MDC is seeking your feedback on the Development and Financial Contributions Policy. This policy outlines who is responsible for paying development contributions and how they should be paid.

What is a Development Contribution?

Development contributions are fees charged to people (developers) who subdivide land, usually to build new houses or commercial buildings. They pay for projects that provide the additional services that development creates in Council identified growth areas, including roads and footpaths, water pipes, drainage, and new parks and reserves.

These services are required because of growth. Growth is good for the district – it brings vibrancy, economic benefits and allows us to spread costs over more people. But it has to be well-planned with services in place when developments happen.

Historically, how have Development Contributions been funded?

Up to now, 100% of the costs of council projects that support growth are funded by development contributions. The idea behind this is that developers create the need for these projects, and benefit from them, and therefore they should pay all the cost.

Development contribution fees for a standard property are $26,342 in the Feilding Urban area, $19,696in the Feilding Intensification area (CBD), and $7,355 in the Village and Rural areas. However, interest and construction costs have increased significantly over recent years. We need to significantly increase development contribution fees to cover costs. We are proposing two options on how to calculate development contribution fees.

Why Your Feedback Matters:

This decision affects the growth of our District and ultimately who is financially responsibility for growth.

Should developers pay the full cost, or should ratepayers pay some of the cost of projects to reflect the benefits the wider community receives from the projects that support growth.

Take the time to review the two proposed options and use the submission form to tell us your feedback.

Consultation is open from 30 October 2024 to 29 November 2024.

Consultation Options:

  • Option One

    Developers would continue to pay 100% of the costs of future projects through development contributions.

    Learn more about option one below.

  • Option Two

    Developers would pay the growth component, and ratepayers would pay the renewals and increased levels of service component of each future council project.

    Option 2 is MDC’s preferred option.

    Learn more about option two below.

Option 1: Developers would continue to pay 100% of the costs of future projects through development contributions.

Developers would continue to pay 100% of the cost of council projects that support growth. Under this option development fees would increase significantly.

For example, under this option, someone who subdivides residential land would pay $53,770 per new section (a 104% increase) in the Feilding Urban area, $38,883 (a 97% increase) in the Feilding Intensification area (around the main town area), and $11,235 (a 53% increase) in Rural and Village areas.

Under this approach, ratepayers do not have to pay for council projects that deliver additional services to support growth – only developers, who create the need for the additional service, pay for the projects.

However, higher development contribution fees could potentially discourage new houses or commercial buildings being built in our district.

Option 2: Developers would pay the growth component, and ratepayers would pay the renewals and increased levels of service component of each future council project.

Option 2 is MDC’s preferred option.

We have identified future council projects that provide additional services required to support growth in our District. We would assess each of those projects, and determine how much of each project benefits the developers (the growth proportion). We would also assess how much of each project benefits the wider community (through increased service levels or renewed assets). Developers would continue to pay for the proportion of projects that benefit them, but ratepayers would begin to pay for the proportion of projects that benefits the wider community, including about a 0.9% additional rates increase next year. This is MDC’s preferred option.

Developers would pay a major proportion of the total costs to reflect the benefit they receive. Ratepayers would pay a smaller proportion of the total costs to reflect the benefits to the wider community from the projects delivered.

Under this option, the fees charged to developers would still increase significantly, but not as much as under Option 1. Our initial workings indicate that under Option 2, a new residential section might incur a fee of approximately $38,000 (a 44% increase) in the Feilding Urban area, $27,000 (a 37% increase) in the Feilding Intensification area (CBD), and $8,000 (a 9% increase) in the Village and Rural areas.

We estimate that this option would mean we would have to collect an extra $450,000 of rates in 2025/26, progressively building up to an extra $1.3 million in 2033/34. We fund these projects using debt, so the progressive increase in rates required is to pay the interest as the total debt amount builds. This option would result in an additional rates increase for ratepayers of around 0.9% in 2025/26, and additional rates impacts of between 0% and 0.33% compounding each year from 2026 to 2034.

MDC prefers this option because it helps keep development affordable and encourages growth, although it does shift some of the financial responsibility to ratepayers to reflect the wider community benefits they receive.