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Productivity Commission Nails Urban Planning 

The 23 recommendations contained in the draft report of the Productivity Commission Better Urban Planning apply principally to urban situations, but on consideration are equally applicable to the situation in this District where 'hodge-podge'  planning has resulted from inadequate rules surrounding land-use, and sub-division.

The net result is summed up in the final two paragraphs of Brian Fallow‘s comments on the report  in today’s NZ Herald.  and set out below.

Who isn’t aware here of the inordinate bias in favour of developers who have been shamelessly encouraged by a Council committed to development at any cost. And that means any cost to existing rate-payers.

The prime example here was the Eastern Seaboard wastewater development overseen by Lux and his chosen successor Barriball, ably assisted by Steve Ruru and his “cost sharing” philosophies that were based simply on the inability of those benefiting to pay the $94m cost. So every ratepayer was and continues to be duded with the cost.  

Then we had the unconscionable situation that arose in the case of Hopper’s marina developments when our basically amateur and naïve planners were faced with one of the best advised and most experienced developers in the country who proceeded to take the entire District to the cleaners over development contributions, and infrastructure costs.

The eternal dilemma facing councils lies is the desire to achieve 'growth,' and be seen as doing something - anything. The emphasis over the last six years on tourism in the District is a prime example, but it could just as easily been growth in terms of accelerated sub-division, or 'catch-up' in existing developments - witness Waterways at Whitianga.

The problem is that in both cases, Council is constantly under pressure to provide infrastructure and inadequately compenstaed by developers - there is only one alternative - increased rates or borrowing. In the case of the latter, low interest rates help to disguise the long term effects, and deliberate risk taking as in the case of delayed essential renewal (i.e. Drainage) results.  

On the other hand, councils are shamed and threatened by the likes of Nick Smith, and his unrealistic expectations of keeping urban section costs at an absolute minimum, while offering nothing by way of Government use of the fiscal levers available to them. Ironically, our problem is not related to section cost - rather the opposite, and there is simply no good reason why they should not fully reflect infrastructure cost. Otherwise, we will continue to be taken to the cleaners.   

Cross-subsidisation of development is one area of public policy where aspirants to high office in this District should be questioned during the election campaign to establish once and for all where they stand in this regard. Once they are in office it is too late for us to bellyache about the benefits that developers have achieved at our expense.

Here are extracts from Brian Fallows article on the Productivity Commission recommendations:

“Targeted rates, for which there is already statutory provision, would help ensure that those who benefit from new infrastructure contribute to the cost, rather than having it socialised through general rates.

The commission sees targeted rates as a way of filling funding gaps arising from restrictions on the development contributions which developers pay and which get front-loaded into the purchase price when they sell properties.

"A future planning system should enable councils to levy targeted rates on the basis of changes in land value where this occurs as the result of public action, for example installation of new infrastructure or upzoning," it says.

The commission is inclined to accept the argument councils run that "growth does not pay for growth." In other words, the eventual increase in the rating base is not enough to cover the cost local authorities face in enabling that growth.

Unsurprisingly for a bunch of economists, the commission emphasises the usefulness of price signals, not just to users of roads and water, but to planning authorities themselves.

When price separation along a rural-urban boundary, for example, exceeds some threshold, that should trigger action to increase land supply for development.

It recommends making independent hearings panels, like the one which has just delivered Auckland's Unitary Plan, a permanent feature of the system.

And it would narrow rights to appeal planning decisions, especially by those not directly affected.

It calls for a greater use of pricing mechanisms rather than command and control regulation.

It favours measures for funding infrastructure which reduce cross-subsidies from the wider community and which supplement front-loaded costs (development contributions) with ongoing finance from user-pays and targeted rates.

And it favours a greater role for central government, both to reduce the capture of decision-making by local vested interests and to reflect genuine national interest in having well-functioning cities that people can afford to live in”.

And here are relevant extracts from the Recommendations:

       -  A future planning system should allow councils to:

  • set volumetric charges for both drinking water and wastewater; and
  •  apply pricesfor the use of existing local roads where this would enable more efficient use of the road network. 
-  Councils should use targeted rates to help fund investments in local infrastructure,
wherever the benefits generated can be well defined.
-  A future planning system should enable councils to levy targeted rates on the basis of
changes in land value, where this occurs as the result of public action
(eg, installation of new infrastructure, upzoning)

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