Developers mull reserve levy

By Christine Nikiel

Friday 9th August 2002

Problems caused by a contentious council tax on residential developments have prompted action by Auckland developers.

Issues over the council's reserve contribution requirement were highlighted this week in reports about Melview Developments' $100 million Beaumont Quarter, spurring the Auckland Property Group, which represents high-profile residential property developers, to announce a focus meeting next month to nut out the issues.

Melview managing director Nigel McKenna was originally required to pay $3.2 million to compensate for the loss of parkland to the public and the Auckland City Council at Beaumont Quarter, a development on the old gasworks site on Beaumont St near Auckland's Viaduct.

But the council agreed to grant Melview a reduction to $1.1 million with the balance paid in land.

Mr McKenna said developers found it easier to pay the levy in cash so they could develop the site to its maximum with as many units as possible and get maximum financial return.

Had Melview done this with the Beaumont Quarter it could have developed 3155 units on the site, Mr McKenna said, but instead chose to build a 208-unit residential/office development.

The council formula for calculating the levy for a land contribution is based on 30sq m for each residential unit, while the cash alternative requires the owner pay a sum based on the site value and site area of each unit.

The council requirement for the 208 units was 6240sq m and Melview had also provided 6456sq m as public space, Mr McKenna said. That leaves 216sq m, which will also be used as public space.

Smaller developers found it easier to pay in cash than land because a smaller development had less chance of providing useful open spaces on site, he said. "Ten units times 30sq m is not a lot of space."

The levy has created difficulties for developers building smaller one- and two-bedroom projects in city suburbs such as Parnell and Ponsonby.

Hemisphere Group and Retro Developments last year successfully appealed against the Auckland City Council over development levies they claimed were excessive.

The two companies received resource consents for their Parnell and Ponsonby developments before the city council changed the reserve contribution calculation in 1999, increasing the levy for a land contribution from 20sq m per unit to 30m sq m per unit.

However, the city council then demanded they pay a levy based on the new calculation.

Melview has also applied to cut back the number of carparks at Beaumont Quarter for the 74-unit first stage from 148 to 96 (because the developer said they were found to be unnecessary). That decision has been passed to the city council's regulatory and fixtures subcommittee, which wants the public to have a say in the matter.

Meanwhile, stage three of the Beaumont Quarter is scheduled to be launched in the next two months with a new display suite being built. Wet weather had slowed the project down somewhat, Mr McKenna said, but stage one was on target for completion at the end of this month.

Prices for a one-bedroom apartment start at $169,000 and stretch up to $439,000 for a four-bedroom terrace house.

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