Challenging Development Contribution Fees
The Local Government Act 2002 Amendment Act 2014 came into force on 7 August 2014 and implements the Government's second phase of legislative reform of the operation of local government. The Act contains some significant changes in relation to development contributions, how these are levied, and what you can do to dispute them.
Overpriced development contributions have hit the papers a few times recently. A lot of developers have argued that it is uneconomical to free up land in Christchurch because of the fees payable to the council.
The purpose of these fees is to enable recovery of a fair and proportionate amount of the total costs of expenditure necessary to service long term growth.
Changes to the Act now include principles that specify on what basis the council can levy the fees, namely:
a) Development contributions should only be charged if the effects or cumulative effects of developments will create a requirement for the territorial authority to provide new or additional assets or assets of increased capacity;
b) Development contributions should be determined in a manner that is generally consistent with the capacity life of the assets for which they are intended to be used and in a way that avoids over-recovery of costs allocated to development contribution funding.
The change also reflects the fact that some developments will never require particular infrastructure. For example, development contributions cannot be charged for reserves where a particular development does not involve the creation of additional housing or accommodation.
It is now also possible for the council and a developer to come up with a development agreement between themselves regarding payment towards infrastructure.
If a developer disagrees with the amount of development contributions, the provisions of the act now allow a developer to request that the council reconsiders the development contribution. A reconsideration may be on the grounds that the contribution has been assessed incorrectly, the development contribution policy has been incorrectly applied, or the information used in the assessment was incomplete or erroneous.
A development contributions objection process has been introduced with objections heard and decisions made by an independent development contributions commissioner appointed by the Minister.
If you would like further information on how to dispute development contributions, or the development contributions policy, please contact our Commercial Property team on 03 352 2293.