The Queenstown Lakes District Council wants to change the district plan to force developers to pay the Queenstown Lakes Community Housing Trust 5% of estimated sales value in cash or land.
It would not apply to developments already making affordable housing contributions.
Winton Land Ltd lawyer Daniel Minhinnick told an inclusionary housing variation hearing panel the company supported the intention to increase the affordable housing supply.
He called the council’s aspiration "admirable" but labelled the execution, assessment and analysis as flawed.
Mr Minhinnick said the proposed variation to the district plan was "a blunt instrument".
There was a "myriad" of different causes of Queenstown’s housing problems, he said, and there "could well be" a range of tools to address the issue.
"In this instance, council has elected to levy a financial contribution on a small sector of the community."
Referring to other evidence provided to the hearing Mr Minhinnick said a "key option" that had not been fully assessed was funding from general or targeted rates.
Mr Minhinnick said Winton had a portfolio of 6500 residential lots, dwellings, apartment units, retirement village units and commercial lots across New Zealand and Australia.
Imposing additional costs on developers was a disincentive to residential development.
"Evidence for council acknowledges that a financial contribution will result in adverse costs, including costs for developers, administration costs for council plus the possibility of housing being delayed, not proceeding or having to be sold at a higher price.
"The council’s case seems fixated on a perception that developers are somehow getting a windfall gain, and that this variation simply reflects a quid pro quo."
Winton’s Queenstown general manager Lauren Christie gave evidence that while Winton "generally supports" the intention to increase the affordable housing supply, the district plan variation was "not the most appropriate method."
"As a major developer across the district, the variation has the potential to significantly affect Winton’s developments.
"There is substantial risk associated with undertaking residential development and margins are carefully calculated to take account of the risk.
"The cost of the actual construction of development is significant,.
"There are also significant costs incurred prior to construction, such as the costs of consent and plan change applications, evidence and hearing processes, and for many large developments, appeals to the Environment Court.
"Any additional costs that affect margin will inevitably be included in the purchase price.
"The variation imposes additional costs on developers, which will make the process more expensive for developers, but does not provide any corresponding incentive or benefit.
"This will not only discourage residential developments from being built but is likely to result in the additional costs being passed on to the purchasers of the property.
"This is precisely what the contribution is attempting to avoid.
"The variation does not incentivise the development of land.
"The mandatory contribution imposed by the variation on residential developers will have unintended consequences and is unlikely to achieve the outcomes sought."
The two-week hearing by commissioners Jan Caunter (chairwoman), Jane Taylor, Ken Fletcher and Lee Beattie, is due to conclude later this week.
