Who pays for the new pipes to houses that never get built?
Ratepayers do.
Auckland house prices are down about a quarter since 2021. Growth charges have more than doubled in places. Who do you think funds that gap? No one, because the homes don’t get built.
Growth can only pay for growth when growth is feasible.
https://www.rnz.co.nz/national/programmes/ninetonoon/audio/2019053037/developer-wants-infrastructure-costs-spread-out
On an Auckland infill site, council development contributions, Watercare’s growth charge and Vector connection charges can add $120,000 or more to a new house, sometimes more than their share of the land is worth.
Infill sites carry more homes. Say a developer pays $800,000 for an old house on an 800 m² site and can fit four additional homes on it. The growth charges on those four extra homes can reach about $440,000. At today’s prices the finished homes can’t carry that cost. The project runs at a loss, so it doesn’t get built.
Watercare’s growth charge alone is $30,000 a home, rising to $33,000 next year. These costs only work if house prices go up. Christopher Bishop, is that the outcome you want?
No homes means no growth charges, no levies and no new ratepayers. What is left? Pipes planned for growth that never comes, and existing ratepayers paying for white elephants until new growth eventually comes.
What your council will not tell you is why. In some areas new homes have been priced out of existence.
A better way to charge
The way it is charged makes it worse. Council’s funding model already includes interest. The whole bill is then charged upfront to the developer, in other words the new home owner, who funds it on a 30 year mortgage if the project is feasible. Unless you think we work for free?
Why not spread the cost? Attach it to the new home and pay it off over the life of the pipes, adjusted as the real growth costs become known. Think of it as hire purchase at government backed interest rates. It is a far better way of doing it.
Regulation is welcome. It also needs competition, and a fine tooth comb over the estimates. Listening to some of the questioning in council meetings on YouTube, I am not confident that there has been proper quantity surveying over their tenders.
Planning without regard to what Kiwis want to live in is pointless. Why force development into zones that cannot take the housing? RMA reform will not do much for intensification while the feasibility is a loss.
Kiwis cannot afford ever rising house prices. So where is the money for this infrastructure coming from?
Kiwis will move to where they are welcomed and where they can afford to live and work. That is not always where council has decided growth should be placed.
