Tauranga developers balk at proposal to charge 2000 Tauriko homes infrastructure levy of $2500 a year

A developer has warned a proposed $2500-a-year charge on 2000 new homes will drive the market out of Tauranga to “fringe” areas.

The city council, which is looking at the levy as part of a Government infrastructure loan scheme, has pitched it as an example of growth paying for growth.

But property developers say it would be “unaffordable” and “unsustainable”.

Tauranga City Council held its first day of hearings into the Long-term Plan Amendment and Annual Plan 2022/23 yesterday, with commissioners hearing verbal submissions on proposed changes.

A key issue was a funding mechanism being explored to help pay for transport and growth infrastructure, particularly at Tauriko West – an area expected to provide up to 4000 homes by 2025.

Classic Group director Peter Cooney raised concerns about the council’s potential use of the Government’s Infrastructure Funding and Financing Act.

The act was introduced in 2020. It allows high-growth area councils, including Tauranga, to invest in new, essential infrastructure – roads and water, wastewater, stormwater -without affecting their debt levels.

A Special Purpose Vehicle, owned and operated by the Crown, borrows money that is repaid by charging levies on properties that benefit from the infrastructure. These levies would be collected by the council in rates bills and passed on to the entity.

As commission chairwoman Anne Tolley put it in the meeting, it would mean “growth pays for growth”.

But Cooney said the levies would be too much for most people.

“There’s only so much a market will take,” Cooney said.

“We as a development company are making big investments in Matamata, Katikati, Rotorua, Waihī. We believe there’s a huge proportion of the market that is going to leave Tauranga and go to fringes like these. You are already seeing it in Auckland right now and Hamilton (with) Morrinsville.”

Cooney said there was “huge growth” in these areas for good reason.

“Our costs have got out of control. There will be a limit the market will hit before people move on.”

Cooney’s concerns were echoed by Grant Downing from real estate developer Element IMF.

“It’s all about infrastructure and funding. Infrastructure, that’s always been very big dollars but it seems it’s getting bigger and bigger,” Downing said.

He acknowledged the commission had put together a plan to increase revenue and “we understand we have to play a part of that”.

Like Cooney, Downing congratulated the council and commission on recent moves, such as making it to the final stage for Infrastructure Acceleration Fund consideration. He said he was greatly encouraged by the way some funding was already coming through.

“Please don’t slow down. We are just conscious of affordability and apportionment of the wider funding package.”

Downing was wary of the impact the infrastructure levies could have on future homeowners.

If the council went through with the proposal, about 2000 Tauriko West homes would be expected to pay $2500 a year for the next 30 years to help pay off the Government loan.

Downing questioned what the remaining 2000 homeowners expected in the yet-to-be-built development would be expected to pay.

“How are they contributing? We want to continue to be involved in that conversation.”

Tolley said there was “a lot more detail to come before we commit to using it”.

“Two and a half thousand dollars [a year] over 30 years is pretty expensive for future ratepayers.”

She said the commission was in the process of going out to the community “to get their buy-in or their argument to investigate those alternative methods of funding”.

The council was also seeking money from the Infrastructure Acceleration Fund to help pay for $200m in transport projects.

Urban Task Force chairman Scott Adams said the group supported the use of Special Purpose Vehicles but said the proposed levies of up to $2500 “may prove to be unaffordable, not sustainable”.

“It’s important the quantum of infrastructure cost is set at a realistic level.”

He said central government had underinvested in infrastructure for decades while reaping “billions” from the region in tax and GST.

“I think they could do a lot better.”

Submitter Doug Barnes said he supported the council’s use of the act because “it’s important that will save the debt load on the council”.

The council received nearly 1200 written submissions to its proposed Long-term Plan Amendment and Annual Plan 2022/23 and hearings of verbal submissions will continue on Wednesday.

Deliberations are set down for May 24 to 26 with finalised plans expected to be adopted on June 27.

Museum debate heats up at hearings

The response to a $303m proposed revamp of Tauranga’s central city civic precinct was split at the hearings.

Pāpāmoa resident David Holland challenged commissioners to guarantee the finished project would be completed within four years at no more than $303m.

“If I, as a developer, went to a financier – as you are effectively doing now to TCC ratepayers – for $303m based on a concept plan with no apparent business plan, I would be laughed at and very likely never to be a client again.”

Tauranga Ratepayers Alliance representative Ross Crowley said there was no one coming into the CBD already and half of the proposed facilities as part of the $303m option were already in town.

Crowley said there were no measurable criteria to determine the project’s success.

“This does not pass the most basic management test of value for money.”

In Crowley’s view, including a museum would only serve to repel people from the CBD because if it were to recount a true version of colonisation in New Zealand, people would find it too confronting.

Submitter Chris Pattison said money for a museum would be “better spent on roading, widening key bottleneck bridges such as Turret Rd and Maungatapu bridge on State Highway 29”.

Pattinson said the proposed design of the civic precinct was “ugly” and suggested an architectural competition.

Submitter Doug Barnes said the plan in its entirety would be great and a museum was essential but asked commissioners to “consider the cost”.

Father of two Charlie Sherratt disputed the claim the proposed $303m option would fail to draw crowds.

“I know my kids, we would be down there every weekend. You just need to look at an example of Kulim Park . . . it’s crazy [busy], it’s really cool.

“I was a designer for the Wharf St upgrade. Early on there was push back but you look down there now, it’s all restaurants and it’s just bustling. I’m fairly confident the [project] would draw a crowd.”

Submitter Richard Hart also supported the option.

“Get a good design, good project manager . . . get on with it.”

Twelve-year-old Marcus Knight asked: “Why does Tauranga not have a museum?”

“Where are our stories told?”

Urban Task Force chairman Scott Adams, Mainstreet Tauranga chairman Brian Berry, Property Council New Zealand’s Logan Rainey and Priority One chief executive Nigel Tutt all spoke in support of the $303m option.

Tutt said it would foster more investment from the private sector.

Commissioners will decide how the delivery of the civic precinct redevelopment project will be phased and how it will be funded in June.

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