The controversial proposal to fund the hefty infrastructure bill required to enable the construction of a new city the size of Napier in South Auckland is going to councillors for vote this morning.
The council’s share of infrastructure works, including transport, and community facilities, is expected to cost $2.9 billion in the next three decades.
The proposal being recommended to councillors, which requires Drury developers to pay contributions for a 30-year period rather than the standard 10 years, is largely unchanged from its original form despite strong opposition from developers.
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A total of 60 submissions were made on the proposed policy, with half against, just over a third in favour and the remainder’s stance unclear.
A key point in developers’ submissions was an unfair commercial advantage given to developers in unimpacted areas of Auckland, calling for a wider approach to funding, and the knock-on impact on housing affordability caused by the increased levy.
There are some indications a judicial review would be sought if the proposal goes ahead.
In its submission, Kiwi Property, the NZX-listed business building Drury Town Centre, warned the extra cost would have to be passed on to incoming residents in the form of higher rents as well as incentivising less affordable and larger, more profitable homes to retain profit margins.
Auckland Council itself said independent economic advice found there was no evidence it would lead to higher house prices, but a Market Economics study commissioned by Ryman Healthcare said the council’s stance was on the basis the contributions policy would reduce land purchase prices – but almost all residential land has already been purchased.
The original proposal for Drury was for a levy of $80,000 on average per household, compared to $22,564 per household in other parts of Auckland.
In the proposal being put before councillors this morning, Auckland Council has made changes that drop the average contribution price to $74,142 per household – though some areas will pay more.
Those changes include assessing transport property acquisition costs on a property-by-property basis (rather than average values) reducing costs for Drury transport projects by $497m and making changes to the timing of projects.
Another change was to shrink the community facility funding areas, which actually added a further $5,042 per household.
The result will see developers pay $91,494 per house in Drury East, $70,758 in Drury West 1, $59,604 in Drury West 2 and $67,144 in Ōpaheke.
Drury East is to the east of State Highway 1 and includes the Drury Town Centre project, while Drury West is to the west of the motorway. Ōpaheke is to the north of Drury East.
Ōpaheke’s contribution rate saw a significant decline from the second highest at $98,618 to $67,144, while Drury West 2’s contribution rate rose by $4,200.
Councillors also have the option to choose to continue with the 10-year planning approach for Drury or to defer endorsing the 30-year programme.
Continuing to operate on a 10-year model would reduce the risk of over- or underestimating the cost of investment but would continue the current uncertainty around infrastructure provision and limit the ability to recover costs from beneficiaries.
The status quo could also lead to underinvestment resulting in lost productivity, higher congestion and poor climate and safety outcomes.
The deferral option would also impact the ability to recover developer contributions, which would need to be covered by ratepayers; however, it would allow for greater certainty of project costing.
That being said, the council believes it currently has a sufficient level of certainty to endorse the programme.
Councillors are set to vote on the proposal at a meeting starting at 10am today.
If approved, council officers will begin work on expanding 30-year contribution policies to other investment priority areas.