HuttCity_TeAwaKairangi_BLACK_AGENDA_COVER

 

 

Long Term Plan/Annual Plan Subcommittee

 

 

14 December 2020

 

 

 

Order Paper for the meeting to be held in the

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

on:

 

 

Monday 21 December 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 21 December 2020 commencing at 2.00pm.

 

ORDER PAPER

 

Public Business

 

 

1.       OPENING FORMALITIES - Karakia Timatanga 

Kia hora te marino

Kia whakapapa pounamu te moana

He huarahi mā tātou i te rangi nei

Aroha atu, aroha mai

Tātou i a tātou katoa

Hui e Tāiki e!

May peace be wide spread

May the sea be like greenstone

A pathway for us all this day

Let us show respect for each other

For one another

Bind us together!

 

2.       APOLOGIES 

3.       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.

4.       Mayoral Statement (20/1755)

5.       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.      

6.       Recommendations to Council - 21 December 2020

i)       Urban Plus Statement of Intent (20/1749)

Report No. LTPAP2020/6/328 by the Director Economy and Development                                    7

Chair’s Recommendation:

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

 

 

 

 

ii)      Draft Infrastructure Strategy 2021-2051 (20/1626)

Report No. LTPAP2020/6/330 by the Head of Strategy and Planning   33

Chair’s Recommendation:

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

 

iii)     Draft Development and Financial Contributions Policy 2021 (20/1687)

Report No. LTPAP2020/6/314 by the Head of Strategy and Planning   42

Chair’s Recommendation:

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

 

iv)     Long Term Plan 2021-2031: Non-Financial Aspects (20/1667)

Report No. LTPAP2020/6/319 by the Head of Strategy and Planning   86

Attachment to be separately circulated

Chair’s Recommendation:

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

 

v)      Long Term Plan 2021-2031, Financial Aspects (20/1353)

Report No. LTPAP2020/6/317 by the Chief Financial Officer                 91

Chair’s Recommendation:

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

 

vi)     Long Term Plan 2021/31 Approach for Asset Management (20/1597)

Report No. LTPAP2020/6/316 by the Director Neighbourhoods and Communities           256

Chair’s Recommendation:

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

 

vii)    Proposed budgets regarding Solid Waste Disposal and Resources Recovery for the 2021-2031 Long Term Plan (20/1743)

Report No. LTPAP2020/6/329 by the Contracts Solid Waste Manager 279

Chair’s Recommendation:

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

 

viii)   Rubbish and recycling fees and charges further information (20/1743)

          Memorandum dated 3 December 2020 by the Business Analyst - Rates 302

Chair’s Recommendation:

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

 

 

7.         Information Item

          Engagement (20/1748)

Memorandum dated 11 December 2020 by the Head of Strategy and Planning       305

Chair’s Recommendation:

That the recommendations contained in the report be endorsed.”

      

8.       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

            


                                                                                       8                                                  21 December 2020

Long Term Plan/Annual Plan Subcommittee

11 December 2020

 

 

 

File: (20/1749)

 

 

 

 

Report no: LTPAP2020/6/328

 

Urban Plus Statement of Intent

 

Purpose of Report

1.    The purpose of this report is to consider the final Statement of Intent (SOI) for Urban Plus Group (UPL) for 2020 – 2023 financial year (attached at Appendix 1 to the report).

Recommendations

That the Subcommittee recommends that Council:

(i)    receives and agrees the Statement of Intent for Urban Plus Group for the 2020 – 2023 financial years attached as Appendix 1 to the report;

(ii)   notes that this Statement of Intent is a modification of the Statement of Intent presented to Councilors for the period from 1 July 2020;  

(iii)  notes that officers are currently working with Urban Plus Limited to finalise an amended Statement of Intent which will be approved by the Urban Plus Limited Board on Thursday 17 December 2020 and that an update will be provided to members at the 21 December 2020 Long Term Plan/Annual Plan Subcommittee Meeting to the amended Statement of Intent;

(iv) notes that in order to give effect to the Urban Plus Limited Statement of Intent, with the new strategic priorities, Council will be required to increase its borrowing to Urban Plus Limited and that the finalised increased borrowing request will be provided to members at the 21 December Long Term Plan/Annual Plan Subcommittee meeting; and

(v)  notes that Urban Plus Limited and Council will work together to seek further forms of co-funding that will enable the delivery of safe, warm, dry and affordable homes within Hutt City.

 

 

Background

2.    UPL delivered its SOI to Council in June 2020 where Council noted its desire to change UPLs strategic priorities. These changes were to address social and environmental outcomes such as:

a.    the provision of social and affordable housing;

b.    the application of best practice environmental standards (e.g water sensitive urban design); and,

c.     working in greater partnership with mana whenua and community housing providers (CHPs).

3.    In August 2020, Councillors, officers and UPL staff held a briefing to explore the development of new strategic priorities for the SOI. The discussion reflected the current issues and concerns within the housing system and noted matters such as (but not limited to):

a.    homelessness and housing hardship;

b.    the provision of transitional housing;

c.     providing social or local authority housing for different cohorts; and,

d.    developing initiatives for assisted ownership and affordable rentals, through to home ownership.

4.    In Septembers, Council’s Policy, Finance and Strategy Committee agreed the six new priorities for the UPL SOI:

a.    Providing for wider housing need;

b.    Building More Housing Partnerships;

c.     Building Pathways to Permanency;

d.    Application of Agreed Environmental Standards ;

e.     Achieving Wider Outcomes; and

f.     Delivering on Plan Change 43.

5.    These priorities were agreed by Council at its meeting held on 24 September 2020.

6.    In October 2020 Council provided for UPL’s consideration the shareholders letter of expectation (LOE) which articulated Council’s new strategic priorities for UPL as well as Council’s general priorities.  The strategic priorities included:

a.    Providing for wider housing need

b.    Building More Housing Partnerships

c.     Building Pathways to Permanency

d.    Application of Agreed Environmental Standards

e.     Achieving Wider Outcomes

f.     Delivering on Plan Change 43

7.    The general priorities included:

a.    Promoting Māori Outcomes

b.    Financial accountability

c.     Climate Change

Discussion

8.    The LOE from Council sets out a significant change in the Strategic Direction for UPL. In response UPL have identified and costed a number of sites and housing projects which if executed will enable the achievement of the strategic objectives noted in the LOE.

9.    Council officers and UPL are currently in the process of finalising an amended SOI with an agreed borrowing request from Council as its sole shareholder. The amended SOI will be taken to the UPL Board on 17 December for their approval. A verbal update on the amended SOI will be provided at the 21 December Long Term Plan Subcommittee Meeting.

10.  The UPL Board is aware that Council could request changes to the UPL SOI when Council has completed its Housing Strategy and that a renewed SOI will be required by June 2021.

Options

11.  If Council do not agree to the final SOI, it may by resolution, require the board to modify the SOI. Before giving notice of the resolution to the board, Council must consult the board as to the matters requiring modification.

Climate Change Impact and Considerations

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

Consultation

13.  Consultation between Council officers, members and UPL has been ongoing. The agreed Strategic Priorities for UPL are publicly available and have been reviewed and agreed by Council. 

Legal Considerations

14.  There is an obligation on the board of a Council Controlled Organisation, that each SOI and each modification that is adopted to a SOI, “must be made available to the public within one month after the date on which it is delivered to the shareholders or adopted, as the case may be”.  The final SOIs will be made available to the public via the website of UPL immediately after receiving notification of approval of the final SOI by Council.

Financial Considerations

15.  The SOI contains the financial forecasts for the three year periods commencing 2020.

16.  UPL’s planned activities for the period covered by its SOI, are funded via retained earnings, profits on properties developed for resale, and approved loan agreements with Council. Council loans to UPL are funded by Council through borrowings.

17.  The Total Equity of UPL is estimated to be $48.930 million at 30 June 2020.

Appendices

No.

Title

Page

1

Appendix 1 - UPL GROUP Statement of Intent 2020-2023

11

    

 

 

 

 

 

Author: Kara Puketapu-Dentice

Director Economy and Development

 

 

 

Author: Jenny Livschitz

Chief Financial Officer

 

 

 

Author: Simon George

Senior Accountant

 

 

 

 

 

 

Approved By: Jo Miller

Chief Executive


Attachment 1

Appendix 1 - UPL GROUP Statement of Intent 2020-2023

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


                                                                                      40                                                 21 December 2020

Long Term Plan/Annual Plan Subcommittee

01 December 2020

 

 

 

File: (20/1626)

 

 

 

 

Report no: LTPAP2020/6/330

 

Draft Infrastructure Strategy 2021-2051

 

Purpose of Report

1.    The purpose of this report is to seek approval of the vision, goals, issues/opportunities and the principal options for managing these for the draft Infrastructure Strategy 2021-2051 (the Strategy). The Strategy will be included in consultation as part of the 2021-2031 Long Term Plan (LTP).

2.    The complete draft Infrastructure Strategy 2021-2051 was due for Subcommittee recommendation on 21 December 2020. The draft Infrastructure Strategy 2021-2051 will now be presented in the new-year in order for a full and complete review to occur. The draft strategy has been developed but is awaiting review by Wellington Water Limited and the Transport Division.

3.    Following approval of this report the draft Infrastructure Strategy 2021-2051 will continue to be developed and reviewed. The completed Strategy will be presented to the Long Term Plan/Annual Plan Subcommittee and Council on 2 February 2021 for recommendation and approval. These timings will still enable Council to meet its key timings and have no adverse effect on the overall LTP project. 

Recommendations

That the Subcommittee recommends Council:

(i)    notes the Infrastructure Strategy 2018-2048 is being reviewed as part of the preparation of the draft Long Term Plan 2021-2031;

(ii)   approves the vision, goals, issues and principal options, and management practices for inclusion in the draft Infrastructure Strategy;

(iii)  notes that the draft Infrastructure Strategy will be presented to Subcommittee and Council on 2 February 2021;

(iv) notes that the draft Infrastructure Strategy will be included in the draft Long Term Plan consultation; and

(v)  considers and provides any direction(s) to officers in preparation of the draft infrastructure strategy.

The draft Infrastructure Strategy 2021-2051 sets out how our infrastructure will enable our city and people to thrive whilst at the same time providing effective guardianship of Lower Hutt/Te Awa Kairangi.  It outlines the principal options for investment in core infrastructure, promotes practices that ensure efficient and effective management of these assets to achieve the identified goals and deliver the services expected by our community and focusses on where improvements can be made in response to the key infrastructure challenges and opportunities our city faces in the next 30 years.

 

Background

4.    The review of Council’s current Infrastructure Strategy 2018-2048 was completed in collaboration with Wellington Water Ltd and with staff from across the organisation including asset managers.  Reviewing the Infrastructure Strategy 2018-48, provides an excellent opportunity for Council to reassess its infrastructure priorities and reset its investment programme.  In addition it also allows Council and its communities to consider how infrastructure contributes to the look and feel of our city as well as how it functions and operates.

Discussion

5.    The Local Government Act 2002 requires councils to prepare and adopt an Infrastructure Strategy every three years as part of the LTP. The Infrastructure Strategy must cover a period of at least 30 consecutive financial years as the 10-year focus of most long-term plans can result in less of a focus on the longer term consequences of infrastructure investment and service level decisions.  While individual asset management plans may identify longer term infrastructure issues for the city, these do not provide an integrated picture of strategic infrastructure requirements, the financial impacts of these, and the choices and options faced by the city as a whole.

6.    The main purpose of the strategy is:

a.    Identify significant infrastructure issues;

b.    Identify infrastructure options to address identified issues; and

c.     Provide guidance for the management of core council infrastructure.

7.    The strategy must:

a.    Present indicative estimates of the capital and operating expenditure required to manage infrastructure assets on an annual basis for the first ten years (but may be in five-year blocks for the subsequent 20 years).

b.    Provide estimates regarding the timing and cost of significant capital expenditure decisions the Council expects to need to make, and the options it will need to consider in making those decisions.

8.    The city has seen a significant period of under-investment in infrastructure and inaccurate growth estimates. This could prevent the city from thriving unless redressed. The draft 2021-2051 Infrastructure Strategy will outline how the council will invest and manage its infrastructure to enable its people to grow and thrive.

9.    The draft 2021-2051 Infrastructure Strategy will include Council’s infrastructure Vision and Goals, and the Principal Options for addressing our significant infrastructure issues and opportunities. It will also explain our practices and underpinning principles for our management of infrastructure. In addition, a list of significant projects planned and decisions expected to be made within the period will be detailed.

Infrastructure Vision

10.  Council has an important kaitiaki/stewardship role for city infrastructure over the long term. The Council vision for infrastructure is:

Managing and investing in infrastructure that ensures the City and its People thrive and grow now and into the future

Infrastructure Goals

11.  Council has developed and agreed six draft LTP priorities:

a.    Getting the basics right;

b.    Investing in infrastructure;

c.     Increasing housing supply;

d.    Caring for and protecting our environment;

e.     Supporting an innovative, agile economy and attractive city; and

f.     Connecting communities.

12.  The core infrastructure goals to support these LTP goals are:

a.    Improving and strengthening our basic infrastructure with a primary focus on Three Waters;

b.    Improving the reliability, efficiency and effectiveness of the infrastructure networks; and

c.     Maintaining current and investing in new infrastructure, in a sustainable manner, which focuses on guardianship of our environment and communities.

Principal options

13.  This section of the Strategy outlines the four significant infrastructure issues and opportunities identified for Te Awa Kairangi/Lower Hutt for inclusion in the Strategy, together with the options for managing those issues and the implications of the options.

14.  Underpinning the principal options and guiding the management of infrastructure are the following principles:

a.    Our infrastructure must protect people, property and the environment;

b.    Our investment decisions must align with the Financial Strategy principles with a crystal clear focus on; getting the basics right and financial sustainability;

c.     Our management and investment in infrastructure must align with councils climate change principles and its key goal of reducing emissions to net zero by 2050;

d.    Our decisions must improve the resilience, sustainability and long term adaptability of the city’s infrastructure;

e.     Our management and investment in infrastructure must be made with and strengthen the partnership with Mana Whenua; and

f.     We must ensure all Council infrastructure complies with all appropriate regulations and standards.

15.  There are four issues and opportunities identified that Council will face over the Strategy’s period. The issues, opportunities and how Council will manage them are below:


 

Issue/Opportunity

Management

Aging infrastructure and investment in renewals

Increase our investment in understanding our aging infrastructure 

Develop an enhanced maintenance programme that supports our aging infrastructure

Enable a structured programme of planned investment in renewals of ageing assets

The effects of climate change and natural hazards

Strengthen identified, at risk, infrastructure

Ensure Council maintains a robust emergency preparedness system

Maintain, and where required, invest in providing back up infrastructure

Invest in protective infrastructure

Ensure the regulation and monitoring system is robust and functioning

Growth and demand variations

Promotion of alternative transportation modes.

Improve Councils demand management process

Enhance accessibility options for the ageing population

Focus on adapting and developing infrastructure for and in high demand areas

Technological advancements

Increase the development of modelling and monitoring tools

 

Management practices

Communication and Engagement

16.  The importance of engaging with our mana whenua partners in planning, funding and delivering infrastructure is critical. The strategy will identify and summarise engagement goals, the form that the engagement will take, and how engagement will relate to the decision-making process.

17.  In addition the community will be engaged to ensure that the public and key stakeholders have a voice in the management of and investment in key projects and that Council’s decisions reflect community values.

18.  Close collaboration with key stakeholders such as Waka Kotahi and Wellington Water Ltd is also essential in enabling Council to perform its functions and deliver improved long term outcomes.

Levels of Service

19.  Based on the findings of community consultation and in conjunction with Asset Management Plans (AMPs) the following groups of indicators will be used to monitor the performance and service provided by city infrastructure:

a.       LTP performance measures:  Performance measures published in the LTP and reported on in the ‘Hutt City Council Annual Report’

b.       Customer standards: Quality and service availability, target response times for addressing problems with service provision, and courtesy, e.g. keeping property owners informed of system maintenance or other works.

c.       Activity standards:  Activity standards cover aspects of activity likely to be of concern to the community, such as service quality, customer focus, cost-effectiveness, environmental performance and compliance with legal and industry standards.

d.      Management indicators: Indicators relating to the performance of particular assets (e.g. pump stations), and the performance of service contracts.

Service Delivery

20.  Wellington Water Ltd was established in September 2014 to take a regional focus to the delivery of the three waters services, water supply, wastewater and storm water, as the natural structure of the region dictates. Wellington Water is a council-controlled organisation jointly owned by the Hutt, Porirua, Upper Hutt, Wellington City and South Wairarapa District Councils and Greater Wellington Regional Council; each council is an equal shareholder. A representative from each council sits on the regional Wellington Water Committee that provides overall leadership and direction for the company.

21.  The Committee writes an annual Letter of Expectations to the Chair of the Board of Wellington Water which outlines key priorities and areas of focus for the company. This Letter further guides the development of Wellington Water’s Statement of Intent[1]. Services are provided using the assets owned by shareholding councils.

22.  Hutt City Council also works closely with Waka Kotahi as a co-investor in our transport network to ensure an appropriate level of service is delivered. Waka Kotahi provides subsidies for most of our roading and shared path (cycles and pedestrians) projects; therefore, the policies and priorities of Waka Kotahi and the way in which this impacts their funding decisions has influence on the decisions made in regard to this infrastructure.

Asset Management Planning

23.  Sound management of the assets is essential to improve the design, development and management of infrastructure. This is ensured and supported through comprehensive activity management or regional service plans.

24.  Wellington Water Ltd developed a Regional Service Plan that sets out the approach to deliver the three waters services for the region in a cost effective and sustainable manner. This is the foundation for integrated three waters planning and ensures a consistent approach is applied across the Wellington metropolitan region.

25.  A Business Case approach is currently taken in developing the Transport Activity Management Plan where the identified problems and how these will be addressed through our transport activities are explored. The work programmes developed directly respond to the strategic problems identified and considers how we manage levels of service for all road users, provide a safe and high quality network, deliver resilient connections, and provide value for money of our Road Asset investment.

26.  In addition, Council is developing an Integrated Transport Plan which will build on the Infrastructure Strategy. The Integrated Transport Plan will:

a.       Provide a high level vision for the city’s transport system;

b.       Highlight links and dependencies with external influences as well as other Council plans;

c.       Inform strategies, policies, action plans and funding applications; and

d.      Identify focus areas and strategic interventions for the city.

Spatial Planning

27.  Many aspects of our infrastructure vary due to geographical/spatial factors. Council is currently planning the development of a City Spatial Plan and is fully participating in a regional spatial planning approach (the Wellington Regional Growth Framework) that encompasses factors such as risk and resilience, growth and demand, and economic and demographic factors.

Sustainability and Public Health

28.  Council has a responsibility to achieve a balance between looking after our people and our environment, to comply with all appropriate legislation and standards and to ensure that wherever possible we create a positive impact rather than following a do no harm approach.

29.  Pressures on the environment and public health can be due to the construction or operation of infrastructure systems and may include:

a.       Water: improved usage and quality

b.       Roads: Network optimization

c.       Land use: accessibility and efficient use of space

d.      Protection and enhancement of the natural environment

Consultation

30.  The draft Infrastructure Strategy 2021-2051 will be consulted on through the LTP Consultation Document as a separate document.

Legal Considerations

31.  In making this recommendation, officers have given careful consideration to the section 101B of the Local Government Act 2002. Officers believe that this draft Infrastructure Strategy meets the legal requirements set by the Act.

32.  Other appropriate national and regional regulations and standards have also been considered in developing this Strategy.

Financial Considerations

33.  The draft Infrastructure Strategy provides indicative estimates of capital and operating expenditures in each asset category over the next 30 years. The Strategy will reflect Council decisions on financing and projects made to date, including any decisions made as part of the ‘Financial Aspects’ report to the committee today. The strategy will outline the funding methods and affordability considerations of the decisions made.

34.  The planned projects and proposed decisions connect the principal options presented to manage and respond to the identified infrastructure challenges and opportunities to the financial information.

35.  Officers confirm that the financial assumptions of the draft Infrastructure Strategy and the Financial Strategy are consistent.

Other Considerations

36.  In making this recommendation, officers have given careful consideration to the purpose of local government in section 10 of the Local Government Act 2002. Officers believe that this recommendation falls within the purpose of the local government by ensuring that the core local infrastructure that the community needs now and into the future is provided in the most cost-effective approach.

Appendices

There are no appendices for this report.  

 

 

 

Author: Wendy Moore

Head of Strategy and Planning

 

Author: Daniel Koenders

Manager Financial Strategy & Planning

 

 

Reviewed By: Jenny Livschitz

Chief Financial Officer

 

 

Approved By: Matt Boggs

Director, Strategy and Engagement

 


                                                                                      42                                                 21 December 2020

Long Term Plan/Annual Plan Subcommittee

05 December 2020

 

 

 

File: (20/1687)

 

 

 

 

Report no: LTPAP2020/6/314

 

Draft Development and Financial Contributions Policy 2021

 

Purpose of Report

1.    The purpose of this report is to seek approval of:

·    Council’s proposed 2021 Development and Financial Contributions Policy(the Policy); and

·    The consultation information required under section 82 and 82A of the Local Government Act 2002 (LGA) to assist with consultation on the proposed 2021 Policy.

2.    Following approval, the documents will be formatted and submitted to full Council in March 2021 for consultation approval. 

Recommendations

That the Subcommittee recommends that Council:

(i)         approves the proposed 2021 Development and Financial Contributions Policy, attached as Appendix 1 to the report, to be submitted to Council for consultation approval in March 2021;

(ii)        authorises the Chief Executive to make any changes to the proposed 2021 Development and Financial Contributions Policy and consultation information needed as a result of audit feedback or changes to the Proposed Long Term Plan infrastructure programme; and

(iii)       notes that the proposed 2021 Development and Financial Contributions Policy and consultation information will be formatted before staff seek consultation approval in March 2021.

For the reasons outlined in the report below.

 

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 LTP/Annual Plan Subcommittee has considered proposed changes to the Policy in two previous reports ((LTPAP2020/5/211 and LTPAP2020/6/291). 

5.    A proposed 2021 Policy has been drafted, including the charges and associated information. This draft gives effect to the resolutions in the two previous reports and is included as Attachment 1. If approved, the proposed 2021 Policy will be formatted and officers will seek consultation approval from Full Council in March 2021. Changes may be required to the proposed 2021 Policy as a result of audit feedback or if the 2021 LTP infrastructure programme is changed, following consideration of this report. 

Discussion

6.    The primary change to the proposed 2021 Policy since the 30 November LTP/Annual Plan subcommittee meeting is the inclusion of the revised charges and associated information. The charges are summarised and compared to current charges in table 1. These are based on the 2021 LTP infrastructure programme as of 4 December 2020. The charges and associated information may change if the 2021 LTP infrastructure programme is modified.


 

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

 

 

Catchment

 

 

Eastbourne

Stokes Valley

Valley

Floor

Wainuiomata

Western Hills

Rural

District

wide

Activity 

 

Development contribution per EHU

Transport

Current

$1,436

$324

$65

$407

$249

$3,803

$0

Proposed

0

0

0

0

0

0

2,240

Water Supply

Current

$8,979

$182

$54

$28

$1,119

$0

$0

Proposed

$0

$0

$6,891

$11,111

$1,070

$0

$304

Wastewater

Current

$0

$0

$36

$32

$0

$0

$3,568

Proposed

$596

$596

$596

$4,958

$596

$0

$2,858

Stormwater

Current

$1,084

$1,025

$205

$24

$436

$0

$0

Proposed

$751

$13

$142

$1,583

$77

$0

$218

Total

Current

$11,499

$1,531

$361

$491

$1,803

$3,803

$3,568

Proposed

$1,347

$609

$7,629

$17,652

$1,743

$0

$5,620

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

Current

$15,067

$5,099

$3,928

$4,059

$5,372

$3,803

$3,568

Proposed

$6,968

$6,230

$13,249

$23,272

$7,363

$2,240

$5,620

Change

Decrease

Increase

Increase

Increase

Increase

Decrease

Increase

-$8,099

$1,131

$9,321

$19,213

$1,991

-$1,563

$2,052

 

7.    Development Contribution charges have been calculated for inclusion in the Policy using the “SPM Projects” software module.  This is a new software module that has been implemented to support the new policy. The software provides an improved financial model of development contribution projects, including the associated interest costs of each project that are used as the basis for each DC charge. 

8.    The use of the model has resulted in a reduction in charges compared to initial estimates provided.  This is a reflection of improved modelling of interest costs associated with each growth element and the flow on effect to the DC charges.

9.    The uplift in the size of the charges proposed in the new Policy compared to previous policies are as a result of work completed to better understand growth related projects required to enable growth in the city. This reflects the decisions on project spend made to date by the Council including the increased spend on three waters.

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. These Councils are likely to be reviewing their Development Contributions policies and amending the fees during the LTP process.

Figure 1 - Development contribution charge sample comparison

11.  Reports LTPAP2020/5/211 and LTPAP2020/6/291 covered the key decisions and associated options required to develop Council’s proposed 2021 Policy. The decisions sought in this report are to approve Council’s proposed 2021 Policy which consolidates the earlier decisions (attached as Appendix I).

12.  The main options available to the subcommittee are to:

a.   Approve the proposed 2021 Policy and consultation information; OR

b.   Approve the proposed 2021 Policy and consultation information, with amendments; OR

c.   Not approve the proposed 2021 Policy and consultation information.

13.  Officers recommend option A. The proposed 2021 Policy and consultation information meets the requirements of the LGA and reflect previous Council decisions.  Approval will help ensure that the required time is available to have formatted documents ready for consultation approval by full Council in March 2021.

14.  If the Subcommittee wishes to make amendments to the proposed 2021 Policy or consultation information, depending on the nature of the amendments, the documents should still be able to be formatted in time for consultation approval by full Council in March 2021. However, this may be difficult if the proposed amendment require legal advice or create any significant flow on impacts on other aspects of the 2021 LTP.

15.  Officers do not recommend option C. This option would jeopardise the Council’s preferred growth infrastructure funding strategy.

Climate Change Impact and Considerations

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

17.  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

18.  Council will engage directly with developers individually and through their professional associations such as the Property Developers Forum and the Hutt Valley Chamber of Commerce. Key relationship managers will lead this engagement.

19.  Section 102(4) of the LGA requires that the Council consult on the proposed 2021 Policy in a manner that gives effect to the requirements of section 82 of the LGA. To help meet these requirements, the Council must prepare consultation material under section 82A that sets out:

a.   The reasons for the proposal.

b.   An analysis of the reasonably practicable options, including the proposal, identified under section 77(1) of the LGA. This is usually provided in summary form.

c.   The draft Policy to be adopted.

20.  It is proposed that the following three options will be consulted on in relation to development contributions as part of the Council’s wider consultation story:

a.   Retain a policy of meeting 100% of the Council’s planned growth costs from new developments from development and financial contributions.

b.   Fund part of the Council’s planned growth costs from development contributions and financial contributions, and the remainder from another funding source, such as through increased rates.

c.   Fund 100% of the Council’s planned growth costs from a funding source other than development contributions and financial contributions, such as through increased rates.

21.  Consultation information will be developed to meet these requirements. The consultation process on the proposed 2021 Policy will run concurrently with consultation on the 2021-31 LTP - effectively as part of one process with shared publicity, community engagement, hearings, and decision making processes. This will ensure that the process gives effect to the other consultation requirements of section 82 of the LGA.

Legal Considerations

22.  The proposed 2021 Development Contributions Policy contains all of the content required by the LGA.  Officers have asked Simpson Grierson to complete a review of the proposed Policy and this report.  Simpson Grierson has been specifically asked to consider the options proposed to respond to Councillors questions regarding the ability to smooth the impact of the fee increases for different catchments.

Financial Considerations

23.  The total cost of projects to address growth for up to the next 30 years is estimated to be $523M that development contributions are contributing to. Approximately 20% of this cost is expected to be funded by development contributions.  A breakdown by activity is in table 2 below. This excludes interest costs.


 

Table 2: Total cost of capital expenditure for growth and funding sources ($000), GST exclusive.

 

 

Water

Wastewater

Stormwater

Transport

Total

Total capex

$105,315,910

$170,265,377

$13,321,699

$234,180,797

$523,083,783

Growth capex

$54,533,937

$24,137,281

$5,679,364

$36,734,243

$121,084,825

DC funded capex

$54,533,937

$24,137,281

$5,679,364

$18,308,278

$102,658,860

Total capex proportion funded by development contributions

52%

14%

43%

8%

20%

Capex proportion funded from other sources

48%

86%

57%

92%

80%

Total amount to be funded by development contributions

(inc interest)

$63,280,011

$26,593,149

$6,366,961

$21,788,712

$118,028,833

 

24.  Significant individual projects included in this programme include:

·      The Cross Valley Connector programme – approximately $205m of which 16.5% has been attributed to growth and 8% of which is proposed to be funded by development contributions.

·      The Naenae Reservoir Project – approximately $29M of which 50% has been attributed to growth and is proposed to be funded by development contributions.

·      The Wainuiomata Reservoir Project Number 3 project - approximately $60M of which 50% has been attributed to growth and is proposed to be funded by development contributions.

·      Seaview Wastewater Treatment Plant Storage - approximately $21M of which 25% has been attributed to growth and is proposed to be funded by development contributions.

25.  There are also several large ongoing programmes that collectively will provide capacity for growth in the wastewater and transport activities. For these programmes, the percentage attributable to growth, and proposed to be funded by development contributions, is generally low (less than 6%). A full list of projects and programmes proposed to be funded by development contributions is included in Schedule 1 of the proposed 2021 Policy.   

26.  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 $1.9M- $5.7M 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.

 

Table 3. Forecast development contributions revenue ($000), GST exclusive

Activity

2021 / 22

2022 / 23

2023 / 24

2024 / 25

2025 / 26

2026 / 27

2027 / 28

2028 / 29

2029 / 30

2030 / 31

Transport

$636

$666

$753

$889

$1,054

$1,101

$943

$876

$853

$832

Storm- water

$93

$125

$147

$171

$210

$236

$236

$238

$261

$282

Water supply

$722

$1,074

$1,387

$1,677

$2,089

$2,404

$2,435

$2,477

$2,599

$2,734

Waste-water

$442

$681

$878

$1,078

$1,360

$1,577

$1,616

$1,634

$1,721

$1,804

Total

$1,893

$2,546

$3,165

$3,815

$4,713

$5,318

$5,230

$5,225

$5,434

$5,652

 

27.  A refund for development contributions for water in the Eastbourne catchment is likely to be needed as a consequence of removing the Eastbourne reservoir from Council’s Long-Term Plan. Officers are investigating the likely scale of the refund required and will report back to Council in early 2021.

 

Appendices

No.

Title

Page

1

Draft Development Contributions Policy 2021

50

    

 

 

Author: Wendy Moore

Head of Strategy and Planning

 

 

Author: Daniel Koenders

Manager Financial Strategy & Planning

 

 

 

 

Reviewed By: Jenny Livschitz

Chief Financial Officer

 

 

Approved By: Matt Boggs

Director, Strategy and Engagement

 


Attachment 1

Draft Development Contributions Policy 2021

 

Hutt City Council 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 Growth related assets and development contribution calculations summary

Part 3: Catchment Map

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 on the Valley Floor will pay three times the water, wastewater, stormwater, and transport charges for that catchment (see DC per EHU in Table 1). The total development contributions payable in this case would be $45,237 (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

 

Eastbourne

Stokes Valley

Valley Floor

Wainuiomata

Western Hills

Rural

District Wide

 

Transport

$0

$0

$0

$0

$0

$0

$2,577

 

Water

$0

$0

$7,925

$12,778

$1,231

$0

$349

 

Wastewater

$686

$686

$686

$5,701

$686

$0

$3,286

 

Stormwater

$864

$15

$163

$1,821

$88

$0

$251

 

Total

$1,549

$701

$8,773

$20,300

$2,004

$0

$6,463

 

DC per EHU

(including the district wide charge)

$8,013

$7,164

$15,237

$26,763

$8,467

$2,577

$6,463

 

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 Schedule 1 (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 uses; 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 category in Table 5; 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 (Schedule 1).

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 $523m (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, approximately 20 percent will be funded from development contributions. Including interest costs, the total amount to be funded is $118M.

99.    Table 9 provides a summary of the total costs of growth-related capital expenditure and the funding sought by development contributions for each activity. A breakdown by activities and catchment is available in Schedule 1.  

Table 9. Total cost of capital expenditure for growth and funding sources (GST exclusive)

 

Water

Wastewater

Stormwater

Transport

Total

Total capex

$105,315,910

$170,265,377

$13,321,699

$234,180,797

$523,083,783

Growth capex

$54,533,937

$24,137,281

$5,679,364

$36,734,243

$121,084,825

DC funded capex

$54,533,937

$24,137,281

$5,679,364

$18,308,278

$102,658,860

Total capex proportion funded by development contributions

52%

14%

43%

8%

20%

Capex proportion funded from other sources

48%

86%

57%

92%

80%

Total amount to be funded by development contributions

(inc interest)

$63,280,011

$26,593,149

$6,366,961

$21,788,712

$118,028,833

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 1 of this Policy. In some cases, Council has undertaken works to support forecast growth and these are also listed in schedule 1. 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 Council consider the factors listed in section 101(3) of the LGA and:

·    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 rationale for the 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.

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 map in Part 3 of this Policy. Development occurring within these catchments will be required to pay contributions applicable in that catchment.

120. 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 being funded by development contributions, and judgments involving a balance between administrative efficiency and, fairness and equity. Projects or programmes that provide capacity and benefits for more than one catchment are attributed to all relevant catchments, and growth costs are shared among those catchments. 

121. The district wide catchment is only used where it is not be practical to breakdown a project or programme to individual catchments. For example, the Seaview wastewater storage project or cross valley connector benefits all developments. To disaggregate the costs of this projects to catchment level would require different portions of growth capacity to be assigned to different catchments. Without a very detailed amount of information (that the Council does not have available), this would be an arbitrary exercise and likely result in some catchments paying less or more than is fair, or than other catchments for similar capacity and benefits provided. Using the district wide catchment is a practical way of addressing this, and ensures fairness across all catchments.

Significant assumptions of the policy

Methodology

122. 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

123. 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

124. 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. 

125. 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.   

126. 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

127. 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

128. 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  

129. 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 1) are derived from Annual Reports and will be updated at least every three years.

130. 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).

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

Key risks/effects

132. 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

133. That methods of service delivery, and levels of service, will remain substantially unchanged and in accordance with Council’s Long Term Plan and asset management plans.

Funding model

134. 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 and renewal 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 equally over the capacity life of each asset.

Cost allocation

135. 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).    

136. The approach uses easily available information but generally provides a conservative (low) estimate of the portion of a project’s cost attributable to growth compared to other possible approaches.

137. For particularly large and expensive projects, Council may undertake a specific cost apportionment assessment that differs from the general approach outlined above if better information is available. 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. 

Wainuiomata is forecast to growth by over 3,000 homes over 30 years.

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.

Wellington water have identified a need to additional water storage for existing residents and growth. Wainuiomata reservoir number 3 is planned as a result. The inflation adjusted estimated cost of the project is $59.7M (GST esclusive).

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.

Schedule 1 of the Policy outlines the amount required to fund growth from development contributions for each of these assets or programmes.

Half of the capacity of the new reservoir is for an existing level of service gap, and half is for growth over 30 years. As a result, 50% of the cost of the project is attributable to growth. 

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. 

After considering the matters in section 101 (3) of the LGA, Council has generally adopted an approach of recovering 100% of growth costs for each activity from development via development contributions. Because the Wainuiomata reservoir is a particularly expensive growth project and will significantly increase charges, the Council did consider whether to spread the growth costs of the project just within Wainuiomata or more widely, and whether it should fund some of the growth costs from rates. It has decided to retain the growth costs within the Wainuiomata catchment and retain the position that 100% of growth costs are funded by development contributions. 

4. Adjust for inflation and interest costs

The growth costs from step 4 are inflation adjusted if they are future works. Council then estimates the interest cost (or interest accrued) for each project over the period it will be paid off (called capacity life)

The inflation adjusted growth related cost of the Wainuiomata reservoir are $29.9M, and expected interest costs are $3.7M, making a total sum of $33.6M that must be funded by development contributions.

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. 

$33.6M is divided by the capacity life estimates of the reservoir (3,022) to produce charge of asset specific charge of $11,111 (GST exclusive).  

7.Sum all per asset charges

For each catchment and activity, add up the per EHU asset or programme charges to provide a total development contribution charge.

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

Wainuiomata has only one catchment specific water project being funded by development contributions. However, development in Wainuiomata is also subject to a district wide charge for water.   

GST is added to these charges.

Summary of calculations

140. Schedule 1 provides information on each asset or programme including the information and summarises the calculation of the development contribution charge for each activity/catchment.


Schedule 1 – growth related assets and Development contribution CALCULATIONS SUMMARY  

Schedule 1 outlines capital expenditure on asset or programmes attributable to new growth in accordance with section 201A of the LGA and provides a summary of the development contribution calculations. All figures exclude GST and future costs are inflation adjusted.

Water

Asset or programme name

ID

Description

Total cost $

% Funded by DCs

% Funded
from
other
sources

DC funded Cost $

(exc interest)

DC funded Cost $

(inc interest)

Already Constructed

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

Valley Floor

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Naenae reservoir

TBC

Provide 8,000m3 reservoir at current Naenae reservoir site for levels of service and growth

29,365,835

50%

50%

14,682,918

16,626,255

-

802,409

1,376,112

1,417,460

12,156,730

13,613,125

-

-

-

-

-

-

3,455

4,812

Naenae reservoir outlet main

TBC

New main from Naenae reservoir to provide additional flow and maintain head in the network for growth

8,497,734

100%

0%

8,497,734

11,418,637

-

-

241,370

580,119

7,676,245

-

-

-

-

-

-

-

5,492

2,079

 

 

Total

37,863,569

61%

39%

23,180,652

28,044,892

 

 

 

 

 

 

 

 

 

 

 

 

 

6,891

Wainuiomata

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wainuiomata reservoir number 3

TBC

Provide 8,000m3 reservoir in Wainuiomata, including main and road access, for levels of service and growth

59,762,118

50%

50%

29,881,059

33,578,621

-

-

-

-

-

-

-

-

-

979,107

1,006,241

57,776,770

3,022

11,111

 

 

Total

59,762,118

50%

50%

29,881,059

33,578,621

 

 

 

 

 

 

 

 

 

 

 

 

 

11,111

Western Hills

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sweetacres reservoir number upgrade

TBC

New reservoir for levels of service and growth

2,200,715

25%

75%

550,179

783,291

2,200,715

-

-

-

-

-

-

-

-

-

-

-

732

1,070

 

 

Total

2,200,715

25%

75%

550,179

783,291

 

 

 

 

 

 

 

 

 

 

 

 

 

1,070

District Wide

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Network renewals

TBC

Programme of network renewals including upsizing to provide capacity for growth

4,853,837

6%

94%

286,376

306,685

4,853,837

-

-

-

-

-

-

-

-

-

-

-

2,874

107

Drinking Water development projects - reactive

TBC

Provision to enable reticulation capacity for growth

635,671

100%

0%

635,671

566,523

-

55,723

57,338

59,061

60,784

62,560

64,283

66,114

67,998

69,936

71,874

-

2,874

197

 

 

Total

5,489,508

17%

83%

922,047

873,207

 

 

 

 

 

 

 

 

 

 

 

 

 

304

 

 

Wastewater

Asset or programme name

ID

Description

Total cost $

% Funded by DCs

% Funded
from
other
sources

DC funded Cost $

(exc interest)

DC funded Cost $

(inc interest)

Already Constructed

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

Valley Floor, Western Hills, Stokes Valley, & Eastbourne

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trunk DBO asset replacement and upgrade

TBC

Programme of network renewals including upsizing to provide capacity for growth

2,951,619

6%

94%

174,146

176,575

2,145,472

22,623

23,279

23,979

24,678

25,399

26,099

26,842

27,607

76,860

528,780

-

2,246

79

Trunk DBO network cyclic replacement

TBC

Programme of network renewals including upsizing to provide capacity for growth

22,664,844

6%

94%

1,337,226

1,162,253

175,661

-

-

-

-

-

-

1,480,946

1,427,958

7,304,136

12,276,144

-

2,246

517

 

 

Total

25,616,463

6%

94.1%

1,511,371

1,338,829

 

 

 

 

 

 

 

 

 

 

 

 

 

596

Wainuiomata

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wise Park pump station upgrade stage 1

TBC

Upgrade pump station capacity to provide increased forward flow capacity within capacity of existing rising main.

1,596,354

21%

79%

333,638

416,874

-

156,024

1,440,330

-

-

-

-

-

-

-

-

-

1,822

229

Wise Street North wastewater upgrade

TBC

Upgrades to Wise Street North wastewater networks to provide capacity for growth.

4,061,823

55%

45%

2,250,250

3,264,183

-

273,042

1,866,351

1,922,430

-

-

-

-

-

-

-

-

3,022

1,080

Wastewater storage Fraser Street and Main Road

TBC

Wastewater storage to minimise wet weather overflows.

8,842,110

9%

91%

813,474

713,735

-

-

-

-

850,971

3,941,300

4,049,838

-

-

-

-

-

628

1,137

Greenfield Wainuiomata pump station and rising main

TBC

New wastewater pump station and rising main to convey wastewater from northern greenfield area to Wellington Road Pump Station.

7,110,802

100%

0.0%

7,110,802

7,591,476

-

-

-

-

-

-

-

-

-

-

-

7,110,802

 

3,022

2,512

 

 

Total

21,611,089

49%

51%

10,508,164

11,986,267

 

 

 

 

 

 

 

 

 

 

 

 

 

4,958

District Wide

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sewer mains upgrade

TBC

Upgrade of sewers to improve level of service and provide for growth

426,282

6%

94%

25,151

28,022

426,282

-

-

-

-

-

-

-

-

-

-

-

2,874

10

Network renewals

TBC

Programme of network renewals including upsizing to provide capacity for growth

100,918,432

6%

94%

5,954,187

5,264,248

4,786,153

5,743,909

6,259,948

5,865,893

5,896,014

6,068,351

6,749,731

13,421,073

13,803,595

14,197,047

18,126,718

-

2,874

1,832

Seaview WWTP storage

TBC

Provision of 10,000 m3 of additional storage capacity

20,739,605

25%

75%

5,184,901

7,125,971

-

358,712

6,254,372

9,289,894

4,836,627

-

-

-

-

-

-

-

9,891

720

Wastewater development projects reactive

TBC

Provision to enable reticulation capacity for growth

953,506

100%

0%

953,506

849,813

-

83,584

86,007

88,591

91,175

93,840

96,425

99,170

101,997

104,904

107,812

-

2,874

296

 

 

Total

123,037,825

10%

90%

12,117,745

13,268,054

 

 

 

 

 

 

 

 

 

 

 

 

 

2,858

 

Stormwater

Asset or programme name

ID

Description

Total cost $

% Funded by DCs

% Funded
from
other
sources

DC funded Cost $

(exc interest)

DC funded Cost $

(inc interest)

Already Constructed

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

Valley Floor

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Victoria Street / Humes Street

TBC

TBC

2,230,037

12%

88%

274,295

393,337

-

1,099,090

1,130,947