It seems efforts to stimulate land/housing supply are gaining momentum, with Sunshine Coast Council today announcing plans to encourage developers to bring homes to market more quickly by offering discounts on infrastructure charges:
THE Sunshine Coast Council will offer developers who are sitting on approved but dormant projects up to 50% discount on their infrastructure charges if they complete the projects by mid-2014.
The “Build and Benefit” initiative – designed to push the economy forward, “stimulating the economy, improving our competitiveness and boosting the construction industry” – will be announced formally by Mayor Mark Jamieson today.
“It’s designed to increase investment, get building projects under way and create jobs,” Cr Jamieson said.
“The initiative offers up to a 50% ‘reduction’ on council infrastructure charges for targeted developments built to a deadline – and the ‘build and benefit’ incentives extend to older approvals.
“There are hundreds of developments approved by council worth many millions of dollars which are lying idle.
“These incentives will help to unlock a significant part of that potential.
“Developers are being given a great opportunity here – if they build it, they will benefit, and so will the region”…
THE INITIATIVE
a) 50% discount on infrastructure charges for developments starting July, and completed June 30, 2014
b) 37.5% discount on infrastructure charges for developments starting July and completed by December 31, 2014
c) 25% discount on infrastructure charges for developments starting July and completed by June 30, 2015
I will state from the outset that I am no fan of upfront infrastructure charging as it inflates the ‘sticker price’ of new housing, thereby stifling construction and, in the process, inflating the cost of pre-existing homes.
A far more efficient and equitable way of funding new housing-related infrastructure, as well as encouraging speedier development of pre-approved lots, would be via a combination of:
- old-fashioned bond financing, whereby funds for infrastructure provision are raised through the bond market and repaid by ratepayers over an extended time frame (e.g. 30-years); and
- implementing a broad-based land values tax in exchange for the abolishion of transaction taxes.
Such measures would reduce the upfront costs of new housing, would ensure that housing-related infrastructure is adequately funded and provided, and would discourage land-banking by developers, speeding-up development times.
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