Rotorua Lakes Council hear submissions on its draft policy that would put a levy on developers

Growth could be stalled and put in the too-hard basket if development contributions are re-introduced in Rotorua.

That was the view of several submitters who voiced their concerns to councillors on the Strategy, Policy and Finance committee on Friday.

Rotorua Lakes Council wants to bring back the levy which could potentially return $31 million in the next decade to help fund infrastructure. The levy was last used in 2013.

It approved the initial proposal to go out for public consultation on May 12, 2022 and 60 people and groups submitted in the process.

Of the submitters who wished to speak at the hearing, Brett Farquhar of Stratum Consultants was up first, representing R&B Property Group for Ray Cook.

Their stance was that the new policy would a have serious effect on future commercial and industrial property developments in Rotorua.

He said it opposed it in part; it supported the policy for residential development and greenfield development on city centre, commercial or industrial land, but not as it relates to the development or redevelopment of brownfield sites.

Instead, redevelopment of brownfield sites should be encouraged, he said.

Farquhar told councillors there could be a disincentive for growth, and the policy could mean the difference financially of a site being redeveloped or left as is.

He argued developers already contribute a significant financial contribution to the council including consent fees and upgrading of infrastructure connections, such as power and stormwater, to new developments.

Cook added construction costs were “running completely out the gate”, and had seen a 20 per cent increase across its three present developments.

“You throw a development levy on there and it’s all too hard.”

Councillor Tania Tapsell asked directly if the introduction of a development contribution reduced the feasibility of developments going ahead.

Cook’s answer was yes, and he had already experienced an instance of development becoming too expensive to work with inflation and rents.

Farquhar stayed on for the next submission for Pukeroa Oruawhata Group.

The submission was similar to the first heard, but a main difference was that Ngāti Whakaue, through Pukeroa, requested that they be exempt from the proposed levies.

He said this was as recognition of its contributions they have made to the establishment and growth of Rotorua and its gifting of land.

If there was no exemption, Pukeroa supported the policy in part.

Tapsell thanked them for making the point it felt the calculation process was too complex and open to interpretation, and she said the council would look to make it simpler.

Stratum’s own surveying director Bart Yetsenga gave its spoken submission and noted Rotorua was one of few districts without development contributions.

“That is quite a unique point of difference.”

While he said they did not believe the contribution should not be introduced, the point of difference and the benefits needed to be considered when determining the amount to be contributed.

As with the previous submissions, he said there were clients who would view the indicated commencement in September as unrealistic.

He instead suggested a start date of mid 2023.

Developer Simon Webbison said the reason he had chosen to work in Rotorua was because there were no contributions to pay.

He said these contributions add to the cost of delivering new housing and he asked them to consider applying the levy to brand new land and not infill housing.

While he could not say how much extra it would cost per unit being built, councillor Sandra Kai Fong said it would be about $10,000 under the current policy.

He said typically every $1000 added to development cost translated to about an extra dollar added to rent each week.

Mike McVicker told councillors he felt it was the wrong time to introduce the costs for a sector already struggling.

“The issue of residential development worries me because I see the council has indicated it wishes to build 6000 houses over 10 years.

“I would suggest that figure is somewhat aspirational given the current circumstances and the likelihood of a further decline in demand across the board.”

He said that comment was made in regard to the numbers of people leaving the city, but Tapsell said demand remained high as the population increased.

Committee chairwoman Merepeka Raukawa-Tait said there was never really a good time.

Other submissions included were from Federated Farmers, Retirement Villages
Association of New Zealand and the Rotorua District Residents and Ratepayers.

While many of the submissions heard on Friday were in opposition, including in part, many of the written submissions listed their preferred option of the draft policy.

Council would consider feedback and make a decision on the policy in August.