What are development contributions and how might they affect you?

What are development contributions, and how might they affect you?

Development Contributions (DCs) are charges imposed by city and district councils on new residential and commercial developments. Their purpose is to help fund the expansion and improvement of public infrastructure needed to support population growth and urban development.

Councils provide essential services such as sewerage systems, potable water, reserves, roads, and stormwater networks. If a region experienced no growth, rates alone would cover the ongoing maintenance of these services. However, councils are legally required to plan for future infrastructure upgrades — including new footpaths, intersections, park facilities, sports grounds, drainage systems, and community amenities. Development Contributions ensure the costs of growth are fairly shared.

What types of developments are affected?

Most new developments are subject to DCs, including:

• Subdivision
• New house builds
• Granny flats or student accommodation
• New office, retail, or commercial premises

Charges are calculated based on the development’s impact. For example, a shopping centre creates more traffic than a single home and therefore attracts higher transport-related contributions. Similarly, larger subdivisions increase the demand on council services and infrastructure, which is reflected in the fees charged.

Developers may be offset DCs by dedicating land or infrastructure to the council, such as esplanade reserves or parkland, roading upgrades, public infrastructure built to council standards. These offsets are evaluated on a case-by-case basis and can reduce overall development costs.

When are contributions assessed?

DCs are assessed when a developer applies for resource consent, building consent, or service connections. Councils evaluate the size, type, and impact of the proposed development. Many councils provide online estimator tools or fee schedules to give developers an indicative cost early in the planning process, helping with budgeting and feasibility assessments.

DC policies can change — and sometimes dramatically. Staying informed and working closely with your local council or a planning consultant can help you time your project to avoid unexpected cost increases.

Case Study: Christchurch City Council’s 2025 Policy Update

Christchurch City Council (CCC) recently proposed a significant overhaul of its Development Contributions Policy, which offers a practical example of how DCs can affect development.

Key proposed changes include:

• Higher contribution rates: In many areas of the city, proposed DCs will increase substantially. Some areas may see rises of over 200%, significantly increasing the upfront cost for developers.
• Revised Household Unit Equivalents (HUEs): One-bedroom homes will now be charged at 0.6 HUEs, acknowledging their lower infrastructure demand. However, two- and three-bedroom homes under 100m² may lose their current discounted rate — increasing costs for smaller, more affordable builds.
• Catchment changes: Adjustments to catchment areas could shift which developments are responsible for funding which specific infrastructure projects, affecting the location-based cost of development.

This policy illustrates how development contributions aren’t static — they change as councils respond to growth pressures and funding needs. For developers, these changes can make or break a project’s feasibility. In an ever-changing environment, those who act early, stay flexible, and plan efficiently are best positioned for success.

Let Baseline Group help you stay ahead of the curve.