A leading property organisation has welcomed Hamilton City Council’s boost for urban design, while warning developer discontent is likely to persist.
As part of its 10 year plan, the council has overhauled its developer contribution (DC) settings while also proposing an average 8.9 percent rates rise.
Among a raft of changes, builds in the CBD of six storeys and higher are set to gain a full contribution remission, dropping to 50 percent for other buildings. The remissions depend on engagement with the urban design panel.
Elsewhere, industrial, commercial and retail contributions will be capped citywide, while growth cells Peacocke, Rotokauri and Ruakura continue to attract substantially higher residential contributions than elsewhere.
In the absence of the much-touted special purpose vehicles to take some of the burden, and with high debt levels, the city is constrained in what it can do.
Thomas Gibbons, who is on the Property Council Waikato regional executive, emphasises the city has engaged with his membership-based organisation over the changes.
“There have been some robust discussions about the background to those and the evidence base for them, and the implications of them. From a Property Council point of view, I think there has certainly been a degree of positive engagement.”
However, he says there remains a view that the city’s DCs are still too high, and a current court challenge to Hamilton City Council may be just the tip of the iceberg when it comes to developer dissatisfaction.
“Among the overall development community, there has continued to be a lot of angst around DCs,” he says.
“There are still many examples where people are dismayed or concerned or even outraged at the level of DCs in Hamilton.”
City Council chief executive Richard Briggs acknowledges the concerns, but says part of the issue is the difficulty in flexing around the District Plan, with development requirements potentially changing years later, after infrastructure has already begun in an area.
“It is really complex, and that leads to lack of transparency, and I can understand why the developers find that a challenge. But ultimately, I’ve got confidence in the model.”
When it comes to the caps for non-residential development contributions around the city, Gibbons says they are not enough.
“There’s really a lot of work to do around having a simpler policy that is more enabling of development.”
Gibbons says his organisation supports remissions as a way of encouraging further development, though it remains to be seen whether the six storey limit will encourage buildings of that height. The Property Council is also very supportive of the boosted role for the urban design panel.
“We’ve been aiming for some time to have the design panel to have a more empowered role. The experience of those who go through the urban design panel is almost always positive. It really does achieve good things for development.”
Gibbons also sees an important role for the panel throughout the city as intensification continues.
“There is a real need for more housing and in particular more affordable housing. Balanced against that are some of the community expectations around how that development will happen and what it will look like,” he says.
“Principles are more important than the rulebook, and one of the things we’d really like to see there is the ability to use the design panel to allow greater levels of departure from the strict rules of the district plan where good design outcomes are created.
“An example which comes to mind is there are some sites in which you might see three sets of duplexes on them, because the district plan clearly allows for duplexes. Now, it might actually be much better from a design point of view to have two sets of triplexes, that might look a lot better.
But that’s harder to do. And therefore, a lot of the time people work to the basics of what is in the plan, and to some extent council planners do as well.”
Gibbons says it’s important that “the right voices” are heard. “I think it’s very easy for local government to get tied up with community resistance to certain proposals, for various reasons,” he says.
“I think it is unfortunate at times that we don’t give a voice to those families who will be moving into the new houses that are put up. Every duplex unit is a new home for someone, and it might be a home that they’re actually very proud of, even if the neighbours don’t like it.”
Growing concerns around carving up productive farmland for housing and around urban sprawl present barriers to future greenfield development.
Gibbons says regional sprawl can also become an issue as DC costs are passed on to home buyers, raising house prices in the city and potentially driving drift to smaller towns, in turn putting pressure on the roading system and commuter times.
That could be exacerbated by the “easy alternatives” to Hamilton when it comes to commercial and industrial developments. “From an individual developer or business owner point of view, some of these decisions [to go out of Hamilton]become almost a no-brainer. From a regional point of view, it enhances those issues of sprawl and so on, and isn’t always the right answer.”
Briggs accepts there have been examples of companies choosing to go outside the city, citing Visy setting up at Hamilton Airport. He says that is partly around the level of service the city provides, including a tertiary level wastewater treatment plant and water plant.
“We provide that for everyone in the city. Not all businesses want that. And if they don’t want it, they’re not necessarily prepared to pay for it.”
Gibbons acknowledges DCs have been a hot topic in a number of high growth areas, including Auckland. “At the same time, I think Property Council’s view over a number of years has been that Hamilton city has taken a very assertive view on DCs. It’s acknowledged that reflects the pace of growth and the difficulties of working out how to fund that growth. But Property Council has taken the view that even though there has been good engagement, there have still been some real concerns about the impact of Hamilton’s DC policy in the sense it’s making Hamilton something
of an outlier.
“It is really important for Hamilton city to get the balance right around community interest and the interest of being a city that is open to growth.”
Come in, SPV
Growth doesn’t come cheap, with infrastructure a major cost for councils. One potential solution often mentioned is a special purpose vehicle (SPV), similar to a targeted rate, whereby the cost of development is taken off the city’s balance sheet.
Thomas Gibbons has welcomed the urban design panel’s greater role.
It is among the solutions proposed by the Property Council, with Thomas Gibbons saying his organisation has pushed over a number of years for the city to be more innovative in how it funds infrastructure.
“The obvious examples are targeted rates, use of special purpose vehicles, in some situations public-private partnership. So there are those tools there and particularly in a place like Hamilton, that has high growth, they need to be used.”
Milldale in Auckland is the prime example of an SPV, with ACC stumping up with long-term finance and house buyers paying an annual $1000 levy over 30 years. Hamilton has yet to get a similar arrangement off the ground, though council chief executive Richard Briggs says it’s not alone in that.
He says managing risk tolerance requires work but Hamilton is “right up the list” in terms of councils that are most prepared to do something.
“We’ve done our numbers, and we know what it looks like. We know how we can do it.”
Peacocke is a prime area where a “conversation” is being held. “I suggest that holdups aren’t at our end, it’s more of a case of getting everyone in the right position.”
