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Franklin Local Board
25 March 2025
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Franklin
Local Board views on the draft Contributions Policy 2025
File No.: CP2025/04746
Te take mō te
pūrongo
Purpose of the report
1. To
invite local board views on the draft Contributions Policy 2025 for inclusion
in the Governing Body decision report on 1 May 2025
Whakarāpopototanga matua
Executive summary
2. The
most-recent full review of the contributions policy, was completed and adopted
in December 2021, based on the investments in the Long-term Plan 2021-2031.
This was operational from 10 January 2022.
3. In
April 2023, the Governing Body adopted the Contributions Policy 2022 Variation
A which added investments over a 30-year period to support growth in Drury.
4. In
June 2024, the council adopted its new Long-term Plan 2024-2034, which sets out
capital expenditure plans for this period. The Contributions Policy 2025 now
proposed for adoption reflects these decisions.
5. The
draft Contributions Policy 2025 also includes investments over a longer time
horizon for the Inner Northwest, and Auckland Housing Programme (AHPs) and to
update the investments to be made in Drury beyond 2031. This follows through on
the agreement in principle from December 2021 (FIN/2021/119) and subsequent
noting in April 2023 (GB/2023/63).
6. The
remaining Investment Priority Area (IPA), the City Centre/City Rail Link (CRL)
stations, will be added as a next step later in 2025/early 2026 as more
information becomes available, Also in this timeframe updates will be made for
additional investments in Drury West, and stormwater in Mt Roskill and
Māngere.
7. The
Governing Body approved consultation on the draft Contributions Policy 2025 in
September 2024 and consultation took place from September to December 2024.
8. A
memorandum and summary of feedback received from consultation was circulated to
all local board and Governing Body members in February 2025. These are attached
to this report as Attachment F.
9. This
was followed up with Subject Matter Expert (SME) attendance at local board
workshops as requested by individual local boards.
10. Any local
board views agreed through this report will form an attachment to the
decision-making report being presented to Governing Body on 1 May 2025.
Ngā tūtohunga
Recommendation/s
That the Franklin Local Board:
a) tuku /
provide views on the draft Contributions Policy 2025 for inclusion in the
Governing Body decision report on 1 May 2025.
Horopaki
Context
11. Development
contributions (DCs) allow for an equitable and proportionate share of the total
cost of growth-related capital expenditure to be recovered from the development
community. The Contributions Policy sets out how the council will recover from
new development an appropriate and fair share of the cost of infrastructure
investment attributable to growth.
12. Auckland's population has grown substantially over the 12 years to
the end of 2024, from 1.4 million to over 1.8 million at an average of 1.4 per
cent annually. It is forecast to continue to grow, with approximately 200,000
more Aucklanders expected by 2034. The population is expected to grow by a
further 400,000 by 2054[1].
13. To support
the development enabled by the Auckland Unitary Plan, we are facing both
immediate and longer-term demands for infrastructure in growth areas. If we do
not adequately plan for the delivery and funding of this infrastructure, the
cumulative effects of this development could lead to an unfair rates burden on
future ratepayers or a risk of infrastructure shortfalls for future residents.
14. Auckland
Council’s current contributions policy was introduced in January 2022 and
later updated from June 2023 to extend cost recovery in Drury over a 30-year
period instead of the previous 10-year approach.
15. Between
September and November 2024, the council consulted on a proposal to adopt a new
policy that incorporates updated capital expenditure from the Long-term Plan
2024-2034, revised growth and interest rate forecasts, adjustments to project
costs, and extended investment planning for Drury.
16. The proposed
policy also expands the 30-year cost recovery model to other Investment
Priority Areas, including the Inner Northwest (Red Hills, Westgate, and
Whenuapai) and Auckland Housing Programme (AHP) areas in Tāmaki,
Māngere, and Mt Roskill. In addition, several smaller adjustments aim to
ensure fairer cost distribution between ratepayers and developers.
17. The policy
proposed for consultation included $10.3 billion in growth-related capital
investment in the period to 2034, increasing the average development
contribution from $21,000 to $30,000, while contributions in Drury would rise
from $70,000 to $83,000. The proposed policy also provided for $10.9 billion of
investment in Drury, Inner Northwest, and the AHP areas in the period beyond
2034. With these investments included the average DC price across the region
would rise to $50,000. Different charges apply to different geographical areas
based on the relevant activity funding areas in the proposal.
18. The
Consultation Document (CD) provided to support consultation set out the key
issues to be considered in assessing the proposal. The CD can be found at
Attachment B. The key changes set out in consultation are summarised below.
Update for decisions in the
LTP 2024-2034 and updates to Drury
19. The draft
Contributions Policy 2025 that was consulted on updated the capital expenditure
projects to reflect the decisions made since 2021 and the associated investment
planned over the 10-year timeframe of the LTP.
20. The key
changes include:
· Level
crossings – Takanini ($550 million)
· Development
of new town square in Henderson ($12.5 million)
· Waterview
catchment separation ($59 million) – updated costs.
21. The current
contributions policy included projects which are now funded as part of the NZ
Upgrade Programme. Government decisions on the NZ Upgrade Programme had not
been made at the time the Contributions Policy 2022 Variation A was adopted. We
are now removing these projects from the policy as they are not expected to
require council funding and there is no basis to recover any costs for them.
Contributions collected for these projects to date will be re-allocated against
similar projects within the same funding area.
22. The
assessment of requirements for stormwater infrastructure in Drury has now been
completed. This identified one project the council would need to deliver in
addition to those that would be provided by developers as a condition of
resource consent, and this has been included in the draft policy. Some
adjustments have now also been made to the timing of projects including
reducing investment and deferral of the timing of open space acquisitions. The
assumptions made for investments in Drury over the longer horizon have also
been reviewed based on the latest available information and the capital
expenditure included in the policy has been updated. This includes updated land
cost assumptions, alignment with the Cost Estimation guide published by
Auckland Transport, and the latest growth forecasts. These changes raised the
DC price for Drury that was consulted on from $70,000 to $83,000.
23. The draft
policy will include a list of over 1,700 programmes and projects for which the
council will seek to recover the growth share of costs through development
contributions (see Attachment B).
24. The table
below shows the total investments with a growth component in transport,
stormwater, reserves, and community facilities over the LTP period and their
funding source in the CD. In this analysis and that which follows later it is
assumed that National Land Transport Fund from Waka Kotahi will fund 51 per
cent funding of qualifying transport projects.
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Funding
source
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CAPEX investment type $ millions
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Transport
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Reserves
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Community spaces
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Stormwater
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Total funding
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Total
NZTA/Waka Kotahi
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3,569
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0
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0
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0
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3,569
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Total
rates
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3,072
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557
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301
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463
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4,393
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Total
development contributions
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893
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1,005
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127
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309
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2,334
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Total CAPEX
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7,534
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1,562
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428
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772
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10,296
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25. As a result
of the capital expenditure changes in the period to 2034, updated forecasts of
NZTA/Waka Kotahi funding and dwelling construction, and adjustments to the
investments in Drury before and after 2034 the weighted average development
contributions price for a standard residential unit would rise from $21,000
under the Contributions Policy 2022, Variation A to $30,000 under the draft
Contributions Policy 2025. The average price increase is driven by the
increased level of investment within the LTP period in the Investment Priority
Areas (IPA). This is a weighted average and varies widely by location depending
on the investments the council plans to make to support growth in each area.
Inclusion of investments in
IPA areas beyond 2034
26. The
consultation proposed the addition of investments beyond 2034 to support growth
in the IPA areas. The proposed investments and consequent changes to DC prices
for each of the IPA areas is set out below.
Inner Northwest
27. The LTP
provides for investment of $155 million in transport and $139 million in
reserves between 2024 and 2034. The table below shows the investments with a
growth component in transport, reserves, and community facilities beyond 2034
and their funding sources. No stormwater investment is required by the council
as the nature of infrastructure needed in this area is such that it is expected
to be delivered by developers as a condition of resource consent.
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Total
investments and funding source by activity in the Inner Northwest over a longer horizon
$
millions
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Funding
source
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Transport
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Reserves
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Community facilities
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Total
NZTA/Waka Kotahi
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1,142
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0
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0
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Total
rates
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558
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118
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82
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Total
development contributions
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1,366
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903
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133
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Total
CAPEX
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3,066
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1,021
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215
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28. The
additional funding requirement would increase the contributions price for the
Inner Northwest from an average of $25,167 per household unit equivalent (HUE)
to an average of around $98,000 per HUE when the investments beyond 2034 are
added. Different charges apply to different geographical areas based on the
relevant activity funding areas in the proposal. The proposed charges are set
out in the table below.
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Changes
to funding area charges in the Inner Northwest over a longer horizon
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Funding
area
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Current DC charge
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Proposed DC for investments within the
LTP period incl regional and sub-regional DCs
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Proposed DC price for investments beyond
LTP
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Total proposed price including all
investments incl regional and sub-regional DCs
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Whenuapai
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$25k
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$27k
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$75k
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$102k
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Redhills
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$25k
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$27k
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$62k
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$89k
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Westgate
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$23k
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$34k
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$61k
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$95k
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Māngere Auckland Housing
Programme area
29. The LTP
provides for investment of $46 million in transport and $23 million in reserves
between 2024 and 2034. The table below shows the transport investments with a
growth component beyond 2034 and their funding sources. Investments in
stormwater infrastructure will be added in 2025 once further work is completed.
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Total
investments and funding source by activity in Māngere over a longer horizon
$
millions
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Funding
source
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Transport
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Reserves
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Community facilities
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Total NZTA/Waka Kotahi
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292
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0
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0
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Total rates
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531
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0
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0
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Total development contributions
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89
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0
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0
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Total CAPEX
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912
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0
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0
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30. The
additional funding requirement would increase the contributions price for the
Māngere Auckland Housing Programme from an average of $18,123 per HUE to
an average of around $29,000 per HUE when the investments beyond 2034 are
added.
Mt Roskill Auckland Housing
Programme area
31. The LTP
provides for investment of $44 million in transport and $15 million in reserves
between 2024 and 2034. The table below shows the transport investments with a
growth component beyond 2034 and their funding sources. Investments in
stormwater infrastructure will be added in 2025 once further work is completed.
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Total
investments and funding source by activity in Mt Roskill over a longer horizon
$
millions
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Funding
source
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Transport
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Reserves
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Community facilities
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Total NZTA/Waka Kotahi
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594
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0
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0
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Total rates
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677
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0
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0
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Total development contributions
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344
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0
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0
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Total CAPEX
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1,615
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0
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0
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32. The
additional funding requirement would increase the contributions price for the
Mt Roskill from an average of $20,406, per HUE to an average of around $52,000
per HUE when the investments beyond 2034 are added. Different charges may apply
depending on the combination of activity funding areas a development falls
within. The primary driver of the higher DCs in the above range is the recovery
of historic stormwater investments in the Inner West Triangle and the
Waitematā Central funding areas.
Tāmaki Regeneration area
33. The LTP
provides for investment of $76 million in transport, $67 million in stormwater,
$87 million in reserves, and $1 million in community facilities between 2024
and 2034. The table below shows the investments with a growth component in
transport, community facilities and stormwater beyond 2034 and their funding
sources.
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Total
investments and funding source by activity in Tāmaki over a longer horizon $ millions
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Funding
source
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Transport
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Reserves
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Community facilities
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Stormwater
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Total NZTA/Waka Kotahi
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181
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0
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0
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0
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Total rates
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194
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0
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41
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18
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Total development contributions
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171
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0
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19
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788
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Total CAPEX
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546
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0
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60
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806
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34. The standard
of service for stormwater in Tāmaki has been planned to deliver the same
level of service as in the Inner Northwest and Drury. This is higher than the
service level presently provided by historical investment in the other
brownfields areas that aren’t expected to develop. Accordingly, the scale
of and cost of the investment required to redevelop the area is substantial.
35. The
additional funding requirement would increase the contributions price for
Tāmaki from $31,157 per HUE to $119,114 per HUE when the investments
beyond 2034 are added.
Other proposed changes to the
policy
Funding areas
36. Changes were
proposed to funding areas to provide a more refined allocation of costs to
development areas to better reflect beneficiaries of the planned
infrastructure. The new proposed funding areas include:
· new
sub-regional funding areas at Paerata, Whau, Inner Northwest
· a new
local funding area at Avondale.
37. Changes to
neighbouring funding areas were proposed to accommodate these new areas.
38. A number of
other refinements were proposed to local and sub-regional funding areas to
better reflect the beneficiaries of infrastructure. Details of these changes
are included in Attachment E: Funding area maps.
Other changes
39. Some
technical changes were proposed to the policy to clarify its intent and ensure
fairness. Changes were highlighted in the draft policy in Attachment A.
40. Aside from
the proposed changes discussed, the Contributions Policy 2022, Variation A was
recommended as appropriate and fit for purpose and it was proposed to continue
the unamended provisions in the current policy into the new policy.
Tātaritanga me ngā
tohutohu
Analysis and advice
41. Key issues
addressed in the CD related to the uncertainty inherent in taking a 30-year
view of growth and the infrastructure investment required to support that along
with the impact that higher DCs would have on current landowners planning to
develop and whether higher DCs would impact on house prices. Key points made in
the advice that supported the adoption of the draft policy for consultation on
these issues is set out below. Further advice on these matters and other issues
raised in consultation will form part of the advice to the council on 1 May.
42. The
uncertainty associated with long-term planning is managed through the
three-yearly review of our infrastructure planning priorities and funding
through the council’s LTP. This allows the council to manage the risk of
the pace of growth changing from our forecasts and consequent changes in the
required infrastructure.
43. Continuing
with a 10-year focus would continue the uncertainty for developers, landowners,
and other infrastructure providers. It would also make it difficult to recover
a fair share of the funding of expected capital expenditure in years 11-30 from
early developers to address the longer-term cumulative impacts of their
development. This would risk development occurring without adequate
infrastructure and place more demand on future ratepayers.
44. These changes
will not materially impact on house prices, which are driven by supply and
demand and are not determined via a cost-plus methodology. That is, the
developers are price takers. Their market power is limited, given they are part
of a larger market, and their products are substitutable for near equivalents.
Higher DC prices will eventually flow through to lower prices for raw land as
the cost of enabling infrastructure is capitalised into the land value.
However, they may have a short-term negative impact on the pace of development
as developers respond to the change. Developers must absorb the cost into a
lower land value. Depending on their financial position, they may either
proceed with development, defer development and hold the land awaiting future
value uplift, or on-sell the land to another developer. Staff consider
that these short-term effects are outweighed by better cost signalling and
associated longer-term benefits.
45. As these
investments are being planned over decades, they are subject to refinement as
investment plans are developed further, development intentions change, and
economic conditions fluctuate. Future contributions policies will be updated as
more refined information becomes available.
Consultation
46. Public
consultation ran from 30 September to December 2024, featuring webinars,
in-person events, and an opportunity for submitters to present directly to
councillors.
47. Materials
released to support consultation included the following documents attached to
this report:
· Attachment
A: Draft Development Contributions Policy 2025
· Attachment
B: Schedule 8 Assets for which development contributions (DCs) will be used
· Attachment
C: Consultation Document - Contributions Policy 2025
· Attachment
D: How we set Development Contributions – Cost Allocation Methodology
· Attachment
E: Funding area maps.
Feedback received
48. A total of
147 submissions were received, including 46 from organisations.
49. Key concerns
raised included the impact of higher contributions on house prices and
development, uncertainty around 30-year planning and cost escalation, the scale
of stormwater investment in Tāmaki, delays in infrastructure investment,
consideration of alternative funding sources, transparency of information, and
specific issues with funding areas and projects.
50. A full
analysis of the feedback can be found in Attachment F.
Updates for Final Policy for
Adoption
51. Officers are
analysing the points raised in the submissions. Advice on these points and
further analysis conducted since the consultation process, including updated
growth and economic forecasts, will be incorporated in advice to the Governing
Body for decision making, planned for 1 May 2025. Potential changes to the
proposed policy will also be presented at that time.
52. The
Government has announced intended reforms to infrastructure funding and
financing as part of the Going for Housing Growth policy program. The reforms
are planned for implementation alongside council long-term plans in 2027. The
exact form the reforms take will only be confirmed once legislation has passed.
Staff consider that the Contributions Policy will still be required for at
least the next two years and the council should continue with the updates and
improvements proposed.
Tauākī whakaaweawe
āhuarangi
Climate impact statement
53. Planning now
for the funding of investments to support growth in the IPAs will ensure that
the council is better able to deliver the infrastructure required for
development in the IPAs to manage climate impacts of development and to connect
to the rest of the city with a reduced climate impact. The proposal provides
for early developers to meet a share of the costs of the infrastructure they
will benefit from and create the need for, to address the cumulative
impacts of growth.
54. If plans for
securing a share of funding with DCs from early developers aren’t made
now, greater demands will fall on future ratepayers to deliver this
infrastructure. While adjustments can be made to the DC policy in the future
these can’t retrospectively secure revenue from early developers. General
rates are the only practical alternative funding source to make up this
shortfall. Given the competing demands on general rates there is a real risk
that all the funding required won’t be available in the future. This will
mean the council won’t be able to deliver the level of investment
required, leading to a greater negative climate impact.
Ngā whakaaweawe me
ngā tirohanga a te rōpū Kaunihera
Council group impacts and views
55. The
information prepared for consultation on the draft Contributions Policy 2025
was developed in conjunction with the following council-controlled
organisations and council units:
· Auckland
Transport
· Public
Law
· Policy
· Planning
and Resource Consents
· Eke
Panuku Development Auckland
· Healthy
Waters and Flood Resilience
· Service
Strategy and Partnerships
· Chief
Economist Unit
· Spatial
Analysis and Modelling.
Ngā whakaaweawe
ā-rohe me ngā tirohanga a te poari ā-rohe
Local impacts and local board views
56. The DC price
varies by location depending on the cost of infrastructure required to support
development in an area. These locations do not usually align to local board
areas.
57. A local board
briefing session was held on 30 September 2024 to brief members on this topic.
Local boards have received a memorandum to update them on the review of the
contributions policy and the feedback from public consultation. 18 local boards
accepted an offer for workshop briefing sessions which were held in March. The
purpose of this report is to seek local board views.
Tauākī whakaaweawe
Māori
Māori impact statement
58. Development
contributions are assessed against the demand that different types of
development generate on council infrastructure. Māori developments are
assessed under broader development types based on the demand they generate. For
example, kaumātua housing is treated the same as retirement villages, and
marae are considered under community facilities.
59. Iwi
authorities with mana whenua interests were contacted prior to the start of
consultation to seek expressions of interest in discussing and providing
feedback on the proposed changes. All iwi authorities were also notified when
consultation opened, further advising of how they could have their say. The
Mana Whenua forum and other council forums were advised of the consultation.
60. Seven
submitters on the proposal identified as Māori. One response supported the
proposed changes to update the policy for changes to the LTP and to reflect
growth beyond 2034 in the IPA areas and four were opposed. In regard to the
changes to Drury and the other changes proposed two were in favour and two
against. The only comment received was that new development needs to be fully
funded by developers.
Ngā ritenga
ā-pūtea
Financial implications
61. The Long-term
Plan 2024-2034 assumes DCs revenue of $2.0 billion over the LTP period. After
completing the analysis of the cost of investments in the LTP that can be
recovered with DCs and the impact of the proposed policy changes, it was
estimated that the revenue would be $2.6 billion. The achievement of this
revised revenue forecast requires, as a first step, the implementation of a
contributions policy updated for the capital expenditure decisions in the LTP,
and the other changes proposed in this report.
Ngā raru tūpono me
ngā whakamaurutanga
Risks and mitigations
62. Forecasting
long-term growth, infrastructure investment, and development contributions
(DCs) carries risks, but these can be managed through the triennial long-term
plans, policy adjustments, and reallocation or refunds of DCs if planned assets
are not delivered.
63. There is a
risk that projected development and DC revenue may not be met, which will be
managed by monitoring consent applications and DC revenue.
64. The council
ensures its contributions policy complies with legislation, but given the
proposed increases in DCs, some developers may challenge the policy.
Ngā koringa ā-muri
Next steps
65. The Governing
Body will consider the feedback and updates to the proposed policy and make a
decision on the final policy adoption on 1 May 2025.
Ngā tāpirihanga
Attachments
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No.
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Title
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Page
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a⇩
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Attachment A: Draft Development Contributions Policy
2025
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15
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b⇩
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Attachment B: Schedule 8 Asset for which development
contributions (DCs) will be used
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59
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c⇩
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Attachment C: Consultation Document - Contributions
Policy 2025
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89
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d⇩
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Attachment D: How we set Development Contributions
– Cost Allocation Methodology
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117
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e⇩
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Attachment E: Funding area maps
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185
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f⇩
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Attachment F: Memorandum and Summary of consultation
feedback
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197
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Ngā kaihaina
Signatories
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Author
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Andrew Duncan - Manager Financial Policy
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Authorisers
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Lou-Ann Ballantyne – General Manager,
Governance and Engagement
Manoj Ragupathy – Local Area Manager
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