DR-093-Taupo-District-Council.Pdf [209
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SUBMISSION TO THE PRODUCTIVITY COMMISSION .USING LAND FOR HOUSING' DRAFT REPORT, JUNE 2015 TAUPO DISTRICT COUNCIL GREAT LAKE TAUPO Taupo District Coundl OFFICE OF THE MAYOR/CHIEF EXECUTIVE OFFICER July 2015 72 Lake Terrace, Taupo 3330 Private Bag 2005, Taupo Mail Centre Taupa3352, New Zealand T 07 376 0633 F 073773583 E cbjuckner®tauDo.aovt.nz 1 www.tauDO.aovLriz Thank you for the opportunity to make comment on the draft report. We understand the focus of the report and the heavy emphasise on the challenges facing Auckland. Our comments are intended to provide a different perspective, identify some of our experiences that may be of relevance and to highlight the importance of regional New Zealand. 2. Managing land subdivision and population growth are different - but both are relevant The report is cleariy focused on the issues facing high growth urban areas. We would like to emphasise that this will change over time and that this needs to be considered when looking at potential options. In the period around 2003 - 2007 the Taupo District experienced substantial growth in land subdivision. As an example the town of Kinloch essentially doubled in size in terms of allotments. In contrast, there was subdued growth in terms of population and actual building activity. In terms of population the district was a relatively low growth area, however the land subdivision activity pushed the district into the upper echelons of those growth councils around the country. The district was faced with a range of issues around managing the location of development and the provision of infrastructure. In response, the Council developed a spatial plan (Taupo District 2050) which it embedded in the District Plan and supplemented by specific structure planning and infrastructure planning. The key points are: . It is important for the Commission to consider the management of growth in the context of both land subdivision and population growth. They do not necessarily happen in parallel. Areas will go through phases of change, moving in and out of being "high growth' areas. The impacts of growth will often be proportional. In the context of Auckland a 500 allotment development is relatively minor, where in the Taupo context such a development would have major implications in terms of market capacity and infrastructure demand. It is important for Councils experiencing growth to have access to a tool box to manage the effects. Those tools should be available to all councils, however this needs to be balanced with recognition that not everyone will need to apply them to the same extent. 3. Solutions to address Auckland's problems wont necessarily be applicable elsewhere The report repeatedly refers to the issues in Auckland - and rightly so. As New Zealand's largest city and most important growth area you would expect land supply and housing affordability to be an issue. Many of the recommendations that the draft report identifies are predominately about responding to the issues that Auckland and a select number of high growth areas are experiencing. However, the suggestion is that a number of these would be applied on a national basis. It is unclear what the unintended consequences would be from these changes for provincial and rural councils that either have low growth or are in decline. One of the advantages that regional New Zealand can offer is a simplified approach to regulation. The reduced scale of urban areas and related infrastructure can enable a more streamlined approach compared to the complex nature of issues in centres like Auckland and Christehurch. As an example, we were able to complete our spatial planning within a year compared to the multi year project that the Auckland spatial plan became. It is important that councils in regional New Zealand don't lose this economic advantage, as a result of the imposition of national solutions to an Auckland set of problems. 4. The solutions for high growth areas like Auckland could involve regional New Zealand There are some very real constraints on the growth of major urban centres. White there are clearly agglomeration benefits associated with major urban centres, there are likewise costs that we do not always quantify as part of investment decision making. In thinking about the growth management issues we would like to challenge the Commission to think beyond solutions that are focused on Auckland. We would like to see a greater consideration of the part that regional New Zealand could play in alleviating some of the pressures on the high growth urban centres. Many regional urban centres have ready capacity for population growth. For example Taupo has land already zoned for several thousand residential allotments. The challenge is aligning this ready supply of affordable housing with employment opportunities. We suggest that the Commission give more attention to the opportunities afforded by towns such as Taupo and specifically that they look at encouraging a more integrated approach to regional economic development. We don't expect that there will be mass migration out of Auckland, however the encouragement of employment opportunities in regional New Zealand would make better use of existing resources and at the same time help alleviate some pressure on Auckland. 5. Avoid the private provision of infrastructure We acknowledge that there can be circumstances where the private provision of infrastructure is of value; however we believe that there are significant risks unless this is very limited. Given the smaller scale of development that we tend to see in the Taupo District, it is rare that water or wastewater could be provided by developers at a cheaper rate than Council. What tends to happen with private infrastructure is that they are built to a lower standard than what the community expects and pressure is then applied to Council to take over the inferior assets at a cost to ratepayers. This has been a reoccurring problem with private roads in the Taupo district. After 10 or so years of use, pressure is placed on Council to take on these inferior assets that place a burden on existing ratepayers. We have the added issue of being within a nitrogen limited catchment and therefore any onsite discharge for wastewater needs Regional Council consent, a process that is difficult and costly. This also applies to any new water takes as gaining approval for additional water takes is difficult in an over allocated catchment. In terms of housing affordability, Taupo District Council does not see a correlation with the private provision of infrastructure as an alternative to community infrastructure. Council has the ability to invest in large scale infrastructure and then transfer payment across a wider funding base. If a developer had to build this infrastructure it would place a significant financial burden at the front end of the development and add to their overall risk. It is likely to have the opposite effect on housing affordability than that anticipated by the Government. 6. Valuation basis of general rates The commission shows a strong preference for a land value based rating system as opposed to a capital value based rating system, stating that "the use of land value rating systems would encourage land flowing to its highest value uses, including more and denser housing." As mentioned earlier in this submission, housing affordability is an issue in some parts of New Zealand, mainly Auckland, Wellington, Queenstown and Christchurch, but in the Taupo District a large range of housing options are available across all pricing brackets. To give an example, the following is provided from Councils rating database: Capital Value (2013 Rating valuation) Dwelling Numbers $0 - $200,000 3,919 $201,000-$300,000 4,316 $301,000-$400,000 4,091 $401,000-$500,000 2,278 Greater than $501,000 2,618 Total 17,222 We feel it is very important that the principle of subsidiarity applies when looking at rating systems. Every city, town or region has its own unique characteristics and the ability for local Councillors to design an effective rating system to best reflect its own community is critical. Discussion in the report focusses on cities when discussing rates and the impact on residential housing. The distribution of the general rate take in the Taup5 district is shown in the table below: 2015/16 General Sector Rates Residential 49% Rural 24% Industrial/Commercial 11% Electricity 10% Accommodation 4% Utilities 1% Other 1% As can be seen from the table, the rural sector is a very important part of our economy and rating base. Federated Farmers have strongly advocated for capital value rating systems and continue to lobby on a national basis for this. In addition Taupo is in a unique situation with significant hydro and geothermal electricity generators located in our region, which accounts for 10% of our general rate collection. Of the 49% residential ratepayers approximately 42% of these are non residents i.e. holiday homes. All of these factors need to be considered when designing an effective rating system for the Taupo distpe^. A one size fits all approach simply will not produce a good result. / / D^ivid J Trewavas MAYOR.