use,” Langford said.

“This is an important principle, so if a development doesn’t use the infrastructure, such as on-site stormwater soakage, they wouldn’t be expected to pay for it under the updated policy.

“We’re also proposing to expand the remissions in the policy so there is the flexibility to waive development contributions for not-for-profit organisations and registered social housing providers so they are not adversely affected by the policy.”

Bullocks director William Morrell said he believed the policy should be redrafted to ensure it was simple to read and interpret for council officers, developers and the public.

He said it looked like it had been “written by policy officers for policy officers”.

“Mum and dad who want to put a third bedroom or a fifth bedroom on to their house are going to be stung with development levies, which is okay, but I think a lot of people in the community don’t know this yet because it hasn’t been broadly consulted on.”

The council predicts the district’s population to rise to 53,000 by 2034, resulting in 1160 new households.

Developer Lance Attrill said those figures had been exaggerated.

He said Whanganui’s birthrates were coming down and its population was ageing.

“We are not going to grow to [53,000] and this policy is all done on growth.

“Whanganui hasn’t got a university driving us, we have affordable housing. If we make affordable housing dear, we will not have people come.”

Langford said the council’s draft LTP budget included a big increase in investment in core infrastructure and projects to support growth.

“Development contributions paid by house builders and developers help fund this extra investment so that ratepayers don’t have to foot the bill.

“The principle behind the development contributions policy is that those that benefit from the infrastructure should pay for it.”

The council will decide on the policy as part of the council’s LTP deliberations on June 5-7.

Mike Tweed is an assistant news director and multimedia journalist at the Whanganui Chronicle. Since starting in March 2020, he has dabbled in everything from sports to music. At present his focus is local government, primarily the Whanganui District Council.