Archive | Financial contributions

Council defers business land & housing policy discussions

Auckland Council’s Auckland development committee got itself bogged down in a confidential debate on the next tranche of special housing areas on Thursday, and ended up deferring 2 important items on its agenda.

One was to reaffirm what should have happened long ago, to make provision of business land for growth a priority.

The other was to dismantle the council’s housing strategic action plan. This plan was created to advance a better framework enabling more housing to be built, but was superseded by the September 2013 housing accord between the council & Housing Minister Nick Smith.

Because of the housing accord, the development committee was going to endorse stage 1 as completed and agree not to proceed with stage 2 because of agreements & actions under the accord.

These agenda items are not simply matters to be ticked off, on to the next, but are important to council policy enabling economic activity to occur.

The council is an overall policy writer. Implementation of those policies may be done by insiders (council staff writing strategies to enable economic activity) or by outsiders (developers taking up rezoned land to establish businesses or subdivide for housing).

But the overall policy is still needed. The housing accord is a short-term measure to lift house construction beyond the level the economic upcycle was already going to take it to, largely for political purposes. For those political reasons, nonsensical targets were set for the first 3 years – 39,000 building consents for the first years out of a recession, when 13,000/year is the target to accommodate a population increase of one million spread over the whole 30-year plan period.

The primary accord response, through applications to the council’s housing project office, has been to subdivide greenfields – or to get approval for that, followed by repricing of the land – making it harder for the council to advance its compact city concept, although apartment consents have coincidentally increased.

Greenfields subdivision is undoubtedly cheaper for the developer, but not necessarily for the homebuyer or the council & ratepayer – the overall cost, including access to jobs & amenities, depends on infrastructure. And neither the council nor the Government has advanced a solution to funding of infrastructure to meet housing accord decisions.

In fact, the Government has gone out of its way to make funding of some infrastructure harder, through the Local Government Act Amendment Act (No 3), which came into force on 8 August and changes the development contributions regime.

Post-election, and post-housing accord, Auckland Council will need a stable policy and a strategy to ensure adequate land is available in the right places – serviced, and therefore part of a structure, not just available willy-nilly – for both business & housing (and also for amenity, such as parks, though this is often an afterthought).

Without that policy & strategy the council will be dysfunctional, right down to provision of appropriate consenting processes. Business needs the council to have a land availability programme so businesses can plan ahead, and the council needs a long-term zoning strategy (some of which will come when the unitary plan is finalised) to enable housing demand to be met.

Both these agenda items have been deferred to the development committee’s September meeting. The development committee needs to make stronger decisions about business land than those that came up from its economic development committee, which merely acknowledged it should be a priority, and it needs to get housing policy back on track for the long term, not just the 2 more years of the accord.

Earlier stories:
2 July 2014: Report indicates acute shortage of industrial land likely, but key land advocates don’t press for specific measures
30 June 2014: Report says business land supply “at best” meets 5-year demand

Links, development committee 14 August 2014 agenda items:
13 Industrial business land, recommendations from 1 July economic development committee meeting, to agree that business land is a critical consideration of the spatial priorities work the council is advancing, and that new areas of business land growth are prioritised in any future land release programme outlined by the council
14 Housing strategic action plan, stage 1 update & next stage, recommendations to endorse the completion of stage 1 and agree not to proceed with the original stage 2 as this has been superseded by agreements & actions being undertaken under the Auckland housing accord

Attribution: Council committee meeting, agenda, comment.

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Property Council accuses local bodies of abusing development levies, wants right of appeal

Published 23 August 2006


Property Council national director Connal Townsend charged yesterday that local bodies are abusing the legal power to levy development contributions, which in turn was stifling job-rich economic growth and making home ownership an unaffordable dream for thousands of young New Zealanders.



Releasing the Property Council’s policy on development contributions, Mr Townsend said the Local Government Act 2002 must be amended to force local bodies to play fair: “Dozens of local authorities throughout New Zealand are distorting the purpose of development contributions and using millions of dollars collected from new property owners to fund capital expenditure which is not growth-related. Not only is this not legal, it is unfair and artificially driving up the cost of commercial & residential development.


“The act needs to be amended to provide for appeal rights. Developers & property owners who are confronted with a bill which can run into 10s & 1000s of dollars should have the right to appeal the development contribution charged by local authorities. The current lack of appeal rights gives local authorities carte blanche power to charge a development contribution which is often grossly excessive & not reflective of true growth-related costs.


“Local authorities are not and should not be entitled to levy development contributions for any reason other than to recoup the cost of growth-related capital expenditure. New residents and businesses should not be required to pay development contributions which are then channelled into funding deferred capital expenditure.


“While the Property Council acknowledges that existing communities suffer because many local authorities are inefficient and have failed to build infrastructure, new communities should not be legally responsible for picking up the tab for decades of political neglect & mismanagement.”


Mr Townsend said the Property Council acknowledged that development contributions were a compliance cost that would be passed on to the property owner. “However, the Property Council considers that development contributions have a wider economic & social impact, which is manifest in terms of:


(a)  housing affordability, particularly for younger people (who are sensitive to changes in the cost of housing)


(b)  demand for transport infrastructure as people seek affordable housing in remote locations, often far removed from paid employment, and


(c)  the inflationary impact of more expensive housing and increased transport costs (resulting from development contributions).


“Parliament must amend the act to force local authorities to behave responsibly. Unless Parliament intervenes, local authorities will continue to administer development contributions policy scams which make housing & commercial property development unaffordable and drive up transport costs.”


In a letter to Property Council members, Mr Townsend said the Auckland Regional Council tried unsuccessfully this year to secure a late amendment to the Local Government Law Reform Bill, which would have extended the power to collect development contributions to regional councils.  “The ARC failed on that occasion, thanks in part to the Property Council’s opposition.”


Mr Townsend said many territorial authorities had elevated development contributions to become the main source of funding for future asset development and an increase in the capacity of existing assets. “This preference does not give adequate recognition to the benefits of capital expenditure which will accrue to existing ratepayers as improved levels of service and through extending infrastructure life. It consequently loads a disproportionately high share of costs on to residential & business growth.


“The Property Council supports a regulatory environment that forces territorial authorities to demonstrate that their development contributions policy:


(a)  correctly allocate the costs of the territorial authority’s asset development programme between growth (new) & deferred capital expenditure (catch-up), and


(b)  spread the costs of growth-related capital expenditures so as to ensure that those who benefit from improved levels of service & infrastructure pay for it.”


Mr Townsend said the Property Council considered that only city & district territorial authorities, as the owners & providers of capital expenditure, should be entitled to charge a development contribution. “Regional authorities, council-controlled organisations, Transit NZ, Land Transport NZ & Watercare Services Ltd should not be entitled to charge a development contribution. In the view of the Property Council:


(i)                 the function of regional authorities is to act as an environmental regulator. Regional authorities are not the owners of capital expenditure


(ii)               territorial authorities should apply principles of causation & benefits received when considering whether a project is a development against which a development contribution should be charged. The territorial authority should recover the ‘growth’ component of a project cost if it can demonstrate that the cost recovery reflects only the marginal cost of growth.”


Defining development


Mr Townsend laid out a proposal for local bodies to define what they would be charging money for: “Before commencing the formation of any development contributions policy, each territorial authority should first be statutorily required to assess whether each of the projects codified in its long-term council community plan & asset management plan is a ‘development’ as defined by the act. If a project is not deemed to be a ‘development’ as defined by the act then the territorial authority should not require the payment of a development contribution.


“When assessing whether a project is a development pursuant to the definition of the act, the territorial authority should also be statutorily required to determine whether any defined development generates growth-driven demand. If the territorial authority cannot demonstrate how a development creates growth-driven demand, then no development contribution should be levied against the property owner or developer.”


Reserves


Mr Townsend said territorial authorities should be statutorily required to establish a standard for reserves: “The standard should determine how much reserve land the territorial authority requires to meet the demands of its current & projected future population. This standard should be subject to review every 3 years, concurrent to the adoption of each territorial authority’s long-term council community plan.”


Appeals


To address the absence of review rights, Mr Townsend said the Property Council supported the inclusion of an independent appeal process.


“The only possible legal remedy currently available to developers & property owners is judicial review through the High Court. Due to the prohibitive cost of judicial review proceedings, justice is literally unaffordable to the vast majority of potential appellants at present.”


Want to comment? Click on The new BD Central Forum or email [email protected].


 


Attribution: Property Council release, story written by Bob Dey for this website.

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Kirby puts 6 April deadline on plan change 62 talks

“Or else” approach leaves developers cold

The huffing and puffing sounded good: Grant Kirby was going to resolve the plan change 62 deadlock before leaving his job as Rodney District commissioner around 11 April.

Not so, say the district’s developers. Why? Because the council is still proposing an unworkable scheme.

When the item was reached on the commission agenda yesterday, Mr Kirby, supported by principal hearings commissioner Ken Graham, made himself look big and the new executive charged with handling the mediation on the proposed financial contributions system, Geoff Mears, look small.

The financial contributions scenario — the complete rulebook on making developers pay for the costs they cause to a council — was the creation of former Rodney general manager Brian Sharplin, ousted shortly after the resigned/suspended councillors were replaced by Mr Kirby a year ago.

Council has presented its case

The proposal arose about 1995 and was adopted by the council in 1997. The appeal by developers was part-heard in the Environment Court in 1999 — the developers’ appeal case was presented, but not the council’s defence, before the parties left court to enter mediation.

The scheme got bogged down in complications, but that didn’t stop the council imposing the sums suggested in the modelling — as “voluntary contributions”.

There are two parts to plan change 62 — theory and practice. Over five years of negotiation with developers on it, there have been several changes of negotiator on the council side, making it hard to get a consistent stance and understanding.

The theory is the methodology for charging contributions towards capital spending resulting from property development. That in itself is a complicated issue because it goes well beyond the immediate infrastructure requirements for a subdivision.

The practice is the application of the methodology to the council’s capital works schedule. Developers say new works are added, old works don’t necessarily drop off, and the subjective application of liability percentages by staff who don’t understand the scheme have all helped to make it unworkable so far.

Commissioner lays down hard line

Enter the commissioner at his last meeting (unless the new council can’t be sworn in as scheduled in a fortnight).

Modifications to the plan change were set out:

There would be no top-ups on existing consents

Maximum contributions for “average urban sections” would be $14,800 including reserve contributions and for residential rural $3500, plus gst

Maximum contributions would be determined every three years, at the same intervals as the council’s long-term financial strategy. “The methodology will use a shared driver approach.”

The role of an audit review group — developer and council representatives, independently chaired — would be written into the district plan. It would recommend projects for inclusion in the project list, review their implementation, and hear and determine objections to specific contribution assessments.

Meetings have run all week

The two sides met for 4-5 hours daily this week before an Environment Court commissioner, following mediation on 20 March. According to Mr Kirby, this was expressly to agree to a consent order by this Friday, 30 March.

“The commission is concerned that further delays will continue to add unjustified ratepayer cost to the proposal, which is in excess of $2 million already. The commission has concluded that it is obligated in the interests of ratepayers to finalise this matter,” Mr Kirby said in his report, which was in much stronger terms than the report to him of chief executive Wayne Donnelly.

Mr Donnelly’s report had recommended: “That if no such consent order can be finalised for 11 April 2001, the matter be referred to the new council for direction.”

Mr Kirby, however, adopted the modifications then resolved: “That the parties be given till 5pm on Friday 6 April to sign a consent agreement incorporating these amendments for submission to the court.

“That if this deadline is not met the chief executive officer is to immediately instruct council’s solicitor to cease mediation and to seek an urgent hearing before the Environment Court to determine this matter.”

Developers’ lawyer turns heat back on Kirby

Developers’ counsel Russell Bartlett, who walked out of yesterday’s working party session, said: “Nothing in those resolutions reflects the discussions we’ve had with council officers this week. We have every confidence in the council officers who are dealing with the matter.”

Turning Mr Kirby even more into the drama queen, Mr Bartlett added: “As soon as this resolution is rescinded I’m sure we can get back to discussions. We were moving towards acceptance of the shared driver approach, but we just had to cost it.”

Noting that the council’s part of the court case was finished, which could put it in an invidious position if it chose to return to court, Mr Bartlett said: “I don’t know where this leaves Rodney, but I don’t think they’ve got a paddle.”

Hopper says cost so far $4 million, and it’s a central government issue

One developer, Leigh Hopper, commented on the $14,800 ceiling for contributions on an urban section: “At the last mediation it was $16,800. The one before, it was $15,200. They have nothing to substantiate it.

“Our number is $5000, plus the neighbourhood reserve contribution. In a greenfields subdivision that’s $6000. There’s no evidence that the council has the right to charge more than that.”

And on the commissioner’s numbers for the cost of resolving nothing so far ($2 million), Mr Hopper believed it would be closer to $3 million. On top of the council’s costs, each of three developer group had spent about $400,000.

“We’ve spent probably $4 million doing what is really a section 32 [of the Resource Management Act] analysis.”

He said someone in the company’s office had said the first day plan change 62 was mentioned, that it was a central government issue, not a policy that should be ironed out at local council level.

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Plan change 62 deadline passes

Commissioner wanted formula established before he left

Rodney District commissioner Grant Kirby’s departing threat to developers over plan 62 proved a hollow one.

Mr Kirby resolved at his last commission meeting before handing back the reins on the district to councillors, on 28 March, that he would give the parties to the plan change 62 dispute until 5pm on Friday 6 April to finalise a consent order or the council would take the dispute back to the Environment Court.

The other parties, naturally, didn’t oblige and Mr Kirby duly handed over to the incoming council on Wednesday 11 April.

The council’s new group manager, environmental services, Geoff Mears, said the council would either get a signed agreement or seek mediation — not as hard a line as his former boss’s — but first needed to see where the new councillors wanted to go on the matter, which has been on the council agenda for six years.

One agenda it’s not on, however, is the new council’s first meeting agenda set down for Friday 20 April.

Plan change 62, a formula for charging costs of development, has been before a court-appointed mediator for some months, and Mr Mears said there was no guarantee the court would accept it back in the courtroom instead of continuing to be sorted out in the mediation process.Kirby puts deadline on talks

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New plan change 62 target is 30 June

Council negotiator optimistic about getting workable financial contributions regime in place

Rodney District Council has a new timetable for its proposed new financial contributions regime, plan change 62.

Grant Kirby tried to push through a solution in his last days as Rodney commissioner in April, offering developers a threat they knew he couldn’t match with action.

But the council’s environmental services group manager, Geoff Mears, told the council today a new programme had been put together with the aim of finalising a consent order between council and developers by 30 June.

Six years after former council general manager Brian Sharplin set out to create a payments framework for developers to make appropriate contributions to meet the costs of their projects on infrastructure, the new set of Rodney councillors nearly derailed the process again today.

Cllr Bill Smith wanted some amendments to the resolution that would have seen the council’s chief executive signing the consent order without its first going before councillors. He wanted a workshop for councillors to understand the plan change before the order was signed, a suggestion which had chief executive Wayne Donnelly recoiling.

If the game plan changed at the end, he said, “I think the developers will have less confidence in the process than they do now.”

The timetable, with a 30 June consent order target agreed to by councillors, starts with a 6 June target date to finalise the capital works schedules and proportions of their costs on which financial contributions will be based, and to finalise the methodology and a procedural manual for apportioning capital works costs to developer financial contributions.

The wording to appear in the plan change is to be agreed a week later. The role and composition of an audit group, to scrutinise the application of the agreed methodology to the capital works schedules, are to be decided by 20 June.

Mr Mears said the programme was about a week behind, but he believed the final target date could be met. The proposal of a methodology is keenly awaited by council around the country, which have been relying on Rodney to put together its scheme rather than setting out to do the same thing themselves.

Previous stories: Kirby puts 6 April deadline on plan change 62 talks

New council wants to continue plan change 62 mediation

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New council wants to continue plan change 62 mediation

Resolution softens commissioner’s hard line

Rodney District Council’s solicitor has prepared a request to the Environment Court to cease mediation with a developer group on plan change 62 — the financial contributions change to the district plan — but a softer approach was taken when the new councillors met in formal meeting for the first time last Friday, 20 April.

That meeting came a fortnight after a deadline on getting a consent agreement from the developer parties passed without action. The deadline was set by Rodney’s commissioner for a year, Grant Kirby, at his last formal meeting on 29 March.

It seemed like posturing to get a result before the commissioner exited. What the developers did was to seek “some clarity on the council’s approach before instructing its advisors,” according to council chief executive Wayne Donnelly.

On Friday, the new council agreed that Mr Donnelly should prepare a report for the next council meeting, on May 31, “with a view to recommending a process (in consultation with the developer group) to continue mediation with appropriate deadlines and conditions.”

Said the mayor, John Law: “We want to go to mediation. We do not want to end up in court again.”

Previous stories:

Kirby puts 6 April deadline on plan change 62 talks
Plan change 62 deadline passes

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