Central city rebate policy being debated at council table

Christchurch city councillors are today considering a controversial policy labelled “socialism for the rich” and “cynical corporate welfare".

City councillors will consider extending the central city residential development contributions rebate scheme, which has benefitted developers by millions of dollars since its inception in 2014.

A development contribution is a charge on new developments that place additional demand on the city council’s infrastructure. Revenue from development contributions is used by the city council to repay debt funding, which is used to provide growth infrastructure.

However, since 2014 the city council has rebated residential developments within the four avenues of development contributions in a bid to encourage growth in the city centre.

A total of $13.5 million has been rebated to developers since the policy’s inception, resulting in 1175 new units being built in the central city.

The rebate is debt-funded and comes at a cost of about $756,900 a year to the council with a 0.15 per cent impact on rates.

Keep Our Assets Canterbury has previously labelled the policy “socialism for the rich.”

City councillor Jake McLellan said he was probably going to vote against the policy.

“I have had a long-standing view that it is cynical corporate welfare,” he said.

“I guess people would argue that it is about getting the cost of buying a home in the CBD down but there is no evidence to suggest it does that.”

While city councillor James Gough was not prepared to comment on the decision itself prior to it being considered by council, he thought the premise of the policy was simple.

“If you would like to see the cost of inner-city housing lower or more affordable then you would support the rebate. If you want to see inner-city housing prices increase you would rescind it,” he said.

“Any reduction in a development cost doesn’t impact margin and go into a developer’s back pocket, it just allows for the end-product to be more competitively priced and makes the house more affordable.”

City council staff have recommended the policy is extended beyond its current expiry date of July 1 and continues until a total of $20 million is rebated. The council would also have the ability to end the scheme at any time under this agreement.

Staff have recommended against extending a similar scheme aimed at commercial development within the central city which is set to expire at the end of this month.

Williams Corporation managing director Matthew Horncastle, whose company has benefitted $2.9 million from the policy, helping build 255 units within the heart of the city, refuted claims of the residential policy being “corporate welfare” and “socialism for the rich.”

“You either want to build the city or you don’t. One thing you have to do in achieving that is that you have to make it attractive for developers and reducing as many costs as possible will assist in that heavily.”