DEVELOPMENT CONTRIBUTIONS POLICY

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DEVELOPMENT CONTRIBUTIONS POLICY

• Public Meeting
• 11 April 2007

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What are Development Contributions?

• contributions of money or land to fund the costs
  of
• reserves,
• network infrastructure (water supply and
  conservation, wastewater collection treatment and
  disposal, surface water management and transport)
  and
• community infrastructure (leisure facilities).
• when a new development (that will increase the
• demand for services) is undertaken.

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What will development contributions be used for?

• to pay for new infrastructure or for increasing
  the capacity of existing infrastructure required
  as a result of growth.
• Not to be used to pay for renewing existing
  infrastructure or catch up a backlog of upgrading
  to reach agreed Levels of Service, other than
  capacity increase to cater for extra demand as a
  result of growth.

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Why does the Council have development
contributions?

• It is in response to the steady growth of
  Christchurch.
• With growth will come an increased demand for
  reserves, network infrastructure (e.g. water
  supply) and community infrastructure (e.g.
  facilities).
• In the past, dividends from Council investments
  together with rates, have mostly paid for the
  additional infrastructure.  

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Why does the Council have development
contributions? cont.

• There have been some financial contributions from
  developers (eg reserve contributions) but until
  2002 LGA Act, ability to collect was limited.
• Development contributions enable the Council to
  obtain a larger share of the cost of growth
  related new infrastructure from developers, i.e.
  those who are creating the growth.

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Why does the Council have development
contributions? cont.

• (NOTE Developers are any applicant for a
  resource consent, building consent or service
  connection where a development contribution is
  payable.)
• The Councils proposed 10 year capital works
  programme has been costed at 1.4 billion.
• Of this 324.7M is attributable to growth, with
  273M estimated to be recoverable from DCs.
• This amounts to 19.5 of that total capex being
  met from DCs.

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When were they first introduced?

• First introduced to both CCC and the then BPDC
  on 1 July 2004 (ie as part of the 2004-14
  LTCCPs).
• They apply to any application for resource
  consent, building consent or a service connection
  lodged and granted on or after 1 July 2004.
• The 2006-16 LTCCP incorporated a revised and
  expanded Development Contribution Policy
• (Christchurch City area) and the existing Policy
  (Banks Peninsula area).

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Background to Current Review

• Draft 2006-16 DCP used new methodology, added new
  areas of charging, resulting in a significant
  increase from the 2004 charges.
• Development community expressed concerns through
  submission process about quantum and timing of
  changes
• Council decision, June 06
• - 12 month freeze (04 charges retained)
• - Further review, with Working Party
• - Banks Peninsula DCP to be integrated via
  SCP in 2007

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The DCPR Working Party

• 9 development industry reps.
• 4 Councillors, inc the Mayor
• Independent Chair - David Caygill
• Terms of Reference
• To review the basis, structure and application
  of the 2006-16 Development Contributions Policy
  as adopted by the Council on 30 June 2006, and,
  if appropriate, to recommend a revised policy for
  the Council to consider as part of an amended
  LTCCP in 2007.

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Working Party reported back to the Council in
February 2007

• Most of its recommendations were agreed to and
  have been incorporated in the reviewed Policy,
  including
• Some technical/wording improvements
• On-going liaison with development community
• Independent review of level of costs allocated to
  growth
• Changes to ensure better causal link between
  charges and growth
• Small unit weighting for multiple res. Units
• Move from based to HUE cost based approach for
  reserves single catchment as an interim measure
• Credits for undeveloped residential lots
  quantum confirmed
• Charging for past projects confirmed
• Banks Peninsula charging regime confirmed
  mostly a single, city-wide catchment
• Improvement of alignment of DCPs of adjoining
  councils via UDS.

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• Decision made on setting contribution charges,
  taking into account likely impact on the market
  of significant increases, in early years of
  implementation
• Developers to pay full costs of growth
• Charges to be transitioned in over 3 years
• No transition for reserves contributions

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Financial Basis of the DC Policy
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Topics covered in this section

• Basis of the charge
• What is the growth in the community
• What is a Household Unit Equivalent
• What is the Capital expenditure response to that
  growth
• The DC charges
• When do we charge
• What credits are applied
• Assessments
• Examples

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Basis of the charge Growth in the Community

• Residential 12,500 new households over the next
  ten years
• Non residential
• New lots 542 based on average size
• New GFA 600,000 m2 (gross floor area)
• New ISA 900,000 m2 (impervious surface area)

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Basis of the charge Units of demand - HUEs

• Council response to growth is to supply more
  assets
• To maintain levels of service within the expanded
  city
• Services are organised into activities water,
  transport etc
• Unit of demand per activity for growth in the
  asset base is expressed as an Household Unit
  Equivalent or HUE

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Basis of the charge HUEs

• This is how are all land uses are converted to a
  common charge basis
• HUE Basic unit of charge one per household
  unit
• Straightforward for residential developments
  one per household
• Non residential developments require an
  equivalence, uses
• gross floor area (GFA) for buildings developed or
  
• impervious surface area (ISA)

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Basis of the charge Application of HUEs

• Residential -
• one per household unit
• Subject to a Small unit adjustment
• where less than 100 m2 down to 60 m2 building
  Floor area
• Eg 80 m2 has 80 HUE
• Non residential see equivalence tables
• DCs for all land uses
• Reserves one HUE charge per lot
• Surface water management 3.75 HUE /1000 m2 of
  ISA for all non residential land uses
• DC depends on land use - per 1000 m2 of gfa
• Water supply - 3 to 5 HUE
• Waste water collection and treatment 3.6 to 5.7
  HUE
• Transport 1 to 3.5 HUE

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Basis of the charge Capital expenditure

• Capital expenditure based on the service
  activities
• Planned capital expenditure necessary to maintain
  levels of service when the growth occurs, within
• Water supply
• Waste water
• Transport
• Surface water management
• Reserves
• Community infrastructure
• The demand for the expanded capital expenditure
  converted into a cost per HUE (a unit of demand)
  for each activity

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Water Supply and Conservation

• Drivers
• Replacement of assets that have reached the end
  of their useful life
• Reliability of supply
• Drinking Water Standards
• NRRP
• Provide for future development

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Water Supply and Conservation

• Catchment (serviced land only)
• a single catchment for the Greater Christchurch
  area as network is largely interconnected.
• Ten year total capital programme
  112.3
  million
• Growth Component
  Total capital costs attributed to growth
• 26.9 million (23.9 of the total capital
  programme)
• Estimated funds from development
  contributions 22.9 million
  (20.4 of the total capital programme)

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Water Supply and Conservation
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Water Supply and Conservation

• Full DC HUE Charge - 2009/2010
• 2,292.49 (charge excludes gst)
• (i.e. the charge that would apply to a new
  residential unit or approximately a 300 m2 gross
  floor area non residential unit)

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Water Supply and Conservation

• Key Projects supporting development
• New Wells and Pumping Stations
• New water mains
• Additional Reservoir Storage

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Wastewater

• Drivers
• Replacement/ renewal of assets
• Major Sewer Upgrades
• To meet growth Levels of Service.
• To meet Resource Consent conditions
• Pumping Station Upgrades
• Ocean Outfall
• Treatment Plant Upgrades

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Wastewater

• Catchment (serviced land only)
• a single catchment for the Greater Christchurch
  area
• Total capital programme
  340.7 million
• Growth Component
• Total capital costs attributed to growth
• 81.2 million (23.8 of the total capital
  programme)
• Estimated funds from development
  contributions
• 79.0 million (23.2 of the total
  capital programme)

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Wastewater
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Wastewater

• Full DC HUE Charge 2009/10
• 6,841.47 (charge excludes gst)
• (i.e. the charges that would apply to a new
  residential unit or approximately a 300 m2 gross
  floor area non residential unit)

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Wastewater

• Key Projects supporting development
• New sewer pipes
• New or upgrades to pumping stations
• Major Trunk sewer extensions
• Storage
• Improvements and upgrades to waste water
  treatment plants
• Construction of Ocean Outfall

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Transport

• Drivers
• Provide travel facilities for people living ,
  working and visiting the City.
• Street corridors also provide access for utility
  services.
• Integrating land use planning with planning of
  transport (and other) infrastructure
• Ensuring the citys transport infrastructure
  meets current and future needs

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Transport

• Catchment
  
• a single catchment for the Greater Christchurch
  area as network is interconnected.
• Total capital programme
  649.9 million
• Growth Component
• Total capital costs attributed to growth
• 28.3 million (4.3 of the total
  capital programme)
• Estimated funds from development
  contributions 24.0 million
  
  (3.7 of the total
  capital programme)

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Transport
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Transport

• Full DC HUE Charge 2009/10
• 1,697.11 (charge excludes gst)
• (i.e. the charge that would apply to a new
  residential unit or approximately a 160 m2 gross
  floor area non residential unit)

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Transport

• Key Projects supporting development
• Road widening schemes e.g. Ferry Road, Hills
  Road, four laning
• Expansion of Bus Exchange
• Intersection improvements

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Surface Water Management

• Drivers
• Meet levels of service
• Protect surface water, groundwater and springs
  resource.
• Preserve natural features including watercourses
  and wetlands.
• Meet the demands of infill and greater density in
  inner suburbs.

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Surface Water Management

• Catchment
  Ten catchments based on natural drainage
  areas- Avon, Halswell, Estuary, Heathcote,
  Otukaikino, Styx, Akaroa, Lyttleton, Northern
  Bays and Southern Bays.
• Total capital programme
  82.0 million
• Growth Component
• Total capital costs attributed to growth
• 21.4 million (26.1 of the total capital
  programme)
• Estimated funds from development
  contributions 15.0 million
  (18.3 of the total capital programme)

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Surface Water Management

• Full DC HUE Charges 2009/10
• - is dependent on catchment
• Avon - 1,721.12
  (charges exclude gst)
• Halswell - 2,132.45
• Estuary - 2,153.38
• Heathcote - 2,721.12
• Otukaikino - 419.20
• Styx - 506.30
• Peninsula - Nil (no capital
  projects at present)
• (i.e. the charge that would apply to a new
  residential unit or to an approximately 270 m2
  impervious surface area non residential unit)

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Surface Water Management

• Key Projects supporting development
• Land purchases to accommodate retention basins
• Land purchases to increase capacity of water ways
• Improvements to existing pipe networks to
  increase capacity

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Reserves

• Drivers
• Level of Service criteria used,
• 13 ha / 1000 population for Regional Parks and
  Reserves
• 4.7 ha / 1000 population for local parks
• (approx 120 m2 per lot)
• Therefore increased population through new
  development the key driver.
• Maintaining Garden City Image

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Reserves

• Catchment
• A single catchment for the Greater Christchurch
  area.
• Total capital programme
  170.0 million
• Growth Component
• Total capital costs attributed to growth
• 160.6 million (94.4 of the total capital
  programme)
• Estimated funds from development
  contributions 137.1 million
  (80.6 of the total capital programme)

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Reserves

• Full DC HUE Charge 2009/10
• 12,272.00 (charge excludes gst)
• (i.e. the charge that would apply to a new
  residential unit or non residential unit)
• Charged when
• At any subdivision creating new lots
• On construction of second additional dwelling
  on any lot
• Subject to the maximum
• 7.5 of the value of additional lots
• 20 m2 of land value
• No transitional discount for Reserves

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Reserves

• Key Projects supporting development
• Land purchases for new reserves to meet level of
  service target
• Land purchases for new local parks to meet level
  of service
• Provision of infrastructure and planting on new
  reserves and local parks

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Leisure Facilities

• Drivers
• Provide a range of community facilities that
  support the growth and development of the City

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Leisure Facilities

• Catchment
  Six catchments - East, North, West,
  South,
• Lyttleton / Mt Herbert and Akaroa / Wairewa.
• Total capital programme
  45.9 million
• Growth Component
• Total capital costs attributed to growth
• 6.3 million (13.7 of the total capital
  programme)
• Estimated funds from development
  contributions 5.0 million
  (10.9 of the total capital programme)

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Leisure Facilities

• Full DC HUE Charges 2009/10
• (i.e. the charge that would apply to a new
  residential unit - there is no non residential
  charge)
• East - 672.67 (charges exclude gst)
• North - 1,079.59
• West - 1,743.34
• South - 464.2
• Lyt./Mt H - nil (no capital projects at
  present)
• Ak./Wai. - nil

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Leisure Facilities

• Key Projects supporting development
• Jellie Park redevelopment and expansion.
• New multi use facility in the North of the city.
• Redevelopment and upgrades to existing leisure
  facilities around the City.

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Capex DC charges
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The DC charges - charged to developments

• Development generates additional demand for
  services
• In this context developments are
• Subdivisions creating new lots
• Construction of new households, or
• Construction of other GFA and ISA on lots
• Charge for each activity per HUE assessed for
  each development

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The DC charges - on Subdivision

• Each lot on subdivision will incur one HUE charge
  for each activity.
• For all the activities where the services are
  available
• Less credit against the charge,
• being the greater of
• Credit of one HUE charge for each existing lot
• Credit of GFA/ISA/HUE equivalents for existing
  developments
• Demolition / destruction of previous developments
• The HUE credits from the development demolished,
  subject to
• Replacement development within ten years,
• Non residential only - un-developed pre-existing
  lots
• Credit of the average HUE for zone based on lot
  area where
• the lot was created before 1 July 2004, and
• Is undeveloped at the time of subdivision

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The DC charges At Building Consent

• Residential -
• All additional residential units incur HUE
  charges, subject to
• a small residential unit adjustment (not for
  Reserves DC charge).
• Demolition credits use it or loose it after ten
  years.
• Non residential
• Charge based on HUE calculated for the
  development
• Less credits - the greater of
• one HUE charge if the lot was inside the serviced
  area, or
• average for zone based on lot area where
• the lot was created before 1 July 2004, and
• Is still undeveloped at the time of subdivision,
  or
• Demolition / destruction of previous developments
• The HUE credits from the development demolished,
  subject to the replacement commenced within ten
  years

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The DC charge discounts

• Current 06/07 charge is 15 of full charge
• The proposed full DC charge has been reduced for
  2007/08 by 57
• The discount is reduced 2008/9 to 28, and
• the discount is removed in 2009
• Reserves DCs are not discounted
• The full reserves fee has been charged in the
  past
• The basis of charge has changed.
• Subject to the reserves maximum

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The DC charges

• No other remissions are provided

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Assessments
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Conclusion
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• North Shore Decision
• Consultation process and times
• Question time

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• North Shore City Council DCP High Court Decision
  has now been released.
• This was about the legality of parts of the Noth
  Shore DCP.
• Councils around NZ, including CCC, are currently
  studying the implications of the decision.
• Decision may be appealed , so law is still not
  clear!
• Some elements of our DCP will need to be adjusted
• DCP will be amended as needed prior to final
  approval in June.

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Consultation Process

• Public consultation on DCP (and Annual Plan and
  some other LTCCP issues) from 11 April 11 May
• Hearings from 28 May-5 June
• Council decisions by 30 June
• New DCP to take effect from July 1

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Public Meetings

• Date Wednesday 11 April
• Topic Development Contributions
• Venue Our City, Cnr Oxford Terrace and Worcester
  Street, Christchurch
• Time 5.30 7.30 pm
• Date Monday 16 April
• Topic Annual Plan amendments to the Long-Term
  Council Community Plan (including the Development
  Contributions Policy)
• Venue Council Chambers, 163-173 Tuam Street,
  Christchurch
• Time 7 9pm

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• Date Wednesday 18 April
• Topic Annual Plan amendments to the Long-Term
  Council Community Plan (including the Development
  Contributions Policy)
• Venue Diamond Harbour Community Centre, Waipapa
  Avenue, Diamond Harbour
• Time 7 9pm
• Date Tuesday 24 April
• Topic Annual Plan amendments to the Long-Term
  Council Community Plan (including the Development
  Contributions Policy)
• Venue Akaroa Sports Complex, Recreation Ground,
  Akaroa
• Time 1 3pm
• Date Thursday 3 May
• Topic Development Contributions
• Venue Council Chambers, 163 -173 Tuam Street,
  Christchurch
• Time 5.30 - 7.30 pm

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Question time!

• Note should there be any contradiction between
  the statements in the seminar slides and the
  draft policy text, the specific text of the
  policy will apply

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CCC Contacts

• Simon Louttit, Development Contributions Mgr,
  Regulation Democracy Services, ph 941 6221
• Geoff Barnes, Funds and Financial Policy Mgr,
  Corporate Services, ph 941 8447
• Terry Howes, Asset Network Planning Mgr, City
  Environment, ph 941 8160
• Dave Hinman, Principal Adviser, Strategy and
  Planning, ph 941 8804

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The End