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Hauraki Gulf Islands review
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Issues and options papers
Financial Contributions
Issue
The Resource Management Act 1991 (RMA) allows the Council to collect financial
contributions in a number of ways for a wide variety of purposes. Financial
contributions can be made not only in cash but also in land, works and services.
A resource consent for any subdivision or land use consent may include a
condition that a financial contribution be made, up to the value of a maximum
amount specified in, or determined in accordance with, the District Plan.
Financial contributions are provided for in Part 9 of the existing Hauraki Gulf
Islands (HGI) Plan. The ability to apply financial contributions is provided for
in Section 108 of the RMA. Section 111 of the RMA requires the consent authority
that has received a cash contribution to deal with that money in accordance with
the reason for which the money was received.
In the HGI Plan, financial contributions are taken for two reasons:
- To provide a fair and efficient way of collecting resources to meet the
demand for public infrastructure that is generated by private development.
This typically includes roading, sanitary and storm water drainage, public
open space (reserves) and car parks. The concept can be extended to other
community facilities such as libraries, swimming pools and community
centres. By requiring financial contributions, new developments help provide
for the increased demand they place on the infrastructure instead of all
residents paying through rates.
- To provide another means of ensuring that development proceeds in an
orderly and efficient way without detrimentally affecting the natural and
physical environment or the community. Contributions combine with market
mechanisms to influence development patterns by ensuring that the true
(public and private) costs of development are faced. This can lead to better
use of resources. Communities can also use voluntary contributions, such as
special rating areas, to fund specific developments or environmental
improvements in their neighbourhoods.
The Local Government Act 2002 allows for a different regime called
development contributions. This regime provides an alternative means of
recovering growth costs from those who create new development. Development
contributions are paid by people and organisations who apply for service
connections, building consents, and resource consents (subdivision and land use
consents).
Development contributions are entirely separate from financial contributions
(which are managed under the Resource Management Act 1991). A single development
may therefore be charged a mixture of development contributions and financial
contributions for different purposes, for example storm water or open space.
They will not be charged under both policies for the same purpose. For example,
if we assume that financial contributions policies are already in place for open
space and for storm water, then, where a decision is made to introduce
development contributions policies for these, the development contributions will
be applied instead of (not as well as) the existing financial contributions
policies.
Auckland City will shortly consult on its development contributions policy
which may be in place for 1 July 2005 for the isthmus. There is no immediate
plan to implement a development contributions strategy for the Hauraki Gulf
islands, so financial contributions, through the district plan process, are
likely to be the principal means for recovering the costs of development in the
coming years.
Financial contributions cannot be levied under any revised section of the
District Plan until that particular section of the Plan is operative. Therefore
the existing financial contributions section of the District Plan will be used
to mitigate the impact of development until the new financial contributions
section is operative.
The financial contributions section of the current District Plan needs to be
reviewed in light of case law decisions, best practice and amendments to the
Resource Management Act. In determining how various costs will be met, the
Council has to give regard to what is a fair sharing of costs between existing
residents and new residents. This matter is not easy to resolve, for just as new
residents and businesses place additional demands on local services and
environments, they also contribute to a growing rating base that will fund
service expansion and environmental protection. Bearing in mind the contribution
that new residents and businesses will make as ratepayers, the Council has to
consider the share of the costs of growth from them in the form of financial
contributions.
Possible approaches
You may have a better or alternative approach to those outlined below. If so,
we would like to hear from you.
- Retain the status quo.
- Review the existing financial contributions section in light of case law
decisions, best practice and amendments to the Resource Management Act.
Consider the sharing of the costs of growth through financial contributions.
- In conjunction with the review of the financial contributions section of
the Hauraki Gulf District Plan, develop a development contributions policy,
in accordance with the Local Government Act 2002. Both contributions
policies could work together to ensure that the appropriate mechanism is
used to levy a contribution.
Note:
While this issue paper can be read in isolation, it is best read in
association with the issue papers relating to:
