2009 Development Contributions Policy

Frequently Asked Questions

INTRODUCTION

 

What are development contributions?

Development contributions are a way of funding community facilities and infrastructure needed as a result of growth of the city.

Development contributions are a way of funding community facilities and infrastructure needed as a result of growth of the city.

Development contributions are contributions of money or land to fund the costs of providing the infrastructure planned and/or constructed in anticipation of growth. This infrastructure is needed when a new development, that will increase the demand for services, is undertaken.

The council’s power to require development contributions comes from the Local Government Act 2002 (LGA 2002). It is a requirement of this act that council consults on the new policy before introduction.

Paragraph [116] of the High Courts decsion in Neil and others states that:
The statutory "triggers" for requiring a development contribution are that a given project:

  • is a development
  • which either alone or in combination with another development will have the effect of requiring expenditure of infrastructure; and
  • is provided for in the development contribution policy.

A development contribution is in the nature of a charge, tied to the expenditure required for capital works for infrastructure as a result of a development or developments. Development contributions can only be imposed pursuant to the clear and express words contained in the statute, and in accordance with statutory powers and requirements

 

Why has the council introduced development contributions?

The council’s introduction of development contributions is in response to the rapid growth of North Shore City.  The city’s current population of around 200,000 is forecast to increase to 300,000 by 2050.  As well as many more residents, there will be many more businesses.

With growth will come an increased demand for infrastructure. This includes roads, stormwater drainage, water supply, wastewater treatment, parks, libraries and community and leisure centres. 

In the past, existing ratepayers have mostly paid for the additional infrastructure through their rates. In addition, the council has recovered some costs from developers by imposing financial contributions under the Resource Management Act for reserves and a wastewater treatment plant levy.
 
Development contributions will enable the council to shift the burden of paying for new infrastructure, needed as a result of growth, from ratepayers to the development community.

The council believes that development contributions will provide greater transparency and certainty for the whole community, and are a fairer way of charging the cost of growth to those who are creating the growth.

 

When were development contributions introduced?

Development contributions were introduced at North Shore City on 1 July 2004. Any application for resource consent, building consent or a service connection lodged after 24 March 2003 and granted on or after 1 July 2004 will be considered for the purposes of identifying a development requiring expenditure on infrastructure in anticipation of growth.

The council’s power to require development contributions comes from the Local Government Act 2002 (LGA 2002).  It is a requirement of this act that council consults on the new policy before introduction. This has been done as part of a City Plan consultation process.

 

What will development contributions be used for?

Development contributions will be used to pay for new infrastructure or for increasing the capacity of existing infrastructure required as a result of growth.  

They will be used to provide reserves, network infrastructure (transport, water supply, stormwater drainage, wastewater and wastewater treatment) and community infrastructure (parks assets, community centres and leisure centres, for example). 

They will not be used to pay for renewing or replacing existing infrastructure, although they may contribute if the replacement infrastructure needs to cater for extra demand as a result of growth.

Development contributions will not be used to help the city catch up a backlog of infrastructure upgrading and renewal. But, again, they may contribute if the capacity of the infrastructure is being increased to cater for extra demand.

 

Who will pay development contributions?

• Developers or owners who are creating new development.
• Developers or owners who subdivide or cross-lease their sections creating new development.
• Developers or owners who construct new commercial, retail or industrial buildings or make changes to existing commercial, retail and industrial buildings.
• Businesses or property owners who change their business use or request a connection to a service – for example, a new water connection when a business premises is being changed from a small retail store to a cafe.
• Owners building residential units including Minor Units and “Granny Flats”.

Development contributions are not required for home improvements or residential extensions – for example, turning the basement into a games room, building a swimming pool or adding a deck. Development contributions will be required from people proposing to build minor residential units or “Granny Flats”.

It should be noted that when we use the term “developer” it includes not only the professional developer that we associate with large subdivisions or commercial construction but also includes those property owners that are carrying out one off change to the configuration of their property.

 

What is a development?

Section 197 of the Local Government Act 2002 defines this as.
development means—
(a) any subdivision or other development that generates a demand for reserves, network infrastructure, or community infrastructure; but
(b) does not include the pipes or lines of a network utility operator

Council will seek to review the nature of a development and demand at certain consent opportunities described in the 2009 Development Contributions Policy at sections 6.1 and  6.2 in order to confirm whether a development contributions assessment process should proceed under the policy resulting in a charge for development contributions.

 

Why is development contributions so important to existing ratepayers without an interest in development of their property be affected?

Existing ratepayers will be advantaged because the costs of infrastructure and services required by new residents and businesses will be met by the development community. 

Existing ratepayers will not pay development contributions unless they are subdividing or changing the use of their property, or connecting to a service such as sewerage or water.

Prior to the introduction of development contributions, existing ratepayers mostly paid for the total capital cost of the additional infrastructure through their rates. In addition, the council had recovered some costs from developers by imposing financial contributions under the Resource Management Act for reserves and a wastewater treatment plant levy. Without this source of funds existing ratepayers would be required to fund the total capital cost of assets constructed in anticipation of growth as well as the costs of those that currently exist.
 
Development contributions will enable the council to shift the burden of paying for the total capital cost of new infrastructure, needed as a result of growth, from non developing ratepayers to the development community who are or will become future ratepayers. Some of these costs of growth related projects are shared between the existing community and the development community with each carrying responsibility for their fair share of the outcomes of a project.

The council believes that development contributions will provide greater transparency and certainty for the whole community, and are a fairer way of charging the cost of growth to those who are responsible for the assets required in anticipation of growth. This funding source is a very important and valuable source of funds that underpins the success of councils capital works program to meet the demands of its growing community.

 

In what situations would it be prudent to make enquiries about the requirement for a development contribution?

If you are considering any development work in the future, we recommend that you consult the full Development Contributions Policy, councils Development Contributions Administration Team or your professional advisers to ensure you understand how development contributions may be applied.

Development contributions are a contribution toward the total capital cost of infrastructure that council must construct in anticipation of providing for growth council's levels of service of the different infrastructure Activities. They are a cost of the development and will need to be funded just like on site drainage, building materials, other costs to construct.

The Development Contributions Policy affects residential and non-residential developments or subdivisions across the whole of North Shore. Development contributions are not required for home improvements or residential extensions – for example, turning the basement into a games room, building a swimming pool or adding a deck.

 

Where can I get more information?

Detailed information about the development contributions, including a full copy of the council’s Development Contributions Policy is available at:

  • www.northshorecity.govt.nz
  • Environmental Services, 521 Lake Road, Takapuna
  • Area offices
  • DC Administration Team on 486 8413 or email dcadmins@northshorecity.govt.nz
  • Actionline on 486 8600 or email actionline@northshorecity.govt.nz

 

  FUNDING GROWTH

How is our city growing?

North Shore City is growing rapidly.  The population is now around 223,000, and this is predicted to increase to 312,000 by 2041.

Growth takes many forms.  Most obvious are large, new subdivisions.  Less obvious are smaller ‘infill’ subdivisions, new commercial developments and changes in commercial activities. Module 2 of the draft City Plan 2009 – 2024 provides good information as to how the North Shore will grow and how council plan the City Direction.

 

What are the impacts of growth on our infrastructure?

No matter what form growth takes, it places demands on infrastructure.  A new subdivision will require roads, a water supply, the removal of stormwater, the removal and treatment of sewage and the provision of parks, libraries and other community facilities.

Growth as a result of ‘infill’ subdivisions places additional demands on the capacity of existing infrastructure.  This means that when the council renews water pipes, for example, it will need to use bigger pipes.  Or may mean the council needs to expand its library or community centre in that area, to cope with additional demand.

Sometimes the assets constructed in anticipation of growth will provide temporary benefits for the existing community. For example, a widened road may speed the network for a period until more use by new vehicles revert the flow back to where it was. Sometimes a project or program of capital works that is constructred in anticipation of growth will also correct existing deficiencies in the current networks level of service standard. Council has cost allocation methodologies (see Cost Allocation Methodology on website) that will ensure that growth and existing communities take responsibility for funding their fair share of the outcomes of what is provided.

 

Are growth and its costs just North Shore City issues?

All of the Auckland Region is growing rapidly and all the councils in the Auckland region must prudently manage how they fund the costs of that growth.

 

Has the council considered options other than development contributions?

The council has considered three options for funding growth:

  1. Development contributions, which are collected from developers at the time property development is planned and constructed.
  2. Financial contributions, which are collected under the Resource Management Act: this option would reduce the amount the council could collect from developers and the balance of costs would need to be met by ratepayers.
  3. Rates funding: ratepayers would effectively fund the council’s infrastructure cots resulting from private land development.

 

Why are development contributions the Council’s preferred option?

Development contributions would result in approximately $400m of growth related capital expenditure, required over the next 15 years, being funded by contributions rather than rates.

The key advantages of development contributions are that the infrastructure required to support growth keeps pace with need, and the costs of growth are met at the time the property development is planned and constructed.

The council believes that development contributions are therefore a fair and reasonable way of growth taking financial responsibility at the time development occurs.

 

How do development contributions differ from financial contributions?

Financial contributions are permitted by the Resource Management Act 1991and address resource management issues. They are a way of reducing the effect of a development on the environment.  They are not a tool for funding the impact of growth.

The statutory basis for development contributions is the Local Government Act 2002.
Development contributions are a way of funding growth-related demands on Community Infrastructure, Network Infrastructure and Parks.

In assessing whether to require development contributions when granting an application for a resource consent, building consent or authorisation for a service connection, the council will consider whether the project:
➾ is a development (s197)
➾ which either alone or in combination with another development will have the effect of requiring expenditure on infrastructure (s199)
➾ is provided for in the Development Contributions Policy (s198(2))

 

Have development contributions replaced financial contributions?

Not completely. We may still charge financial contributions as a condition of consent in some circumstances but not for the same purpose or outcome or to the same extent to which a development contribution is charged. However, in most cases only development contributions will be required.

 

Could the council require both a development contribution and a financial contribution for the same development or subdivision?

Councils cannot double dip but they can charge both development contributions and financial contributions on the same development or subdivision if they are taken for different purposes.

 

Will development contributions affect North Shore’s property prices?

Anyone who develops or creates a subdivision will want to recover the cost of the development contributions when they sell the properties the same as they will want to recover the cost of the building materials for example.  However, property prices are affected by many different factors.

Over time, it is likely interest rates, immigration policy, the supply and demand of housing stock, and other marketpressures (as seen in the city over the past few years and experienced now) will have a greater influence on prices than development contributions alone.

HOW DO DEVELOPMENT CONTRIBUTIONS WORK

 

What developments will contributions be charged on?

Contributions will be charged on any development or change in use or service connection that creates demand on the city’s infrastructure.  The only exception is for residential subdivisions that existed and non-residential properties already under development before 1 January 1992.

Contributions will generally be charged on:

  • New subdivisions
  • Redevelopment of an existing property to change its use
  • New or changes to existing commercial, industrial and retail developments

 

At what stage of the development will contributions be charged?

Development contributions are assessed prior to the granting of a relevant consent and are then invoiced and are due for payment as follows:

Subject to Section 8.1.2 of the policy in respect of land use consents, all development contributions become payable as soon as they are required (i.e. on the granting of the relevant consent or authorisation). The final date for payment shall be:

  • Contribution required on resource consent (subdivision) - prior to application for 224c certificate
  • Contribution required on resource consent (land use) - seeSection 8.1.2
  • Contribution required on building consent - immediately on issue of consent
  • Contribution required on service connection - immediately on granting of authorisation

Section 8.12 of the Policy
Where a contribution is payable for the same development project on a land use and a building consent the development contribution will be due immediately on issue of the building consent but may be paid earlier on the land use consent at the option of the consent holder.

  • A consent holder who chooses to pay that contribution will receive actual credits in respect of any HUEs for which contributions have been paid
  • The Schedule of Charges of the most recent Development Contributions Policy shall be applied at the date prior to payment in respect of the HUE’s assessed on the land use consent
  • The land use consent does not commence until the development contribution is paid. Therefore, a consent holder who chooses not to pay that contribution assumes all risk associated with proceeding with development without the land use consent having commenced

HOW ARE DEVELOPMENT CONTRIBUTIONS ASSESSED

 

What does a development contributions assessment involve?

A typical development project will be assessed as follows:

  • Land use consent: the council will provide an assessment of development contributions. Depending on the type of land use, this assessment may or may not generate an invoice requiring immediate payment on the granting land use consent - see section 8.1.2 of the policy.
  • subdivision consent: the council will provide an assessment of development contributions payable on the consent. This assessment will generate an invoice, assuming calculated HUEs exceed zero.
  • Building consent: the council will provide an assessment of development contributions payable on the consent. This assessment will generate an invoice, assuming calculated HUEs exceed zero.
  • Service connection: the council will provide an assessment of development contributions payable on the consent. This assessment will generate an invoice, assuming calculated HUEs exceed zero.

Whether all such consents are required and the order in which these consents are sought will vary from project to project. For example a developer may start to develop a property which has already received land use consent or has been subdivided, or may apply for a unit title subdivision consent after land use consent, building consent and service connection authorisations have been granted.

To assess development contributions, the council shall carry out the following steps using information made available to it from the applicant and its own records and analysis:
➾ Step One - assess whether the application relates to a "development" as defined in the LGA 2002 and whether development contributions are required
➾ Step Two - identify the units of demand
➾ Step Three - identify credits (including historic and actual credits relating to contributions paid)
➾ Step Four - calculate HUEs
➾ Step Five - identify any remissions, reductions or other discounts
➾ Step Six - combine above to calculate development contributions charge by multiplying respective Activity units of demand (HUE) by Development Contributions Schedule of Charges for the Activity

Council has an experienced Development Contributions Team who is able to advise and assist you through this process. You will be able to contact our development contributions team on (09) 486 8413 or email dcadmins@northshorecity.govt.nz for more information.

How are development contributions Schedule of Charges calculated?

The council has identified the total cost of new assets needed to meet the increased demand on infrastructure resulting from growth over the next 15 years as shown in its draft City Plan 2009 – 2024. It also has record of the historical cost of infrastructure constructed in anticipation of growth able to also available to meet the increased demand arising from growth.

Council has calculated the fair and reasonable share of that demand for each new property or connection identified in council's growth model over the first 10 year period of the 15 year draft City Plan.

From that, it calculated the fair and reasonable share of the cost that is attributable to each new property or connection the first 10 year period of the 15 year draft City Plan.

Rather than look at each development in isolation, council has developed a schedule of development contributions for ‘contribution catchments’ within each of the asset Activities that it charges development contributions.  These relate to specific geographic areas in the city.

The document "Methodology for Determining Development Contribution Charges" more fully describes the overall process of cost allocation of projects or programs of work constructed in anticipation of growth and how these are converted into a development contribution charge for a Household Unit Equivalent (HUE) within the Funding Model.

For more details about how development contributions will be calculated please visit our website www.northshorecity.govt.nz or contact our development contributions team on (09) 486 88413 or dcadmins@northsorecity.govt.nz

 

What are contribution catchments?

Catchments are specific geographical areas in the city for each activity (listed below).

There are three types of contribution catchment for each Activity:

  • Citywide

one for the whole city for each activity (wastewater, wastewater treatment, stormwater, water supply, transport, community services, parks community and parks reserve).

  • Local

many across the city for each activity. The geographical boundaries of local catchments depend on the nature of the activity. For example, the boundaries of stormwater catchments will be based on stormwater flows and watercourses.

  • Precinct

used only for very specific projects, such as a car parking building in central Takapuna.

 

What are Activities?

Development contributions may be required where, as a result of development, the council incurs capital expenditure to provide for reserves, network infrastructure or community infrastructure. There are eight activities within these categories for which we propose to require development contributions. They are:

Reserves

Parks-Reserves

Network infrastructure

Wastewater treatment
Stormwater
Water supply
Wastewater
Transport

Community infrastructure

Parks Community
Community Services

 

How does council allocate the costs?

It uses the HUE, which is short for a ‘Household Unit Equivalent’.  This is the basic unit used to charge a development contribution. For residential developments, a HUE is simply a single house or unit.

One HUE equals the demand of one household for a particular activity. A single residential development will have one HUE for each of the eight activities above. The amount of the HUE will be different for different ‘contribution catchments’ and for different activities.
 
HUEs are calculated using specific formulas for each of the eight activities. The formulas may vary from residential to business. For more details about these formulas please visit our website www.northshorecity.govt.nz or look in the Information Set at Environmental Services, 521 Lake Road, Takapuna and at all area offices.

 

How do HUEs relate to non-residential developments?

For commercial development, the demand on infrastructure is equal to a number of HUEs. This means the demand on infrastructure of a commercial development is considered equal to a number of houses. 

The actual number of HUEs allocated to a commercial development will depend on factors such as the location of the development, the gross floor area and the amount of impervious surface.

For example a laundry may be considered equal to 10 households in its demand for water and wastewater infrastructure, and equal to 15 households for traffic generation and demand.

 

HOW MUCH WILL IT COST

 

How much will I need to pay?

The amount will depend on the type of development and where it is located in the city.

Council have defined contribution catchments (specific geographical areas in the city) to ensure the amount charged is directly related to the works that are needed to support growth in that particular area.

The information to help you calculate how much you will need to pay is available in the Information Set available on the council’s website www.northshorecity.govt.nz and at Environmental Services, 521 Lake Road, Takapuna, and all area offices.

You can also ask for an estimate of the amount by lodging a DC Estimate Request Form

 

Can I object to the development contribution charge?

You may ask us to review a development contribution, but it is important to note that there is no right of appeal as there is for conditions of resource consents.

 

How can the development contribution be paid?

You can pay by direct credit, internet banking, cash or bank cheque.

GENERAL QUESTIONS

 

Does the Crown have to pay?

The Crown is exempt from paying development contributions.  We will ask any Crown Entities who develop in the city to make a voluntary contribution towards the cost of providing infrastructure.

Frequently Asked Questions about the Judicial Review and Revised Policy.

What has happened with the court case?
We have amended the 2004 and 2006 policies.

Where can I get a copy of the amended policies?
They are available on the North Shore City Council Website in the development contribution section.

When will I get my money back?
Any reassessments and refunds required will start being processed 1 July 2009.  We anticipate that this refund process will take up to 6 months.

How can I find out where my refund/reassessment is?
Council will be updating the NSCC website weekly with progress information from 15 July 2009.  You will need your assessment number, site address or consent number to view this information.

How much money will I get back?
It is uncertain at this point in time what your refund will be. 
You can obtain the proposed changes in the schedule of charges from the NSCC Website.
Go to the draft city plan, select the development contribution section and select the development contribution calculator. 
Enter your site address and the policy you were assessed under.  This will show the changes for 1 HUE (Household Unit Equivalent) for your site address and the potential reduction in your assessment. 
This information details the 2004 and 2006 existing and amended schedule of charges and the proposed schedule of charges for the 2009 policy.

How will the new policy affect my old assessment(s)?
The new policy rules and amended schedule will be applied to all assessments. You will be issued with a revised assessment and a refund where applicable.
Your assessment will not increase as part of the new schedule.

What will happen to future assessments?
Consents lodged and granted prior to 1 July 09 will be assessed under the amended 06 policy, and consents lodged after 1 July 09 will be assessed under the new 09 policy and its related fee schedule.

Are the payment terms still the same?
No, there have been several changes made as to when customers are required to pay their development contributions.

  • Subdivisions remain the same being due prior to the issue of the 224c certificate
  • Land use (resource) consents with related building consents are no longer due 180 days after granting, but they are still due prior to commencement of work. Resource consents with no related building consent will be due immediately upon granting of the consent.
  • Building consents are due prior to uplift of the consent. Customers no longer have the 180day time frame.

How can I pay my development contributions?
Customers can pay via direct bank transfer, cash or by bank cheque. Personal cheques are also accepted but no documents (consents or 224c certificates) will be issued until the funds have been cleared. Please note that credit card payments are not accepted.

Will my proposed granny flat or minor unit be assessed for development contributions?
Yes, minor units or granny flats do get assessed for development contributions as they are treated as additional house-hold units. Under the proposed 09 policy minor units or granny flats at 40m2 or less will be assessed at .7 or 70% of a house hold unit instead of a full charge. Units over 40m2 will still be assessed as one full house-hold unit.

What other changes are there in the new 2009 Policy?
There are numerous changes in the new 09 policy. A complete copy of the new draft policy can be obtained off the council website. Appendix E, Summary of Significant Changes, of the new policy document summarises the major changes.
 
 


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City Plan 2009 - 2024 Development Contributions Policy
Cost Allocation Methodology and Funding Model
Development Contributions Projects
Development Contributions Calculator
Frequently Asked Questions
Refunds Arising from Review of Earlier Policies
Refund Status Enquiry
Past Development Contributions Policies
City Plan 2009-2024