Horowhenua Land Boom

Conflicts of interest, land development and Horowhenua District Council

By Veronica Harrod

When the Horowhenua District Council’s Long Term Plan is reviewed in early 2018, will the Council reintroduce development contributions that land developers used to pay towards essential infrastructure costs?

To set the scene, we need to go back to June 2015 when council voted to end development contributions collected from land developers for essential infrastructure to service a growth in population.

Essential infrastructure includes roading, water, wastewater, and stormwater systems.
Historically there have been two ways for council’s to collect contributions from land developers towards essential infrastructure —  development contributions administered under the Local Government Act and financial contributions administered under the Resource Management Act.
 Council vote to throw out development contributions
One of the main reasons council voted to throw out development contributions was because an in-house council report recommended development contributions could be replaced by financial contributions.
The in-house council report on development contributions presented to council was largely based on a Government Development Contributions Review Policy Discussion Paper published by the Department of Internal Affairs in February 2013.
The timeline of events is critical because the 2013 Internal Affairs review argues in favour of ending development contributions too, yet, development contributions were not ended by the Government – financial contributions were.
‘Rampant land development’
The crucial consequence of this shift in the Government’s position combined with the decision by council to end development contributions meant a nice big wide open window of opportunity was created for the kind of rampant land development we now see happening in Horowhenua where land developers are not required to contribute one cent towards infrastructure costs.
Instead the existing ratepayers, many on low and fixed incomes, are left to pick up the tab.
Kapiti Expressway

A shift in the Government’s position, combined with the council’s decision to stop development contributions, has financially benefited land developers in Horowhenua by at least $16 million over ten years, according to the in-house council report on the financial consequences of no longer collecting contributions from land developers.

Combine these facts with an expected population growth fueled by the Road of National Significance being built, plus the lack of land and affordability of large

scale land development on the Kapiti Coast, it is hardly surprising there has been an exponential growth of land development in the next stop off State Highway One — Horowhenua.

Government set the scene for developers

Another big reason why the council and land and property developers are seemingly falling over themselves to get a piece of the land grab action happening in the heart of Horowhenua is tax, legal and funding advantages for land and property developers created by the Government in response to the national housing shortage.

The Kimberley site before development started

So what land development projects have sprouted up like topsy in Horowhenua since development contributions ended?

  • First cab off the land developer rank is deputy mayor Wayne Bishop’s 500 house sub-division on the former Kimberley Hospital site (photo, left) in south east Levin.
  • There is also a 650-700 land development in the north east of Levin, that no-one seems to know who owns, and a 30.77 hectare block in Foxton Beach referred to by the council as “a prime development site” called the Kilmister Block.

Also and this could further compound potential pollution problems at Lake Horowhenua — the Council’s strategy committee met last month to discuss making changes to the District Plan to allow greater housing density.

Lake Horowhenua

In the recently released Waitangi Tribunal document titled ‘Horowhenua, The Muaupoko Priority Report’ evidence presented to the Waitangi Tribunal by Dr Jonathan Procter states, “whether the sewage plant can cope with population growth is not certain.”

Although the owner of the large scale north east development remains a mystery what we do know for a fact is that council’s chief executive David Clapperton owns one of the first properties to be built there because his address in the electoral roll confirms this.

What we also know for a fact is, according to Companies Office records, Mr Clapperton owns two companies, but the nature of the companies he owns is not publicly known.

But his business interests led him to declare a conflict of interest at a publicly excluded meeting of the Finance, Audit and Risk (FAR) committee meeting in February formerly chaired by deputy mayor Wayne Bishop.

How Mr Clapperton’s business interests conflicted with council’s business interests remains unknown to the public not least because the intention to exclude the public was not publicly advertised as required by law, nor did Cr Bishop explain to members of the public who attended the meeting why discussion were being held behind closed doors which is also required by law.

Since then Cr Bishop has been replaced by an unelected chair Philip Jones who was appointed chair of the Finance, Audit and Risk Committee on a recommendation from the Office of the Auditor General.

Pensioner flats in Levin

As well as the Levin and Foxton land developments, there was also the recent controversial sale of the council owned pensioner housing and 1.1 hectare bare land for the fire-sale price of $5.2 million to one of the biggest land and property developers in the country, Willis Bond, which now wants to do business in Horowhenua. Why and what are their long term plans?

One of the problems when formerly publicly-owned assets are transferred into private hands is access to information becomes more difficult because there is not the same legal obligations on businesses to provide information.

Parallel to these land developments council’s in-house Economic Development Board chair Cameron Lewis talks up how fast the district is growing when he declared in council’s Community Connections newsletter this month, “The district is now the 11th fastest growing Local Government Territorial Authority.

Fast growth areas are eligible for a $1 billion infrastructure fund announced by former Prime Minister John Key in July 2016 that have to be paid back by “ratepayers and development contributions” within ten years.

Whether what some would call an unholy alliance between Government, councils and land developers will be the preferred solution to the housing crisis if there is a change of Government is unknown at this stage.

According to Infometrics Quarterly Economic Update, residential consents in Horowhenua are up 30.2 percent compared with 4.7 percent nationally and house prices have increased 22 percent compared with 6.7 percent nationally.

Horowhenua Chief Executive David Clapperton

All of which may explain why Mr Clapperton was recently quoted in a local newspaper article stating, “I see 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.”

Surely when he speaks of the “last three generations” he is not talking about a repeat of the colonial land grab days of old? Or is he?

But the public haven’t been told about the “huge opportunities” which is why seemingly disparate threads and how they relate to each other is the only way to determine exactly what he means by his comments.

A recent newspaper column by businessman and councillor Neville Gimblett breathed life into the existence (and potential power) of the alliance between council, Government and land developers when he said plans to build a major new medical centre in Levin, that the community had no knowledge or input into, demonstrated, “effective growth is a partnership between council, central government and private enterprise.”

As far as Cr Gimblett was concerned, the only time the community became relevant was in relation to being presented with,”some difficult and perhaps controversial choices about service levels and cost” during Long Term Plan consultation in early 2018 in response to, “the challenges ahead…as we face up to increased growth.”

Cr Gimblett made no mention of re-introducing development contributions for land developers as one of the solutions to these “difficult’ choices even though the reintroduction of development contributions is one of several main issues being discussed by councillors in workshops taking place on the review of the Long Term Plan before it goes out for public consultation early next year.

Generally speaking, though, what large-scale land and property deal doesn’t attract investors who are looking for high levels of return with minimal capital exposure?

Capital exposure for land developers has been significantly reduced in Horowhenua by:

  • a combination of increasingly favourable local council policies
  • indirect access to council funds
  • sympathetic councillors including land developer and owner of the Kimberley land development deputy mayor Wayne Bishop
  • and a roll-out of favourable tax, funding and legislative changes by the Government.

Even though these “opportunities” may tick all the boxes for council and land developers, is land development the kind of “growth” projects ratepayer money should be spent on?

Te Takere Library in Levin

Shouldn’t council be administering land development projects rather than directly involved in land development? Especially taking into account that historically more than one land development project has gone belly up.

Land development is a high stakes game which may very well interfere with the role of council to serve their community rather than their own interests or the interests of the few.

Selling the pensioner housing to a major player in land and property development suggests these fears are not unfounded.

Which is why the litmus test will be whether council reintroduces development contributions next year when the Long Term Plan is reviewed.