Auckland Council’s Finance and Performance committee has approved the updated Contributions Policy, which will come into effect on 10 January 2022.
Contributions (also known as Development Contributions or DCs) recover from developers the cost of infrastructure caused by or that will benefit from new developments. This revenue is used for infrastructure, reserves and community facilities to support growth.
The council has had a contributions policy since amalgamation and it is regularly updated to account for projected growth, revision to the capital budgets and any relevant policy changes.
Following public consultation which ran from 20 September to 17 October, staff recommended the final policy for adoption to the Finance and Performance committee today. The committee has agreed to update the policy as follows:
- To support growth by collecting contributions to fund infrastructure investment within the Investment Priority Areas (IPAs) beyond 2031. The IPAs are the Inner Northwest, CRL stations and Auckland Housing Programme areas including Tāmaki, Mangere, Northcote, Oranga, and Mt Roskill.
- To implement this in stages over the next 15 months.
- To defer the inclusion of infrastructure investment beyond 2031 for Drury in the policy until June 2022 to allow for the provision of more information to developers and more time for them to make further submissions with the benefit of this information.
- To retain the current payment timing (six to twelve months after the grant of building consent) for DCs due at building consent, rather than the proposed much earlier time of when building consent is granted.
- To support development of Māori land by way of grants through the Cultural Initiatives Fund and exempting not-for-profit development on Māori land from contributions for reserves.
Manager of Financial Policy Andrew Duncan says, “The city faces major demands to invest in infrastructure to manage forecast growth in Auckland over the next three decades. The council is taking a long-term view as we’ve seen the impacts in other regions where local authorities have failed into invest in critical infrastructure.”
Chair of the Finance and Performance Committee Councillor Desley Simpson says ultimately, this is the council planning for growth, “Auckland’s population is expected to grow by 260,000 in the next ten years. This reflects the attractiveness of our region, and with that comes the forecast construction of 145,800 new dwellings within the same time period.
“The infrastructure to support these developments needs to be funded somehow, whether by the ratepayer, the developer or the taxpayer. We think it is fair developers partially contribute to the cost of the infrastructure they create the need for, and benefit from.”
Duncan says robust consultation has led to meaningful updates to the policy, “Based on feedback, officers have recommended that the first stage of the proposal, the inclusion of projects beyond 2031 in Drury, not be included in the Contributions Policy 2022 at this stage but instead be decided in June 2022.
“This will allow additional information on the investments required in Drury to be shared with Aucklanders. It will allow submitters to carefully consider the impacts before providing feedback and therefore support elected members to make a quality decision.”
Changes to payment timing have also been amended since consultation, “Officers had recommended bringing forward the timing of payment of DCs given the council is facing significant financial challenges in the next few years.
“Having heard the feedback, officers consider that the current payment timing set out in the 2019 policy should be retained. It was determined that the proposed change could disrupt multi-unit developments by requiring capital from developers they don’t have at the time of payment.” says Duncan.
Cr Simpson says the impact on house prices was an important part of deliberations, “National and international evidence provided to councillors showed that increased contributions fees do not cause house prices to rise over time. House prices were in fact determined by the supply and demand for houses. To that end, developers charge as much for housing as the market determines they can.”
“Infrastructure is essential, but it is not cheap or easily provided overnight. It is sensible that the council has taken a long-term view to future-proof our region to minimise the long-term cost to ratepayers,” says Simpson.
The policy considered at the Finance and Performance Committee can be viewed on infocouncil.
The final policy will be made available on the Auckland Council website