Developers are leaving Auckland. This is not new -- the folks who build the city have been quietly leaving for some time in the face of increasing impositions on their efforts -- but apartment developer Conrad Properties decided to speak to Bob Dey to explain why they've had enough.
The short answer is that development in Auckland is now uneconomic. They point the finger squarely at Auckland City Council, saying they're to blame for two things at least:
One is the introduction this year of an Auckland City Council plan change setting minimum sizes for apartments, and the other is the council's policy on development contributions.
The combined effect of both impositions is to add $120,000 to the cost of a two-bedroom unit, and this is on top of the increased costs and sundry delays associated with changes to the Building Act. The cost of the "development contributions" alone -- which is a means by which the Resource Management Act allows council to put their hand even further into property owners' pockets -- amounts to around $70,000 per unit.
Annie Fox explains the sort of thing on which this money is usually wasted by council once extracted: "purchasing multi-million-dollar properties at inflated prices."
One that got my blood boiling for it's total stupidity, was the purchase of the SuperLiquor site on the corner of Ponsonby Road & O'Neill Street, for a staggering $7 million.
Retail? I hear you ask. However, not for retail, but to be demo'ed and turned into a park! The most ridiculous place for a public park, it will be small, which in itself isn't a problem (small parks can be charming) but with roads on two sides (one being a main road) it will be bloody awful place to sit. It will be empty 99% of the time, and anyway within 1km of this site there are 8 reserves and 16 within 2kms.
Apparently, they had to make a purchase to justify all the reserve contributions they have been taking over the years. Why didn't they just give the money back to the developers?
Good question. Another question should be why they're allowed to damn well take the money in the first place. The answer is the Resource Management Act, which gives council's carte blanche to boss developers around and to make them pay for it.
But Conrad Properties and developers like them aren't paying any more. They're getting the hell out -- and who could blame them -- leaving the supply of Auckland housing up to ... whom?
The fact is that the real culprit here isn't the council officers or planners or regulators who make the plans that are forcing developers out; the real culprits are the Resource Management Act that gives planners and regulators the power over other people's property, and a culture that assumes that local governments need planners and regulators to plan and control the city. They don't. On this point I'm four-square behind the Anti-Planner Randal O'Toole, who says that,
"After more than 30 years of reviewing government plans, including forest plans, park plans, watershed plans, wildlife plans, energy plans, urban plans and transportation plans, I've concluded that government planning almost always does more harm than good."
Ain't that the unfortunate truth. Time to put a stake right through the heart of the RMA, and draw the teeth of the planners and regulators for good.
3 comments:
My grandmother died last year leaving section she brought in St Heliers in 1943, paying 200 quid. She kept it and left it to her family to develop. We are in the process of doing so. It is a full section, zoned for two houses.
These are SOME of the costs we have been told, by the council
“Reserve Contribution” : $41,250
“Park Enhancement” : $3,625
“Community Services”: $1,082.25
“Stormwater fee” : $4,185
“Transport Levy: $878
Now we are not developers – merely doing something to a piece of land owned by the family for over 60 years. These costs don’t cover one nail being put in – or one footing being dug. $51,000 just for the right to subdivide OUR land.
Actually the development contributions are the result of the Local Government Act. The RMA allowed for development levies but there had to be a nexus between the application and the levy. This frustrated the planners and councillors the LGA allows for councils to levy for anything they like but mainly for "the costs of growth".
The LGA is much wore than the RMA because it allows unfettered interference with property rights with no rights of formal submissions or appeals.
Tauranga is just as bad.
The 'reserve contribution'is purportedly required to satisfy a LGA (or RMA, I dont know) requirement that a reserve be created for every x lots.
The council 'argument' goes, that since the reserve must be in the 'vicinity' of the lots being taxed, the tax should be based on the land value of the lot so that equivalent land can be bought for the reserve. i.e land in Remuera is more valuable than land in Otara, both lots and reserve land.
Beachfront properties are the most valuable of all, and their 'reserve contributions' per sq m are likely to be several times greater than their landward neighbour, yet both properties to are be serviced by the same reserve. So it is a sham.
The beach lot will also incur rates several times greater than its landward neighbours. I asked the TCC how the rateable values were calculated - they were adamant that these were not 'market valuations', rather they were some sort of 'intrinsic value' assessed by the council. Interesting then, that land which according to council estimates will be under water in 50 years is considered to have far greater intrinsic value than its landward neighbour which according to those same council predicitons will be beachfront property in 50 years.
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