REPORT TO: Commissioner
Hearing
MEETING DATE: Tuesday 28
November 2017
FROM: Financial Policy Advisor
Ashley
Humphrey
SUBJECT: Irongate
Road East, Hastings Lot 2 DP 3067 (CFR) H4/1146)
1.0 INTRODUCTION
1.1 An objection to a Development
Contributions Assessment has been lodged with the Hastings District Council
(HDC or Council) by Jara Family Trust (Jara or the objector). The objection
relates to the development contributions assessment issued on 9 August 2017 in
relation to subdivision consent RMA20170079.
1.2 This report outlines the basis for the
assessment generated and addresses the points raised by the objector in its objection
and in the statement of evidence from John Alan Roil dated 7 November 2017. It
concludes with the view that:
A) the assessment issued has been generated in
accordance with HDC’s 2016/17 Development Contributions Policy (DCP), and
B) HDC rejects those points raised in the objection and
believes the contribution should be paid in accordance with the Local
Government Act 2002 (LGA 2002).
2.0 BACKGROUND
The Land
2.1 Jara Family Trust is the registered
owner of Irongate Road East, Hastings (Lot 2 DP 3067 / CFR H4/1146). The site
consists of 4.98ha of land and prior to development, was predominately used for
horticulture / farming purposes.
The
Development Contributions Policy and the Irongate Industrial Catchment
2.2 HDC first introduced its DCP in July
2007 in accordance with the relevant provisions of the LGA 2002. In
accordance with that Act, the purpose of the DCP is to recover from those
undertaking developments, a fair, equitable and proportionate share of the
costs of capital expenditure necessary to service growth. In general, the
policy was established using a mainly district wide approach, to set and
recover development contributions.
2.3 Following consultation, Council adopted
an amended DCP in 2010, which included the creation of specific local
catchments for the proposed industrial areas at Irongate and at Omahu. This has
enabled and will enable Council to recover the capital costs associated with
growth development in the Irongate Industrial Area, from those landowners /
developers benefitting from, and creating the need for, the infrastructure
assets required to accommodate that growth.
2.4 The capital expenditure costs being
recovered through the Irongate Industrial Area relate primarily to the physical
works proposed within the catchment area. A decision to exclude a share of the
wider network growth-related costs was made by Council at the outset in order
to allow for a lower DC rate for Irongate.
2.5 In May 2011, Irongate was formally
rezoned for industrial purposes under Plan Change 50. The objector’s land
forms part of the 71.5ha of land that was rezoned.
2.6 To minimise the exposure to Council, the
development was proposed over two stages, 35.3ha Stage 1 and 36.2ha Stage 2.
Each stage was anticipated to provide 10 years growth. Council’s DCP in
place at that time was to recover contributions on a Gross Floor Area basis
with a contribution of approximately $273,000 (excl. GST) per ha based on a
2500m2 GFA building.
2.7 Concerns were raised by land owners
around servicing options and the quantum of development contributions, and in
2015, Council commissioned a review of the services through BECA and PwC. The
BECA report concluded that the level of service for the provision of
reticulated infrastructure to service Irongate was appropriate and that the
costs associated with providing the services was also appropriate.
2.8 With land owners concerns still evident,
in March 2016, Council formally resolved to proceed with Variation 2 that would
a) remove the need to connect to a Council reticulated scheme for Stormwater,
b) remove staging and deferment and c) increase the area by an additional
46.9ha. A map showing the current area and proposed additional area is attached
under Attachment 1.
2.9 Workshops were held with land owners in
February and May 2016 who were supportive of Council’s approach and also
receptive to a proposed change in how the DC was recovered, moving from a per
m2 Gross Floor Area Basis to a per m2 of Land Area basis.
2.10 Following consultation, Council amended its
policy to reflect a) remove the need to connect to a Council reticulated scheme
for Stormwater, b) remove staging and deferment, c) update the budgets that
underpin the DC calculation, and d) change the basis for recovering the DC from
m2 GFA to a per m2 of land area. As concerns were raised
around DC’s and other stipulations under which development was allowed to
occur by land owners whose land formed the additional 46.9ha, no change was
made to land area at this point. The rates per m2 of land set under
council’s DCP Schedule of Fees & Charges is based on a capital
expenditure of $7.855m before interest and inflation, servicing the total Plan
Change 50 area of 71.5ha of industrially zoned land.
2.11 Council is currently working through
resolving a number of appeals to the variation which include requirements
around the maximum building height, setbacks, servicing, and the minimum site
size. Council has signalled its intention to revise its Schedule of Fees &
Charges and DCP (which would factor in the additional 46.9ha) once all matters
relating to the appeals are resolved.
2.12 Whilst additional infrastructure is
envisaged, the additional area now likely to be included in the zone is likely
to result in an overall reduction in the DC rate per m2. This is
noted in Council’s DCP under Section 4.6. Jara was advised of this
in the assessment letter issued on 9 August 2017 and in subsequent email
correspondence. If a revision results in a development contribution rate that
is lower than the development contribution paid, a refund of the difference
will be made to the person who has paid the development contribution.
2.13 Until any revision is formally adopted by
Council, the current Schedule of Fees and Charges and 2016/17 DCP applies to
any development.
The
Application for Subdivision Consent
2.14 Subdivision consent was sought by Jara to
subdivide its land at Irongate Road East, over two stages, into four industrial
lots intended for development. The Scheme Plan is attached under Attachment 2.
· Stage 1
o Lot
1 of 1ha in size
o Lot
2 of 3.687ha (balance lot)
o Lot
5 of 1608m2 (to vest as Esplanade Reserve)
o Lot
6 of 766m2 (to vest as Bed of River)
o Lot
7 of 622m2 (to vest as Esplanade Reserve)
· Stage 2, being a subdivision of the balance lot (Lot 2, above)
o Lot
2 of 1ha
o Lot
3 of 1.241ha
o Lot
4 of 1ha
o Lot
5 of 4460m2 (to vest as Road)
The
subdivision consent was approved under the Resource Management Act 1991 by
Council.
Assessment of
Development Contributions
2.15 The resource consent approval triggered a
requirement for Council to undertake an assessment of development contributions
in accordance with 6.1 and 6.1.2 in the 2016/17 DCP.
6.1 Timing of Development Contributions
General
Under Section 202 of the LGA 2002, Council can apply a
development contribution upon the granting of:
A resource consent (subdivision or land use)
A building consent
An authorization for a service or infrastructure connection.
In the case
subdivisions, in the majority of applications, contributions will be collected
at subdivision consent stage. Council considers that the subdivision consent
stage is generally the most appropriate stage to take a development
contribution …
|
Table 6.1.2 Timing of
Development Contributions Milestones – Residential and non-Residential
Applications
|
|
Action
|
Timing
of Action
|
|
Assessment
of the Development Contribution
|
Upon
granting:
1. Subdivision
Consent
2. Land
Use Consent
3. Building
Consent (Including Certificate of Acceptances)
4. Authority
to make service or
infrastructure
connection
|
|
Payment
of the Development Contribution
|
1. Before
issue of 224 Certificate; or
2. On
issue of Code Certificate Of Compliance; or
3. On
issue of an authority to make service or infrastructure connection.
|
2.16 The land, situated at Irongate Road East, is
to the south of Hastings City and lies within Map 10 Irongate Industrial
Catchment as identified in the 2016/17 DCP. The costs of providing
infrastructure to support development in this area have been ring-fenced.
2.17 The consent conditions stipulate that the
development is required to connect to council reticulated services (water and
wastewater). The development will be required to address all stormwater matters
onsite.
2.18 There is a causal nexus link between this
development (and others cumulatively within the catchment area) and the
infrastructure being provided, for which the development contributions are
required.
2.19 An assessment of the contributions for
roading, wastewater and water infrastructure in respect of both Stage 1 and
Stage 2 of the development was generated in accordance with Section 4.6 of the
2016/17 DCP which states that:
“The
assessment will cover development contributions in respect of Roading,
Wastewater and Water Infrastructure services calculated on the land area of the
site being developed.”
2.19 Each
assessment was generated using the Schedule of Fees and Charges as outlined in
Table A-2 in Appendix A of the 2016/17 DCP:
|
Table A-2 IRONGATE INDUSTRIAL
DEVELOPMENT CHARGE PER M2 OF LAND
|
|
Activity
|
DC per m2 Of Land
(Excluding GST)
|
DC per m2 of Land
(Including GST)
|
|
Roading
|
$5.99
|
$6.89
|
|
Wastewater
|
$2.35
|
$2.70
|
|
Water Supply
|
$4.36
|
$5.01
|
2.20 For Stage 1, an assessment in respect of Lot
1 (1ha) only was generated. No assessment was generated in relation to the
balance lot (Lot 2), which was the subject of the Stage 2 assessment (see
below), nor Lot 5, Lot 6 and Lot 7 which are intended to be vested in Council
and not developed.
2.21 For Stage 2, a cumulative assessment in
respect of Lot 2 (1ha), Lot 3 (1.241ha) and Lot 4 (1ha) was generated. No
assessment was generated in relation to Lot 5 which is intended to be vested in
Council and not developed.
2.22 The assessments and invoice for Stage 1 were
formally issued to Jara on 9 August 2017.
2.23 Under section 199C of the LGA 2002, Jara
formally objected to the development contribution assessment issued on 23 August
2017, within the required timeframe.
3.0 GROUNDS
OF OBJECTION
3.1 The
permissible scope of a development contribution objection is set out in section
199D of the LGA 2002. An objection to a development contribution may be made
only on the grounds that the territorial authority has:
a) failed
to properly take into account features of the objector’s development
that, on their own or cumulatively with those of other developments, would
substantially reduce the impact of the development on requirements for
community facilities in the territorial authority’s district or parts of
that district; or
b) required
a development contribution for community facilities not required by, or related
to, the objector’s development, whether on its own or cumulatively with
other developments; or
c) required
a development contribution in breach of section 200; or
d) incorrectly
applied its development contributions policy to the objector’s
development.
3.2 Four main points are raised in the
objection. These are related to matters around:
· Interest costs
· Roading costs
· Water
· Fairness, equity and proportionality under ‘Closing
Comments’.
3.3 The statement of evidence of Mr Roil
dated 7 November 2017 expands on these grounds. Many of the matters raised
in the objection and in Mr Roil’s evidence are not available grounds of
objection. By responding to those matters the Council is not to be taken
as accepting that they are properly the subject of an objection under the LGA
2002.
4.0 CONSIDERATION
OF OBJECTION
4.1 The objector raised a number of
issues in their initial objection and clarified their concerns in their brief
of evidence, which could be claimed to relate to grounds 3.1a and 3.1b. The
following outlines Council’s response to those points raised.
Interest
Costs
The
objector believes the interest cost component of the development contribution
is disproportionate and unfair, and should not be applied to those developing
in the early years of the lifetime of the project.
4.2 Council does not agree that the
interest component of the development contribution is disproportionate and
should not be applied to those developing in the early years of the lifetime of
the project.
4.3 First, the objector’s
calculations around the Year 1 interest component for all activities are
incorrect as it has started by incorrectly calculating the rate per m2
by dividing the $7.855m capital expenditure cost by an area of 100ha. The
2016/17 Policy and Schedule of Fees and Charges is based on servicing an area of
71.5ha over a 20 year period. The following is taken from 4.6 of the 2016/17
DCP which outlines the basis for the current calculation.
The basis
for the calculation under this schedule of charges is a developable area of
71.5ha of land which reflects the current District Plan.
4.4 Council has referenced 100ha in
the policy as the potential extent of the area to be zoned under Variation 2.
Upon resolution of the Variation 2 appeals, Council has signalled its intention
to revise and update its DC rate to encompass both any additional servicing
costs and the increased area. However, the current policy basis is presently
71.5ha.
4.5 By dividing the capital
expenditure by 100ha, the objector has significantly overstated the interest
component of the DC rate as being $4.84 per m2. The correct portion
of capital expenditure and interest for those developing in Year 1 for each
activity is listed below, on a per square metre basis (excl. GST):
|
Activity
|
Cost / Area = Rate per m2
|
Interest Component
|
DC Policy Rate
|
|
Roading
|
$4.199m / 71.5ha = $5.87
|
$0.12
|
$5.99
|
|
Wastewater
|
$1.282m / 71.5ha = $1.79
|
$0.56
|
$2.35
|
|
Water
|
$2.373m / 71.5ha = $3.32
|
$1.04
|
$4.36
|
|
|
$10.98m2
|
$1.72m2
|
$12.70m2
|
4.6 Council does not believe that the
interest component in Year 1 is disproportionate.
4.7 Secondly, the LGA 2002 makes
provision for councils to recover the total cost of capital expenditure which
may (and in most cases, will) include an interest component. When taking
into account the different timeframes of all developments, applying a portion
of the interest cost to those developing in Year 1 is not unfair nor an
unreasonable approach. Early development triggers the requirement for Council
to invest in the infrastructure to which the charge relates, and Council will
start to incur interest costs. If Council was to remove the interest
component from early developments, then all of the interest costs would need to
be passed on through a higher development contribution for land owners within
the catchment who do not develop until later. Those later developers
could well argue that they should not have to pay interest costs incurred
merely because some developers required the infrastructure earlier than they
did.
4.8 There is also the fact that the earlier
developers will have had the use and benefit of the infrastructure over a
longer period, and the later developers will have less use and benefit,
particularly as the infrastructure approaches the end of its design life.
4.9 It should be noted that those developing
in Year 1 do receive a somewhat discounted rate in so far as they will pay a
lower rate per m2 of land than those developing in later years. The
Year 1 rate ($12.70m2) that is set in Council’s DCP, has been
modelled to allow for an ‘inflationary adjustment’ for future
years. Council intends to update its Schedule of Fees & Charges
annually with the new rate, or add a table upon its next revision outlining the
rates for the next three years. This ‘adjustment’ has been
communicated to landowners previously through various workshops.
4.10 The following table shows the level of
development contribution forecast to be required each year. Through the
adjustment, those developing in later years will indirectly be required to pay
a greater share of the interest cost.
4.11 Council intends to monitor all of its
assumptions including interest rates over the lifetime of the project, and
intends to revise its future development contribution calculation where
required, to ensure it does not under or over recover contributions over the
lifetime of the project.
4.12 Council considers it reasonable and
fair that all developments within the Irongate Industrial area pay a share of
the interest cost incurred over the lifetime of the project.
Roading
Costs
The objector believes that as
the intersection upgrades (roundabouts) for Irongate Rd and York / Maraekakaho
Rd are not required until 2030, and as they fall outside the Council’s
10-year LTP, they should be excluded from the calculation. The objector
believes that with a reduction in speed limit, some of the proposed works
(including Maraekakaho Road widening and proposed roundabouts) are not
required. The objector notes that LTNZ are only making a small contribution
towards the cul de sac costs ($50,000).
4.13 The current development
contribution calculation has been set based on a budget of $4.2m, to
specifically cover the following works:
· T-intersection at Irongate Rd (modelled to commence in 2018/19)
· Upgrades to Irongate Road including a cul de sac (modelled to
commence in 2018/19)
· Upgrade from a T-intersection to a roundabout at Irongate Rd,
(modelled to commence in 2030/31)
4.14 The objector makes reference to works that
are not part of the current policy calculation. The current policy calculation
does not include any costs relating to the York / Maraekakaho Road roundabout
nor the Maraekakaho Road widening. These works specifically relate to
additional infrastructure that would be required to support the wider variation
development area (100ha), once appeals are resolved. They are not within
the scope of infrastructure projected to service the 71.5ha. While
Council’s Program of Capital Works could have been more detailed, a
number of workshops have been held with land owners which have outlined the
scope of the infrastructure servicing requirements for both the current 71.5ha
area, and the proposed 100ha Variation 2 area should it be adopted.
4.15 During the design stage, Council engaged
Stantec (previously MWH) to independently undertake detailed traffic data
analysis to support the proposed programme of works. With regards to the above
programme of works, they were firmly of the view that a reduction in the speed
limit would not remove the need for a roundabout at Irongate Rd / Maraekakaho
Road, and they reiterated their view in a workshop held with Irongate land
owners in September 2017.
4.16 The capital expenditure associated with an
upgrade from a T-intersection to a roundabout at Irongate Rd is contained
within Council’s 2015-25 LTP being forecast to be undertaken in 2021/22
and 2022/23. However, since the 2015-25 LTP was adopted, more detailed design
estimates have been provided and these estimates ($4.2m) were used for setting the
DC rate in Council’s 2016/17 DCP.
4.17 The current calculation is modelled on the
upgrade from a T-intersection to a roundabout at Irongate Rd / Maraekakaho Road
commencing in 2030/31, although the actual timing of the work is somewhat
fluid, as the traffic modelling has identified that the upgrade will be
required once 36ha of development has occurred.
4.18 Deferring the upgrade to 2030/31 was very
optimistic considering likely uptake rates. There is every likelihood that the
work will be required much sooner, and well within the 10 year LTP. For the
purpose of modelling and setting its DC rate, given the fluidity of uptake
rates, Council made the decision to leave the timing of this particular work in
2030/31 and review its policy as actual uptake information becomes available.
Bringing forward the upgrade works would result in higher interest costs being
incurred which would be reflected in a higher DC rate.
Water
The objector argues that the
assessment does not align with Council’s development contribution policy.
4.19 The objector implies the water
component is incorrectly set, however the assessment issued ($43,600 per ha or
$4.36 per m2) aligns with council’s Schedule of Fees and
Charges as set out in its 2016/17 DCP.
4.20 The
objector uses an incorrect figure of $23,700 per ha or $2.37 per m2
of land area as a figure that should be assessed for water, however this has
been incorrectly calculated using the proposed Variation 2 area, refer to paras
4.3 to 4.5 above.
4.21 It should be noted that none of the wider
district water costs have been included in the Irongate Industrial rate. A
decision to exclude the wider network costs was made by Council at the outset
in order to set a lower DC rate for Irongate land owners.
Budgetary
Misalignment between Council’s LTP and DCP Policy
The
objector focuses on differences between the budget information contained within
Councils 2015-25 LTP and the 2016/17 DCP as additional capital expenditure
which is unexplained and doesn’t relate to their development.
4.22 The
budget information contained in the 2015-25 LTP was based on servicing 35.3ha
of land under Stage 1 only. Following consultation a number of changes
including changes to the budget were made to Council’s DCP from July
2016. The capital expenditure costs listed within the 2016/17 DCP Policy do
relate to those developments within Irongate.
Council
entering into unfair and inequitable development agreements not aligned to the
2016/17 DCP
The objector implies that Council
has entered into private agreements with developers and provided them with
different assessments that are less than the 2016/17 DCP.
4.23 Council
entered into one agreement with a land owner in the Irongate Industrial Area.
By securing their commitment to paying the DC, Council was able to update its
assumptions around early uptake which underpin the calculation, with this
change being reflected in the 2016/17 DCP. The payment had a positive impact on
the DC rate through reduced interest costs which benefitted all land owners.
The basis for their agreement was the 2016/17 DCP rate of $12.70 per m2
(excl. GST).
Actual
Budgets Vs Estimated Budgets
The
objector implies that Council is over recovering DC’s as actual capital
costs are less than budgeted costs in the DCP
4.24 The implementation of reticulated services has not yet been
completed. The objector submitted a LGOIMA request on 7 November regarding
costs to date which Council will respond to within the permitted timeframes.
Council has been transparent in its policy and communication that once the
Variation 2 appeals are resolved, it will go through the process of revising
its DC rate to reflect the wider extent of the area and any updated servicing
costs, and consult on those changes with affected land owners.
4.25 Where a DC has been paid that is greater than the rate set after
revision following the resolution of the appeals under Variation 2, a one off refund
will be made of the difference between the new rate and what was paid. Council
will continue to monitor its budgets and assumptions around interest rates and
uptake to ensure it does not over recover contributions from those developing
within the Irongate Industrial catchment, in accordance with its legislative
obligations.
Fairness,
Equity and Proportionality under Closing Comments
The objector does not believe
the development contribution assessed is fair, equitable or a proportionate
portion of the total cost of capital expenditure necessary to service Irongate.
4.26 Council acknowledges that
‘growth’ provides some benefits to the wider community in terms of
job creation and economic wellbeing, however, its current funding approach is
to recover growth-related capital costs from those causing the growth and benefiting
from the assets, and not to reduce its development contribution through some
form of explicit public subsidy.
4.27 Council believes that it has
recognised any benefit from the assets accrued to the wider community through
its cost allocation process (particularly for water) and that those costs being
recovered through the contribution are fair, equitable and proportionate.
4.28 The objector uses the proposed water
link via Maraekakaho Road as evidence of greater resilience for the community.
Council does not support this view and believes that the link actually provides
greater resilience to those developments within the Irongate Industrial area as
they are now to be serviced from two sources. This link was originally proposed
for Omahu Road so there is no additional benefit accrued to the wider community
over and above what they would have received had the work been undertaken in
its original intended location.
4.29 It should be noted that none of the
costs associated with this link are being recovered from the Irongate
development contribution. Council has simply replaced the link it was going to
undertake in Omahu Road with a link in Maraekakaho Road which is to be funded
by other sources (rates).
4.30 The costs as they are outlined in the Program
of Capital Expenditure within the 2016/17 DCP implies that 100% of the capital
expenditure cost is being recovered from those developing within the Irongate
Industrial Catchment area without any reduction for funds sourced from
elsewhere. However that is not in fact the case. Aside from the fact none
of the wider district costs have been included in the Irongate Industrial
development contribution rate, which was a decision taken by Council at the
outset in order to set a lower rate, the figures shown in the 2016/17 DCP are
in actually net capital expenditure after factoring in a $50,000 subsidy from
LTNZ, and water cost allocations attributing a share of the Trunk Main Wilson
Road, and Wilson Road Bore Upgrade costs to non-growth (rates). Council
intends to update the policy wording at its next reiteration to correct this
mistaken impression.
5.0 RESPONSE
TO PARTICULAR SECTIONS IN THE EVIDENCE OF MR ROIL DATED 7 NOVEMBER 2017
5.1 As noted earlier in this report, Mr Roil
is wrong to treat the area covered by the DCP as 100ha. The 2016/17 DCP
was prepared on the basis of the Irongate Industrial Zoning as then proposed,
being 71.5ha. Variation 2 should extend this to 100ha (undeveloped) but
that has not been completed and until it is the DCP figures must stand.
Mr Roil’s recalculation of the development contribution rates is
therefore incorrect.
5.2 At para 29 Mr Roil contends that the
development contribution includes financing costs over a 30-year period.
This is incorrect. A period of 20 years has been assumed for the 71.5ha
development area covered by the current DCP. Council’s position
around financing costs is covered under para 4.7.
5.3 Mr Roil’s calculation at para 30
of a “financing fee” of $4.84 (GST exclusive) is
wrong. Based on the correct area of 71.5ha as the basis for the DCP
amounts, the interest and inflation component of the development contributions
charged to Jara is $1.72 per m2 (excl. GST). Refer to para 4.5
above.
5.4 At para 32 Mr Roil complains about the
provision made for ‘contingencies’ in the assessment of the likely
cost of the infrastructure provision. It is common practice to include an
allowance for contingencies when estimating the likely future costs of
construction work. There can be any number of matters arising between
when cost estimates are provided and the final costs are established following
completing of the work. Council’s experience is that an allowance
for contingencies is both necessary and appropriate.
5.5 At para 36 Mr Roil refers to the
Council’s Long Term Plan (LTP) which showed roading projects
totalling $2.761m. These costs were for the originally intended Stage 1
works based on servicing an area of only 36ha. Stage 2 costs sat outside
the 10-year window at that time. As explained earlier in this report, the
anticipated uptake has meant that this has had to be brought forward and
provision made to service 71.5ha (and soon 100ha). Council is currently
in the process of its 3-yearly review of the LTP as the result of which these
figures will be updated.
5.6 At para 37 Mr Roil refers to the roading
expenditure of $4,199,800 which he then says should equate to $4.19 per m2,
and says he has instead been charged $4.99 psm. His calculation of $4.19
per m2 is based on the erroneous figure of 100ha, when the correct
figure (as per the DCP) is 71.5ha. The amount charged to Jara was, as per
the DCP (Tabe A-2) $5.99 per m2 or $6.89 GST inclusive.
5.7 At para 38 Mr Roil refers to unnamed
sources of information that the expenditure is for road widening [and] the
construction of roundabouts at York Road and at the Irongate Road / Maraekakaho
Road intersection. While the $4.199m includes the roundabout at Irongate Road /
Maraekakaho Road, it does not include any costs towards the York Road
roundabout nor the road widening at Maraekakaho Road. The Irongate Road /
Maraekakaho Road roundabout does relate to Jara’s development being
within the 71.5ha development area.
5.8 At para 39 Mr Roil asserts (again based
on unknown sources) that some of the works are unlikely to be constructed until
2030. A traffic impact analysis undertaken by Stantec (formerly MWH)
showed the need for the upgrade is being driven by development at Irongate.
The rate of uptake as now anticipated makes it very likely this will be brought
forward. Had this been carried through into the modelling it would have
increased the interest costs, resulting in a higher overall development
contribution rate.
5.9 Again, at paras 40 and 41 (this time in
relation to water supply) Mr Roil refers to the LTP projections. As noted
above, these were based on Stage 1 only, servicing 36ha. Stage 2
servicing costs sat outside the 10-year window of the LTP at that time.
The 10-year timeframe of the LTP does not dictate the longer term planning
which underpins the DCP.
5.10 In para 42 Mr Roil compounds the error by
spreading the water supply costs over the Variation 2 100ha area, instead of
the 71.5ha in the DCP. The development contribution charged to Jara was
at the rate of $4.36 per m2 (excl. GST) as set out in Table A-2 of
the DCP. This provides a ‘raw’ cost of $3.31 per m2 and
an additional $1.05 per m2 for finance and holding costs.
5.11 At para 43 Mr Roil refers to agreements with
individual landowners at Omahu. His speculation about these agreements is
incorrect. The LGA 2002 provides that Council may enter into such
agreements. They are not relevant to Jara’s land or to the grounds
of its objection.
5.12 At para 44 Mr Roil asserts that the
developers in Irongate are being charged 100% of the costs of roading and water
supply. This is incorrect (although it is acknowledged that the wording of the
DCP gives this impression). In fact, the amounts set out in the DCP are
for the net growth portion only. Funds received (or to be received) from other
sources are not clearly stated, but the amounts shown are net of these
contributions. The wording of the DCP will be updated at its next
iteration to reflect funding from other sources such as LTNZ and rates (for
non-growth related share of the assets).
5.13 It should also be noted that none of the
district-wide growth-related water supply or roading costs have been included
in the Irongate development contribution figures. This is a significant
concession to the Irongate landowners and was done so as to allow a lower
overall DC rate for Irongate.
5.14 At para 45 Mr Roil asserts that properties to
the east of the Irongate Industrial area will obtain a benefit from the water
main constructed from the Flaxmere Pump Station, being looped back along
Maraekakaho Road. This overlooks that the looped service now provides
greater resilience for developments at Irongate which are serviced from two
sources. The ‘loop’ was always intended to be provided via
Omahu Road, so there is no additional benefit to the wider community from the
loop now running up Maraekakaho Road. The cost of the loop itself is not
included in the calculation of the Irongate development contribution.
5.15 Mr Roil is therefore mistaken at para 47
where he claims that 100% of the costs attributable to the reticulation from
Flaxmere has been included. The cost have been apportioned, as part of
the formulation of the DCP, based on the potential demand from Irongate to the
upgrades that have resulted from this new development.
5.16 Mr Roil’s para 49 refers to the roading
improvements which have been addressed above. The need for, and benefit
from, the Irongate Road / Maraekakaho Road roundabout is directly driven by
development within the Irongate catchment.
5.17 At para 52 Mr Roil complains that the money
he pays now represents money the Council will not have to borrow and so incur
interest on. The contribution rate in the DCP has applied assumptions around
those paying early as well as those paying later. It is reasonable that
those paying earlier should pay a share of the interest costs incurred over the
lifetime of a project.
5.18 At para 53 Mr Roil complaints that there is
no “explanation or justification” in Appendix D of the DCP
as to the amount of the capital costs. The 2016/2017 DCP was consulted on
prior to it being adopted by the Council in June 2016. Changes to the
costs in Appendix D were made mainly because of the removal of the Stage 1 and
Stage 2 staging, and reflecting the costs associated with servicing 71.5ha and
not just Stage 1 (35.3ha) as was in the LTP.
5.19 It should also be noted that a number of
workshops and meetings have been held with the objector and other land owners
where details around capital costs. As an example, a meeting was held on 24
June 2016 where the objector and other land owners were provided with a
detailed breakdown of the water capital costs. Attachment 3 records the
minutes of that meeting.
5.20 In summary, Mr Roil has sought to recalculate
the development contribution rate set out in the DCP on the basis of an
incorrect land area and using LTP figures which applied to an earlier (and no
longer applicable) staging scenario. This has resulted in an under-calculation
of the rates as set out in the DCP, and a considerable over-calculation of the
interest component of the rates.
6.0 CONCLUSION
6.1 The assessment
has been generated in accordance with the 2016/17 HDC DCP.
6.2 While there are
some areas for improvement in terms of how the information contained in the DCP
is expressed, specifically the Program of Capital Works, these will be
corrected at the next policy reiteration. However, Council rejects the
points raised in the objection, and believes the development contribution
assessed should be paid in accordance with the LGA 2002.
Attachments:
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1
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Irongate Industrial Map
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25105#0145
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2
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Scheme Plan
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25105#0146
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3
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Minutes of Landowners Meeting held 24 June 2016
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25105#0147
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Hastings District
Council
