Part 3: Relative fee structures and financial performance
3.1
In this Part, we look at:
- selected local authorities' building consent fee structures;
- the costs of a sample of building consents; and
- the annual cost and revenue performance of Auckland Council's Building Control services for 2012/13 and 2013/14.
3.2
We looked at the cost of getting a building consent for a residential and a commercial building in Christchurch, Wellington, Hamilton, and Auckland (see Figure 6). Comparative analysis is difficult because each local authority has different building value "thresholds" and building categories. Further inspections or processing work may be required, which adds to the cost.
Figure 6
What selected local authorities say they charge for building consents
| Type of consent/charge | Project value | GST-inclusive cost | Comments |
|---|---|---|---|
| Auckland Council | |||
| All building work | $100,000-$500,000 | $3,752 | |
| All building work | $500,000 and over | $5,734 | |
| Code of compliance | $100,000-$500,000 | $455 | |
| Technical officers' hourly charge-out rates | $135-$177 | ||
| Pre-application meeting fee | $265 | ||
| Christchurch City Council | |||
| Residential building | $100,000- $300,000 | $3,310 | Assumes eight inspections |
| Commercial building | $500,000- $1 million |
$9,140 | Assumes 15 inspections |
| Code of compliance (residential) | $340 | ||
| Technical officers' hourly charge-out rates | $165-$280 | ||
| Pre-application meeting fee | Varies | First 30 minutes free | |
| Hamilton City Council | |||
| Residential – single storey | Not relevant | $4,510 | |
| Commercial building – up to two storeys | Less than $1 million |
$7,685 | |
| Code of compliance – urgent | $190 | ||
| Technical officers' hourly charge-out rate (commercial) | $220 | ||
| Pre-application meeting fee | Not stated | ||
| Wellington City Council | |||
| Residential building | $100,000-$500,000 | $2,324 | Assumes eight inspections |
| Commercial building | $500,000- $1 million |
$3,595-$4,705 | Assumes 13 inspections |
| Code of compliance (residential) | $100 | ||
| Pre-application meeting fee | $159 | If no more than two hours | |
Note: This information is from local authorities' websites and from Auckland Council. The fees are applicable from 1 July 2014 and include GST.
3.3
To get a picture of the actual costs of getting a building consent in Auckland, Auckland Council supplied data from which the information in Figure 7 was extracted.
Figure 7
Auckland Council's average actual charges for building consents, July-December 2013
| Consent type | Project value | Average GST-inclusive cost | Comments |
|---|---|---|---|
| New residential | $300,000-$399,000 | $6,251 | Based on a sample of 551 consents |
| Residential alterations and renovations | $20,000-$100,000 | $3,318 | Based on a sample of 1102 consents |
| New commercial | $400,000-$500,000 | $9,055 | Based on a sample of 12 consents |
| New commercial | More than $500,000 | $19,553 | Based on a sample of 109 consents |
3.4
Building Control revenue in 2013/14 was significantly more than 2012/13 actual revenue and 2013/14 budgeted revenue because of an increase in the number of consent applications (see Figure 8).
Figure 8
Financial performance of Auckland Council's Building Control department, 2012/13 and 2013/14
| 2012/13 actual $000 | 2013/14 actual $000 | 2013/14 budget $000 | |
|---|---|---|---|
| Revenue | 59,028 | 65,625 | 59,929 |
| Personnel costs | (34,360) | (36,732) | (34,384) |
| Professional services | (7,845) | (8,834) | (5,791) |
| Other direct costs | (2,256) | (2,544) | (2,008) |
| Surplus* | 14,567 | 17,515 | 17,746 |
* Before indirect costs and overhead allocations. The revenue figures include approximately $9.8 million of Land Information Memorandum and other property information product revenue.
3.5
The increase in 2014 operating expenditure over budgeted expenditure is because of:
- additional costs in meeting accreditation requirements on qualifications; and
- additional processing and inspection roles created to respond to the projected significant increase in building consent and inspection activity triggered by the Special Housing Areas.
3.6
The overall result for 2014 was marginally below budget.
3.7
In Auckland Council's Annual Report 2013/14, the total of indirect charges and overhead allocation for all regulatory activity (building consents, resource consents, and licensing and compliance) was $55 million, which is 28% of total costs.
Our observations about consent fee structure
3.8
It is difficult to compare local authorities' building consent costs, because they use different project value thresholds and describe project types differently. They do not show the additional processing and inspection time that might be required. This additional time is charged at hourly rates. However, these figures provide an opportunity for Auckland Council to discuss differences and opportunities with other local authorities. The range raises questions, particularly about charges for code compliance certificates.
3.9
In May 2014, MBIE published the results of a survey of building consent authorities, carried out in 2013. The survey revealed the average total cost to a customer of getting a building consent and code compliance certificate (see Figure 9).
Figure 9
Average total cost to a customer of a building consent and code compliance certificate, 2013
| Type | Average total cost |
|---|---|
| Residential simple | $1,680 |
| Residential complex | $2,870 |
| Commercial simple | $2,380 |
| Commercial complex | $4,967 |
Note: Based on responses from 48 building consent authorities.
3.10
It is difficult to meaningfully compare the costs that Auckland Council charges, because the MBIE survey categorises consent applications differently to Auckland Council.
3.11
However, as Figure 7 shows, it is apparent that the actual building consent costs in Auckland are considerably higher than the initial deposit costs listed in their schedule of charges as shown in Figure 6. This suggests that additional processing time and/or inspections are required. This needs further consideration and monitoring as the time required to process an application is greater when the application is seen as incomplete or of lower quality.