About Development and Financial Contributions

What are development contributions?

Housing overlooking Park Reserve
in Waitakere City

The Local Government Act 2002 (the Act) allows local authorities to impose development contributions, giving local authorities the ability to fund asset costs caused by growth. Those costs can be recovered as cash, vested land or a combination of both, contributions may be charged on any development (building consent), or resource consent (subdivision) that generates a demand for reserves, network infrastructure (roads and transport, water, and wastewater and storm water), or community infrastructure (land and public amenities (community services)).

Development contributions are established through a development contributions policy. As with all of the funding and financial policies required under the Act, the development contributions policy must be adopted using the special consultative procedure and included in the LTCCP. It may be amended only as an amendment to the LTCCP.

The purpose of development contributions policies is to recover costs from those who create the requirement for the Council to provide additional infrastructure that in part satisfies new and expected growth.

The provisions of the Act are reasonably complex. And as a local authority Waitakere City Council must make a number of assumptions and significant judgements in applying them.

At its most basic level, a development contributions policy seeks to recover some or all of the asset costs caused by growth from those who caused the growth.

The Council needs to make a number of judgements. It needs to:

consider whether it will impose development contributions as part of its overall revenue and financing policy. The use or non-use of development contributions as a funding source is a funding decision that needs to be considered and explained in terms of section 101(3) of the Act, which includes the equitable allocation of responsibility for funding throughout the asset's useful life, whether all or only a part of the community benefits, and the extent to which the actions or inactions of particular people have contributed to the funding need;
identify the expected growth within the district or city. Waitakere City Council has identifying different growth areas with different funding requirements;
determine what assets are required in full or in part because of growth. This requires it to consider the existing capacity and location of its infrastructure compared to the areas where growth is expected and increased capacity resulting from the growth will be needed;
define what the relevant asset costs include, for both future assets and assets that have already been completed;
develop an appropriate methodology for differentiating between costs caused by growth and other costs; and
calculate the contributions payable, including whether the Council should set them by location or on a city-wide or district-wide basis.

The assessments made at each point in the creation of a development contributions policy are heavily dependent on the reliability of the forecast information available, the Councils underlying funding principles, and the judgement of the members and management.

Subdivision in West Harbour

What are financial contributions?

The Council may require a financial contribution to be paid or provided at the time of granting resource consent under the Resource Management Act 1991 for the following purposes:

a financial contribution for reserves on subdivision at a maximum rate of 6% for all classes of land under ss285 and 286 LGA 74, pursuant to s407 RMA
a financial contribution for reserves on developments under s294 LGA 74, pursuant to s409 RMA
a financial contribution for stormwater purposes related to Project Twin Streams under s283 LGA 74, pursuant to s407 RMA in the case of a subdivision and s409 RMA in the case of the development
a financial contribution for any other purpose under s283 LGA 74, pursuant to s407 or s409 LGA 74

In addition the Council may also impose as a condition of the consent a condition requiring a consent holder to undertake works and/or to provide services to avoid remedy or mitigate the adverse affects of the activity authorised by the resource consent.

Such works or services must ordinarily be undertaken within the boundaries of the site of a proposed activity. Council will remain open to entering into discussions for the provision of works and services outside the boundaries of the site by the developer, or the payment by the developer of a cash sum to enable the Council to undertake works and services outside the boundaries of the site, as an alternative way to avoid remedy or mitigate the effects of a proposed activity. Where such an agreement is reached with the developer conditions may be imposed on the resource consent to record and give effect to that agreement (but this can only occur at the request of the developer).

The quantum of any financial contribution, and the method of its assessment and details of the timing of payment of that contribution, will be set out in the conditions of the resource consent. Financial contributions will ordinarily be required to be paid at the time of issue of a building consent, before giving effect to a land use consent or prior to the issue of a certificate under s224(c) RMA in the case of subdivision consent.

A financial contribution required as a condition of resource consent under RMA may be the subject of the objection and/or appeal processes set out in the RMA.

The RMA requires that Council spends funds collected in the form of financial contributions only on the purposes for which they were collected. This expenditure must also be accounted for in accordance with the requirements of the Local Government Act.