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Chedworth 2021 DC Policy Submission 07.04.21

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Chedworth 2021 DC Policy Submission 07.04.21 7 April 2021 Hamilton City Council Private Bag 3010 Hamilton 3240 Submitted via Council web site e-mail: [email protected] Submission on Proposed 2021/22 Long-Term Plan, Development Contributions and Growth Funding Policies Introduction Chedworth Properties is currently by far the largest developer of residential sections in Hamilton, having titled 562 since 2016, with a further 78 currently under construction at Greenhill Park. Over 1,000 furthers sections are planned to be delivered at Greenhill Park over the next 10 years. Chedworth Properties accepts the development community should contribute towards the capital cost of the infrastructure provided by Hamilton City Council (HCC), but this must be on a transparent, fair, equitable and proportionate basis. Consultation Process Chedworth Properties is concerned that HCC continues to ignore feedback from the property industry and conduct “claytons” consultation processes as evidenced by: § A consultation period of 5 March – 7 April which while it technically meets the requirements under the Local Government Act 2002 (S 83), it does not provide a minimum of one month given the extensive Easter Holidays during this period. While the Property Council sought an extension to this timeframe of another week, it was declined. § Use of the LGOIMA process by HCC staff to frustrate the consultation process. When questions were asked on the policy, staff advised that they were “logging this as a request under LGOIMA (partly for tracking reasons across community consultation). We will endeavour to respond before the 20 Working day is up”. How is this reasonable when the entire consultation process was only 20 working days? It therefore came as no surprise that when we were reviewing Chedworth’s 2019 submission on HCC’s DC policy that HCC had previously used the same tactics to shorten the consultation period for the 2019 Policy and made it difficult for parties to make comprehensive submissions on the Proposed Policy. The above simply reinforced the view of the property industry that Council is just paying lip service to the consultation process and the general attitude by Council in this regard is probably a significant contributor to why HCC is now facing multiple Judicial Review Proceedings with regard to its Development Contribution policy. DC Judicial Review Proceedings The above along with Chedworth Properties on-going concerns about the lawfulness of HCC’s DC policy prompted us to join the proceedings filed with the High Court by many of Hamilton’s largest property owners. The High Court hearing is scheduled to be held on the week of 19 April 2021 and no doubt many of the issues will be resolved by the Court’s decisions later this year. It seems however a reasonable probability that this will result in significant changes being required to the way HCC’s DC policy is structured which will in turn impact HCC’s LTP and its DC cost recovery projections for the future. Development Contribution Policy Chedworth understands the proposed changes to the base Residential DC charges are best represented by the standard residential charge per dwelling shown on page 22 of DC policy consultation document but excluding the proposed phased transitions identified for years 2021/22 & 2022/23 in the following diagram. The proposed 2021/22 DC policy signals a DC charge decrease for Infill areas and increases of up to 87% in greenfield growth cells. Whilst Chedworth Properties accepts that growth cells can be expensive to develop, it has serious concerns about the integrity of HCC’s current cost allocation and recover methodologies in terms of charge relativity between infill and greenfield development (ie $18,781/HUE to $95,491/HUE) to provide the same levels of service in infill and greenfield locations. Chedworth properties knows that retrofitting infrastructure capacity in brownfield areas such as under roads or even upgrading existing roads is considerably more expensive that providing the same capacity in a greenfield location. The following table shows the reductions in planned DC Capex for the Infill Areas attributed to planned expenditure in 10-year plan for the periods 2019-28 and 2022-31. ACTIVITY 2019 DC POLICY PROPOSED DC % DC CAPEX ($K) POLICY ($K) REDUCTION INFILL WATER 8,678 5,606 35% INFILL EAST WW 35,431 4,508 87% INFILL WEST WW 35,431 2,205 93% INFILL TRANSPORT 3,068 2,875 6% Despite the proposed reduction in DC capex, HCC is anticipating the following 30 year increases in units of demand for the infill area. ACTIVITY 2019-48 HUES 2022/51 HUES % INCREASE INFILL WATER 9,155 14,863 62% INFILL WW 9,767 15,406 57% INFILL TRANSPORT 7,319 13,233 80% Chedworth Properties can but conclude from the proposed DC policy that: § HCC has been installing surplus capacity in the infill areas over many years at someone’s cost to service the now planned intensification; or § HCC is using the DC policy to transfer costs from greenfield areas to infill areas to service the now planned intensification. Chedworth Properties submits HCC should provide evidence justifying the significant differences in the planned DC charge increases between the infill catchments and the growth cells before adopting the 2021/22 DC policy to demonstrate costs are not being transferred between catchments for recovery from other developments. The methodologies HCC uses do not appear to deliver fairness and equity and Chedworth Properties is very concerned that this is likely to result in the relocation of growth to other Districts, at the expense of Hamilton. HCC needs to get the fundamentals of their policy right (eg. transport demand factors, etc) rather than coming up with “incentives” in the form of remissions, caps and transitional charging arrangements to try and avoid putting in place a fair and equitable policy. While HCC continue to insist that the “incentives” being offered for certain types of growth in the Proposed DC policy are being covered by Ratepayers, Chedworth Properties is concerned that it is in fact only because greenfield growth areas are being overcharged. Chedworth Properties is also concerned that the Schedule of Assets supporting the Proposed DC policy includes assets where the growth cost component is fully funded by third parties. This results in Developers having to pay additional DCs for assets not being delivered by HCC. An example is in the Ruakura growth cell where $27 million has been contributed by third parties to the $29.6 million of transport works programmed when the cost allocation methodology identified a growth benefit of $15.1 million. HCC’s current cost allocation methodology does not differentiate between non-targeted and growth targeted third party funding which results in costs being over allocations to growth (ie. cost transfers from ratepayers to growth) which is unfair, inequitable and disproportionate. Chedworth Properties would also like HCC to confirm that the Kirikiriroa stormwater catchment development contribution charge in the Proposed Development Contributions policy includes all downstream erosion mitigation costs and that an additional charge for this will not therefore be payable at 224C. In addition to its Residential development land, Chedworth Properties also owns approximately 14 hectares of Industrial land. Chedworth Properties is of the issues of DC assessments performed under current and earlier policies that, in its view, have not been fair, equitable, proportionate or transparent. Examples include: § Requiring non-residential DCs at the time of subdivision by basing the DCs on assumed final site demand well before it is reasonably known. § HCC amends its policies (eg changes to demand factors, remission criteria etc). § HCC does not apply known rates of demand (ie HUE/sqm) when assessing DCs at existing development sites involving building modifications and upgrades. § Employing a time consuming and expensive remission process to recalculate DCs when the actual demand is clearly significantly lower than HCC originally assumed. § Increasing site demand assessments by adding canopies into the definition of Gross Floor Area (GFA) when such canopies do not do not generate any increase in site demand. § Using demand conversion factors to increases in site demand that exceed rates of demand available in various Industry standard publications, or from direct surveys. Growth Funding Policy Chedworth Properties firmly believes that the Current and Proposed Growth Funding Policies are completely unnecessary and creates an impediment to growth. Specifically we believe it discourages Developers from partnering with Council to share the costs and risks of growth. Such a policy also relies on the assumption that Council know where and when growth will occur and can invest ahead of time, with all the risk of investments for growth being carried by Council. There is no better example than Ruakura, which was an unfunded growth cell in 2015 but through the concerted efforts of Chedworth Properties and TGH was opened up for development with costs shared equitably by the parties through a Private Developer Agreement with Council. Council used the Growth Funding Policy to resist the “out of sequence” development of Ruakura in 2015, as their firm view was that the next big growth cell after Rototuna was Rotokauri and that Ruakura was not needed. Well we all know how that has turned out with: § Partially funded infrastructure (water, wastewater and roads, but no stormwater) resulting in stranded assets in Rotokauri and only 182 sections titled since 2016; compared to; § Chedworth Properties being on track to deliver 640 titled sections at Greenhill Park in Ruakura by July 2021 and over 1,000 more planned over the next 10 years while all other growth cells have largely stalled. In fact since 2016 Chedworth is the biggest developer of sections in Hamilton by some way, with the next largest developer over the same period delivering 296 infill titles. What would the supply of sections looked like in Hamilton without the “out of sequence” development of Ruakura? Long-Term Plan/Maintenance of Assets Chedworth Properties prides itself on the delivery of quality subdivisions that people are proud to live in.
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