Tauranga City Council's fees structure for new housing developments is beginning to strangle the city's growth, forcing the council into debt and causing frustration for developers.

At the heart of the frustration are the subdivison impact fees (SIF) and building impact fees (BIF) – who pays them and when.

In Tauranga, SIFs, which include payments assessed on a per hectare basis for local water, wastewater treatment, all stormwater, almost all transportation projects and local reserves have to be paid by the developer.

The BIFs are paid by the house buyer and include payment for water treatment plants, main trunk pipe networks, reservoirs, waste water pipes and pump stations, libraries community centres, Baywave and Baypark arena.

SIF charges are hectare based and BIF charges are dwelling based.

Most other councils merge these costs with most of them being payable when the subdivision is completed.

Merging the fees would mean higher costs for developers, but reduces consent fees for new houses to $4000-5000.

Discussion about this possible merging of fees is taking place at a series of workshops, with the first one taking place yesterday.

It is all about the difficulties with the council's ‘growth pays for growth' policy.

The present regime of cost allocation is not working with the stalling of two Greenfield housing areas on the east and west of the city an example of this.

In the example of the Wairakei urban growth area, there is a subdivision impact fee there of $275,000 + GST per hectare.

The city's original vision for Wairakei, of it being a high density housing area, has been stymied by the fees structure.

In west Bethlehem the SIF is $482,000+GST per hectare – or $27,500 per lot.

The council has so far spent about $10 million in west Bethlehem, but almost no development has occurred because of the prices, and no SIFs have been collected.

If SIFs and BIFs were merged, it would result in higher costs being payable at the time of the subdivision.

It would reduce building consents for new houses to a comparable level with other cities.

The rationale behind Tauranga's SIF/BIF split is that local infrastructure needs to be in place when subdivision occurs where BIF funded citywide infrastructure only needs to be built as demand increases as the result of population growth.

There can be lag time between a subdivision occurring and the demand being generated.

Developers at the workshop want the council to act quickly to introduce relief measures to stimulate growth in the city over the next two or three years.

As developer Peter Cooney told the meeting, the city is responsible for 20-25 per cent of development costs: 'And you haven't come to the table.”

Workshop two is yet to be scheduled.