1. Kaipara District Development Contributions Policy

2. Purpose Familiarise you with the legislation - LGA 2002
Focus on the 2014 LGA amendments – what did they change?
Have a look at the DC Policy itself
Practical application – processing development applications
Look at the DC Model – focus on Mangawhai Wastewater
As will be seen, the DC policy and its model are complex. Necessary to ensure they are financially and legally sound. Legislation - lots of “tick boxes”
At the same time policy and model must be clear and transparent to create confidence and avoid challenge

3. Legislation
We use the Local Government Act 2002 – s101, s102 and s106 and Part 8 - Subpart 5 - s197AA to s211
In general local authorities and developers have become used to DC Policies and legal challenges are rare
Local authorities even before the 2014 changes tried to be transparent, flexible and fair
Developers accept the need for well-funded infrastructure to support their developments

4. Legislation – changes to the LGA2002
Amendments in 2014:
Strengthened principles
Further improved transparency – schedules
Required a reconsideration process to be written into policies (most TLAs already provided for this)
Introduced a formal objections process
Limited scope of capex that DCs can be required for
Community infrastructure limited to halls, playgrounds, conveniences – reserves (land and development of it) but only on residential development
Allowed for development agreements

5. Legislation – Principles (reinforced) Section 197AB
(a) only new assets or additional capacity in assets and Council incurs expenditure
(b) capacity life – take up of the asset over time
(c) cost share between existing (ILOS) and growth (AC)
(d) use of contributions for purpose intended
(e) and (f) – transparent methodology and schedules
(g) grouping by geographic area

6. Legislation – Note 2017 changes to the RMA1991 Resource Legislation Amendment Act 2017
On 18/04/22, 5 years after Royal Assent, s108(2)(a), (9) and (10) – ability to take financial contributions will be repealed (s175 of RLAA 2017)
By then District Plan will need to have been amended (Schedule 4 of RLAA 2017)
Consent lodged after that date – no FC’s - only DC’s can be applied
Consequential changes to section 106 of LGA to remove references to financial contributions (Schedule 5 of RLAA 2017)
DC Policy will need to be amended accordingly to remove FC references and (if necessary) include reserve and other contributions currently taken under the District Plan

7. Kaipara FC/DC Policy Section 1 – Introduction, purpose
Section 2 – Policy foundations
Section 3 – Practical application
Section 4 – Audit
Section 5 - Cost allocation methodology
Section 6 - Growth assumptions
Section 7 – Interest and inflation
Appendices
Appendix 1 - Development Contribution Activity-Funding Areas
Appendix 2 - Assessment of Significant Assumptions
Appendix 3 – Glossary of Terms
Appendix 4 - Demand Factors for Business Development
Appendix 5 - Schedule of Assets

8. Kaipara FC/DC Policy – Section 1
Combined FC/DC policy – DC policy adopted - FC Policy in District Plan (1.2.1) is now operative
DC’s may be required only when “development” occurs – and effect is to cause Council to incur expenditure (1.3.1)
Approach to growth and development (1.4)
Welcomed and encouraged
Applies DC’s selectively to activities/areas – where growth expected and capex being incurred
Use of DC’s to fund only a part of capex related to growth

9. Kaipara FC/DC Policy Section 2 Policy foundations
Requirement for paying DC’s on “development” (2.1.1)
Activities for which contributions may be required (2.1.3)
Roading
Wastewater treatment
Water supply
Stormwater management
DC’s are not payable for reserves and community infrastructure (2.1.5)

10. Kaipara FC/DC Policy Section 2 Policy foundations
Statement (2.1.6) that Financial Contributions may still be payable BUT:
No condition of resource consent to be imposed (works or funding of works) where that work is identified in the LTP and funded in whole or in part by DC’s (2.2.1 and 2.2.2)
No DC/FC double-take
More slides to follow on Financial Contributions

11. Kaipara FC/DC Policy Section 2 Policy foundations
Policy on existing lots or development –
Lots and development already legally established when policy became operative deemed to have paid a DC (2.13.5) – “Credit”
No such “credit” where water and wastewater not yet connected BUT exception for Mangawhai – where a targeted rate to fund capital costs for the scheme has or will be paid.
Exclusion of DC’s on network infrastructure but office and workshops of network providers will still be liable (2.15)

12. Kaipara FC/DC Policy Section 2 Policy foundations
Reference to remissions, postponements and refunds (2.16 and 2.17)
No renewal, operating or maintenance costs in DC amounts (2.3.1)
No subsidies, grants or works funded by third parties ( )
Value of vested works cannot be used to offset DC’s (2.4.1)

13. Kaipara FC/DC Policy Section 2 Policy foundations
Council can require DC’s for past spending and it does (2.5)
Council can require for cumulative effects of numerous small developments (2.7)
Appropriate sources of funding – Section 101(3) obligations (2.8)
Principles of cost allocation – ILOS and AC Costs split (2.10)

14. Kaipara FC/DC Policy Section 2 Policy foundations
Calculation period – uses LTP and some past spending. Uses 1 July to 30 June 2045 to spread costs over time (2.11)
Significant assumptions behind the policy – reference to Appendix 2 (2.12)
Use of contributions (2.14)
Development agreements (2.20)
In summary – many checks and balances in law to be observed

15. Kaipara FC/DC Policy Section 2 Policy foundations
Development contributions schedule (2.19) (Table 1)
Amounts can vary between policies (even downwards) as growth outlook varies or capex changes – projects, amounts, timing
Also reference to Schedule of Assets (Appendix 5) and Table 2 – Summary of Capital Expenditure

16. Section 3 Practical application

17. Section 3 Practical application
Step 1 - Statutory trigger (3.1.1):
resource consent;
building consent;
authorisation for service connection;
granting of a certificate of acceptance under section 98 of the Building Act 2004
Step 2 – Test for “development” (3.1.1) – has to be done activity by activity
Roading
Wastewater treatment
Water supply
Stormwater.

18. Section 3 Practical application
Step 3 – Calculate contribution using development demand measures in Table 3 – consistent with the content of the policy that was in force at the time the application was submitted (3.1.6) s198(2A) of the Act
Issue an assessment (3.1.3)
Sections and contains remedies in cases of non-payment. Council:
Can start normal debt recovery procedures
Can prevent commencement or require activity to cease on a consented activity or building work
Cannot withhold a building consent - only code compliance

19. Section 3 Practical application
Table 3 - Guide to measuring units of demand
Some features
The Table 3 is used before and after development
DC is only calculated on anything additional to what was already there
One lot – one unit of demand (UoD)
One dwelling of two or more bedrooms – one UoD
Varying dwelling UoD depending on size and type of dwelling
Introduces the new term “accommodation unit”

20. Section 3 Practical application
Table 3 features
Businesses are assessed using Gross Business Area or Impervious Area for Stormwater
Smaller business sites (below 1000m2) attract lower UoD
Factors used to convert business areas to dwelling equivalents
Farm buildings – Attract zero UoD
Proposed lots or dwellings not to be connected to water and wastewater – zero UoD both before and after development
Special assessment provisions

21. Section 3 Practical application Part of Table 3

22. Section 3 Practical application continued
Step 4 – Special assessments (3.7.1)
These are needed for serviced sites (camp grounds) and for cases where the development activity is not specified in Table 3
The nature and scale of the development must :
be considered for each Council activity – not as a whole; and
take account of the relative effects as compared with other development types in Table 3 and the units of demand attributed to them

23. Section 3 Practical application
Step 5 - Issue an invoice (3.1.5):
Subdivision - at the time of application for s224(c) with payment required prior to issue
Land use - at commencement or notification of commencement with payment required prior to commencement

24. Section 3 Practical application
Step 5 - Issue an invoice continued:
Building consent – at the time of granting with payment due in 90 days or prior to issue of code compliance whichever is the earlier
Service connection – at time of approval with payment required prior to connection
Certificate of acceptance – at the time of granting
General approach – is to require the DC as late as possible

25. Section 3 Practical application continued
Step 6 – Remissions and postponements (3.5)
The 2014 LGA changes introduced a reconsideration and objection process
KDC policy has always allowed a consideration of remissions (reduction or waiver) and postponements
Remission – is of limited scope – where the applicant has provided and or funded the same infrastructure that a DC has been required for

26. Section 3 Practical application continued
Step 6 – Remissions and postponements (3.5)
Postponement – (3.5.3) Where a building consent is required to give effect to the resource consent for land use
May postpone (3.5.4) in the case of a subdivision consent and issue a s224(c) before payment
The policy is quite open here but Council may register the DC under the Statutory Land Charges Registration Act 1928
Policy has provision for remission and postponement hearings
These remain in the policy and we now have the formal LGA processes in a new section 3.6 as well

27. Section 3 Practical application continued
Step 7 – Reconsideration and objection process (3.6)

28. Section 3 Practical application continued
Step 7 – Reconsideration and objection process (3.6)
Scope for reconsideration is wider - if the applicant believes that:
the development contribution was incorrectly calculated or assessed; or
the Council incorrectly applied the policy; or
the information used to assess the applicant’s development against the policy, or the way the Council has recorded or used it when requiring the development contribution, was incomplete or contained errors.

29. Section 4 – Brief audit statement
Refers to s94 of the Act (LTP audit provisions

30. Section 5 – Cost Allocation
Excel Model – containing all District capital projects including Mangawhai wastewater projects
Model description that follows uses LTP projects and any past projects with remaining capacity for growth
Not a “black box”
Series of Excel spreadsheets with all projects and programmes listed row-by-row
Each project line can be easily examined to see how its costs are allocated
Assumptions on costs, timing and allocation of costs can be clearly seen
Model then adds up project costs due to growth in the next 10 years
Divides by growth expected in 10 years

31. Section 5 – Cost Allocation
Project name, activity, any subsidies, planned capex from the LTP and past projects - DCP Catchment area/ number
Spreadsheet then shares project costs between additional capacity for growth (AC) and improved level of service to existing (ILOS)

32. Section 5 – Cost Allocation
Yes/ No question
Years over which project is consumed
Allocation of project based on cause and benefit (MATRIX)
% Share of costs is applied to net project cost after any subsidy deducted
Section 5 – Cost Allocation
Yes/No question is the project, even partially to provide additional capacity (AC) for “development” – If “No” – removed from DC calculation
If “Yes” then becomes subject to cost allocation
Start year and year in which capacity expected to be fully consumed to 2045
Then start to allocate cost between the parties causing and benefitting

33. Section 5 – Cost Allocation
Project entirely caused by growth and of benefit only to growth
Combined project shared by growth and existing community
Project entirely caused by need to improve levels of service to existing community and of benefit only to existing community
Section 5 – Cost Allocation
Cause/benefits matrix approach to AC/ILOS projects – while growth may cause a project it can benefit wider community
Percentage multiplied by net project cost determines AC cost
AC cost then shared over time between ACn (growth units in the LTP period) and ACf, (future growth after the LTP)

34. Section 5 – Cost Allocation in summary
Only part of the cost of past and proposed LTP projects is attributable to New growth in the LTP (yellow)
All other sources of revenue have been excluded such as:
Revenue expected from future growth – after the LTP
Revenue from subsidies and revenue from rates – because existing community benefits

35. Section 5 – Cost Allocation - Example
The notion of “causer pays” fails in law
Wrong to say “We only did the project because of growth - growth must pay”
Ignores wider benefits – North Shore Busway case – pivotal
As growth was the cause of the project, Council allocated 94.2% of its cost (after subsidies) to growth - just 18% of total cost
Judicial Review found
Almost no recognition of existing congestion
Benefit of use to existing community - allocating just 0.1%

36. Section 6 – Growth assumptions
Growth worksheet gives growth in rating units for each activity funding area
Rating units - good measure of infrastructure demands from development - regularly updated
LTP assumptions used to provide long-term estimates to 2045
Separate model to establish Mangawhai growth units – from new dwellings expected
But not all new development may be eligible for DC’s – a rate may have been paid on the lot already

37. Section 7 – Interest and Inflation
DC Model includes interest on growth related capital expenditure
Recovers all interest by end of the DC calculation period – 2045
Except for Mangawhai Wastewater – interest on past spending is regarded as funded as an operating expense – excluded from the model
Mangawhai Wastewater – interest and finance costs incurred since construction have been included in the DC amounts
DC calculation uses the inflated capital costs in the LTP
DC amounts - 3 separate yearly prices to take account of price variations in life of current DC Policy

38. Financial contributions

39. Financial contributions
Development contributions are Council’s primary source of funding growth
Development contributions and financial contributions cannot be taken for the same purpose (s.200 of the Local Government Act 2002)
District Plan Chapter 22 Section states:
Council considers that Financial Contributions will generally only be imposed:
in areas of the District where the Development Contributions Policy does not apply; or
where the Development Contributions Policy does not address the type of adverse effects generated by the development or activity.
In summary - require FC’s with caution AND they will fall away by 2022

40. Financial contributions - scope

41. Financial contributions
FC policy says they must be handled case–by-case
Some basic questions to ask first:
What will the FC be used for?
Can the developers to do it themselves/provide suitable land?
Is the asset manager planning to do the job – is it on the capital programme?
Is the capital work used in the DC calculation?

42. Financial contributions
Particularly cautious requiring a FC for Transport and Network Utilities - Sewerage, Stormwater and Water supply (Sections and of the FC Policy)
Council takes DCs for these activities in some (not all areas)
Do not require an FC if the job is DC funded
FCs for protecting and enhancing:
Significant heritage or ecological features
Features supporting renewable energy activities
Riparian areas
Less likelihood of a conflict with DC’s

43. Financial contributions
If the asset managers say they are not intending to do the work
Do not require an FC
There will be no means of spending the contribution and mitigating the effects
The FC policy states that the FC is:
“calculated on the basis of providing Council the financial means to undertake the works etc”
Estimated costs of upgrading roads and network utilities
There must be something tangible to cost
ReservesFC uses an area based formulae but Council still needs a planned programme of acquisitions and works before a reserve contribution can be taken

44. Financial contributions