Developers may be asked to pay more for infrastructure

Thursday, 31 October 2024

The government have announced changes to the building act to make it easier to build so-called 'granny flats.'

Developers may end up paying twice as much towards infrastructure in some parts of Christchurch and lose discounts for small builds, depending on the outcome of a review.

However, as the city council seeks to make its development contributions policy more efficient and fair, a major developer cautions that costs would be passed on to prospective buyers.

“One of the reasons why Christchurch is growing is it’s got affordable housing,” said Blair Chappell, managing director of Williams Corporation.

“We’ve seen a lot more relocation from other cities … we want Christchurch to keep that advantage.”

Blair Chappell, right, of Williams Corporation, says the Christchurch City Council’s development contributions policy worked well as is. (File photo)

The policy is being looked at as part of a routine three-year review cycle. Proposed changes, expected to be finalised at a council meeting on November 27, will be subject to public consultation. However, at an information session for councillors on Tuesday, policy analyst Ellen Cavanagh foreshadowed increased charges and a reconfiguration of catchment areas.

The proposed development costs - not yet finalised - in Central and East Christchurch could more than double to a set rate of $29,740 and $29,240 household unit equivalent (HUE) respectively, from a current range of $8000-$13,000.

This would return development contributions to a similar rate as it was prior to a 2021 policy review, where it began at $22,000 HUE.

In South Christchurch, the $8000-$23,000 range could increase to almost $32,000. North Christchurch could go from $11,000-$34,000 to $35,000. Banks Peninsula might increase from $17,000 to $24,800.

Almost half of all new builds in Christchurch were under 100m2, so were eligible for a discount under the current developer contribution settings.

Akaroa could see a significant decrease from $68,000 to $45,107, which Cavanagh said reflected the projected growth in the area, while still acknowledging the huge cost of growing infrastructure out there.

She said development contributions were set by dividing the cost of growing infrastructure - which had become more expensive - to the number of projected households - which was trending downward.

The council collected $35.2 million in development contributions in the 2023/24 financial year, down from $43m in the 2020/21 financial year.

In previous years the council has spent an average of $50m a year in infrastructure to support population growth, but did not provide an updated figure on Wednesday.

The council also wanted to return to a simpler catchment model, with Cavanagh saying the current system - which had multiple layers, including separate drinking, waste and stormwater catchments - was overly complex.

It meant someone trying to build a granny flat on one side of the street could be paying more than the neighbour across from them.

The small dwelling discount was set to make it fairer for people wanting to build a granny flat, and to increase housing supply.

The council may also remove its discount for residential units under 100m2, which is currently applied on a sliding scale in proportion to the gross floor area. A 70m2 dwelling, for example, would be assessed at 70% of the full development contribution charge.

The discount is intended to make it fairer for people just wanting to build a granny flat and to encourage housing intensification. However, Cavanagh told councillors it meant half of all new Christchurch dwellings qualified for a discount.

Houses were getting smaller, and many three bedroom homes were under 100m2, she said. Some 24% of building consents were for homes less than 80m2. Staff were interested in changing it so only dwellings with one bedroom were eligible.

Meanwhile, council was considering charging developers more for dwellings with seven or more bedrooms.

Most townhouses built by Williams Corporation were under 100m2. Chappell said the current policy was fair and reasonable, and the Christchurch City Council was better than other councils.

He opposed any move to increase development contributions, particularly in the city centre, which he said was only just returning to pre-earthquake resident numbers - almost 9000 as of October 2023 - and was below the council’s target of 20,000 residents.

He said the demand was still there and the area needed more time to grow.

“You don’t see many for rent or sale signs on the main road,” he said.