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How might Development Contributions affect you?

By Thomas Holmes, Planner, Baseline Group | May 23, 2022

Development Contributions are a levy that territorial authorities charge for new residential and commercial development, in order to alleviate the additional demand on Council facilities and infrastructure or allow for the creation of new facilities and infrastructure.

Council provides services to ratepayers, such as a sewerage network, potable water network, reserves and roads. If there was no expansion in the region at all, then Council could collect rates to maintain these services. However, the council is required by legislation to consider the future upgrade requirements of services so that they can allow for the growth of the transport network, new footpaths, intersections, park facilities, sports grounds, drainage systems and community facilities.

Types of developments subject to contributions include new subdivisions, new house builds, student accommodation, granny flats, new retail space, new office space, commercial premises and new apartments in old buildings. The level of demand required to invest in infrastructure determines the price Council sets. For example, a shopping centre will cause more traffic movement than a single house and so transport development contributions will be levied against that kind of development. This is the same for new subdivisions, the more sections that are created, the higher the pressure on public services.

Councils may allow the developer to offset contributions with the donation of land to be vested with Council assets. These are usually in the form of esplanades, reserves, or upgrades to an existing roading network.

When an application for resource consent or building consent is made to further develop a site, Council will undertake a full assessment based on the nature of the development. On some occasions further development contributions may be required to reflect additional demand on Council infrastructure. Councils often utilise an online estimator tool or a schedule of fees, which uses assumed land value based on location to give an indicative charge on development contributions. This provides the developer with more clarity for the costs involved in their project.

It is worth noting that there are situations when contributions are not payable. These are usually when you are not increasing the sites demand on public services. For example, if a site had two houses on it, and they were being removed and replaced with two new houses, then contributions should not be required as the demand is existing.

You may be entitled to a rebate of development contributions if you are providing for social housing or undertaking development on Māori land within the Papakāinga / Kāinga Nohoanga zone.

Regional authorities such as Environment Canterbury are not able to charge a development contribution under the Local Government Act 2022, this is restricted to City and District Councils.

You have the opportunity to object to or request a re-assessment of your development contributions within 10 working days of receiving an invoice if you feel that the assessment has not been undertaken fairly or consistently with the Council policy.

So next time you are considering subdividing or developing your land, ensure that your budget accounts for development contributions to avoid any nasty surprises.

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