Part 7: Arrangement about development contributions (October 2010)

Inquiry into aspects of Auckland Council’s Westgate/Massey North town centre project.

In this Part, we describe an agreement under which the Council agreed to remit or postpone the payment of certain development contributions by NZRPG.

Development contributions are a means of recovering costs from landowners where infrastructure services are provided at the Council's cost. Development contributions can comprise money or land, or a combination of the two.

Under the Local Government Act 2002, councils are required to put in place a development contributions policy if they intend to collect development contributions. The development contributions policy must meet specific requirements set out in the Local Government Act 2002. These include, for example, a requirement to explain and justify the way each development contribution is calculated.

Under Waitakere City Council's development contributions policy, the Council was able to postpone, remit, or refund development contributions to developers subject to specific criteria set out in the policy. For example, the Council could remit development contributions if the developer intended to provide community facilities or other works within the development that would otherwise have to be funded through development contributions.

On 27 October 2010, NZRPG wrote to the Council's Chief Executive applying for relief from the requirement to pay development contributions for development carried out in Precincts A and B of the Plan Change 15 area.

The application referred to three specific sections of Waitakere City Council's development contributions policy:

  • Section 27(a) gave the Council a discretion to postpone the obligation to pay development contributions, where certain criteria were met – for example, where there was a demonstrated benefit to the community for the early commencement and completion of the development.
  • Under section 27(c), the Council could remit development contributions under the "Tool for Urban Sustainability Code of Practice (TUSC)". This was a rating system devised by Waitakere City Council in conjunction with its Sustainable Management Fund. It measured the extent to which a new building or other development, whether "greenfields" or "infill", minimised demand on infrastructure.
  • Section 29 allowed the Council to remit development contributions in relation to an Infrastructure Development Agreement.

NZRPG applied for a postponement and remission of development contributions on the following basis:

Postponement under section 27(a) on the grounds that:

The benefit to the community from the commencement, and delivery of a sub-regional town centre which meets the strategic, social, and sustainability aspirations of the Council.

The integration of community, social infrastructure, and public realm within the proposed development.

The assessed development contribution to be postponed is not less than $100,000.

Repayment of the postponed development contribution will be secured by a performance bond to the satisfaction of Council.

Payment of the proposed DC will be made no later than 24 months after the date upon which it would have otherwise been payable.

The postponement of these payments will serve to encourage the delivery of the Town Centre, and is an acknowledgement of the scale, strategic important, and mutually beneficial outcomes that characterise the project. Remission under section 27(c) on the grounds that: The delivery of Precinct A and B Westgate Town Centre as provided for by the Comprehensive Development Plan is aligned in terms of desired sustainability outcomes with the principles and objectives of TUSC policy.

The TUSC rating improvement of 40% is an objective and aspiration adopted by [NZRPG] in the proposed delivery of the Town Centre as reflected in Part 3 of [NZRPG's] Comprehensive Development Plan conditions. Accordingly this application serves to advise that [NZRPG] will be seeking a remission to the equivalent of $2,000 per HHU/HEU upon achieving a 40% TUSC rating or any lower remission commensurate with a lower TUSC rating improvement as the Policy prescribes. [NZRPG] will make application for remission in accordance with Policy 27(c)(i-v) of the Plan.

Remission under section 29 on the grounds that:

The terms of the IFA provide for [NZRPG] to deliver a range of infrastructural assets and areas of land which will vest in the Council. These assets will be constructed in accordance with the terms of the Comprehensive Development Plan approved for Precinct A and B of Westgate Town Centre.

In order to equitably reflect Council's contribution (agreed at 35%) to the external fees and charges incurred by [NZRPG] to obtain the Comprehensive Development Plan and commensurate Resource Consents required to deliver the public infrastructure, [NZRPG] applies for a remission of development contributions payable of $2,520,842 plus any GST.

The sum of this remission is applied against the first development contributions greater than or equal to $2,520,842 assessed for the combined development for which building consent is obtained in both Precincts A and B.

NZRPG also sought to place a maximum limit on the development contributions assessable against the development of land within Precincts A and B of Westgate Town Centre. It said:

The purpose of this limit is to provide certainty to the developer that contributions payable may not exceed those currently budgeted for and advised by Council. Accordingly this application seeks that development contributions be set at a capped maximum in accordance with the schedule attached to this application. Development contributions assessed from time to time shall be the lesser of revised development contributions assessed in accordance with the most recent published schedule or those contributions provided for in the schedule attached.

Agreement between Waitakere City Council and NZRPG was recorded in the letter from NZRPG dated 27 October 2010 and a letter from the Chief Executive to NZRPG dated 28 October 2010. The Chief Executive's letter recorded that the agreement was as set out in NZRPG's letter of 27 October 2010.

The letter states that:

  • the terms and conditions were as set out in NZRPG's letter; and
  • a note would be placed on the Land Information Memorandum, the Resource Consent file, and the Comprehensive Development Plan files to give effect to this agreement.

In summary, the effect of the agreement was that:

  • NZRPG could offset some of its development contributions (about $2.5 million);
  • NZRPG did not have to pay some of the contributions until some future time (when construction consents were given);
  • there was a maximum cap on the amount of contributions NZRPG would be required to pay; and
  • some development contributions were remitted, so were not payable at all.

We have found no record of the development contributions agreement being forwarded to the Auckland Transition Agency for approval.

We discuss the development contributions agreement further in Part 8.