Massive rate rises may subsidise land developers … with profits of $100 million plus
By Veronica Harrod
Land developers and investors in the Horowhenua District will reap at least $100 million profit by not having to pay development contributions towards essential infrastructure.
And the Horowhenua District Council seems intent on loading the burden on to ratepayers who could now face massive rates increases.
The majority of councils in the country charge development contributions because the policy is regarded as the only effective, fair and equitable way to reduce the impact of expensive infrastructure on existing ratepayers.
Contributions scrapped in Horowhenua
But the Horowhenua Council scrapped development contributions in 2015 and, judging by the extent of land development planned behind closed doors by land developers and council since 2008, it would be unconscionable if council did not re-introduce the levy on land developers.
Rate rises have historically been used by councils as a sure fire way to make land available for development by freeing up land from ratepayers who couldn’t afford high rate increases. The increases directly impacted on a large number of home and land owners living on fixed or low incomes.
Ratepayers could face ‘gross unfairness’
If the council does not include development contributions in the 2018-2038 Long Term Plan (LTP), the profits made by land developers will be grossly unfair to existing residents.
The $100 million profit projections are based on a conservative estimate of $15,000 per new build if development contributions were to be charged. This covers a minimum of 2100 new house builds in Levin alone (totalling $31.5 million) contained in a council’s 2008 Horowhenua Development Plan.
Deputy Mayor’s developments
Land developer and deputy mayor Wayne Bishop’s 500-house build project in Kimberley Road has financially benefited by about $750,000 (from the lack of development contributions). Cr Bishop also has four other land developments, which means a total saving of at least one million dollars by not having to pay development contributions.
Mr Bishop declared a conflict of interest when a vote was taken by council to stop charging development contributions, but during all the debates he sat at the council table. His time on the council has coincided with a massive amounts of land development.
Looking at the wider picture, also included in the profit estimates is the potential effect of relaxing urban housing density rules to allow for sub-division and building of two houses on one house lot which council is deliberating on now.
Neighbours would not have to be consulted on increased urban density plans due to changes to the Resource Management Act made by the National-led government early this year. These, of course, favour land developers. Potential profits also include proposed land developments in other parts of the district contained in separate reports available at http://www.horowhenua.govt.nz/Council/Plans-Strategies/Horowhenua-Development-Plan
Evidence that the Council is determined to pursue a land growth agenda is also contained in the council report on relaxing urban density rules.
Relaxing density rules and costs to the environment
The report omitted to include any environmental and cultural costs of land development — even though all the new builds would connect to the existing infrastructure, and even though there is evidence of environmental and cultural costs documented in past council reports (including the 2008 Horowhenua Development Plan).
Cr Neville Gimblet and the Council’s chief executive David Clapperton have made comments recently alluding to the scale of land development and the expectation existing ratepayers would pay for them.
Mr Clapperton said in a recent newspaper article, “I see some huge opportunities for the Horowhenua that have never been seen before, probably in the last three generations. And I’m adamant that I want to be part of that journey.”
His comments were made despite consultation on the 20-year Long Term Plan only just starting, indicating he is a central cog in the wheel of a land development agenda that has captured the council — I think to such an extent that democracy is being undermined by the organisation that’s supposed to uphold democratic principles.
Cr Gimblett’s views
Cr Gimblett alluded to the impact of the high cost of replacing essential infrastructure on existing ratepayers in a newspaper column when he said he was “surprised no-one commented on the $2.8 million of unfunded depreciation in the financial report.” Depreciation is a method used to account for future costs of essential infrastructure by acknowledging wear and tear and need for replacement over time.
“While depreciation is not a cash item so has little impact today, it is a key feature of sustainable long term planning and ultimately your rates,” he stated before warning ratepayers that, “Officers and elected members are currently involved in multiple workshops to prepare for the next Long Term Plan, where we will be mindful of this financial constraint hanging over our heads.”
If Cr Gimblet is so “mindful of the financial constraints,” then it would stand to reason he supports the reintroduction of development contributions as this levy on land developers would not only immediately solve the problem of funding depreciation costs, but also potentially provide enough money to ensure essential infrastructure designs were built and maintained.
However, he didn’t mention re-introducing development contributions he only mentioned the cost to existing ratepayers.
Mayor Michael Feyen has been effectively sidelined because he is viewed as a threat to the cabal of land developers and their investors intent on driving an agenda of unrestrained and unrestricted land development.
This is because during the last local body elections he said he was going to make environmental concerns and Lake Horowhenua a priority.
No matter who Mayor Feyen subsequently turned to in seeking redress to reign in the power of unelected chief executive David Clapperton, not one minister of the last National led government would lift a finger to assist him.
Local Government New Zealand would not assist him either.
Mr Clapperton also has the support of nine out of ten councillors, excluding Cr Ross Campbell. The nine have featured in appointments to committees and other council-led opportunities.
MP Guy is a land guy too
Local former National Party MP Nathan Guy has also refused to take action to restore democracy in
Horowhenua but, as a recent article in a local newspaper stated, Mr Guy has got the largest property and land portfolio of all ex-Government ministers. These include an extensive amount of Horowhenua rural land, a family home, two rental properties, interests in 13 commercial properties and a Wellington property.
I think that land developers and investors interested in developing housing subdivisions on at least 550 hectares in the north east of Levin — land that extends across Mr Guy’s rural properties — could try to influence the Government to ensure the highway of national significance is built to the west of Levin instead of to the east.
Cr Bishop has certainly stated a preference the new highway be built to the west of Levin.
Local Maori could suffer again
As if it’s not enough that local Maori and residents of Hokio on the west of Levin have to endure the Levin Sewage Treatment Plant, the landfill, the infamous smelly “pot” behind the landfill and a polluted Lake Horowhenua, there are now moves to ensure the new highway won’t get in the way of land developers and their investor interests in the east of Levin.
The huge profit margins for developers helps explain the increasing interest that major land and property developers — who have previously only operated in Auckland and Wellington — now have in Horowhenua.
An apparently deliberate refusal to reintroduce development contributions is essentially undemocratic because it put the interests of the few above the many and makes a mockery of the consultation process of a LTP residents and ratepayers will be bound by for the next twenty years.
Even though the Council has been having workshop meetings about priorities of the LTP one public consultation held at Te Takere last week lt had no information at all about the council’s intentions, which gives the public little to respond to.
There were two councillors, a desk and a lot of free pens!
But there was no substance about what council has been discussing in publicly-excluded workshops about the Council’s LTP priorities which makes it a faux consultation on one of the most important issues facing ratepayers today.