Developer’s warning to city: We’ll leave if DCs charged upfront

Thursday, 16 May 2024

Developers speak at the Hamilton City Council meeting about development costs changing.

Developers will quit Hamilton if the city council makes them pay development contributions at the start of a project, says a Waikato builder.

Leon da Silva, of Da Silva Builders, was one of more than 150 individuals and organisations scheduled to deliver verbal submissions on the draft long term plan (LTP) over three days this week.

There was an increased security presence during day one of the sometimes spirited submission hearing, with parts of the council chamber where councillors sat cordoned off from the public.

Leon Da-Silva from Da-Silva Builders addresses Hamilton City Councillors at the draft long term plan hearing.

A proposed rates hike of 19.9% next financial year, followed by 15.5% annually for the next four years, has been a key topic in the submissions as well as the proposed increase to development contributions (DCs).

The city council is budgeting for development contributions to increase nearly 40% over the next five years, to just under $220 million, despite concerns higher proposed fees from 2024-25 could hit growth, with the council planning to hike DCs by more than 100% in some instances.

Da Silva told councillors he was opposed to the increase but it was when the council planned to charge developers that he described as a “kick in the guts”.

Hamilton City Councillors listen to submitters during to the LTP hearings.

“We’ve got enough problems building at the moment.”

DCs are typically charged at the end of a building project when applying for a Code of Compliance Certificate.

“Basically, you get your consent, you build your project, the demand doesn't come online until you get people living in there. You don't get people living in there until you get a CCC or 224 [subdivision certification].

“So you guys say ‘you want a CCC and 224? Pay DCs’. Pretty simple transaction - here's DC, here's the 224, there's the demand, that's it.”

But charging the development contribution from when a project gets consent will see developers take their business out of Hamilton, Da Silva warned, and the city council might as well halve its projected DC revenue.

“It’s not like we don’t want to build… but if I can’t get deals to stack, I can’t build anything.”

And if the financial side of things didn’t stack up, the only thing left to do was “throw the deal in the bin” and go to Waikato, Waipa or Auckland where “you can get deals to stack”, he said.

“So don’t add to the already increasing DCs by asking for it upfront.”

Asked by councillor Andrew Bydder how water infrastructure issues had impacted business, Da Silva replied that it was “massive”, later saying the money for the planned pedestrian and cycling bridge over the Waikato River would be better spent fixing the city’s sewage woes.

Matt Stark of Stark Property told councillors he was disappointed by the lack of clarity during the submissions process.

“It's such a waste of money. It's going to be used by perhaps 2% of people here, if not less I'm pretty sure.

“I haven't done the math but I'm pretty sure 100% of people in the city will use the sewer, 100% and that's occupants, guests, everyone.

“So fix the sewer, take the money from the bridge, fix the sewer.”

Property developer Matt Stark also addressed the council, telling elected members radical change was needed for the city’s vulnerable, for the poor and for the city’s operators.

“Take Made for instance, it seems to be a bit of a shining light in the Hamilton East - our rates are going to go up 68% next year.

“Retail is a challenging environment, right? And we're supporting the makers, creators and doers and the artisans of our city that go to the world like Duck Island and Volare.”

“But there's going to be challenges coming and there will be some of them… we’ll be able to carry most of them through but at our cost.”

Stark also reiterated his commitment to the city, telling councillors “we want to make money but we also want to contribute to a vibrant, beautiful and safe city”.

In a statement following day one of the hearing, Mayor Paula Southgate said Hamilton had “asked us to invest wisely to continue to build a vibrant, successful and progressive city, where people want to love to live”.

“In this budget, we must strike a balance to find savings, while investing in what our city needs. I am not prepared to let our city go backwards,” she said.

The mayor recognised that a modern city is not just about having one central area any more but about about building a series of hubs and a sense of community across Hamilton’s suburbs.

“Council must leave behind a legacy that we can be proud of. Every dollar must count. This means spending ratepayer money wisely and investing in Hamilton’s future for a forward-looking, vibrant and progressive city.”