Auckland is currently in the middle of a massive building boom with consents reaching a new all-time high in August with just under 20,000 issued in the last 12 months.
Most of these consents are within the existing urban area but as Auckland’s population has grown, so too has its urban footprint. That is currently set to continue to happen long into the future with around 30-40% of Auckland’s growth expected to occur in ‘greenfield’ areas. In total there could be as much as 130,000 new homes added those areas.
Yet we also know that growing this way results in some of the worst outcomes for our city. For example, it helps lead to longer journeys to access work, education, recreation and other amenities resulting in greater emissions and congestion. There are many other issues with it too – some of this was excellently explained by urban developer Mark Todd of Ockham
Since 2000, New Zealand has lost a third of all its vegetable-growing land. Once buried in concrete, it’ll never come back. Death by a thousand diggers.
The numbers are numbing – a thousand hectares a year, a hundred thousand trees, a million birds displaced, innumerable lizards and insects. Wetlands are drained, waterways piped. In their place, dozens of new suburbs you’ve probably never heard of. If you can place more than three of the following on the map, you are the undisputed King of Urban Sprawl Bingo.
Hingaia, Waiake, Pahurehure, Red Hill, Rose Hill, Pinehill, Redoubt South, Wattle Downs, Northcross, Randwick Park, Clover Park, Totara Park, Totara Heights, Fairview Heights, Lucas Heights, Palm Heights (note: any land more than five metres above sea level automatically earns the moniker ‘Heights’ in the urban sprawl dictionary).
We tell ourselves this is inevitable – that this is the price of progress. We endure ever-worsening congestion – more lanes, more cars – and arrive late and frazzled, ‘Bloody Auckland traffic’ our stock greeting shared with rolled eyes and a rueful smile.
We fudge or rationalise or simply ignore the cost of our urban sprawl – the billions of dollars for our roads and motorways, the billions of hours wasted at the wheel, the billions of tonnes of carbon emitted. And then there are the 50,000 hectares of nature that have been sliced and diced into subdivisions. Like the apocryphal frog in the pot, we keep adjusting to the new normal, not realising what we’ve lost until it’s gone forever.
It is a development model replicated in car-centric countries all over the world, one driven by a frontier mentality and underpinned by the folly that our horizons are unlimited, and we can just grow ourselves out of trouble. It’s never been less true than now.
Growing this way is also expensive as the council need to pay for the infrastructure to support it, infrastructure such as transport links, parks, three waters and community facilities. Back in 2019 the estimated cost for just the transport infrastructure alone was expected to top $10 billion with the actual figure likely working out at over $100,000 per new home.
It’s no surprise then that the sprawl industrial complex is falling over itself in places like Drury to race ahead of the councils plans for developing these areas when you hear they only contribute between $11,000 to $18,300 per dwelling. In other words, as ratepayers we are significantly subsidising sprawl which in turn helps make our city less liveable.
So it is interesting to see the council are considering changing the amounts they charge for development contributions and the initial cab off the rank is Drury.
Charging development contributions enables us to recover costs from those who cause the need for, or will benefit from, the infrastructure Auckland needs to support the rapidly growing city. If we cannot recover a share of these costs from developers, the full cost will need to be recovered from ratepayers.
What we are proposing
We are proposing a new Contributions Policy, to take effect from 10 January 2022.
Updating for new information in the Recovery Budget
The proposed changes result from updates to the growth component of capital expenditure in the 10-year budget. The development contributions price will rise in some areas and fall in others depending on the level of investment in each area. Overall, the weighted average development contributions price is falling as the pace of growth is outpacing investment.
Including projects beyond ten years
We propose gradually updating the Contributions Policy to include the infrastructure required to support growth in the infrastructure priority areas over 30 years.
For the Contributions Policy 2021, we are proposing to start with Drury. Drury is the area where we have the best information to implement the changes. Others will follow as work progresses.
We have included plans for $400 million on investment in local and arterial roads and parks in the Drury area in the next ten years and a further $2.1 billion to be delivered beyond 2031. Under the new draft policy, development contributions will rise from between $11,000 to $18,300 to $84,900. This ensures developers in Drury pay a fair share of costs. The alternative is for these costs to be met by ratepayers.
What increasing development contributions will do
Our research indicates that increasing development contribution charges will:
- better align these costs with the actual cost of infrastructure
- increase the certainty that infrastructure will be delivered
- ensures ratepayers don’t have to bear all the costs of growth
- encourage more accurate pricing of land purchases for development to reflect future development contribution prices
- impact developers who have paid for land based on current development contribution charges
They’re also looking to change the policy so that these development contributions have to be paid at the time the consent is granted.
Unaspiringly the sprawl pushers aren’t happy, claiming it’s unfair and will put developments at risk. While that may not be the direct intention of the council, which is more focused on balancing their budgets, it could well be a positive side effect. It has long been suggested that one of the best ways to curb growth on the fringes and to encourage more development within the existing urban area is to ensure the developers pay the full cost of greenfield development. While this change still isn’t the full cost, it is a lot closer than it has been before and that potentially helps shift the balance and makes redeveloping existing urban sites more attractive.
Further, the changes that should come as a result of the National Policy Statement on Urban Development, if the council implement it properly, will serve to open up more urban land for redevelopment.
The council are just starting with Drury but it seems these kinds of changes will be seen elsewhere too. It’s unclear what impact this could have on developments within the existing urban area but it should be noted that even if new/upgraded infrastructure and or services are needed to support them, they will also likely benefit existing ratepayers too.
As noted above, the council are focused on this as a way to balance their budget but if it ended up slowing the rate of our urban spread it could end up one of the most significant and positive policy changes of recent times.
Finally, it’s also worth noting the council don’t think this decision will impact on house prices.
Development contributions and house prices
National and international evidence shows that increased contributions fees do not cause house prices to rise over time.
House prices are determined by the supply and demand for houses not the cost of land and building.
Over time the Development Contribution costs are deducted from the price paid for the land. Developers will adjust the price they are prepared to pay for the land, reflecting the price they can sell a house for fewer construction costs, development contributions, other costs and a margin for profit.
The council are currently consulting on the proposal with submissions open till 17 October.