Shot in the Arm for Building Owners

6 December 2013

Two proposals to stimulate economic growth and safety in the Capital City will be considered by the Wellington City Council next week.

Under the proposals before Councillors, as part of the Mayor’s draft 2014-15 Annual Plan, there would be significant changes to development costs paid by developers of new ‘Green Star’ rated buildings, and stronger incentives for owners to strengthen quake-prone buildings.

The Council’s Governance, Finance and Planning Committee Chair, Deputy Mayor Justin Lester, says the proposed changes aim to support quality buildings, reduce council compliance costs and improve the efficiency of council processes.

Development contributions are paid by owners of new buildings to fund the building of public infrastructure, like pipes, roads and footpaths, which are all needed as a result of demand from new buildings in the city. It also includes community infrastructure like sportsfields and pools for residential developments.

The proposal will reduce these levies overall – by an average around 20 percent – including removing reserve contributions from commercial development levies and costs for community infrastructure.

The changes would cut the up-front costs of major new-builds, says Cr Lester. “The proposals signal that the Council understands the importance of building activity to local jobs and the city’s economic sustainability.”

The Council’s Economic Growth and Arts Committee Chair, Cr Jo Coughlan, adds that the proposed changes “demonstrate the Council’s commitment to being ‘open for business’ – and working with the business community.”

Buildings Portfolio Leader Cr Iona Pannett says incentives are also proposed for the developers of new environmentally-friendly buildings.

“We're considering significant reductions in development contributions for ‘green’ buildings – these buildings have economic, environmental and other benefits for the city.”

The intention is to provide greater certainty and to remove unnecessary process costs by: 

  • Shifting the payment of a DC from the front end of the development to when the property is actually occupied or sold.
  • A 50% reduction in DCs for significant ‘green’ rated developments.
  • Exemption from the Downtown Levy and also from the commercial sector targeted rates – totalling around 25% of rates relief during construction. 

“Any reduction in development contributions will be more than offset by the benefit the city receives from rates revenue generated over the life of the new building, which in turn benefits ratepayers,” says Cr Lester.

Mayor Celia Wade-Brown adds: “This is a positive initiative that’s good for business and the environment.”

Quake-strengthening incentives

“The earthquake strengthening proposals add rates relief and reductions in consent fees to the Council’s support package, in addition to existing funding support to our heritage buildings,” says Buildings Portfolio Leader Iona Pannett.

“The Council has to increase our support to save Wellington’s building stock, particularly our heritage buildings, much of which is quake-prone,” says Cr Pannett. “The focus on our earthquake prone buildings makes sense. This will add to our heritage incentives and improve the safety of our built environment.”

The initiative includes:

  • Remitting rates on a building while it is being strengthened but is not able to be tenanted.
  • Once an existing building is strengthened or demolished to hold rates at pre-strengthening levels (plus average rates increase) for three years.
  • Return 10% of building consent fees (up to $5000) once a building is strengthened.

The incentives package would be a ‘do now’ option while the Council works with the Government and other organisations, including the banking and insurance sectors, on the feasibility of other more ambitious schemes that could make financial assistance to building owners more affordable and freely available.