Who Pays for Infrastructure in Greenfield Land Development?

Development of large areas of land to allow for additional residential housing in Selwyn is at an all-time high, with the region experiencing multiple privately initiated plan change requests. These requests usually seek to allow farmland on the edge of townships to be converted to residential zones. There is much dispute if this is a good thing or not, or if we should instead be accommodating people within the existing urban extent of Selwyn’s townships.

When considering your view on this issue it is important to understand the costs to the community versus the costs borne by the land developer. Land developers are responsible for paying for, and installing, the physical infrastructure for servicing the developments. This includes pipes for water supply and wastewater disposal, installing fibre and power, and providing areas for stormwater disposal if the Council network cannot accommodate it. Developers create roads and are required to provide recreational park areas if Council’s existing network of parks is not sufficient to meet the needs of the likely future residents. In addition, developers may be required to upgrade the size of Council’s pipes or install additional infrastructure between the site and Council supply areas if there is insufficient ability to accommodate the future development.

Every time a new section is created in a subdivision, Council levies a contribution from the developer under the Local Government Act at the rate set out in the Development Contributions Policy in the Council’s Long Term Plan. These contributions are required to be spent on the matters they have been levied for, and includes capital investment into sewer disposal, stormwater disposal, water supply, roading upgrades, and community services such as libraries.

In contrast, rates, which are levied to every household in the district, provide for the operational expenses of the district. This includes road maintenance and repairs, maintaining and fixing pipe infrastructure and operational costs involved with community facilities and community programs. Newer subdivisions are charged rates immediately once titles are issued, however the roading, or pipe networks in those areas should only require minimal maintenance for the first few years. Therefore, the rates spend on maintenance can be focused on existing older parts of the district or other areas requiring maintenance.

So, when you are considering your views on the expansion of Selwyn’s townships, it’s helpful to understand that the costs of designing and installing infrastructure are not paid for by Council or the community. Rather, a significant contribution is made by the developer, who has to subtract these costs from any potential profits before moving ahead with any residential development.