HuttCity_TeAwaKairangi_BLACK_AGENDA_COVER

 

 

Long Term Plan/Annual Plan Subcommittee

 

 

23 November 2020

 

 

 

Order Paper for the meeting to be held in the

Council Chambers, 2nd Floor, 30 Laings Road, Lower Hutt,

on:

 

 

Monday 30 November 2020 commencing at 2.00pm

 

 

Membership

 

 

Mayor C Barry (Chair)

Deputy Mayor T Lewis

Cr D Bassett

Cr J Briggs

Cr K Brown

Cr B Dyer

Cr S Edwards

Cr D Hislop

Cr C Milne

Cr A Mitchell

Cr S Rasheed

Cr N Shaw

Cr L Sutton

 

 

 

For the dates and times of Council Meetings please visit www.huttcity.govt.nz

 

Have your say

You can speak under public comment to items on the agenda to the Mayor and Councillors at this meeting. Please let us know by noon the working day before the meeting. You can do this by emailing DemocraticServicesTeam@huttcity.govt.nz or calling the Democratic Services Team on 04 570 6666 | 0800 HUTT CITY

 

 


HuttCity_TeAwaKairangi_SCREEN_MEDRES

 

PURPOSE

To carry out all necessary considerations and hearings, precedent to the Council’s final adoption of Long Term Plans (LTP) and Annual Plans (AP) which give effect to the strategic direction and outcomes set by the Policy, Finance and Strategy Committee through setting levels of service, funding priorities, the performance framework and budgets.

 

Determine:

       Development of a framework and timetable for the LTP and AP processes.

       The nature and scope of engagement and public consultation required.

       Statements to the media.

       Such other matters as the Subcommittee considers appropriate and which fall within its Terms of Reference.

       Informal engagement with the community, and the hearing of any formal public submissions.

       Consideration of submissions on Hutt City Council’s Assessment of Water and Sanitary Services.

 

Consider and make recommendations to Council:

      Levels of service, funding priorities, performance framework, budgets, rating levels and policies required as part of the LTP or AP, excluding any policies recommended to Council by the Policy, Finance and Strategy Committee.

      Consultation Documents.

      Council’s proposed and final LTP.

      Council’s proposed and final AP.

      Final content and wording, and adoption of the final Hutt City Council Assessment of Water and Sanitary Services.

Note:

Extract from the Controller and Auditor General’s October 2010 Good Practice Guide: Guidance for members of local authorities about the Local Authorities (Members’ Interests) Act 1968

 

Appointment as the local authority’s representative on another organisation

5.47         You may have been appointed as the authority’s representative on the governing body of a council-controlled organisation or another body (for example, a community-based trust).

5.48         That role will not usually prevent you from participating in authority matters concerning the other organisation – especially if the role gives you specialised knowledge that it would be valuable to contribute.

5.49         However, you could create legal risks to the decision if your participation in that decision raises a conflict between your duty as a member of the local authority and any duty to act in the interests of the other organisation. These situations are not clear cut and will often require careful consideration and specific legal advice.

5.50         Similarly, if your involvement with the other organisation raises a risk of predetermination, the legal risks to the decision of the authority as a result of your participation may be higher, for example, if the other organisation has made a formal submission to the authority as part of a public submissions process.

 

    


HUTT CITY COUNCIL

 

Long Term Plan/Annual Plan Subcommittee

 

Meeting to be held in the Council Chambers, 2nd Floor, 30 Laings Road, Lower Hutt on

 Monday 30 November 2020 commencing at 2.00pm.

 

ORDER PAPER

 

Public Business

 

1.       APOLOGIES 

2.       PUBLIC COMMENT

Generally up to 30 minutes is set aside for public comment (three minutes per speaker on items appearing on the agenda). Speakers may be asked questions on the matters they raise.

      

3.       CONFLICT OF INTEREST DECLARATIONS

Members are reminded of the need to be vigilant to stand aside from decision making when a conflict arises between their role as a member and any private or other external interest they might have      

4.       Recommendations to Council - 8 December 2020

i)       Fraser Park Sportsville (recommendation from the Community and Environment Committee – 19 November) (20/1475)

                                                                                                                         6

Chair’s Recommendation:

“That the recommendations contained in the memorandum be endorsed.”

 

ii)      Hutt City Community Facilities Trust - options for the future (20/1467)

Report No. LTPAP2020/6/294 by the Chief Financial Officer                 43

Chair’s Recommendation:

“That the recommendations contained in the report be endorsed.”

 

 

 

 

 

 

iii)     Development contributions policy review (20/1350)

Report No. LTPAP2020/6/291 by the Head of Strategy and Planning   74

Chair’s Recommendation:

“That the recommendations contained in the report be endorsed.”

 

iv)     Long Term Plan 2021-2031 - Revenue and Financing Policy update report #3 (20/1417)

Report No. LTPAP2020/6/292 by the Manager Financial Strategy & Planning       126

Chair’s Recommendation:

“That the recommendations contained in the report be endorsed.”

 

v)      Long Term Plan 2021-2031 waste services  - fees and charges, rates remission (20/1428)

Report No. LTPAP2020/6/293 by the Business Analyst - Rates            172

Chair’s Recommendation:

“That the recommendations contained in the report be endorsed.”

 

vi)     Bulk Water Levy (20/1538)

Report No. LTPAP2020/6/132 by the Strategic Advisor                        182

Chair’s Recommendation:

“That the recommendations contained in the report be discussed.”

5.       QUESTIONS

With reference to section 32 of Standing Orders, before putting a question a member shall endeavour to obtain the information. Questions shall be concise and in writing and handed to the Chair prior to the commencement of the meeting.   

 

 

 

 

Kate Glanville

SENIOR DEMOCRACY ADVISOR

   


MEMORANDUM                                                   6                                                 30 November 2020

Our Reference          20/1475

TO:                      Chair and Members

Long Term Plan/Annual Plan Subcommittee

FROM:                Kate Glanville

DATE:                12 November 2020

SUBJECT:           Fraser Park Sportsville recommendation from Community and Environment Committee 19 November 2020

 

 

 

 

Purpose of Memorandum

1.    To consider a recommendation to the Subcommittee from the Community and Environment Committee.

Background

2.    At its meeting on 19 November 2020, the Community and Environment Committee recommended the following to the Long Term Plan/Annual Plan Subcommittee.

RECOMMENDED: (Deputy Mayor Lewis/Cr Brown)           Minute No. CEC 20603

“That the Committee recommends that the Long Term Plan/Annual Subcommittee:

(i)      notes and receives the report;

(ii)     notes the report from the Working Group attached as Appendix 1 to the report;

(iii)    notes that, on balance, officers support the option put forward by the Fraser Park Sportsville Board (FPS) of entering a new agreement for three years with increased funding allocations;

(iv)    notes the request for funding from FPS attached as Appendix 3 to the report;

(v)     agrees to an increase of $134,814 in the funding grant payable to FPS in the current financial year 2020/21 (making the total for the year $234,814);

(vi)    agrees funding for FPS over the next three years of:

(a)        2021/22 - $201,388;

(b)        2022/23 - $156,154; and

(c)        2023/24 - $124,147

(vii)   agrees that any funding request for 2024/25 and beyond is reviewed in 2023;

(viii)  agrees to forgive the current debt of $75,309.11 owed to Council by FPS;

(ix)    agrees to a possible additional payment to FPS of up to $57,402 (reduced by any end of year surplus), to enable payment of outstanding debts to other parties;

(x)     notes that funding recommendations in the report are supported by Hutt City Community Facilities Trust (CFT);

(xi)    notes that additionally CFT is proposing to forgive $45K outstanding from the FPS founding member clubs fundraising contribution to the facility build; and

(xii)   agrees that officers work with FPS and CFT on a formal funding agreement which incorporates clauses on improved governance, outcomes and financial reporting requirements and regular review periods including an annual review of financial grants.

For the reasons that the proposed option provides the best opportunity to achieve the strategic intent of the Ricoh Sports Centre, the centre is still in a settling in period and has been faced with numerous challenges during this time, and the centre has shown improved operating performance over recent months.”

 

Appendices

No.

Title

Page

1

Appendix 1 - Fraser Park Sportsville Working Group Report 2020

8

2

Appendix 3 - Fraser Park Sportsville Funding Request to HCC Nov 2020

28

    

 

 

 

 

 

 

Author: Kate Glanville

Senior Democracy Advisor

 

 

 

 

 

 


Attachment 1

Appendix 1 - Fraser Park Sportsville Working Group Report 2020

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


Attachment 2

Appendix 3 - Fraser Park Sportsville Funding Request to HCC Nov 2020

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 

         


                                                                                      46                                                30 November 2020

Long Term Plan/Annual Plan Subcommittee

18 November 2020

 

 

 

File: (20/1467)

 

 

 

 

Report no: LTPAP2020/6/294

 

Hutt City Community Facilities Trust - options for the future

 

Purpose of Report

1.    The purpose of this report is to receive advice in relation to the future of Hutt City Community Facilities Trust (CFT) and to seek decisions from Council in regards to public consultation through the Draft LTP 2021-2031.

Recommendations

That the Subcommittee recommends that Council:

(i)        receives the report ;

(ii)       notes the advice from PWC in regards to the future of Hutt City Community Facilities Trust (CFT), refer Appendix 2 attached to the report;

(iii)      agrees that option 3 as detailed in the PWC advice is the preferred option;

(iv)      agrees to include in the Draft LTP 2021-2031 for consultation a proposed transfer of the assets from CFT to Council, with CFT  retained as a non-active Trust for potential future use (being option 3 in the PWC advice); and

(v)       notes that officers will progress further detailed assessment and planning in relation to option 3.

 

Background - Statement of Intent process

2.     Each year the CCOs provide a draft Statement of Intent (SOI) to the Council before 31 March. The Council reviews these draft SOIs and provides feedback and direction to the CCOs. The Board of the CCO then delivers a final SOI to Council by 30 June each year in line with the legislation.

3.     For the three year period commencing 1 July 2020, the LTP Subcommittee reviewed the final SOI from CFT at the meeting 18 June 2020. The Council then agreed to this final SOI on the same day. Refer to appendix 1 for a copy of the SOI. 

4.     Extracts from the SOI

The CFT was established by the Hutt City Council (Council) in August 2012 as a CCO to promote, develop, own, operate, and maintain recreational, leisure, and community facilities in Lower Hutt.

The main role of the CFT has been to develop and then maintain a range of fit-for-purpose, leisure, recreation and community facilities that are attractive to the residents and visitors of Lower Hutt.

In 2019 the trustees conducted a strategic review of the CFT’s future direction and concluded that while it will remain a landlord of its existing facilities, most day to day work to provide ongoing management for these is best conducted by Council staff as is future project management of new builds. The board concluded that CFT’s main focus will be to provide leadership in the identification, promotion and fundraising for new projects which support Council’s overall strategic objectives.

5.   In the Annual Plan 2020/21 process and the decisions to date on the Draft LTP 2021-2031 there are no projects planned for the future that would be delivered through CFT.

 

Background – Financial context and recent challenges

6.     In 2020/21 the Council approved an increase in operational grant funding for CFT from $250k to $365k. The additional funding was approved due to urgent water egress issues needing to be resolved at the Koraunui Stokes Valley Community Hub.  The CFT operational grant funding for 2021/22 has been budgeted at $250k.

7.   In July 2020 the Community and Environment Committee received a paper detailing financial challenges being experienced by Fraser Park Sportsville (FPS) in operating the Ricoh Sports Centre (RSC) which is a CFT property.

8.   Both CFT and Council have made financial contributions beyond what was expected and budgeted to enable the facility to continue to run. There is general agreement that the original operating model was flawed. This was further explored at a workshop in October 2020 involving Councillors, officers and members of the FPS Board.

3.   A further paper is going to the Community and Environment Committee in November 2020 seeking an increased operating grant and the forgiveness of debt to put FPS and the RSC back on a sound financial footing. 

External advice in regards to the way forward

9.     Please refer to Appendix 2 to this report which is advice from PWC in regards to the options for CFT going forward. The report includes information on the current state of play, options for the future and advantages and disadvantages of the options.

10.   The report concludes with a recommendation (option 3) to transfer the assets of CFT to Council who will then become the landlord and retain CFT as a non-active Trust for potential future use. The key advantages of this option are

·    that CFT would continue to be available for future developments should there be a desire to use this again for future new projects.

·    the opportunity to improve efficiencies in how the properties are maintained and managed, and the financial transactions are handled.

·    reduced compliance costs, removing the need for CFT to be audited for example.

Officers are supportive of option 3 being the preferred option.

11.   There is no requirement to consult on a proposal to transfer the assets from CFT to Council. However in the interests of transparency, officer advice is that any proposed change of this nature could be included in the Draft LTP 2021-2031 for consultation. Decisions by Council could then be progressed as part of the final LTP decisions by the 30 June 2021. 

12. CFT Chairperson John Strahl has been consulted throughout this process and has provided input to the review. His view is that if Council considers there are no facility development projects in the short or medium-term future which Council requires CFT to deliver, then the recommended option seems sensible.

13. If Council resolves in support of option 3 as the preferred option, then officers will progress further detailed assessment and planning.

Climate Change Impact and Considerations

14.   The matters addressed in this report have been considered in accordance with the process set out in Council’s Climate Change Considerations Guide.  There are no direct climate change impacts or considerations arising from this report other than those identified within the report.

Legal Considerations

15.   The most relevant legislation includes the Local Government Act 2002, Local Government (Rating) Act 2002 and the Rating Valuations Act 1998. 

Financial Considerations

16.   There are no further financial considerations apart from those detailed in the report.

Appendices

No.

Title

Page

1

Appendix 1 - Hutt City Community Facilities Trust Statement of Intent 2020-2023

47

2

Appendix 2 - PWC report on future options for Hutt City Community Facilities Trust

62

    

 

 

 

 

 

Author: Jenny Livschitz

Chief Financial Officer

 

 

 

 

 

 

Reviewed By: Andrea Blackshaw

Director Neighbourhoods and Communities

 

 

 

Approved By: Jo Miller

Chief Executive

 


Attachment 1

Appendix 1 - Hutt City Community Facilities Trust Statement of Intent 2020-2023

 

 

  

 

 


Statement of Intent

 

Hutt City Community Facilities Trust

 

2020/21 – 2022/23

 


 

 

Contents

 

Introduction. 3

Objectives. 3

Activities. 4

Governance. 5

Ratio of Consolidated Shareholders’ Funds to Total Assets. 6

Accounting Policies of the CFT. 6

Performance Targets. 8

Prospective Statement of Financial Performance. 9

Prospective Statement of Movements in Equity. 10

Prospective Statement of Financial Position. 11

Prospective Statement of Cash Flows. 12

The CFT Depreciation Policy. 13

Information to be provided to Shareholders. 13

Procedures to be followed before members acquire shares in other groups etc. 14

Activities for which the Board seeks compensation from a local authority. 14

Board estimate of the commercial value of the shareholder’s investment in the group. 14

Other Management Issues. 15

 


 

Introduction

This Statement of Intent has been prepared by the Hutt City Community Facilities Trust (CFT), as required under Section 64(1) of the Local Government Act 2002 for a Council Controlled Organisation (CCO).  It gives an overview of the CFT, the objectives we will work to achieve, the activities we will undertake, and how we will measure our performance.  It covers the three year period to 30 June 2023.

The CFT was established by the Hutt City Council (Council) in August 2012 as a CCO to promote, develop, own, operate, and maintain recreational, leisure, and community facilities in Lower Hutt.  Over the next 30 years a number of facilities in Lower Hutt will have to be upgraded or replaced.  Changing preferences in the community for the way recreation, leisure, and community services are delivered led HCC to adopt an integrated facilities approach to new developments, which will allow for a range of services to be accessed in one place.  The Walter Nash Centre completed by the CFT in late 2015 is a good example of an integrated community facility. The Walter Mildenhall Park Redevelopment completed in 2017 at Naenae, the Koraunui Stokes Valley Community Hub also completed in 2017 and the Ricoh Sports Centre at Fraser Park, completed in 2019, are examples of projects that also follow the integrated facilities model.

The main role of the CFT has been to develop and then maintain a range of fit-for-purpose, leisure, recreation and community facilities that are attractive to the residents and visitors of Lower Hutt.

In 2019 the trustees conducted a strategic review of the CFT’s future direction and concluded that while it will remain a landlord of its existing facilities, most day to day work to provide ongoing management for these is best conducted by Council staff as is future project management of new builds. The board concluded that CFT’s main focus will be to provide leadership in the identification, promotion and fundraising for new projects which support Council’s overall strategic objectives.

Where appropriate, the CFT will assist with fundraising work to attract donations for these developments from philanthropic organisations, the corporate sector and the community.  The Trust will do this by acting as a voice for community facilities in Lower Hutt, using the skills and expertise its trustees bring from valuable experience in business, asset management, and community affiliation.

The CFT will strive to have a positive and productive working relationship with Council. The Trust will contribute to Council’s community outcomes of a city that is actively engaged in community activities, and a city that promotes strong and inclusive communities.  Accordingly, the CFT Board looks forward to working with Council to optimise the overall social, cultural, health and economic wellbeing of Lower Hutt.

Objectives

The objectives of the CFT will follow section 59 of the Local Government Act 2002, which outlines the principal objectives for a Council Controlled Organisation as follows:

 (a)          Achieve the objectives of its shareholders, both commercial and non-commercial, as specified in the Statement of Intent;

(b)          Be a good employer; and

(c)           Exhibit a sense of social and environmental responsibility by having regard to the interests of the community in which it operates and by endeavouring to accommodate or encourage these when able to do so.

 

In addition to the statutory objectives, the CFT Deed of Trust has a range of charitable objectives designed to promote the health and wellbeing of Lower Hutt’s communities. These objectives are to:

·    Promote, operate, develop, and maintain community facilities in Lower Hutt through the management of the interests and rights relating to these facilities.

·    Assist with attracting fundraising from the community and philanthropic organisations for the development of high quality community facilities.

·    Provide strategic planning, in partnership with HCC, in relation to the ongoing development and administration of community facilities in Lower Hutt.

·    Provide high quality amenities which attract and engage, promoting the health and well-being of residents of and visitors to Lower Hutt.

·    Practise prudent commercial administration of high quality community, recreation, and leisure facilities, with a view that they will be financially sustainable.

 

Environmental objectives

 

The Board will be considering during the year what we can do effectively to support the Council’s environmental objectives. In particular we will give consideration to the potential impacts of climate change and ‘carbon zero’ initiatives, and what contribution the trust can make to this. We will work with and hold discussions with Council staff to ensure we are working on a co-ordinated basis.

 

Health and Safety

 

The Board sees the health and safety of its staff, contractors, the public and all users of its facilities as a top priority. Enhanced reporting to the Board to ensure that there is the best possible health and safety practices and culture in all its facilities is a top priority for the year.

Activities

This draft Statement of Intent has been provided at a busy time for Council after the recent election and restructuring of its management team. It has also been busy with its consideration of the future for the Naenae Pool. As a consequence of its initial plans to rebuild that in some form, it has signalled the suspension of various other funding allocations for gym sports and the proposed Wainuiomata Sports and Community Hub, both of which were part of CFT’s longer term work plan. The Board has not received from Council the usual letter of expectation to guide it in the completion of this SOI thus the plan for the year is limited to managing the existing facilities of the Trust until Council makes its broader decisions on funding priorities for any new project and what role it would like to see CFT play in them.

In the next three years the CFT will focus its activities in the following areas:

·    Completing the bedding in of the recently constructed Ricoh Sports Centre at Fraser Park. The new building is a complex structure and the CFT will work with the tenant, Fraser Park Sportsville (FPS), to best optimise the use and to capture the benefits of the technologies and infrastructure imbedded in the complex.

 

·    Continue to manage, in partnership with the tenant (FPS), the artificial turfs at Fraser Park.

·    Continue to manage in partnership with the tenant (Council), the Walter Nash Centre at Taita.

·    In partnership with the tenant (Council), continue to make modest improvements to the old Walter Nash Centre to bring that building up to modern standards.

·    Working with the Naenae Bowls Club and the community to maximise the use of the facility and to improve its ability to fully fund all operational costs, including insurance, rates and long-term maintenance.

·    Review facility related maintenance plans – for all CFT facilities – to ensure they comply with relevant legislation and are maintained to a high and safe standard.

·    The development of any other community or sporting buildings which the Council has funding for and requests the CFT to project manage.

Governance

The CFT board of trustees comprises five members, one of whom is a Councillor appointed by Council.  All other trustees are appointed by Council in line with its Appointment and Remuneration of Directors Policy.  The Chairperson is appointed by the trustees. 

The trust board meets six weekly.

The CFT adopts an approach to governance that is in accordance with the best practice statements produced by the Institute of Directors New Zealand (Incorporated

The Trustees of the CFT must act in accordance first and foremost with the charitable purposes of the Trust.

The CFT will give effect to the Hutt City Council Long Term Plan and act consistently with other Council plans, strategies and policies.

The CFT will adopt in its relationship with Council ways of working that reflect Council and CCOs as partners in the delivery of shared outcomes. This includes a commitment to the agreed Memorandum of Understanding between the Trust and Council that was signed in the 2012/13 period.   This includes:

·    A commitment to collaboration.

·    A commitment to openness and transparency.

·    Adherence to a ‘no surprises’ policy  - where it is appropriate the CFT trust board will bring to Council’s attention immediately all new and significant projects, initiatives, and/or issues.

·    A commitment by the CFT to the aims and objectives of the Council Long Term Integrated Community Facilities Plan.

·    A commitment by Council where it sells recreation or similar land or any other identified community facility, that the profits arising from that sale shall be vested in a reserve for future investment in reserve development, which may include the development of associated community facilities by the CFT and Council. The use of the reserve will be negotiated between Council and the CFT.

 

The CFT Deed of Trust allows the CFT the ability to raise a loan to part fund approved CFT projects.  The CFT will not however raise any significant loans without consulting the shareholder.

 

Office space, office equipment, IT and administrative support is provided to the CFT by Council. This is expected to continue.  From 1 July 2020, the CFT will pay Council an annual fee to cover financial, HR and IT support that it receives during the year.  For the 2020/21 financial year the fee has been set at $28,642.  This fee will rise by 2% a year thereafter.  Prior to 2020/21 no support fees had been charged.

Ratio of Consolidated Shareholders’ Funds to Total Assets

Definition of Terms

Shareholders’ Funds:  Represent the net equity the shareholder has contributed to the Trust since its incorporation. This amount includes issued share capital, revaluation reserves, and retained earnings. There are currently no shareholder funds distributed to the CFT.

Total Assets:  Represent the total assets both intangible and tangible of the CFT, disclosed in accordance with applicable financial reporting standards. For completeness it is noted that any tax liabilities in respect of GST and deferred tax are classified as liabilities irrespective of them being a debit or credit balance.

Accounting Policies of the CFT

Financial Statements

The Financial Statements will comply with generally accepted accounting practice in New Zealand (NZ GAAP). They will comply with NZ IFRS and other applicable Financial Reporting Standards. Financial statements will also comply with the Local Government Act 2002.

General Accounting Policies

Accounting policies adopted will be consistent with the New Zealand equivalent of International Financial Reporting Standards (NZ IFRS) issued by the XRB (External Reporting Board).

Particular Accounting Policies

Recognition of Income – Revenue will be recognised when an invoice is raised after service is provided. Other transactions that comply with the definition of "Revenue" in the Statement of Concepts issued by the XRB (External Reporting Board) will also be recognised as revenue.

Goods and Services Tax

Financial statements will be prepared on a GST exclusive basis.

Cash and Cash Equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks, and other short term highly liquid investments with original maturities of three months or less and bank overdrafts.

Accounts Receivable

Accounts receivable will be stated at net realisable value.

Investments

Investments will be stated at fair value.

 Property Plant and Equipment

CFT’s buildings and site improvements are revalued every three years (or sooner if necessary) to ensure the assets carrying amount does not differ materially from fair value.  All other are shown at cost, less accumulated depreciation and impairment losses.

Consolidation

The purchase method will be applied to prepare the Consolidated Financial Statements (if required).

Leases

Cost of operating leases (if any) will be recognised as expenditure over the term of the lease.

Borrowing

Borrowing is recognised in the balance sheet on a fair value basis.

Taxation

As the CFT has been established as a charitable trust, it should not be liable for income tax. If the Trust does engage in any activity making it liable for income tax, the income tax expense will be calculated after allowance for permanent differences and any group loss offsets.

Funding Commitments

Funding commitments are recognised as a liability and asset until such time that the community facility development is undertaken.  At this time it will be recognised as revenue.


 

Performance Targets

Performance indicators for the CFT are as follows:

 

Indicator and measure

Target 2020/2023

Operational Management

·   Operational expenditure is within budget

·   All reporting requirements set by Council and the Board of CFT are met in accordance with the Local Government Act 2002, the CFT Statement of Intent and the CFT Deed of Trust

 

 

100%

 

Annual Report by 30/9/20, 30/9/21 and 30/9/22

SOI and six monthly report by 1/3/21, 1/3/22 and 1/3/23

Facilities Management

·   All facilities maintain legal compliance, WOFs and/or certification

 

·   All facilities have in place an agreement to lease within three months of completion

 

 

·   All facilities have detailed maintenance plans in place within 12 months of completion

 

 

100% Building safety upheld

 

 

100% Legal partnerships covering leases and maintenance are agreed with the principal tenants 

 

100% Maintenance programmes instituted to ensure facilities’ amenity values are retained and are safe for users

 

Environmental Objectives

 

·   Consider how the board can effectively support the Council’s environmental objectives.  In particular give consideration to potential impacts of climate change and ‘carbon zero’ initiatives, and what contribution the Trust can make to this.

 

 

 

Potential impact assessment and action plan report completed by 30 June 2021

Health and Safety

 

·   Enhanced reporting to the Board to ensure best possible health and safety practices and culture are in all CFT facilities.

·   All CFT construction projects have Health and Safety plans and monitoring in place.

 

 

 

Monitoring is in place and reporting to the Board by 30 June 2021

 

 

100% compliance


Attachment 1

Appendix 1 - Hutt City Community Facilities Trust Statement of Intent 2020-2023

 

Prospective Statement of Financial Performance

 

* LTAR&M is defined as Long Term Asset Replacement and Maintenance


 

Prospective Statement of Movements in Equity

 


 

Prospective Statement of Financial Position

 


 

Prospective Statement of Cash Flows


 

Proportion of Accumulated Profits/Capital Reserves Distributed to Shareholder

The CFT is a non-profit entity, and any accumulated profits and/or capital reserves are to be used to fulfil the Trust’s charitable objectives. There is no current requirement to distribute a proportion of these funds to Council.

The CFT Depreciation Policy

The CFT is still evolving policy with respect to the establishment of cost sharing arrangements between itself and sporting bodies and individuals who will use its facilities, buildings and artificial turfs. Wherever possible the CFT will seek to deliver to the users, debt free buildings and facilities at a price which will encourage and stimulate sporting and community participation.

The accounts published above assume that CFT will strike a facilities/building and turf rental that is designed to raise sufficient funds to maintain the asset over the next 25 years.

The CFT is however mindful that some of its assets will have a life well beyond 25 years and could still be in use in 75 years’ time. Predicting what sporting facilities a community might need in 75 years is fraught and the CFT will not attempt to do this. It has therefore resolved to not build into its rental or long-term maintenance strategy an allowance to fund the replacement of an asset older than 25 years. The financial accounts above reflect this policy. Maintenance costs for an asset life of up to 25 years are generally funded out of user charges. Major assets like roofs, lifts and turf carpets which require replacement at the end of their predictable known life, will be funded by a specific arrangement with Council, or Council, the CFT and the tenant combined.

Because the CFT is still evolving its rental and depreciation charges, negotiations to fix agreed rentals with Council and its other tenants are ongoing. Further research, designed to more accurately determine the actual depreciation and maintenance costs on the CFT’s assets and the ability of its tenants to meet those costs, may lead to a change in the above policy and associated CFT budgets for the years beyond 2019/20.

Information to be provided to Shareholders

In each year the CFT shall comply with the reporting requirements specified for Council Controlled Organisations under the Local Government Act 2002, the Companies Act 1993 and other relevant regulations.

In particular, it shall provide the following:

·    Statement of Intent

                A draft Statement of Intent by 1 March detailing all matters required under the Local Government Act 2002.

 

·    Annual Report

                Within three months  after the end of each financial year, the CFT will provide an annual report which provides a comparison of its performance with the Statement of Intent, with an explanation of any material variances, audited consolidated financial statements for the financial year, and an auditor’s report (in accordance with sections 67, 68 and 69 of the LGA 2002).

·    Half-Yearly Report

                Within two months after the end of the first half of each financial year the CFT shall provide a  report on the operations of the Trust to enable an informed assessment of its performance, including financial statements, and progress on activities and projects (in accordance with section 66 of the LGA 2002).

Procedures to be followed before members acquire shares in other groups etc.

Subscription for shares in any other Company or interest in any other organisation will only take place with express prior approval from Council.

Activities for which the Board seeks compensation from a local authority

It is not anticipated that the Trust will seek compensation from any local authority otherwise than in the context of the normal contractual relationship with Hutt City Council.

If the Trust has undertaken to obtain or has obtained compensation from its shareholders in respect of any activity, this undertaking or the amount of compensation obtained will be recorded in:

·    The annual report of the CFT; and

·    The annual report of the Hutt City Council.

Board estimate of the commercial value of the shareholder’s investment in the group

The Board will conduct an assessment of the value of Council’s investment in the Trust.  The assessment will be based on the net asset value shown in the Trust’s six-monthly report.

Following completion of the Ricoh Sports Centre at Fraser Park, the estimated replacement value of the Trust’s assets is $40 million.

Other Management Issues

Health and Safety in Employment

CFT will maintain best industry practice and ensure 100% compliance with legislated obligations for its sites and buildings.

Community Outcomes

For the past five years CFT has been in building and development mode, it will now commit more resources and work with Council officers to monitor and report on the outcomes of the new CFT facilities. The CFT facilities have had a significant positive impact on the communities that surround them; however this has not been well researched or documented.

Long Term Facility Planning

The CFT has prepared 20 year maintenance plans for all of its buildings and other sporting assets and will now work with Council officers to prepare funding plans for that work. While some of the costs will be met from tenant rentals, more significant expenditure, for example on the cost of reroofing a major building like the Walter Nash, will need to be determined and agreed with Council.

Business Continuity

CFT is refining management practices and back up plans which will become operational in the event of unforeseen circumstances and natural disasters so that any events will have a minimal impact on the future operation of its facilities and assets.

Insurances

CFT will maintain appropriate insurances and/or require its tenants to have appropriate insurances, to mitigate risk of portfolio damage, business interruption and professional indemnity. This will include Directors and Office Bearers’ cover where appropriate.

Emergency Preparedness

CFT will continue to develop and maintain systems and procedures to best position itself and its facilities to deal with emergency situations.

Environmental Objectives

CFT is working with Council staff and consultants to formulate an environmental strategy for CFT that could change the way CFT builds and manages its sporting infrastructure and buildings. It is probable that CFT will not in future use gas heating in its buildings and will consider changing existing gas units at the end of their working life. CFT is already working to include solar power units on its buildings and will make provision for such units on future buildings. CFT will also investigate designing future buildings under the Green Star rating system if such an approach is affordable.

 

 


Attachment 2

Appendix 2 - PWC report on future options for Hutt City Community Facilities Trust

 


 


 


 


 


 


 


 


 


 


 


 


                                                                                      88                                                30 November 2020

Long Term Plan/Annual Plan Subcommittee

19 November 2020

 

 

 

File: (20/1350)

 

 

 

 

Report no: LTPAP2020/6/291

 

Development contributions policy review

 

Purpose of Report

1.    The purpose of this report is to: 

·    Seek in-principle agreement to the revised draft Development Contributions and Financial Contributions Policy (Policy), excluding the charges and asset schedules; and

·    Provide an indication of the development contribution charges that will apply under the Policy from 1 July 2021.

2.    Following further refinement of the charges, a complete and final draft of the Policy will be submitted to the 21 December 2020 LTP/Annual Plan Subcommittee for consultation approval. 

Recommendations

That the Subcommittee recommends that Council:

(i)    notes the following changes have been included in the draft Development Contributions and Financial Contributions Policy referred to in recommendation (v);

a.    The introduction of clearer information about when development contributions are assessed and paid; 

b.    The introduction of differentiated assessment rates for residential developments;

c.     Refinement of non-residential assessment rates and the introduction of a clear position on how non-residential subdivisions will be assessed;

d.    Inclusion of guidance on when it is acceptable to use special assessments;

e.     The introduction of more formal processes for reconsiderations, objections, and remissions; and

f.     Inclusion of new definitions to support administration of the draft Policy, such as a definition of bedroom to support differentiated assessment rates for residential developments;

(ii)   notes the indicative charges for development contributions in Table 1 of the report, and that further work is progressing on finalising these charges which may result in changes;

(iii)  notes that section 197AB(g) of the Local Government Act means that while a district wide catchment is not prohibited, it is strongly discouraged;

(iv) notes that district wide charges are proposed in the draft Policy for elements of the infrastructure programme that will serve and benefit all developments and areas in the city, especially the Transport programme and capacity upgrades at the Seaview wastewater treatment plant; 

(v)  agrees in-principle to the draft Development Contributions and Financial Contributions Policy, excluding the charges and schedules, attached as Appendix 1 to the report; and

(vi) notes that a complete and final draft of the Development Contributions and Financial Contributions Policy will be submitted to the 21 December LTP/Annual Plan Subcommittee for consultation approval.

 

Background

3.    As part of the Long Term Plan, Council must make decisions on how it funds its activities – including growth related infrastructure. Development contributions are one of the funding tools available to the Council and can be used to help fund growth related infrastructure. Development contributions are levied on development and are established in a Development Contributions and Financial Contributions Policy (Policy), which the Council must review every three years. 

4.    The 24 September, the LTP/Annual Plan Subcommittee considered an early direction report (LTPAP2020/5/211) on development contributions and resolved the following:

i.     notes that Wellington Water Limited has indicated that significant investment is required to support forecast growth in Lower Hutt;

ii.    notes that economic incentive remissions package for development contributions have ceased and that consequently, all new developments now pay full development contribution charges;

iii.   agrees in principle to:

a.       expand growth planning and capacity life horizons for the Development Contributions Policy to 30 years;

b.       retain the scope of activities funded by development contributions – water, wastewater, transport, and stormwater;

c.       retain a policy where 100% of the capital cost of providing growth related infrastructure for water, wastewater, transport, and stormwater are funded by development contributions; and

d.      introduce differentiated development contribution assessment rates for smaller residential units; and 

iv.   agrees to update the Development Contributions Policy to be more user friendly and align it with best practice in the sector. 

5.    A draft Policy has been developed to give effect to these resolutions and is included as Appendix 1. However, it excludes the charges and schedules which have yet to be finalised. Instead, indicative charges are included in this report for information purposes, and feedback from the subcommittee.

Discussion

Indicative Charges

6.    Officers are working to finalise all of the assumptions that go into the calculation of the charges, including:

·      Growth. 

·      The projects and programmes needed to support growth.

·      How the cost for different projects and programmes are attributed to growth, renewal, and levels of service. 

·      How interest costs are accounted for.

7.    The overall programme to be funded by development contributions has risen substantially in cost compared to the 2018-2028 Long Term Plan. As a result, work to date indicates that charges will rise for most catchments and for most activities (transport, water supply, wastewater, and stormwater). Overall, charges are likely to rise by between $4,000 - $27,000 per EHU approximately. The indicative charges are listed in Table 1. These are subject to further refinement and may change once finalised.  

8.    The catchments with the largest increase and overall charge are Wainuiomata and the Valley Floor, with the charges for water in Wainuiomata being particularly high. Increases in these two catchments are driven by reservoir projects and in Wainuiomata also by wastewater main and pump station projects.

9.    Eastbourne is likely to have a drop in its water (and overall) charges because a reservoir project has been removed from the programme. Officers are considering the implications of this change, including whether refunds will need to be made to developments that paid the current charge.

 

 

 

 

 

Table 1 - Current development contribution charges vs. indicative development contribution charges (GST exclusive)

 

 

Catchment

 

 

Western Hills

Valley Floor

Stokes Valley

Wainuiomata

Eastbourne

Rural

Districtwide

Activity

 

Development contribution per EHU

Transport

Current

$249

$65

$324

$407

$1,436

$3,803

$0

Proposed

Districtwide charge

$4,991

Water Supply

Current

$1,119

$54

$182

$28

$8,979

$0

$0

Proposed

$1,378

$7,320

$0

$17,135

$0

$371

Wastewater

Current

$0

$36

$0

$32

$0

$0

$3,568

Proposed

$521

$521

$521

$4,265

$0

$0

$2,505

Stormwater

Current

$436

$205

$1,025

$24

$1,084

$0

$0

Proposed

$106

$243

$19

$884

$1,081

$0

$268

Total

Current

$1,803

$361

$1,531

$491

$11,499

$3,803

$3,568

Proposed

$2,255

$8,149

$864

$22,691

$2,517

$0

$3,144

DC per EHU ($) a development will pay in each catchment

Current

$5,372

$3,928

$5,099

$4,059

$15,067

$3,803

$3,568

Proposed

$10,389

$16,284

$8,999

$30,826

$10,652

$4,991

$8,135

Change

Increase

$5,017

Increase

$12,356

Increase

$3,900

Increase

$26,767

Decrease

($4,415)

Increase

$1,188

Increase$4,567

 

10.  While the charges have increased, the charges are still generally in line with development contribution charges nationwide, although the charges for Wainuiomata are at the high end. A sample of other council’s current lowest and highest development contribution charges is shown in Figure 1. Figures are GST exclusive and based on current charges only for areas that have all three water charges and roading, except for Hamilton which excludes stormwater and Wellington which includes reserves.

 

Figure 1 - Development contribution charge sample comparison

Draft Policy

11.     The draft Policy has been developed in line with a voluntary use template being considered by the Department of Internal Affairs and the Society of Local Government New Zealand. Two other councils already use a similar format, and others are considering it.

12.     Using the new template necessarily involves a lot of changes, most of which do not affect the substantive policy or key administrative elements of the Policy.

13.     The most significant changes to the Policy are:

·        The introduction of clearer information about when development contributions are assessed and paid.

·        The introduction of differentiated assessment rates for residential developments.

·      Refinement of non-residential assessment rates and the introduction of a clear statement about how non-residential subdivisions will be assessed.

·      Inclusion of guidance on when it is acceptable to use special assessments.

·      The introduction of more formal processes for reconsideration, objections and remissions.

·      Inclusion of new definitions to support administration of the Policy, such as a definition of bedroom to support differentiated assessment rates for residential developments.

14.     These are discussed below.

Assessment, notice, invoice and payment process

15.     The draft Policy introduces a clearer assessment, notice, invoice and payment process that aligns with the requirements of the Local Government Act 2002 (LGA) and makes it easier for customers to understand how the Policy will apply to them. The key changes are:  

·      Change from a ‘quote’ for development contributions to a ‘Notice of requirement” in line with the language of the LGA. It has also been made clearer in the draft Policy that this notice is the trigger for lodging requests for reconsiderations, objections, or remissions.

·      Introduction of clear dates for when invoices are issued, linked to the timing of payments.

·      Changes to the payment dates for development contributions levied for service connections, or resource consents that are not subdivision related. Development contributions levied for service connections will be payable when the connection authorisation is granted. Development contributions levied for resource consents that are not subdivision related will be payable on the 20th of the following month. These changes will simplify administration of the Policy and lower the risk of non-payment occurring. 

·      Introduction of a payment date for development contributions levied for a certificate of acceptance, being at the time of issue. This payment date was chosen to ensure payment is made concurrently with the certificate being issued. Council’s only recourse for non-payment after this date is debt collection. 

16.     While not a policy change, the draft Policy also makes it clear that debt collection, as permitted by section 252, of the LGA will start if payment is not made by due dates.

Assessment rates for residential developments

17.     The draft Policy includes differentiated development contribution assessment rates for smaller residential units, as agreed in-principle by the LTP/Annual Plan Subcommittee.

18.     The proposed rates are included in Table 2. These rates are similar to rates used at other councils. They are correlated with the size of households typically occupying 1 bedroom, 2 bedroom, and larger residential units (RU) and the average demands they place on services.

 

 

 

Table 2 - Proposed EHU assessment rates for residential development

 

MINOR RU

SMALL RU

STANDARD RU

No. of bedrooms

1

2

3 or more

EHU Discount (all services)

50%

25%

Nil

Proportion of EHU Payable for all charges

0.5

0.75

1

 

 

 

 

19.     ‘Top up’ rates are also included in the draft Policy to cover cases where minor and small residential units have additional bedrooms added later. For example, should a dwelling be assessed as a small RU (2 bedrooms), and subsequently extend by adding a third bedroom, they will need to pay a development contribution for an additional 0.25 EHUs. This will help ensure parity with assessment rates for a standard RU (3 bedrooms).

20.     The draft Policy includes a definition of a ‘bedroom’ to support administration of these assessments.

21.     Assessments rates for retirement villages and visitor accommodation have been included in the draft Policy also, formalising current practice within Hutt City Council and the sector more widely.

Assessment rates for non-residential developments

22.     Four main changes are proposed for non-residential assessment rates.

·      A nominal 1 EHU will be assessed for each non-residential subdivision lot, with the remainder to be assessed at building consent. Currently the Policy is silent on how non-residential subdivision is treated.

·      The current Policy states the gross floor area (GFA) per EHU for non-residential development types. This is being changed to EHUs per 100m2 GFA. This change makes the calculation of EHUs simpler and more intuitive.

·      Introduction of an ‘other non- residential’ category to ensure that non-residential developments that are not industrial, commercial, or retail in nature are covered and can be assessed (via special assessment) under the draft Policy.

·      Re-setting of EHU rates for transport. This is based on updated information on the average trips per day per EHU (now 8 rather than 10) and applying a primary purpose adjustment to nominal trip generation rates. The proposed and current (equivalent) assessment rates are in table 3 below.

 

 

 

Table 3: Proposed transport EHU Assessment rates per 100m2

Proposed

Current (equivalent)

Industrial

4

3.3

Commercial

3

2

Retail

6

10

Other non-residential

Special assessment

Not stated

 

Special assessments

23.     The section on self-assessments in the current Policy provides broad discretion for Council to undertake a special assessment (or accept a self-assessment) and is also overly complex. The draft Policy simplifies this section and provides guidance on when it is appropriate to use special assessment. The proposed criteria for using or accepting the use of a special assessment are:

·        A development is of relatively large scale; or

·        A development is likely to have less than half or more than twice the demand for an activity listed in Table 7 for that development type; or

·        A non-residential development does not fit into an industrial, retail, or commercial land use and must be considered under the ‘other’ non residential category proposed in the Policy; or

·        A non-residential development may use more than 5 m3 of water per day.

Reconsideration, objections, and remissions 

24.     The draft Policy makes it clearer that a development contribution Notice shall be the trigger for lodging reconsideration, objection, and remission requests.

25.     It also signals a more formal process for lodging reconsideration and objections by requiring the use of forms, and paying fees for reconsideration and objections, and also a deposit for objections.

26.     These changes are to help ensure requests provide a reasonable standard of information and are focused on the grounds for reconsiderations or objections under the LGA. It may also help discourage lodgement of vexatious requests and objections.

Definitions

27.     Various changes have been made to the definitions in the draft Policy. Most of these are of a minor nature or have been made to align definitions in the draft Policy with the National Planning Standards.  Notable changes include the definition of bedroom, commercial, retail, and industrial activities, gross floor area, and retirement village.

Options

28.  Council has two matters to consider for each of the options in this report:

·    The acceptance of the magnitude of the indicative charges, associated catchments, and continued endorsement of the principle that growth pays for growth.

·    The acceptance in-principle to the draft Policy including associated changes.

29.  Each is discussed below.

Indicative charges

30.  This report is not seeking a decision to adopt new development contributions charges because these have not yet been finalised. However, the charges listed in Table 1 provide a reasonable indication of how high the charges may be when they are finalised.

31.  Wanuiomata’s charges will remain the highest and are likely to remain in the $25,000-$35,000 range (GST excl.). This may be of concern to Council given house price levels in the city, and the potential to discourage growth. A high proportion of the city’s growth is expected to occur in Wainuiomata where the highest charges will be – about 23% over the next 10 years and 30% over 11-30 years.

32.  A summary of the options available to Council is listed in Table 4.

33.  Given the LTP/Annual Plan Subcommittee’s resolutions on 24 September 2020, Option A is the basis for the work currently being undertaken by officers. It will guide the charges calculated and presented for adoption on 21 December 2020, unless officers are directed by the Subcommittee to pursue one of the other options.


 

Table 4 - Options for changing development contribution charges

Option

Impact

Pro

Cons / risks

A.

Retain proposed approach to growth funding (default option given 24 September resolutions)

100% of growth costs recovered from development contributions across 8 catchments

•   Consistent with growth pays for growth principle

•   Highest charge equates to just 12% of house price increases over last five years

•   Continuity of catchments

•   Administration continuity

•   Major charge difference between Wainuiomata and other catchments **

•   May increase cost of developing new housing

 

**gap likely to close in future LTPs

B.

Reduce % of growth costs funded by development contributions for some or all catchments

Lower charges in some or all catchments

•   Lowers cost of developing new housing

•   Ability to target just high cost catchments (Wainuiomata)

•   Erosion of growth pays for growth principle

•   Rates increases to pay for growth costs

C.

Reduce number of catchments

Spread costs over larger catchments

•   Reduce charges in high growth-costs areas (Wainuiomata)

•   Easier to administer

•   Raises charges for low-growth cost areas

•   Weaker nexus between individual projects and developments

•   Higher risk of successful legal challenge

•   Loss of continuity

D.

Increase number of catchments

Focuses cost recovery – spread cost over smaller catchments

•   Stronger nexus between individual projects and developments

•   More difficult to administer

•   Likely to result in very high charges in some areas

•   Higher risk of under-recovery

•   Loss of continuity

 

 

Grouping of catchments

34.  The grouping of catchments is guided by sections 101(3) and 197AB (g) of the Local Government Act.

 

35.  Section 101(3)(a) and (b) outline the general factors that councils should take into consideration when determining catchments for development contributions purposes. Those factors are:

 

(a)     in relation to each activity to be funded, -

                             i.          the community outcomes to which the activity primarily contributes;

                           ii.          the distribution of benefits between the community as a whole, any identifiable part of the community, and individuals;

                         iii.          the period in or over which those benefits are expected to occur;

                         iv.          the extent to which the actions or inaction of particular individuals or a group contribute to the need to undertake the activity;

                           v.          the costs and benefits, including consequences for transparency and accountability, of funding the activity distinctly from other activities; and

(b)     The overall impact of any allocation of liability for revenue needs on the community.

36.  Under section 197AB(g), when calculating and requiring development contributions, territorial authorities may group together certain developments by geographic area or categories of land use, provided that:

 

i.   the grouping is done in a manner that balances practical and administrative efficiencies with considerations of fairness and equity;[1]and

ii.  grouping by geographic area avoids grouping across an entire district wherever practical.

 

37.  In officer’s view, this legislation (clause (ii) in particular) means that while a district wide catchment is not prohibited, it is strongly discouraged and a key determinant of whether a territorial authority can take a one catchment approach is whether it is practical administratively to have multiple catchments.  Council has multiple catchments already and has been able to administer them without difficulty. So, in practice, multiple catchments can and are being managed.

38.  In addition, given the city’s size, geographic spread, and ''natural" catchments with distinct servicing characteristics and community identities, it would also seem reasonable and practical for Council to take a multi-catchment approach for most aspects of the programme

39.  In some cases, there is infrastructure that services the whole city like the wastewater treatment plant and there is a fairly consistent relationship between a unit of development and the benefit received. In cases like that a districtwide charge is generally considered practical and defensible. The cost of the infrastructure per EHU benefiting from the infrastructure is the same whether a single catchment or multiple catchment approach is used.

40.  Where practical and more defensible, this approach has already been taken in the draft Policy, with the most significant district wide charge being for Transport – largely driven by the Cross-Valley Connector. This is based on a view that transport related infrastructure in a relatively compact city like Hutt City provides benefits to all developments and areas. The main alternative to this approach is to discount areas as benefiting from the transport programme, or weight the relative benefits different areas receive.    Officers are investigating this approach further.

41.  Section 197AB(g) presumes that fewer catchments will be easier to administer but asks council to balance ease of administration with fairness and equity.  Some may interpret “fairness and equity” as meaning council should have a policy that doesn’t result in charges that are very high in some areas because that wouldn't be "fair'' on those areas i.e. it would cost more to develop there and mean that houses will cost more.

42.  However, this is not how this section should be interpreted.  Generally the section is taken to mean that the smaller the catchment, the closer the link between the growth and therefore the development contributions charges and costs incurred by council for that area.  It also means that less cross-subsidisation is likely to occur between areas.   The smaller the catchments, the fairer and more equitable the catchment system is.

43.  Larger catchments mean more grouping of growth costs, so involve a greater degree of cross subsidisation - which in turn may be construed as less fair or less equitable.  Developments in areas that are low cost to service pay higher charges to help reduce the cost for development in areas that are a high cost to service.  This is also consistent with the determination of catchments when weighing up the factors in section 101(a) – particularly benefits (ii) and casuation (iv).

44.  In Wainuiomata, the need for a reservoir to support growth is driving up the cost of the development contributions charges there. There is a very material difference between the water charges elsewhere in Hutt City when compared to Wainuiomata, which means there would be a very high degree of cross-subsidisation if the catchment was widened for example, to include the valley floor.

45.  Wellington Water has confirmed that the reservoir will not provide benefits beyond Wainuiomata and this, together with the material difference in costs between Wainuiomata and other catchments, makes a "wider benefits" argument unfeasible. This supports the position that Wainuiomata should retain its own catchment for water development contributions.

46.  Council can weigh the points above against 101(3)(b) - which enable the council to ‘step back’ and assess the overall impact of any allocation of liability for revenue needs on the community. Council could adjust its approach if it considers that this is in the best interest of the community. For example, because of concerns about the feasibility of development or affordability of housing in Wainuiomata.  

47.  The determination is ultimately council’s to make, and the key test is that it is a reasonable decision i.e. that after weighing up all relevant matters, it is a decision that a reasonable person could make.

Transitioning charges

48.  Officers have also investigated options for transitioning charges particularly for areas that will see large increases in those charges. Officer’s view is that this could be achieved via a policy of funded remissions. This would involve keeping the charges as they are but discounting the charges applied to developers and making up the difference with rates funded contributions into the DC accounts over a period of say 3 years. This would ensure that later developers would not be lumped with the ''cost" of the transition and ensures transparency. Council cannot alter the cost allocations to achieve a transition, as this will lower the charges for all developers over time.

49.  Taking this approach would not however align with Council’s in principle decision that growth pays for growth and would see ratepayers continuing to subsidise growth. 

Draft policy

50.  The main options available to the Subcommittee in relation to the draft Policy are outlined in Table 5. Officers recommend option A.

51.  Option A aligns best with decisions council has already made as part of their decision making for the 2021-3 LTP particularly the Financial Strategy

a.   Fairness and equity - the funding of expenditure is equitable across both present and future ratepayers.

b.   Growth pays for growth – the capital costs incurred to develop infrastructure that supports growth within the city should be primarily covered by those causing the growth and increasing the demand on Council infrastructure.

52.  It is possible that developers will be incentivised to develop where costs are lower and this could result in intensification continuing or accelerating in Naenae, the CBD and Petone where infrastructure costs related to growth are lower.  It is likely that greenfield will only be undertaken where there are economies of scale for developers and this could mean that development in Wainuiomata may slow.

 

 

 

 

53.  Option A avoids ratepayer subsidisation of growth

 Option

Pro

Cons / risks

A.

Accept in-principle the draft Policy in full

•   New format consistent with proposed sector template and more user friendly

•   Addresses all LGA requirements

•   Key changes consistent with sector practice and previous Subcommittee decisions

•   Current Policy format may be familiar to officers and local development sector

•   Change in some policy elements that may be unpopular, such as the new transport assessments rates for commercial and industrial developments

 

B.

Reject the draft Policy in full

•   Current Policy format and rules familiar to officers and local development sector

 

•   Key changes to bring Policy in line with sector practice and previous subcommittee decisions won’t be made

•   Lose opportunity to use Policy format that will be familiar to developers from some other cities and districts

C.

Accept in-principle the draft Policy with amendments

Depending on the amendments sought:

•   New format consistent with proposed sector template and more user friendly

•   Addresses all LGA requirements

•   Key changes consistent with sector practice and previous subcommittee decisions

•   Amendments sought may better align with Council’s preferred approach to managing growth, growth funding, and/or administration of the Policy 

Depending on the amendments sought:

•   Current Policy format may be familiar to officers and local development sector

•   Change in some policy elements that may be unpopular, such as the new transport assessments rates for commercial and industrial developments

•   Changes may be contrary to recommended good practice or the LGA

 

Climate Change Impact and Considerations

54.  The matters addressed in this report have been considered in accordance with the process set out in Council’s Climate Change Considerations Guide.

55.  Population forecasts indicate that the need for growth related transport and three waters infrastructure will increase in the medium to long term.   Increasing population and dwelling density in turn places pressure on infrastructure systems and, with the added impact of climate change, will require higher levels of investment to adequately cater for that growth. 

Consultation

56.  Council must consult on its Policy at least every three years. Officers will submit a draft Policy for consultation approval on 21 December 2020. Consultation on this draft Policy will occur as part of the 2021 Long Term Plan process.

Legal Considerations

57.  Development contributions (and the decision to use them) are governed by the LGA. In particular - sections 101(3) and 106, and subpart 5.  The draft Policy proposed in this report is consistent with these and the previous in-principle decisions made by the Subcommittee on funding growth related infrastructure in report LTPAP2020/5/211.

58.  The grouping of catchments (see paragraphs 34-45 above) is a key decision and legal advice sought.  This advice supports officer’s advice that section 197AB (g) of the Local Government Act means that while a district wide catchment is not prohibited, it is strongly discouraged. Given this, officers strongly advise that council agrees to the catchments proposed in the draft policy. 

Financial Considerations

59.  Using the indicative charges listed in Table 1 and forecast growth, officers expect revenue from development contributions will rise from around $1M per annum at present to between $3M to 5M per annum. It will take several years to rise to this level because the current charges apply to any developments granted consent before 1 July 2021. The additional revenue from development contributions would result in reduced borrowings incurred by Council to fund growth related capital expenditure.

Appendices

No.

Title

Page

1

Draft HCC Development Contributions Policy 2021

89

    

 

 Author: Wendy Moore

Head of Strategy and Planning

 

Author: Jenny Livschitz

Chief Financial Officer

 

 

Approved By: Matt Boggs

Director, Strategy and Engagement

 


Attachment 1

Draft HCC Development Contributions Policy 2021

 

Hutt City development and financial contributions policy 2021-2031

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adoption, application and review of the policy

This Development and Financial Contributions Policy (the Policy) was adopted by Hutt City Council (Council) on [date]. It will apply to all resource consents, building consents, certificates of acceptance, and service connections applied for from 1 July 2021. The previous policies shall continue to apply for all resource or building consents and authorisations for service connections granted before this date.

The Policy will be reviewed on a three-yearly basis but may be updated at shorter intervals if Council considers it necessary. See the Council website www.huttcity.govt.nz for further information.

INTRODUCTION

Purpose of the Policy

1.      Population and business growth create the need for new subdivisions and developments, and these place increasing demands on the assets and services provided by Council.  As a result, significant investment in new or upgraded assets and services is required.

2.      The purpose of the Policy is to ensure that a fair, equitable, and proportionate share of the cost of that infrastructure is funded by development. Hutt City Council intends to achieve this by using:

·    Development contributions under the Local Government Act 2002 (LGA) to help fund growth related water, wastewater, stormwater, and transport in the city; and

·    Financial contributions under the Resource Management Act 1991 (RMA) to help fund growth related reserve provision, and any infrastructure impacts caused directly by a development that are not addressed and funded by development contributions.

Navigating this document

3.      The Policy outlines Council’s approach to funding development infrastructure via development contributions and financial contributions. The Policy has three main parts:

·    Part 1: Policy operation

·    Part 2: Policy background and supporting information

·    Part 3: Catchment maps for the development contribution charges

Part 1: Policy Operation

4.      Part 1 provides information needed to understand if, when, and how development contributions and financial contributions will apply to developments.  It also explains peoples’ rights and the steps required to properly operate the Policy.

5.      The key sections of Part 1 are:

·    The charges

·    Liability for development contributions

·    When development contributions are levied

·    Determining infrastructure impact

·    Review rights

·    Other operational matters

·    Summary of financial contributions

·    Definitions

Part 2: Background and SUPPORTING INFORMATION

6.      Part 2 provides the information needed to meet the accountability and transparency requirements of the LGA for the Policy, including explaining Council’s policy decisions, how the development contribution charges were calculated, and what assets the development contributions are intended to be used towards.

7.      The key sections of part 2 are:

·    Requirement to have the Policy

·    Funding summary

·    Funding policy summary 

·    Catchment determination

·    Significant assumptions of the Policy

·    Cost allocation

·    Calculating the development contribution charges

·    Schedule 1 Development contribution charge calculations

·    Schedule 2 Future assets and programmes funded by development contributions

·    Schedule 3 Past assets and programmes funded by development contributions

Part 3: CATCHMENT Maps

8.      Part 3 provides the catchment maps that show where the development contribution charges in the Policy apply.

Part 1: Policy OPERATION

Development contributions

The charges

9.      There are six district catchments, plus one district wide catchment, within Hutt City for development contributions. The catchments are mapped in Part 3 of the Policy.

10.    The related development contribution charges per Equivalent Household Unit (EHU) for each activity are in Table 1. See the Determining infrastructure impact section below for an explanation of an EHU.  

11.    For each infrastructure activity and catchment for which development contributions are required, the development contribution payable is calculated by multiplying the number of EHUs generated through the development by the charge for that activity. This is then aggregated for all activities to give the total charge.  For example, a three-lot residential development in Eastbourne will pay three times the water, wastewater, and transport charges for that catchment, plus three time the district side wastewater charge. The total development contributions payable would be $[X] (GST inc).

12.    These charges may be adjusted for inflation annually in line with the Producers Price Index outputs for Construction, as permitted by sections 106 (2B) and (2C) of the LGA. The latest charges will be published on Council’s website www.huttcity.govt.nz.

Table 1: Development contribution charge per EHU at 1 July 2021 (GST inclusive)[2]

Development contribution per EHU 2021/2022

 

Western Hills

Valley Floor

Stokes Valley

Wainuiomata

Eastbourne

Rural

District Wide

 

Transport

 

 

 

 

 

 

 

 

Water

 

 

 

 

 

 

 

 

Wastewater

 

 

 

 

 

 

 

 

Stormwater

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

DC per EHU

(including the district wide charge)

 

 

 

 

 

 

 

 

Liability for development contributions

13.    If subdividing, building, connecting to Council’s services, or otherwise undertaking development in Hutt City, development contributions may need to be paid.

14.    In some circumstances, development contributions may not apply or may be reduced. Further information on these circumstances can be found in the sections, when development contributions are levied, credits, and limitations on imposing development contributions

15.    Financial contributions may also be required in some cases. This is discussed later in the Policy.

16.    Development of new infrastructure sometimes means that areas not previously liable for a development contribution become so. For example, a bare section in a subdivision may be liable for development contributions whereas previously constructed houses on the same subdivision were not.

17.    Council officers will be available to help resolve any uncertainty about development contribution liabilities.

When development contributions are levied

18.    Once an application for a resource consent, building consent, certificate of acceptance, or service connection has been made with all the required information, the normal steps for assessing and requiring payment of development contributions are.

Trigger

We assess the development for development contributions

NOTICE

We issue a formal notice of requirement

INVOICE

We issue an invoice requiring payment

 

pAYMENT

Development contributions are paid

19.    These steps are explained in more detail below.

Trigger for requiring Development Contributions

20.    Council can require development contributions for a development upon the granting of:

·    A resource consent.

·    A building consent or certificate of acceptance.

·    An authorisation for a service connection for water, wastewater or stormwater services.

21.    Council will generally require development contributions at the earliest possible point (i.e. whichever consent, certificate, or authorisation listed above is granted first). For new developments, the resource consent is often the first step in the process and therefore the first opportunity to levy development contributions. Where development contributions were not assessed (or only part assessed) on the first consent, certificate or authorisation for a development this does not prevent the Council assessing contributions on a subsequent consent, certificate or authorisation for the same development. This approach is the same for all charges in all catchments.

22.    Development contributions will be assessed under the Policy in force at the time the application for resource consent, building consent, certificate of acceptance or service connection was submitted with all required information.

Assessment

23.    On receiving an application for resource consent, building consent, certificate of acceptance, or service connection, Council will check that:

(A)    The development (subdivision, building, land use, or work) generates a demand for network infrastructure; and

(B)    The effect of that development (together with other developments) is to require new or additional assets or assets of increased capacity in network infrastructure; and

(C)    Council has incurred or will incur capital expenditure to provide appropriately for those assets. This includes capital expenditure already incurred by Council in anticipation of development.

24.    Council has identified the assets and areas that are likely to meet the requirements of (B) and (C), and these are outlined in Schedules 2 and 3 (Past and future assets funded by development contributions) and Part 3 (Development contribution catchment maps). In general, if a development is within one of the areas covered by the catchment maps it is likely that development contributions will be required.

25.    Development contributions may be waived or reduced if: 

·    A resource consent or building consent does not generate additional demand for any community facilities (such as a minor boundary adjustment); or

·    One of the circumstances outlined in the section Limitations on imposing development contributions apply; or

·    Credits apply as outlined in the Credits section. 

26.    If a subsequent resource consent (excluding a change to conditions of an existing resource consent), building consent, certificate of acceptance, or service connection is sought, a new assessment may be undertaken using the Policy in force at that time. Any increase or decrease in the number of EHUs, relative to the original assessment, will be calculated and the contributions adjusted to reflect this.

27.    This means Council will require additional development contributions where additional units of demand are created, and development contributions for those additional units of demand have not already been required.

28.    Examples of where these would be needed, include:

·    Minimal development contributions were levied on a commercial development at subdivision or land use consent stage as the type of development that will happen will only be known at building consent stage.

·    Development contributions levied at the subdivision or land use consent stage were for a small home, but the home built is larger or is subsequently extended.

·    The nature of use has changed, for example from a low infrastructure demand commercial use to a high infrastructure demand commercial use.  

Notice

29.    A development contribution notice will normally be issued when a resource consent, building consent, certificate of acceptance, or service connection authorisation is granted. In some cases, the notice may be issued or re-issued later. The notice is an important step in the process as it outlines the activities and the number of EHUs assessed for development contributions, as well as the charges that will apply to the development. It also triggers rights to request a development contributions reconsideration or to lodge an objection (see the section on Review rights below). 

30.    If multiple consents or authorisations are being issued for a development, a notice of requirement may be issued for each. However, where payments are made in relation to one of the notices, actual credits will be recognised for the remaining notices. 

31.    Development contributions notices do not constitute an invoice or an obligation to pay for the purposes of the Goods and Services Tax Act 1985.  A tax invoice will be issued at the time of supply, being, the earlier of Council issuing an invoice to the applicant or payment of the development contributions.

Invoice

32.    An invoice for development contribution charges will be issued to provide an accounting record and to initiate the payment process. The timing of the invoice is different for different types of consents or authorisations (see Table 2). If there is a delay between when a notice is issued and when an invoice is issued, the Council may adjust the charges levied in the invoice to account for inflation. 

Table 2: Invoice timing

 

Invoice timing

Building consent

At the time of application for a code compliance certificate

Certificate of acceptance 

At issue of a certificate of acceptance

Resource consent for subdivision

At the time of application for a certificate under section 224(c) of the Resource Management Act 1991. An invoice will be issued for each stage of a development for which 224 (c) certificates are sought, even where separate stages are part of the same consent

Resource consent (other)

At granting of the resource consent

Service connection

At granting of the service connection for water, wastewater or stormwater services

33.    Despite the provisions set out above, if a development contribution required by Council is not invoiced at the specified time as a result of an error or omission on the part of Council, the invoice will be issued when the error or omission is identified. The development contributions remain payable.

Payment

34.    Development contributions must be paid by the due dates in Table 3.

Table 3: Payment due date

 

Payment due date

Building consent

Prior to issue of the code compliance certificate 

Certificate of acceptance 

At issue of the certificate of acceptance

Resource consent for subdivision

Prior to release of the certificate under section 224(c) of the Resource Management Act 1991 (the 224(c) certificate) for each stage

Resource consent (other)

20th of the following month (after the issue of the invoice)

Service connection

At issue if of the connection approval

35.    On time payment is important because, until the development contributions have been paid in full, Council may:

·    Prevent the commencement of a resource consent.

·    Withhold a certificate under Section 224(c) of the RMA.

·    Withhold a code compliance certificate under Section 95 of the Building Act 2004.

·    Withhold a service connection to the development.

·    Withhold a certificate of acceptance under section 99 of the Building Act 2004.

36.    Where invoices remain unpaid beyond the payment terms set out in the Policy, Council will start debt collection proceedings, which may involve the use of a credit recovery agent. Council may also register the development contribution under the Land Transfer Act 2017, as a charge on the title of the land in respect of which the development contribution was required.

Determining infrastructure impact

37.    In order to have a consistent method of charging for development contributions, the Policy is centred around the concept of an equivalent household unit or “EHU” for infrastructure. In other words, an average household in a standard residential unit and the demands they typically place on community facilities. Table 4 summarises the demand characteristics of an EHU.

Table 4: EHU demand measures

Activity

Unit of measurement

demand per EHU

Water

Litres per day

567 litres per day

Wastewater

Litres per day

510 litres per day

Stormwater

Impervious surface area

200m2

Transport

Trips per day

8 trips per day

Residential development

38.    In general, the number of EHUs charged is one per new allotment or residential unit created, although lower assessments can apply in some cases for minor and small residential units.

39.    When calculating the number of EHUs for a residential subdivision, Council will adjust the assessment to account for any:

·    Credits relating to the site (refer to the Credits section below).

·    Allotment which, by agreement, is to be vested in Council for a public purpose.

·    Allotment required as a condition of consent to be amalgamated with another allotment.

40.    Retirement units and visitor accommodation units will be assessed as 0.5 EHUs for each service.

Minor and small residential units

41.    Council will permit lower assessments for minor or small residential units in relation to:

·    Building consents or certificate of acceptance.

·    Subdivision, land use consents, or connection authorisation where information is provided by the applicant that demonstrates that a minor or small residential unit(s) will be provided, to the satisfaction of Council. Council may enter into agreements with developers or landowners to give effect to a minor or small residential unit assessment and bind the applicant to any conditions that accompany the assessment.

42.    Alternatively, for subdivisions, Council will assess each allotment as 1 EHU and may agree to postpone payment by the person undertaking the subdivision until a building consent is issued for an allotment. At that time, Council will adjust the assessment and the payment required accordingly. See the section on Postponement.

43.    Such assessments are guided by the parameters outlined in Table 5.

Table 5: Small residential unit (RU) assessment guidance

 

MINOR RU

SMALL RU

STANDARD RU

No. of bedrooms*

1

2

 3 or more

EHU Discount (all services)

50%

25%

Nil

Proportion of EHU Payable for all charges

0.5

0.75

1

* A definition of bedroom is provided in the glossary

44.    Should additional bedrooms be proposed to a minor or small residential unit that has been assessed under this section, Council will require additional development contributions in line with Table 6.

Table 6: Small residential unit (RU) extension assessment guidance (EHUs)

TYPE OF EXTENSION

TOP OF PROPORTION REQUIRED

TOTAL PROPORTION REQUIRED

Extend minor RU to a small RU

0.25

0.75

Extend minor RU to a standard RU

0.5

1

Extend small RU to a standard RU

0.25

1

Non-Residential development

45.    Non-residential subdivisions, land uses, or building developments are more complicated as they do not usually conform with typical household demands for each service.

46.    In these cases, Council makes an EHU “equivalent” assessment based on the characteristics of the development and demand loadings likely to be placed on the services. To provide consistency, the demand measures in Table 4 have been converted for assessing non-residential developments based on gross floor area (Table 7). Council will use these rates for determining EHUs for non-residential developments unless it seeks or accepts a special assessment.

Table 7: EHU per 100 m2 GFA (*except stormwater, which is based on total impervious surface area)

Development TYpe

Water

Wastewater

Storm water*

Transport

Industrial

0.4

0.4

0.5

4

Commercial

0.4

0.4

0.5

3

Retail

0.4

0.4

0.5

6.0

Other non-residential

Special assessment

Special assessment

0.5

Special assessment

47.    If no proper assessment of the likely demand for activities is able to be carried out at the subdivision consent stage, a development contribution based on one EHU will be charged for each new allotment created and Council will require an assessment to be carried out at the building consent stage. This later assessment will credit any development contributions paid at the subdivision consent stage.

special assessments

48.    Developments sometimes require a special level of service or are of a type or scale which is not readily assessed in terms of EHUs – such as large-scale primary sector processors or service stations. In these cases, Council may decide to make a special assessment of the EHUs applicable to the development. Council may initiate this process or may consider a request by the developer, in writing, to make a special assessment prior to a development contribution notice being issued.

49.    In general, Council will evaluate the need for a special assessment for one or more activities where it considers that:

(A)   The development is of relatively large scale; or

(B)   The development is likely to have less than half or more than twice the demand for an activity listed in Table 7 for that development type; or

(C)   A non-residential development does not fit into an industrial, retail, or commercial land use and must be considered under the other’ non-residential category proposed in the Policy; or

(D)   A non-residential development may use more than 5 m3 of water per day.

50.    The demand measures in Table 4 will be used to help guide special assessments.

51.    Where the special assessment is requested by the developer, the onus is on the applicant to prove (on the balance of probabilities) that the actual increased demand created by the development meets the requirement of criteria (B) above.

52.    Any application for a special assessment must be accompanied by the fee payable to recover the Council's actual and reasonable costs of determining the application. The fee will be assessed at the time of application. Council may levy additional fees to meet Council's actual costs, should the actual costs be materially higher than the initial assessment.

53.    If a special assessment is undertaken, Council may require the developer to provide information on the demand for community facilities generated by the development. Council may also carry out its own assessment for any development and may determine the applicable development contributions based on its estimates.

Credits

54.    Credits are a way of acknowledging that the lot, home or business may already be connected to, or lawfully entitled to use, one or more Council services, or a development contribution has been paid previously. Credits can reduce or even eliminate the need for a development contribution. Credits cannot be refunded and can only be used for development on the same site and for the same service for which they were created.

55.    A credit is given for the number of EHUs paid previously or assessed for the existing or most recent prior use of the site. This is to recognise situations where the incremental demand increase on infrastructure is not as high as the assessed number of units of demand implies.

56.    The number of EHU credits available will be calculated by applying the criteria in the above paragraph except where residential allotments existing as at 1 July 2006 – these are deemed to have a credit of one EHU.

57.    Examples where credits will arise are illustrated in table 8.

Table 8: Credit examples

 

 

Re-development of six residential allotments into a commercial office block

6 EHUs credits, i.e. one for each of the existing residential allotments

Infill residential subdivision of existing allotment into two allotments.

1 EHU credit, i.e. one for the original allotment. Development contributions payable on 1 EHU

Residential development of existing CBD site with 400 m2 GFA commercial building (200m2 footprint) into eight unit title apartments – no additional impervious area

Roading and traffic: 8 EHUs credits (400 m2 GFA / 50 m2 per EHU)

Water supply: 1.6 EHU credits (400 m2 GFA / 225 m2 per EHU)

Wastewater: 1.6 EHU credits (400 m2 GFA / 225 m2 per EHU)

Stormwater: 1 EHU credit (200m2 impervious surface / 200 m2 per EHU)

Review rights

58.    Developers are entitled under the LGA to request a reconsideration or lodge a formal objection If they believe Council has made a mistake in assessing the level of development contributions for their development.

Reconsideration

59.    Reconsideration requests are a process that formally requires Council to reconsider its assessment of development contributions for a development. Reconsideration requests can be made where the developer has grounds to believe that:   

·    The development contribution levied was incorrectly calculated or assessed under the Policy; or

·    Council has incorrectly applied the Policy; or

·    The information Council used to assess the development against the Policy, or the way that Council has recorded or used that information when requiring a development contribution, was incomplete or contained errors.

60.    To seek a reconsideration, the developer must:

·    Lodge the reconsideration request within 10 working days of receiving the development contribution notice by emailing it to developmentcontributions@huttcity.govt.nz.

·    Use the reconsideration form (found on www.huttcity.govt.nz) and supply any supporting information with the form.

·    Pay the reconsideration fee at the time of application, as set out in Council’s Schedule of Fees and Charges.

61.    Applications with insufficient information or without payment of fee will be returned to the applicant, with a request for additional information or payment.

62.    Once Council has received all required information and the reconsideration fee, the request will be considered by a panel of a minimum of two, and a maximum of three, staff. The panel will comprise staff that were not involved in the original assessment. Before reaching decision, the panel will consider all of the information supplied by the applicant and will consider and apply the requirements of the Policy, along with and any other information that the panel considers is relevant to the reconsideration request. The result of a reconsideration decision may confirm the original assessment or increase or decrease the amount required

63.    Council will notify the applicant of its decision within 15 working days from the date on which Council receives all required relevant information relating to the request (including additional information sought be Council).

64.    No reconsideration request will be accepted by Council if it is received after the 10 working day period above, or if an objection has already been lodged under section 199C of the LGA. The applicant will receive written notice if the request for reconsideration cannot be made for one of these reasons. Council reserves the right to reconsider an assessment if it believes an error has been made.

Objections

65.    Objections are a more formal process that allow developers to seek a review of the Council’s decision. An application for reconsideration does not prevent the applicant from also filing an objection under section 199C of the LGA.

66.    A panel of up to three independent commissioners will consider the objection. The decision of the commissioners is binding on the developer and the Council, although either party may seek a judicial review of the decision.

67.    Objections may only be made on the grounds that Council has:

·    Failed to properly take into account features of the development that, on their own or cumulatively with those of other developments, would substantially reduce the impact of the development on requirements for community facilities in the District or parts of the District; or

·    Required a development contribution for community facilities not required by, or related to, the development, whether on its own or cumulatively with other developments; or

·    Required a development contribution in breach of section 200 of the LGA; or

·    Incorrectly applied the Policy to the development. 

68.    Schedule 13A of the LGA sets out the objection process. To pursue an objection, the developer must:

·    Lodge the request for an objection within 15 working days of receiving notice to pay a development contribution, or within 15 working days of receiving the outcome of any request for a reconsideration; and

·    Use the objection form (found on www.huttcity.govt.nz) and supply any supporting information with the form; and

·    Pay a deposit.

69.    Objectors are liable for all costs incurred in the objection process including staff arranging and administering the process, commissioner’s time, and other costs incurred by Council associated with any hearings such as room hire and associated expenses, as provided by section 150A of LGA. However, objectors are not liable for the fees and allowances costs associated with any Council witnesses.

other OPERATIONAL matters

Refunds

70.    Sections 209 of the LGA states the circumstances where development contributions must be refunded, or land returned. In summary, Council will refund development contributions paid if:

·    The resource consent:

-        lapses under section 125 of the RMA; or

-        is surrendered under section 138 of the RMA; or

·    The building consent lapses under section 52 of the Building Act 2004; or

·    The development or building in respect of which the resource consent or building consent was granted does not proceed; or

·    Council does not provide the reserve or network infrastructure for which the development contributions were required.

71.    Council will also provide refunds where overpayment has been made (for whatever reason).

72.    The Council may retain any portion of a development contribution referred to above of a value equivalent to the costs incurred by the Council in assessing, requiring, and refunding the charges.

Limitations on Imposing Development Contributions

73.    Council is unable to require a development contribution in certain circumstances, as outlined in section 200 of the LGA, if, and to the extent that:

·    It has, under section 108(2)(a) of the RMA, imposed a condition on a resource consent in relation to the same development for the same purpose; or

·    The developer will fund or otherwise provide for the same network infrastructure; or

·    A third party has funded or provided, or undertaken to fund or provide, the same network infrastructure.

·    The Council has already required a development contribution for the same purpose in respect of the same building work, whether on the granting of a building consent or a certificate of acceptance.

74.    In addition, Council will not require a development contribution in any of the following circumstances:

·    Non-residential building work for which a building consent is required and is either less than $20,000 exclusive of GST in value, or less than 10m2 of gross floor area, unless the building consent is for a change of use.

·    In relation to any dwelling, replacement development, repair or renovation work generates no additional demand for reserve or network infrastructure.

·    The conversion of an existing unit developments into unit titles. This does not apply to any building consents required as part of any changes to the existing units, which will still be assessed to determine if development contributions are applicable.

·    A building consent is for a bridge, dam (confined to the dam structure and any tail race) or other public utility.

·    The application for a resource or building consent, authorisation, or certificate of acceptance is made by the Crown.

·    The development is being undertaken by Council. This exemption does not apply to developments undertaken by or on behalf of Council organisations, Council-controlled organisations, or Council-controlled trading organisations, as defined in section 6 of the LGA.

·    In rural areas for stormwater development contributions, where no Council stormwater systems are provided.

·    For water and/or wastewater development contributions if a development does not connect to Council’s water supply and/or wastewater reticulation systems.   

postponement

75.    Postponement of development contribution payment will only be permitted at Council’s discretion and only:

·    For development contributions over $50,000; and

·    Where a bond or guarantee equal in value to the payment owed is provided. 

76.    The request for postponement must be made at the time a resource consent, building consent or service connection is granted. Bond or guarantees:

·    Will only be accepted from a registered trading bank.

·    Shall be for a maximum period of 24 months, beyond the normal payment date set out in the Policy, subject to later extension as agreed by Council.

·    Will have an interest component added, at an interest rate of 2 percent per annum above the Reserve Bank 90-day bank bill rate on the day the bond document is prepared. The bonded sum will include interest, calculated using the maximum term set out in the bond document. If Council agrees to an extension of the term of the guarantee beyond 24 months, the applicable interest rate will be reassessed from the date of the Council's decision and the guaranteed sum will be amended accordingly.

·    Shall be based on the GST inclusive amount of the contribution.

77.    At the end of the term of the guarantee, the development contribution (together with interest) is payable immediately to Council.

78.    If the discretion to allow a bond is exercised, all costs for preparation of the bond documents will be met by the applicant.

Development Agreements

79.    Council may enter into specific arrangements with a developer for the provision and funding of particular infrastructure under a development agreement, including the development contributions payable, as provided for under sections 207A-207F of the LGA. For activities covered by a development agreement, the agreement overrides the development contributions normally assessed as payable under the Policy.

REMISSIONS

80.    Council may remit a development contribution at its complete discretion. Council will only consider exercising its discretion in exceptional circumstances. Applications made under this part will be considered on their own merits and any previous decisions of Council will not be regarded as binding precedent.

81.    Any request for remission must be made in writing and set out the reasons for the request. The request must be made:

·    within 15 working days after Council has issued a notice for the development contribution payable; and

·    before the development contribution payment is made to Council.

82.    Council will not allow retrospective remissions of development contributions.

83.    Council delegates to the CEO, in conjunction with the Chair of the Finance and Audit Committee, with authority to delegate to officers, the authority to make a decision on a request for remission.

84.    When considering a request for remission, Council will take into account:

·    The purpose of Development Contributions, Council’s financial modelling, and Council’s funding and financial policies.

·    The extent to which the value and nature of the works proposed by the applicant reduces the need for works proposed by Council in its capital works programme.

·    Any other matter(s) that Council considers relevant.

 

financial contributions

Relationship between financial contributions and development contributions

85.    The financial contributions and development contributions in this Policy are separate charges and are used to fund separate categories of expenditure by Council. This ensures there is no ‘’double dipping” and is consistent with the intention of section 200 of the LGA.

86.    Development contributions can be required under the LGA and are used to help fund planned and budgeted capital expenditure related to growth for the activities and assets listed in the development contributions schedule of assets in this Policy (Schedules 2 and 3).

87.    Financial contributions can be required under the RMA in line with the provisions in the District Plan. Financial contributions are required for reserves and where individual developments give rise to capital expenditure that is not planned and recovered via development contributions. In these cases, Council may impose a financial contribution as a condition of resource consent, specifically:

·    Financial contributions for reserves.

·    Financial contributions to which District Plan Rules 12.2.1 through to 12.2.1.6, and 12.2.2.1 apply.

88.    A brief summary of these is provided below. Further information on financial contributions can be found in the District Plan (www.huttcity.govt.nz).

Summary of financial contributions under the district plan

Reserve Contributions – Subdivision of land

89.    There is a long history of requiring subdividers of land to provide land or money for the purpose of providing public open space as reserves. Reserves are generally required as part of the subdivision process as they provide open space and recreation facilities and opportunities necessary to cater for additional demand generated and also to protect and enhance amenity values. As communities continue to grow in size and population there is a need to provide recreation and open space to meet their needs and requirements.

90.    As part of its evaluation under section 32 of the RMA, a number of options were assessed by Council and after considerable consultation with the public, developers and other special interest groups. It was considered that reserve contributions should be set at a maximum of 7.5% of the value of each additional allotment. It was recognised that the maximum reserve contribution is not appropriate in all cases and this can be adjusted taking into account criteria specified in Rule 12.2.1.7(b) of the District Plan.

Reserve Contributions – Development of land

91.    The District Plan also recognises that the development of land for business/commercial purposes can increase the number of people employed at a particular location and consequently there may be an increase in demand for open space and recreation areas. After considerable consultation with the public, property owners, developers and other special interest groups, and after evaluating various options, it was considered by Council that where commercial or industrial development will result in an increase or intensification of use of land, a reserve contribution in the form of money equivalent to 0.5% of the value of the development in excess of $200,000 is appropriate. It was also recognised that the maximum reserve contribution is not appropriate in every case and the maximum could be adjusted based on criteria specified in Rule 12.2.2.2(b) of the District Plan.

Financial Contributions – Services

92.    In the District Plan the developer of a subdivision or development is responsible for funding all work within its boundaries relating to services directly required for the subdivision or development. This approach has been in practice for a very long period of time. Two main methods for imposing financial contributions have been adopted in the District Plan, these being the recoupment impact fee (or sometimes called the recognised equity method) and the capital improvements programme fee.

93.    In summary the District Plan requires financial contributions as follows:

·    In subdivision or development of land the rules specify that the developer is responsible for all work within its boundaries relating to services directly required.

·    The rules specify that where, as a result of subdivision or development of land, services in adjoining land which were previously adequate become inadequate, the subdivider or developer should pay for the full and actual costs of upgrading services.

·    Where subdivision or development takes place and the services in the adjoining land are already inadequate, then the rules specify that the subdivider or developer should pay a proportion of the costs of upgrading services.

·    In cases where Council has upgraded services in advance of land being subdivided then the subdivider or developer should pay the full and actual costs of upgrading, taking into account the time value of money, when the land is subsequently subdivided or developed

Financial Contributions – Traffic impact fee for retail activities and places of assembly in all residential and rural activity areas

94.    The District Plan recognises that large scale retail activities exceeding 3,000 square metres in floor area and all places of assembly in residential and rural activity areas may have adverse effects on the surrounding roading network and on pedestrian circulation. In such circumstances the District Plan requires that the developer contribute to the upgrading and modification of the surrounding roads, intersections and footpaths.

95.    However, it noted that changes introduced in the Resource Legislation Amendment Act 2017 mean that councils would not be able to charge financial contributions under the RMA from 5 years following its Royal Assent. Council will take this issue into account at the next 3 yearly review cycle for this Policy.

Definitions

96.    In the Policy, unless the context otherwise requires, the following applies:

Accommodation unit has the meaning given in section 197 of the LGA.

Activity means the provision of facilities and amenities within the meaning or network infrastructure for which a development contribution charge exists under the Policy.  

Actual increased demand means the demand created by the most intensive non-residential use(s) likely to become established in the development within 10 years from the date of application.

Allotment (or lot) has the meaning given to allotment in section 218(2) of the Resource Management Act 1991.

Asset management plan means Council plan for the management of assets within an activity that applies technical and financial management techniques to ensure that specified levels of service are provided in the most cost-effective manner over the life-cycle of the asset.

Bedroom means any habitable space within a residential unit capable of being used for sleeping purposes and can be partitioned or closed for privacy including spaces such as a “games”, “family”, “recreation”, “study”, “office”, “sewing”, “den”, or “works room” but excludes:

·    any kitchen or pantry;

·    bathroom or toilet;

·    laundry or clothes-drying room;

·    walk-in wardrobe;

·    corridor, hallway, or lobby;

·    garage; and

·    any other room smaller than 6m2.

Where a residential unit has any living or dining rooms that can be partitioned or closed for privacy, all such rooms except one shall be considered a bedroom.     

Capacity life means the number of years that the infrastructure will provide capacity for and associated EHUs.

Catchment means the areas within which development contributions charges are determined and charged.

Commercial activity means any activity associated with (but not limited to): communication services, financial services, insurance, services to finance and investment, real estate, business services, central government administration, public order and safety services, tertiary education provision, local government administration services and civil defence, and commercial offices.

Community facilities means reserves, network infrastructure, or community infrastructure as defined by the LGA, for which development contributions may be required.

Community infrastructure means:

·    Land, or development assets on land, owned or controlled by the Council for the purpose of providing public amenities; and

·    Includes land that the Council authority will acquire for that purpose.

Council means Hutt City Council. 

Development means any subdivision, building, land use, or work that generates a demand for reserves, network infrastructure, or community infrastructure (but does not include the pipes or lines of a network utility operator).

District means the Lower Hutt.

Equivalent household unit (EHU) means demand for Council services, equivalent to that produced by a nominal household in a standard residential unit.

Gross floor area (GFA) means the sum of the total area of all floors of a building or buildings (including any void area in each of those floors, such as service shafts, liftwells or stairwells) measured:  

·    where there are exterior walls, from the exterior faces of those exterior walls;

·    where there are walls separating two buildings, from the centre lines of the walls separating the two buildings;

·    where a wall or walls are lacking (for example, a mezzanine floor) and the edge of the floor is discernible, from the edge of the floor.

See National Planning Standards 2019. https://www.mfe.govt.nz/sites/default/files/media/RMA/national-planning-standards-november-2019.pdf

Industrial activity means an activity that manufactures, fabricates, processes, packages, distributes, repairs, stores, or disposes of materials (including raw, processed, or partly processed materials) or goods. It includes any ancillary activity to the industrial activity.

LGA means the Local Government Act 2002.

Network infrastructure means the provision of transportation (roading), water, wastewater and stormwater infrastructure.

Network utility operator has the meaning given to it by section 166 of the Resource Management Act 1991.

Non-residential development means any development that falls outside the definition of residential development in this Policy.

Policy means this Development and Financial Contributions Policy.

Reserves means land for public open space and improvements to that land needed for it to function as an area of usable green open space for recreation and sporting activities and the physical welfare and enjoyment of the public, and for the protection of the natural environment and beauty of the countryside (including landscaping, sports and play equipment, walkways and cycleways, carparks, and toilets). In the Policy, reserve does not include land that forms or is to form part of any road or is used or is to be used for stormwater management purposes.

Residential development means the development of land and buildings for any domestic/living purposes for use by people living on the land or in the buildings.

Residential unit means building(s) or part of a building that is used for a residential activity exclusively by one household, and must include sleeping, cooking, bathing and toilet facilities. See National Planning Standards 2019. https://www.mfe.govt.nz/sites/default/files/media/RMA/national-planning-standards-november-2019.pdf

Retail activity means any activity trading in goods, equipment or services that is not an industrial activity or commercial activity.

Retirement unit means any dwelling unit in a retirement village, but does not include aged care rooms in a hospital or similar facility.

Retirement village has the meaning given in section 6 of the Retirement Villages Act 2003.

RMA means the Resource Management Act 1991.

Service connection means a physical connection to an activity provided by, or on behalf of, Council (such as water, wastewater or stormwater services).


 

Part 2: Policy Details

Requirement to have a policy

97.    Council is required to have a policy on development contributions and financial contributions as a component of its funding and financial policies in its Long-term Plan (LTP) under section 102(2)(d) of the LGA. The Policy meets this requirement.

Funding summary

98.    Council plans to incur [$X] (before interest costs) on infrastructure partially or wholly needed to meet the increased demand for community facilities resulting from growth. This includes works undertaken in anticipation of growth, and future planned works. Of this cost, [X] percent will be funded from development contributions. Including interest costs, the total amount to be funded is [$X].

99.    Table 9 provides a summary of the total costs of growth-related capital expenditure and the funding sought by development contributions for all activities and catchments. 

Table 9. Total cost of capital expenditure for growth and funding sources

Activity

Total cAPEX

GROWTH CAPEX

DC funded capex

Total CAPEX Proportion funded by development contributions

CAPex Proportion funded from other sources

development contribution INTEREST

Total amount to be funded by development contributions

calcs

A

B

C

C/A*100

((A-C)/A)*100

D

C+D

Total water supply

 

 

 

 

 

 

 

Catchment W1

 

 

 

 

 

 

 

Catchment W2

 

 

 

 

 

 

 

Total Wastewater

 

 

 

 

 

 

 

Catchment WW1

 

 

 

 

 

 

 

Catchment WW2

 

 

 

 

 

 

 

etc

 

 

 

 

 

 

 

Grand Total

 

 

 

 

 

 

 

GROWTH INFRASTRUCTURE

100. Council’s growth forecasts (see the section projecting growth) are used to derive a programme of infrastructure works.  Future elements of this programme (and associated costs) are identified in the Council’s Long-Term Plan (LTP), and in Schedule 2 of this Policy. In some cases, Council has undertaken works to support forecast growth and this is listed schedule 3 of this Policy. All of part of the costs of these projects can be funded from Development contributions.

101. When determining whether a project or programme is growth related and therefore should be included in this Policy, Council asks whether growth:

·    Is an important driver for the works. This is usually the case for projects that have been specifically designed for growth capacity upgrade purposes.  

·    Influences the scope or capacity of the proposed work. This is often the case for a large number of smaller improvements, upgrade and renewal works that also increase infrastructure capacity and takes account of the impact on infrastructure of continuing growth within the city.

102. The proportion of the costs of these projects or programmes that are attributable to growth is determined in line with the approach outline in the cost allocation section of this Policy.

funding policy SUMMARY

Funding growth expenditure

103. Population and business growth create the need for new subdivisions and development, and these place increasing demands on the assets and services provided by Council.  Accordingly, significant investment in new or upgraded assets and services are required to meet the demands of growth – as noted in the previous section.

104. The Council has decided to fund these costs from:

·    Development contributions under the LGA for planned expenditure on water, wastewater, stormwater and transport. 

·    Financial contributions under the Resource Management Act 1991 for reserve and where individual developments give rise to capital expenditure that is not planned and recovered via development contributions.

105. In forming this view, Council has considered the matters set out in section 101(3) of the LGA within its Revenue and Financing Policy, and within the Policy for each activity.

106. The Revenue and Financing Policy is Council’s primary and over-arching statement on its approach to funding its activities. It outlines how all activities will be funded, and the rationale for Council’s preferred funding approach.

107. In addition, Council is required under section 106(2)(c) of the LGA to explain within the Policy why it has decided to use development contributions and financial contributions to fund capital expenditure relating to the cost of growth for each activity. This explanation is below. There are no material differences for this assessment for different activities funded by development contributions, so this assessment applies equally to each activity.

108. Council uses financial contributions for funding the cost of growth-related reserves infrastructure. Reserve financial contributions achieve many of the same benefits and outcomes as development contributions but are simpler to administer. 

Community outcomes (section 101(3)(a)(i))

109. Council has considered whether development contributions and financial contributions are an appropriate source of funding considering each activity, the outcomes sought, and their links to growth infrastructure. Council has developed nine outcomes to help achieve our vision of making our city a great place to live, work and play.

·    A safe community.

·    A strong and diverse economy.

·    An accessible and connected city.

·    Healthy people.

·    A healthy natural environment.

·    Actively engaged in community activities.

·    Strong and inclusive communities.

·    A healthy and attractive built environment.

·    A well-governed city.

110. These outcomes describe a city which is safe, well connected and accessible, looks after the environment and provides the foundation needed for a thriving economy. To enable this, infrastructure most be provided and maintained to a high level of service, and investment is made to ensure growth is catered for. This growth is much better able to be accommodated if additional funding through development contribution is possible, rather than levelling all cost on existing ratepayers. As a dedicated growth funding source, development contributions also offer funding through which we can deliver on our vision and outcomes for new communities.

Other funding decision factors (sections 101(3)(a)(ii) – (v))

111. Council has considered the funding of growth-related community facilities against the following matters:

·    The distribution of benefits between the community as a whole, any identifiable part of the community, and individuals, and the extent to which the actions or inaction of particular groups or individuals contribute to the need to undertake the activity.

·    The period in or over which those benefits are expected to occur.

·    The costs and benefits, including consequences for transparency and accountability, of funding the activity distinctly from other activities.

112. A summary of this assessment is below.

Table 10: Other funding decision factors  

Who Benefits / whose act creates the need

A significant portion of Council’s work programme over the next 30 years is driven by development or has been scoped to ensure it provides for new developments. The extent to which growth is serviced by, and benefits from an asset or programme as well as how much it serves and benefits existing ratepayers is determined for each asset or programme in line with the requirements of section 197(c) of the LGA.

Council believes that the growth costs identified through this process should be recovered from development, as this is what creates the need for the expenditure and /or benefit principally from new assets and additional network capacity. Where and to the extent that works benefit existing residents and businesses, those costs are recovered through rates.

The Catchment determination section below outlines how Council determined the catchments for development contributions in the Policy. 

Using financial contributions for reserves has a similar impact. Financial contributions for other services are required where individual developments give rise to capital expenditure that is not planned and budgeted, and therefore that expenditure is not included in Council’s Development Contributions Policy. In these cases, Council can usually identify the individual or group involved and may impose a financial contribution as a condition of resource consent.

Period of benefit

The assets constructed for development will last for a very long time and provide benefits and capacity for developments now and developments in the future. In many cases, the “capacity life” of such assets spans decades.

Development contributions allow development related capital expenditure to be apportioned over the capacity life of assets. Developments that benefit from the assets will contribute to its cost, regardless of whether they happen now or in the future. This helps ensures that growth now and later contributes fair share to those assets. 

Financial contributions for reserves have a similar affect by distributing the cost of providing for growth over time so that current and future developments that benefit contribute.

Funding sources & rationale including rationale for separate funding

The cost of supporting development in Lower Hutt is significant. Development contributions and financial contributions send clear signals to the development community about the cost of growth and the capital costs of providing infrastructure to support that growth.

Council also considers that allocating the full cost of growth to development is fairer to existing ratepayers, and helps ensure economic efficiency. By not imposing the burden of growth costs on existing ratepayers, rates income is also able to be used to advance Council’s other activities. These activities contribute in a wide range of ways to improving current and future community outcomes.

Consequently, council consider that the benefits to the community are significantly greater than the cost of policy making, calculations, collection, accounting and distribution of funding for development and financial contributions.

 

Overall impact of liability on the community (section 101(3)(b))

113. Council has also considered the impact of the overall allocation of liability on the community. In this case, the liability for revenue falls directly with the development community. Council considers that the level of development and financial contributions are affordable and are not out of step with those required by other councils. Consequently, Council does not consider it likely that there will be an undue or unreasonable impact on the social, economic, and cultural wellbeing of this section of the community.  Nor are the charges expected to divert private sector investment from Lower Hutt on any significant scale.

114. Moreover, shifting development costs onto ratepayers is likely to be perceived as unfair and would significantly impact the rates revenue required from existing residents - who do not cause the need, or benefit directly from the growth infrastructure, needed to service new developments. 

115. Overall, Council considers it fair and reasonable, and that the social, economic and cultural interests of the District’s communities are best advanced through using development contributions and financial contributions to fund the costs of growth-related capital expenditure for community facilities.

Catchment determination

116. When setting development contributions, Council must consider how it sets it catchments for grouping charges by geographic areas. The LGA gives Council wide scope to determine these catchments, provided that:

·    The grouping is done in a manner that balances practical and administrative efficiencies with considerations of fairness and equity; and

·    Grouping by geographic area avoids grouping across an entire district wherever practical.

117. Council has determined that there will seven catchments. These catchments are:

·    The Western Hills.

·    The Valley Floor.

·    Stokes Valley.

·    Wainuiomata.

·    Eastbourne.

·    Rural.

·    Districtwide. 

118. The catchments and their boundaries are based on communities of interest (aggregating district suburbs), the geography of the district, the characteristics of the infrastructure and service it provides, the common benefits received across the geographical area supplied by the infrastructure, and judgments involving a balance between administrative efficiency and, fairness and equity.

119. The boundaries of these catchments, excluding the Rural catchment, are defined by the aggregated suburb boundaries and the urban zoning in the district plan. The catchments are shown on the plan in Appendix 1 (at end of this Policy). Development occurring within these catchments will be required to pay contributions applicable in that catchment.

120. The rationale for the limited number of catchments is to:

·    Keep the Policy as simple as practicable.

·    Provide flexibility to deliver growth infrastructure where it is most needed.

·    Reconcile the contributions as closely as practicable to the areas where developments have generated the need for capital expenditure on new assets, or assets of increased capacity.

121. The infrastructure included within the catchments to which a development contribution will apply are stormwater, water, wastewater, and transport. However, there are two exceptions - the districtwide and rural catchments.

122. The Districtwide catchment includes only the recovery of incurred costs for excess capacity built into the Wastewater Treatment Plant when it was constructed. The Rural catchment includes only roading capital expenditure upgrade projects. A capital expenditure project would generally be assigned to one catchment. However, these projects may be allocated across more than one catchment where they provide benefits across those catchments. The allocation of capital expenditure across the catchments would be assessed when the asset schedules in the Policy are reviewed and updated.

Significant assumptions of the policy

Methodology

123. In developing a methodology for the development contributions in the Policy, Council has taken an approach to ensure that the cumulative effect of development is considered across each catchment.

Planning horizons

124. A 30-year timeframe has been used as a basis for forecasting growth and growth-related assets and programmes. This is set out in Council’s asset management plans.

Projecting growth

125. Hutt City has experienced high population and steady economic growth in recent years, and this growth is forecast to continue. Statistics New Zealand (SNZ) figures indicate steady population growth in the District, with the number of residents increasing by [X%] per annum since 2013. 

126. Using forecast adapted from on SNZ’s median growth forecasts and a commercial growth study as a base, the key assumptions on future growth are:

·    Years 2021-2031:

-       Population growth in the District of around 7%, or around 7,000 people.

-       Residential unit growth in the District of around 8%, or around 3,200 residential units.

-       Minimal net development of GFA for commercial space – although intensity of use is expected to increase.  

·    Years 2031-2051:

-       Population growth in the District of around 16,700 people from 2031.

-       Residential unit growth in the District of around 7,000 residential units from 2031.

-       Minimal net development of GFA for commercial space – although intensity of use is expected to increase.  

127. A five-yearly breakdown of the population and household forecast is in table 11.

Table 11: Five-yearly breakdown of population and household forecasts

2013

Census

2021

(est)

2026

2031

2036

2041

2046

2051

Western Hills

 

 

 

 

 

 

 

 

Population

10423

10586

10966

11296

11499

11668

11857

12042

Households

3851

3992

4164

4338

4451

4542

4626

4711

Wainuiomata

Population

17787

19198

19842

21077

22761

24403

26080

27759

Households

6331

6801

7067

7544

8147

8743

9343

9943

eastbourne

 

 

 

 

 

 

 

 

Population

4803

4809

4765

4734

4738

4758

4784

4810

Households

2017

2041

2067

2082

2097

2112

2127

2142

STOKES VALLEY

 

 

 

 

 

 

 

 

Population

9805

10245

10861

11189

11284

11356

11473

11589

Households

3573

3729

3961

4085

4144

4198

4258

4318

VALLEY FLOOR

 

 

 

 

 

 

 

 

Population

58378

61509

63308

64977

66870

69083

71412

73742

Households

22775

23759

24665

25490

26403

27422

28437

29453

HUtt City TOTAL

 

 

 

 

 

 

 

 

Population

101196

106347

109742

113273

117152

121268

125606

129942

Households

38547

40322

41924

43539

45242

47017

48792

50567

Best available knowledge

128. Development contributions are based on projects and programmes previously undertaken, future works proposed in Council’s Long Term Plan and/or Asset Management Plans, and projected estimates of future growth. These are all based on the best available knowledge at the time of preparation. As better information becomes available the Policy will be updated, generally through the Annual Plan process.

capacity lives

129. The capacity lives for projects and programme within the Policy are approximated to the closet decade that they provide for growth, being 10 years, 20 years or 30 years. Projects that provide do not provide capacity for development within the period 2021-2031 are not included in this Policy.    

Cost of INFRASTRUCTURE 

130. Future capital expenditure costs used in this Policy are based on the forecast costs in the LTP and/or Hutt City Council and Wellington Water Asset Management Plans. There are Past project costs (schedule 3) are derived from Annual Reports and will be updated at least every three years.

131. Interest costs are added to the above to account of the costs of borrowing (see Funding Model section below) and third part funding is deducted (such as Waka Kotahi subsidies).

132. As better information becomes available the Policy will be updated.

Key risks/effects

133. There are two key risks associated with administering development contributions, and the resulting effects are:

·    That the growth predictions do not eventuate, resulting in a change to the assumed rate of development. In that event, Council will continue to monitor the rate of growth and will update assumptions in the growth and funding predictions, as required.

·    That the time lag between expenditure incurred by Council and development contributions received from those undertaking developments is different from that assumed in the funding model, and that the costs of capital are greater than expected. This would result in an increase in debt servicing costs. To guard against that occurrence, Council will continue to monitor the rate of growth and will update assumptions in the growth and funding models, as required.

Service assumptions

134. That methods of service delivery, and levels of service, will remain substantially unchanged and in accordance with Council’s Long Term Plan, asset management plans, and [Technical Specifications/Land Development Manual/Engineering Standards].

Funding model

135. A funding model has been developed to calculate development contribution charges under the Policy. It accounts for the activities for which contributions are sought, the assets and programmes related to growth, forecast growth and associated revenue. The funding model embodies several important assumptions, including that:

·    All capital expenditure estimates are inflation adjusted and GST exclusive.

·    The levels of service (LOS) /backlog, renewal and maintenance portions of each asset or programme will not be funded by development contributions. See the Cost allocation section below.

·    The growth costs associated with an asset are spread over the capacity life of the asset and any debt incurred in relation to that asset will be fully repaid by the end of that capacity life.

·    Interest expenses incurred on debt accrued will be recovered via development contributions and shared over the capacity life of each asset.

Cost allocation

136. Council must consider how to allocate the cost of each asset or programme between three principal drivers – growth, level of service /backlog, and renewal. Council’s general approach to cost allocation is summarised as: 

·    Where a project provides for and benefits only growth, 100% of a project’s cost is attributed to growth. To qualify for this, there would have to be no renewal element (see below) or material level of service benefit or capacity provided for existing residents and businesses. 

·    Where a project involves renewal of existing capacity, the value of a stand-alone renewal component is generally determined separately for significant individual identified works. For smaller projects or ongoing programmes, a proportion of the works is attributed to growth in line with future beneficiary split (see below).  

·    If a project provides for growth and LOS, after deducting any share of costs attributable to renewal, Council will split the cost between growth and LOS based on a future beneficiary split approach. Under this approach, the cost attributed to: 

-       LOS will be based on proportion that the existing community (in EHUs) will make up of the future community (in EHUs).

-       Growth will be based on proportion that the growth (in EHUs) will make up of the future community (in EHUs).    

137. For particularly large and expensive projects, Council may undertake a specific cost apportionment assessment that differs from the general approach outlined above. For example, using identified capacity share as the basis for cost allocation.

Calculating the development contribution charges

138. This section outlines how the development contribution charges were calculated in accordance with section 203 and schedule 13 of the LGA.

Process

139. The steps needed to determine growth, growth projects, cost allocations, and to calculate the development contributions charges are summarised in Table 12.

Table 12: Summary of development contribution charge calculation methodology

Step

Description / comment

Example ($ GST Exc)

1. Forecast growth

Council estimates potential land supply and likely take up of that land. The estimates help provide household and business growth forecasts for up to 30 years.  See the Projecting Growth section above for further information. 

[provide worked example]

2. Identify projects required to facilitate growth

Develop the works programme needed to facilitate growth. In some cases, Council may have already undertaken the work. The programme in the Policy is for 30 years.

[provide worked example]

3. Determine the cost allocation for projects

The cost of each asset or programme is apportioned between renewal, growth, and LOS/backlog in accordance with the approach outlined in the cost allocation section of the Policy.

Schedules 2 and 3 of the Policy outlines the amount required to fund growth from development contributions for each of these assets or programmes.

[provide worked example]

4.Determine growth costs to be funded by development contributions

Council determines whether to recover all of the growth costs identified in step 3 from development contributions, or whether some of the growth costs will be funded from other sources. 

[provide worked example]

5. Divide DC funded growth costs by capacity lives

The growth costs from step 4 are divided by the estimated capacity life (defined in EHUs) to provide an EHU charge for each future and past asset and programme. 

[provide worked example]

6.Sum all per asset charges

For each catchment and activity, add up the per EHU asset or programme charges to provide a “raw” total development contribution charge before interest cost are added.

For each activity and catchment, development contributions fund the programme on an aggregated basis. 

[provide worked example]

7. Adjust for interest costs and charge inflation adjustments 

The raw cost requires adjustments in the funding model to ensure total revenue received over equals total costs after accounting for interest costs. These costs are shared over the capacity life of each asset.

These adjustments impact the final charges. 

[provide worked example]

Summary of calculations

140. Schedule 1 summarises the calculation of the development contribution charge for each activity/catchment (step 7). Schedules 2 and 3 provide information on each asset or programme including the information in steps 2 - 6.


Schedule 1 – Development contribution charge calculations

This schedule summarises the calculation of the development contribution charge for each activity for each catchment. This include the components of the charge related to capital expenditure on past assets, capital expenditure on future assets, and interest costs. All figures exclude GST. 

Water

reference

Development Contribution funded $

Recoverable Growth / Capacity Life (UNITS)

Development Contribution Charge per UNIT (GST exc)

CATCHMENT W1

 

 

 

Future asset or programmes

(refer schedule 2)

C1 (future asset/programme costs funded by DCs)

Refer schedule 2

DCF

Past assets or programmes

(refer schedule 3)

C2 (past asset/programme costs funded by DCs)

Refer schedule 3

DCP

loan interest costs

IC (interest costs)

#IC (EHUs over which interest costs are being recovered)

DCIC = IC/#IC

Total

TGC (total growth costs funded by DCs) = C1 + C2 + IC

 

DCW1 = DC1+ DC2+ DCIC

CATCHMENT W2 (example)

 

 

 

Future asset or programmes

(refer schedule 2)

$4,720,000

Refer schedule 2

$8,400

Past assets or programmes

(refer schedule 3)

$12,000,000

Refer schedule 3

$12,000

Loan interest costs

$800,000

800

$1,000

Total

$17,520,000

 

$21,400

WasteWater

reference

Development Contribution funded $

Recoverable Growth / Capacity Life (UNITS)

Development Contribution Charge per UNIT (GST exc)

CATCHMENT WW1

 

 

 

Future asset or programmes

(refer schedule 2)

 

Refer schedule 2

 

Past assets or programmes

(refer schedule 3)

 

Refer schedule 3

 

Loan interest costs

 

 

 

Total

 

 

 

CATCHMENT WW2

 

 

 

Future asset or programmes

(refer schedule 2)

 

Refer schedule 2

 

Past assets or programmes

(refer schedule 3)

 

Refer schedule 3

 

Loan interest costs

 

 

 

Total

 

 

 

 

..etc


 

Schedule 2 – Future assets 

Schedule 2 provides the forecast future capital expenditure on asset or programmes attributable to new growth in accordance with section 201A of the LGA. All figures exclude GST. 

Water

ID

Asset or programme name

Description

Total cost $

% Funded by DCs

% Funded
from
other
sources

DC funded Cost $

Year1
2021/
2022
$

Year2
2022/
2023
$

Year3
2023/
2024
$

Year4
2024/
2025
$

Year5
2025/
2026
$

Year6
2026/
2027
$

Year7
2027/
2028
$

Year8
2028/
2029
$

Year9
2029/
2030
$

Year10
2029/
2030
$

Years 11-30
2031/2032-
2051/2052

Recoverable Growth / Capacity Life (EHUs)

Development Contribution Charge

CATCHMENT W1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

W1001

[Asset or programme name]

[Asset or programme description]

$[X1]

[Y2]%

[100-Y]%

$Z1 = [X1 x Y1]

Y1 DC funded portion of costs

Y2 DC funded portion of costs

Y3 etc

Y4 etc

Y5 etc

Y6 etc

Y7 etc

Y8 etc

Y9 etc

Y10 etc

Ys 11-30 DC funded portion of costs

#1

DC1 = $Z1/#1

W1002

[Asset or programme name]

[Asset or programme description]

$[X2]

[Y2]%

[100-Y]%

$Z2 = [X2 x Y2]

Y1 DC funded portion of costs

Y2 DC funded portion of costs

Y3 etc

Y4 etc

Y5 etc

Y6 etc

Y7 etc

Y8 etc

Y9 etc

Y10 etc

Ys 11-30 DC funded portion of costs

#2

DC2 = $Z2/#2

W1003

[Asset or programme name]

[Asset or programme description]

$[X3]

[Y3]%

[100-Y]%

$Z3 = [X3 x Y3]

Y1 DC funded portion of costs

Y2 DC funded portion of costs

Y3 etc

Y4 etc

Y5 etc

Y6 etc

Y7 etc

Y8 etc

Y9 etc

Y10 etc

Ys 11-30 DC funded portion of costs

#3

DC3 = $Z3/#3

 

 

Total future growth expenditure

$[X1+X2+X3]

 

 

$[Z1+z2+Z3]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Future asset development contribution charge (DCF)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$DCF = [DC1+DC2+DC3]

CATCHMENT W2 (example)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

W1004

[Dowder reservoir]

[Provide 2500m3 reservoir to link to new main and provide storage for Dowder growth area]

 $3,400,000

80%

20%

$2,720,000

$1,360,000

$1,360,000

0

0

0

0

0

0

0

0

0

800

 $3,400

W1005

[Dowder booster pump station]

[Booster pump station to provide water at require pressure to residentially zoned land above 65 metres of elevation]

 $2,000,000

100%

0%

 $2,000,000

0

0

0

0

0

0

0

0

$2,000,000

0

0

400

 $5,000

 

 

Total future growth expenditure

$5,400,000

87%

13%

 $4,720,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Future asset development contribution charge (DCF)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$8,400

 

 

 

Wastewater

ID

Asset or programme name

Description

Total cost $

% Funded by DCs

% Funded
from
other
sources

DC funded Cost $

Year1
2021/
2022
$

Year2
2022/
2023
$

Year3
2023/
2024
$

Year4
2024/
2025
$

Year5
2025/
2026
$

Year6
2026/
2027
$

Year7
2027/
2028
$

Year8
2028/
2029
$

Year9
2029/
2030
$

Year10
2029/
2030
$

Years 11-30
2031/2032-
2051/2052

Recoverable Growth / Capacity Life (EHUs)

Development Contribution Charge

CATCHMENT WW1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total past growth expenditure

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Past asset development contribution charge (DCF)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CATCHMENT W2 (example)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total future growth expenditure

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Future asset development contribution charge (DCF)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

Schedule 3 – Past assets 

Schedule 3 provides the capital expenditure incurred on asset and programmes attributable to new growth constructed in anticipation of growth, in accordance with section 201A of the LGA. All figures exclude GST. 

Water

ID

Asset or programme name

Description

Total cost $

% Funded by DCs

% Funded
from
other
sources

DC funded Cost $

Years

Recoverable Growth / Capacity Life (EHUs)

Development Contribution Charge

CATCHMENT W1

 

 

&nbs