Agenda of Governing Body - Thursday, 29 May 2025

Name	Value	Next update
Annual CPI Inflation (March 25 quarter)	2.5 per cent	21-07-2025
Annual non-tradeable inflation (March 25 quarter)	4.0 per cent	21-07-2025
Official Cash Rate (OCR)	3.5 per cent	28-05-2025
Unemployment rate (March 25 quarter)	5.1 per cent	06-08-2025
GDP quarterly change (March 25 quarter)	0.7 per cent	19-06-2025
GDP annual change (as of March 25 quarter)	-0.5 per cent	19-06-2025
International net migration (year to March)	26,400 people	11-06-2025
Auckland dwellings consented (year to March)	14,049 (-4.4 per cent)	30-05-2025
City Centre pedestrian count change (Apr-25 v Apr-24)	-3.8 per cent*^	30-06-2025
City Centre retail spending change (Mar-25 v Mar-24)	-8.5 per cent^	30-06-2025
Auckland retail spending change (Mar-25 v Mar-24)	-1.2 per cent^	30-06-2025

No.	Title	Page
a ⇨	Group and Auckland Council Quarterly Performance Report Q3 2024/2025
b ⇨	Auckland Council Group Statutory Financial Report 31 March 2025
c ⇨	Reconciliation of Management to Statutory Results to 31 March 2025

No.	Title	Page
a ⇨	Business Improvement District (BID) Policy 2025
b ⇨	BID Feedback Received
c ⇨	Local Board Feedback Received

Common expectations	AFFTL response
Accelerate implementation of group shared services	P
Delivering Auckland Council’s commitment in Year 2 of the Long-term Plan and alignment to final 2025/2026 Annual Plan	P
Upholding the Group’s Te Tiriti o Waitangi-derived obligations	P
Compliance with Statement of Expectations of substantive CCOs	P

AFFTL specific expectations	AFFTL response
Deliver distributions to council from the Auckland Future Fund in 2025/2026 in accordance with the Auckland Future Fund Distribution Policy.	P

No.	Title	Page
a ⇨	Auckland Future Fund Trustee Limited 2024/2025 Quarter Three report
b ⇨	Auckland Future Fund Trustee Limited draft Statement of Intent 2025-2028

Governing Body

29 May 2025

Investment Priority Areas Infrastructure Investment

File No.: CP2025/00216

Te take mō te pūrongo

Purpose of the report

1. To endorse a 30-year programme of infrastructure investment required to support the development forecast for identified Investment Priority Areas in Auckland.

Whakarāpopototanga matua

Executive summary

3. Auckland’s population continues to grow rapidly, and infrastructure is needed to provide services and amenities to new residents.

4. The Future Development Strategy (FDS) identifies spatial priority areas for growth. The Long-term Plan 2024-2034 (LTP), and its associated 30-year infrastructure strategy, prioritises infrastructure investment in these areas, identified as Investment Priority Areas (IPAs). The IPAs are the:

· Auckland Housing Programme (Mt Roskill, Māngere, and Tāmaki)

· City Centre (City Rail Link (CRL) stations at Maungawhau and Karanga-a-Hape)

· Inner Northwest (Redhills, Westgate and Whenuapai)

· Drury.

5. Since 2020, the council has been progressively developing a 30-year infrastructure investment programme for these IPA areas, starting with Drury. A plan for the 30-year investment required to support growth in Drury was adopted in April 2023. These plans provide greater clarity about the council’s intentions for investment and support better alignment of land-use decisions, including the phasing of development, and planning for other network infrastructure providers. The infrastructure investment contained in an endorsed programme can also be included in the council’s contributions policy, to ensure a fair allocation of the full cost of growth infrastructure between all parties that benefit from, or cause the need for, this infrastructure.

6. In September 2024 the council endorsed a proposed 30-year programme of infrastructure works for consultation alongside the draft Contributions Policy 2025. This infrastructure work programme involves the investment of $11 billion over 30 years to support growth in the IPAs and deliver good urban environment outcomes in accordance with the priorities set out in the council’s Future Development Strategy, Infrastructure Strategy and Long-term Plan.

7. In addition to the existing investment in Drury, this infrastructure work programme will provide:

· new transport, parks and community facilities investments for the Inner Northwest, Māngere, Mount Roskill and Tāmaki

· updates to the transport, parks and community facilities investment programme for Drury included in the council’s current contributions policy in April 2023

· new stormwater investment for Drury and Tāmaki.

8. Consultation on the draft Contributions Policy 2025 and the 30-year investment programme was undertaken between September and November 2024. A full analysis of feedback received during this consultation is in attachment D to the report Contributions Policy 2025 Adoption next on the agenda for this meeting. Key feedback specific to the 30-year investment programme was:

· uncertainty and fairness of planning over a 30-year time frame

· escalation forecasts over a 30-year timeframe and their impact on the cost of investment

· delayed timing proposed for key investments potentially delaying the ability to develop and subjecting costs to further escalation

· specific issues with projects, in particular the scale of stormwater investment in Tāmaki, the cost of transport investment in safety and footpaths in the Auckland Housing Programme areas, and active mode corridors in Drury.

9. The 30-year works programme has been revised following consideration of feedback from consultation, alongside updated information on project requirements as well as developer and central government intentions. Key changes to the draft programme are:

· adjustments to the timing and funding mix for transport investments planned for the 2024/2025 to 2026/2027 years, and consequently 2027/2028, to reflect the Council’s reprioritisation in response to the Government’s decisions on the scale of National Land Transport Fund (NLTF) funding and which projects are eligible

· updated cost escalation and interest rates

· revised transport project and land acquisition timings in the Inner Northwest

· reduction in costs for Drury Active Mode Corridor investment from $65 million to $20 million, due to a revised design for this project

· reduction in transport safety costs from $246 million to $114 million in Auckland Housing Programme areas to adjust for the use of chicanes instead of speed tables

10. Other changes are proposed to reflect detailed feedback on projects and costings and further analysis of project requirements and appropriate investment timing. There are modifications to the proposed investment programme for Tāmaki stormwater and for footpath upgrades in Auckland Housing Programme areas:

· reduced Tāmaki stormwater network upgrade programme that prioritises a reduction in the frequency of hazardous road floodings by reducing flooding related to increased development. This reduces the cost of the proposed network to be included in the Council 30-year investment programme from $798 million, to $547 million.

· widening existing pavements in the Auckland Housing Programme areas, rather than full replacement. This reduces the cost of upgrading footpaths to the 1.8m standard, from $407 million to $165m million.

11. These reduced investment programmes for stormwater and footpaths are recommended for inclusion in the 30-year investment programme, as they provide an appropriate balance between achieving safety outcomes and cost to the council (and therefore to ratepayers and developers).

12. The table below shows the total infrastructure investment by IPA area.

IPA Area	30-year investment programme ($m)
IPA Area	Contributions Policy 2022 Variation A	Consultation Proposal	Recommendation
Inner Northwest	424	4,565	4,062
Mt Roskill	108	1,734	1,605
Tāmaki	254	1,649	1,223
Māngere	132	981	878
Drury	2,333	2,760	2,493
Total	3,251	11,689	10,260

Note to table - excludes projects that are designed to support regional growth irrespective of growth in these areas.

13. The investment timing reflects the forecast pace of growth and the council’s ability to finance. The council will continue to work with Government and developers to bring forward investment where possible. Cost escalations have been reviewed and updated based on the latest economic advice.

14. 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.

15. Staff consider the proposed programme of infrastructure investment is required to support the development forecast for the identified Investment Priority Areas in Auckland. To the extent there is some inherent uncertainty in this longer-term planning, it can be managed through the three-yearly review of our infrastructure planning priorities and funding through the council’s Long-term plan.

Ngā tūtohunga

Recommendation/s

That the Governing Body:

a) tuhi tīpoka / note that the council’s 10-year budget 2024-2034 and its associated 30-year Infrastructure Strategy identifies the Inner Northwest (Redhills, Westgate and Whenuapai), the Auckland Housing Programme (Mt Roskill, Māngere, and Tāmaki) and Drury as Investment Priority Areas in which the council intends to focus its investment to support growth;

b) tuhi tīpoka / note that the 30-year programme of Auckland Council capital expenditure for Inner Northwest (Redhills, Westgate and Whenuapai), the Auckland Housing Programme (Mt Roskill, Māngere, and Tāmaki) and Drury set out in Attachment A to this report includes $10.260 billion of investment broken down into:

i) $877 million in the first 10 years, which is already included in the 10-year budget 2024-2034; and

ii) an additional $9.383 billion of investment for delivery beyond 2034;

c) ohia / endorse the 30-year programme of works for Inner Northwest (Redhills, Westgate and Whenuapai), the Auckland Housing Programme (Mt Roskill, Māngere, and Tāmaki) and Drury set out in Attachment A as those which the Council intends to deliver, subject to available funding and to clause d) below;

d) tuhi tīpoka / note that the precise scope and timing of investments included in the programme will be subject to review as part of the development of future council long-term plans, the development and on-going review of the Future Development Strategy and Regional Land Transport Plans.

Horopaki

Context

16. 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]}.

17. Rapid growth is creating substantial demand for infrastructure investment in both brownfield (previously built on) and greenfield (never built on) areas. Significant investment in infrastructure is required to cope with the cumulative impacts of growth expected over the next 30 years.

18. The Future Development Strategy sets out the expected timing of development areas across Tāmaki Makaurau. This includes the identification of spatial priority areas for housing and employment growth. The growth forecasts used in this report are based on the Auckland Growth Scenario 2023 v1.1 (AGS2023v1.1), which forecasts growth to 2052.

19. For IPAs, we have considered the anticipated growth until each area is expected to be fully developed. The population at full build out is used to determine the ultimate requirements (type, location and size) of infrastructure in each area. Full build out dates for each IPA area have been extrapolated from the AGS2023v1.1growth forecasts, applying an even growth distribution from year 2053.

20. The LTP, and its associated 30-year infrastructure strategy, prioritises investment in the spatial priority areas identified in the Future Development Strategy areas as IPAs. The IPAs are the:

· Auckland Housing Programme (Mt Roskill, Māngere, and Tāmaki)

· Inner Northwest (Redhills, Westgate and Whenuapai)

· City Centre (CRL stations at Maungawhau and Karang-a-Hape)

· Drury.

21. The council agreed at its meeting on 9 December 2021 to endorse a programme of proposed works in Drury planned for delivery beyond the period of the 10-year budget 2021-2031. That programme of works was subsequently included by way of an amendment to the contributions policy, allowing for development contribution funding. At that time, the council agreed in principle for longer term investment in other IPAs to be identified and endorsed in the same way. If this is done, then the contributions policy can similarly provide for an appropriate portion of the capital expenditure of that infrastructure to be met thorough development contributions.

22. To support faster housing development in the coming decade, staff have continued work with Kāinga Ora and central government to enable further investment in the Auckland Housing Programme areas using the Housing Acceleration Fund, additional National Land Transport Funding, and development contributions. This would allow for an acceleration of investment in the transport, stormwater, parks, and community infrastructure to support growth in these areas in the next decade that would otherwise not be possible with the council’s resources alone.

23. The projects that may be funded by the Housing Acceleration Fund have been included in the proposed investments. Proposed investments in transport projects are also subject to the approval of co-funding through the National Land Transport Funding by the New Zealand Transport Agency/Waka Kotahi. The Housing Acceleration Fund and longer-term National Land Transport Funding are awaiting decisions through government processes that are still underway.

Development of the 30-year programme of work

Transport infrastructure

24. Proposed transport investment priorities for the IPAs were identified from investment business cases produced by Auckland Transport in conjunction with the New Zealand Transport Agency/Waka Kotahi for the Northwest and brownfield areas. The council and Auckland Transport have undertaken additional analysis to scope further arterial, collector and local roads which are not included in the above. Original business case assumptions were updated with the latest growth forecasts and took into account central government plans for transport investment.

25. The 30-year transport costing methodology developed for Drury was revised to ensure alignment with Auckland Transport’s Cost Estimation Guide released in May 2023, and adapted for application to the brownfield IPA areas.

Parks and community infrastructure

26. The requirements for parks and community infrastructure are based on the provision metrics in the Open Space Provision Policy, the Community Facilities Network Plan, and operational planning in the short-term. For the Inner Northwest, we considered the nature of forecast development identified in the Whenuapai Structure Plan and the Future Development Strategy and precinct plans.

Stormwater infrastructure

27. The stormwater infrastructure required to support growth in the Inner Northwest, Drury, and the Tāmaki IPAs has been identified and assessed. The assessment evaluated pre- and post-development flows, contaminant loads, and their impacts on the stormwater system's capacity to convey and treat water. Catchment-scale projects addressing major flooding events, as well as the hydrological and water quality impacts of new development, are reflected in this programme.

28. The proposed stormwater infrastructure programme reflects a new approach to managing the stormwater piped network in brownfield areas. In greenfield areas, all stormwater infrastructure is newly constructed and designed to meet the current Code of Practice (CoP). However, in Tāmaki, like many other brownfield areas of the city, the existing stormwater pipes were designed for lower capacities than today’s standards require, resulting in more frequent flooding of roads and properties compared to newer greenfield suburbs. The planned stormwater investment aims to achieve flood hazard risk outcomes in Tāmaki comparable to those in greenfield areas. This will provide a higher service level in Tāmaki than in other brownfield areas of the city, where such significant stormwater investment has not been planned.

29. Stormwater requirements for Māngere and Mount Roskill will be assessed for inclusion in the programme later in 2025 based on the approach adopted for the Tāmaki area.

Water and wastewater

Auckland Housing Programme (Kainga Ora Large Scale Project areas)

30. Watercare has provided for $205 million of water and wastewater investment in the 10-year Budget 2024-2034 to support the initial development in the Auckland Housing Programme areas.

31. Watercare has been working collaboratively with Kainga Ora and Tāmaki Regeneration Company over a number of years to determine the programme of water and wastewater projects that are needed to support growth in Māngere, Mt Roskill, Northcote, Oranga and Tāmaki. This has led to the development of a joint programme of local and precinct level upgrades.

32. The precinct level upgrades are reflected within Watercare’s Asset Management Plan. A number of water and wastewater projects have already been delivered through Shovel Ready funding in Mt Roskill and Tāmaki.

Inner Northwest

33. Watercare is working with a number of major developers in the Northwest across Redhills and Whenuapai to understand their servicing needs. A number of wastewater upgrades are currently underway in the Northwest to enable early stages of development with further works identified and to be delivered.

Drury

34. Watercare has worked with developers within Drury to understand the servicing requirements. A number of projects are already underway, and future works are signalled in Watercare’s Assessment Management Plan to align with the planned growth.

Tātaritanga me ngā tohutohu

Analysis and advice

Issue: Enabling Growth

35. Proceeding with new development in areas without public infrastructure in place could create major problems like the safety of services and amenities such as water and sewage, or transport systems that do not allow people to move around communities safely and easily.

36. The Council should endeavour to fund that growth infrastructure in a way which fairly allocates costs between all parties that benefit from, or cause the need for, the infrastructure. At present, and except for in Drury, the Council cannot recover a contribution from developers for investment to be delivered beyond the period of the LTP, even though that development is creating demand for the investment. This is because liability for contributions is determined under the Contributions Policy in force at the time a consent is lodged, and this longer-term investment is not presently included in our Contributions Policy. As a result, the cost of delivering the infrastructure that supports these developments falls to ratepayers.

37. To address this issue, in 2023 the council agreed to include infrastructure investment over the next 30 years in its contribution policy, starting with Drury. The council now needs to consider whether to extend the 30-year infrastructure works programmes to other investment priority areas.

38. The need to prioritise spending in the LTP means that the planned investment in growth infrastructure in priority geographical areas over the next decade is less than what is preferable to support the growth expected in this timeframe, and some projects have been deferred into future periods.

Proposal for Consultation

39. At its 26 September 2024 meeting, the Governing Body endorsed the 30-year programme of proposed works for Investment Priority Areas for consultation alongside the draft Contributions Policy 2025. This works programme provided new 30-year investment in transport and parks for the Inner Northwest, Mt Roskill, Tāmaki and Māngere as well as updates to the 30-year programme of work for Drury. The work programme also included 30-year stormwater investment for Tāmaki and Drury. No requirement for stormwater investment in the Inner Northwest was identified, as all works required to support development will be delivered by developers. Work on assessing the stormwater investments required in Mt Roskill and Māngere, additional updates to Dury and investments in the City Centre will be completed later in 2025.

IPA Area	Consultation Proposal: Investment in $ millions 2025-2054
IPA Area	Transport	Stormwater	Parks and Community Facilities	Total
Inner Northwest	3,221	0	1,344	4,565
Mt Roskill	1,659	0	75	1,734
Tāmaki	629	873	147	1,649
Māngere	958	0	23	981
Drury: Investment adopted April 2023	1,627	0	705	2,332
Drury: Updates to Investment	92	36	300	428
Total	8,186	909	2,594	11,689

Inner Northwest (Westgate, Whenuapai, and Redhills)

40. By 2065 the Inner Northwest growth area is forecast to accommodate an additional 87,000 people, 35,000 new households and 27,000 additional employees.

41. As a greenfield area we expect all new local roads and a majority of collector roads to be delivered by developers (referred to as developer mitigation). Developers will also be required to deliver all the stormwater infrastructure required to support development.

42. The programme of council works consulted on for the Inner Northwest included:

· intersection upgrades, delivery of new /upgraded active mode cycling and walking routes, new or upgraded arterial roads and improved connectivity over State Highways 16 and 18

· new parks to be acquired and the development of these and recently acquired parks

· aquatic-recreation space for the wider Northwest with the benefiting catchment including the Huapai and Kumeu areas

· library and community space required for the Inner Northwest in addition to the facility at Westgate.

Tāmaki, Māngere and Mt Roskill

43. By 2060, the Tāmaki, Māngere and Mt Roskill Auckland Housing Programme growth areas are forecast to accommodate an additional 118,000 people, 38,000 new households and 22,000 additional employees.

44. As these are brownfield areas, only limited developer mitigation works are expected. The majority of the proposed transport, stormwater, parks and community investment is focused on upgrades to existing assets. The draft 30-year programme of works for consultation included investment in these areas for:

· upgrades within existing transport corridors. This includes responding to higher number of traffic movements, upgrading intersections, improving active mode connectivity and pedestrian safety, undertaking works to support railway station upgrades, and bus prioritisation.

· parks investment focused on upgrading and optimising existing assets but includes provision to acquire two new parks.

· in general, the existing community spaces across the three IPA areas can accommodate population growth. However, investment in additional library space in Tāmaki will be required late in the 30-year horizon.

· the proposed stormwater investment in Tāmaki included catchment-scale projects designed to address large-scale flooding, as well as the water quality and hydrological impacts of forecasted growth, as outlined in the Long-term Plan. In addition to these catchment-scale initiatives, a new approach to the piped stormwater network was proposed. This approach involves extending and upgrading the pipe network to reduce the frequency of hazardous flooding on roads and improve overall drainage across the catchment. Increased flooding risks are anticipated due to higher runoff from impervious surfaces associated with new development, as well as the effects of climate change. The proposed level of investment aims to achieve drainage and flood management outcomes comparable to those in developing greenfield areas.

· no additional stormwater investment was proposed for Mount Roskill or Māngere. The stormwater requirements for these areas will be assessed later in 2025, in alignment with projects identified through the Making Space for Water programme and decisions on this programme.

Drury

45. The proposal for consultation also included updates to the Drury 30-year investment programme of works. The updates increased investment for Drury from $2,332 million to $2,760 million, with changes including:

· updates to the transport programme to reflect investment decisions made by the government through their Roads of Regional Significance (previously New Zealand Upgrade Programme) and to align projected costs with Auckland Transport’s Cost Estimation Guide. The key impact of these updates is the removal of the Waihoehoe Road /Great South Road project (part of the Waihoehoe Rd upgrade project) and some state highway intersections, and to increase the contingency provision in all transport projects.

· the inclusion of one stormwater trunk project. All other required stormwater infrastructure is expected to be delivered by developers as developer mitigation works.

· updates to the expected timing of projects to reflect latest information, including decisions made through the LTP. The primary impact was the deferral of the delivery of some park’s projects beyond 2034.

46. Further updates to include investments required for Drury West will be completed later in 2025.

Consultation and feedback

47. Consultation on the 30-year programme of proposed works and the draft Contributions Policy 2025 was undertaken between September and November 2024. A full analysis of feedback received during this consultation is in attachment D to the report Contributions Policy 2025 Adoption next on the agenda for this meeting. The feedback form included two questions related to the 30-year investment programme. These questions and the responses received are shown in the following table:

Question	Support	Do not support	Other
1. What do you think of our proposal to add projects to the Investment Priority Areas beyond the next 10 years?	31	55	14
2. What do you think of our proposed changes for the Drury area?	36	36	28

48. Of the submitters who made specific comments on the 30-year investment programme, the following themes were raised:

· 20 considered there was too much uncertainty regarding the nature, location, cost or timing of investment beyond the 10-year LTP period

· 20 raised issues of complexity or transparency, such as difficulty understanding the approach to costing projects, and/or lack of consultation on the investment programme

· 15 questioned the robustness of our assumptions, approach to costing or the level of escalation applied

49. Individual developers also raised specific concerns with projects relevant to their areas, for example the:

· potential to reduce Tāmaki stormwater investment by developers providing onsite solutions

· timing of specific projects such as Drury stormwater in relation to their development plans

· overlaps between the council’s work programme and Kainga Ora’s investment intentions in the AHP areas

· that the level of contingency applied to project costs is much higher than the industry standard of 10 per cent.

50. It was suggested that greater provision should be made for developers to undertake more of the capital investment as they can do this sooner and at much lower cost. The submitters said that the council needs to make appropriate provision to adjust DCs for these developers to reflect their investment.

Staff response to feedback

51. The proposed investments include projects in the Auckland Housing Programme areas that may be funded by the Housing Acceleration Fund and transport projects with assumed funding from the National Land Transport Fund. These projects are subject to central government approval processes which are ongoing. Where decisions have been made the proposed investment plans have been adjusted accordingly. Further adjustments will be made to the council’s plans in response to future government decisions as they occur. The council is also undertaking a review of the 2016 Whenuapai Structure Plan which is currently underway. Decisions made through that process will be reflected in the investment plans when that work is completed.

52. Council staff will continue to work alongside developers on alternative mechanisms for funding infrastructure. Our investment plans will be updated to reflect any future infrastructure agreements with developers.

53. Staff consider that there is sufficient certainty to endorse the proposed investments as required to support the development forecast for the identified Investment Priority Areas in Auckland. Any uncertainty associated with longer-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.

54. Retaining a 10-year horizon would continue uncertainty about future council investment 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 increase the funding burden on future ratepayers.

55. Officers recognise that developers may wish to deliver infrastructure the council would otherwise provide earlier than the council has planned for. The council will work with developers to facilitate this. In doing so officers will seek to put in place arrangements that treat the investing developers fairly without impacting on the council’s balance sheet or negatively affecting ratepayers or other developers.

56. Cost projections for capital projects are based on the best available information at the time of adoption and are set at a mid-point of the expected total project cost. The level of contingency the council group applies to project costs differs between asset types, based on the relative risks and options for managing the non-cost contingency of projects. Contingency rates are developed in accordance with relevant industry standards, and rely on historical costs for similar projects, supplier quotes or estimates, independent cost estimations and expert advice as appropriate.

57. Contingency of between 0 and 15 per cent applies to reserve acquisitions, reserve development and community facilities, depending on the design phase of the project, and whether costs can be managed at a programme level by adjusting the scope of the final project design or through choices regarding the size and location of land.

58. Network infrastructure such as transport and stormwater normally require land from specific properties and meet appropriate engineering standards. Unlike park acquisition and community facilities there is limited ability to manage costs through location or design choices.

59. Higher rates of contingency are applied to network infrastructure projects in the earliest phases of their development, with lower rates applied as the project progresses through design phases towards completion. This is because contingencies are applied to manage the risk of the unknown, such as the geology of an area, or whether projects will affect underground services in brownfield areas – factors that are already known are accounted for in the base cost estimate. As a project proceeds through the phases of its development through to detailed design, the base project cost estimate becomes more accurate and the level of contingency applied decreases.

60. Contingency rates for Transport projects are based on historic project out-turn costs versus phase activity estimates and are set in accordance with the AT Guide to Cost Estimation^{^[2]}.The Council’s approach to contingency allowances over its 30-year investment programme has been externally peer reviewed by Deloitte in 2022.

61. Feedback related to specific projects that are now proposed for change is discussed in the next sections of this report.

Changes to the proposed work programme since consultation

62. The 30-year work programme endorsed for consultation has been reviewed in light of feedback received from consultation, alongside ongoing discussions with developers and third-party delivery agencies such as the New Zealand Transport Agency regarding their plans and intentions. As a result, some changes to the work programme are now proposed where this is considered appropriate following more detailed analysis or updated information. In addition, alternative options for the level of investment in the AHP areas have been developed.

Programme-wide updates

63. Feedback questioned the appropriateness of escalation rates applied to costs in the investment plan, particularly for land. The council’s approach to cost escalation has subsequently been reviewed by the Chief Economist Unit and is considered to be robust. The use of property price indexes is considered appropriate as a base for estimating land price escalation given the property is significantly weighted towards the land value, representing the bulk of the increase.

64. Escalation rates for land and construction costs have been updated in line with advice received from the council’s Chief Economist Unit in December 2024. Interest rates were also updated in line with December 2024 advice from the council’s treasury department. See table following for the updated rates.

December 2024 Escalation Rates from Chief Economist Unit
Applies to:	2023/24 (Actual)	2024/25	2025/26	2026/27	Long-Run Projection
Land	1.4%	2.8%	7.0%	4.3%	7.1%
Construction	2.8%	3.2%	3.2%	3.1%	3.1%

65. Land cost escalation is now slightly lower than forecast for consultation, while construction costs are slightly higher. The overall impact is negligible, with less than one per cent increase in costs for transport and stormwater projects, and a similar decrease for parks land acquisition.

66. Interest rates costs have also been updated in line with December 2024 advice received from the council’s Treasury department as shown in the following table:

December Interest Rates Auckland Council Treasury
FY25	FY26	FY27	FY28	FY29	FY30	FY31	FY32	FY33	FY34
4.70%	4.70%	4.70%	4.50%	4.40%	4.40%	4.50%	4.50%	4.60%	4.60%

67. As a result of the updates to the programme, some project timings within the first ten years of the programme have been adjusted, to ensure alignment with the available long-term plan budget over this period.

68. The transport capital investment programme for the 2024/2025 to 2026/2027 period has been updated to reflect the council’s decisions made in response to the Government’s decisions to reduce NLTF funding for this period by $569 million dollars. The impact of these changes is to reduce the investment for projects supporting growth in this period by $295 million and the NLTF funding by $162 million.

69. As the Government has not yet provided direction on longer-term NLTF funding the council has not been able to make any consequential adjustments to its plans beyond this period. The longer-term investments plans will be updated when further government direction is provided and the council undertakes a revision via the appropriate annual or long-term plan. Pending that direction the projects deferred from the 2024/2025 to 2026/2027 period are treated as being delivered in the 2027/2028 year with the NLTF funding at the 51 per cent rate contained in the LTP. No changes have been made to the programme beyond 2027/2028.

Changes to the Inner Northwest works programme

70. The expected full build out date for Whenuapai (the date when the area is expected to be fully developed) has been brought forward from 2080 to 2065. This shift aligns growth with the planned infrastructure provision and considers the impacts of later growth on the DC prices. The timing of some Inner Northwest transport projects and the associated land acquisitions have been adjusted to enable more efficient sequencing of projects, there have also been minor updates to the developer mitigation assumptions. This has raised the cost of some projects and decreased the cost of others, with an overall increase of 0.4% of the transport programme costs for the Inner Northwest.

Changes to Drury works programme

71. Feedback was received that the level of investment in the Drury Active Mode corridor was too high. This project provides improved walking and cycling connectivity between Drury Central and Drury West. A more detailed assessment has been undertaken of this project, resulting in a revised design and modified apportionment of its share of costs with the adjoining rail 4 track project resulting in reduced land acquisition and construction costs.
This decreased the cost of the project from $65 million to $20 million and lowers the cost of the overall transport programme in Drury by 7 per cent.

72. Several developers requested that the stormwater project be brought forward from 2043 to 2028 to enable development. Staff are continuing to work with developers in this area on a potential alternative solution and financing options for this project. In the meantime, the project remains as proposed and is therefore retained in the work programme. If an agreement is reached, then the 30-year work programme and the contributions policy can be quickly amended to remove this project. Similar discussions are underway in regard to Waihoehoe Roading upgrades will be treated in the same way.

Changes to the Auckland Housing Programme works programme

73. The following changes have been made to the transport programme of works proposed for adoption:

· reduction of local transport safety costs in Mount Roskill and Tāmaki from $246 million to $101 million due to an adjustment from speed tables to chicanes or other similar cost saving measures, to align with the current Auckland Transport approach to road safety investment

· some project timings have been adjusted to better align with Kainga Ora’s work programme.

Update to Auckland Housing Programme Footpaths investment

74. Feedback on the Auckland Housing Programme work programme raised concerns about the level of investment proposed for transport, in particular the cost of footpath upgrades. Auckland Transport’s design guidelines specify a minimum width of 1.8m for new footpaths in urban areas. This is to provide sufficient room for pedestrians and other footpath users (such as those with baby strollers or mobility devices) to safely manoeuvre past each other. The 1.8m width requirement ensures that pedestrian facilities are adequate to accommodate increased foot traffic resulting from higher-density development.

75. The 30-year work programme consulted on included investment to upgrade footpaths within the Auckland Housing Programme areas that are 1.4m wide or less to the current standard of 1.8m wide. This would upgrade around 140km of footpaths in Māngere, 90km in Mount Roskill and 10km in Tāmaki.

76. The consultation proposal provided for the full replacement of footpaths. Funding constraints within the LTP period means that the footpath upgrade programme will only start from 2036, with a cost of $407 million within the 30-year period.

77. Since consultation, work has been undertaken on an alternative proposal for footpath investments. Under this proposal, the required path width will be achieved by constructing a paved extension alongside an existing path, with a reduced cost of $165 million. This approach also means that the mitigation costs associated with reinstatement of current footpaths affected by utility and construction works within a road are borne by the developer or utility company causing the damage. The widening work would be most likely to occur in conjunction with or after any work to renew or reinstate current footpaths. The 30-year works programme now recommended for endorsement has been updated with this lower cost footpath investment programme.

78. A more detailed analysis of the footpath investment proposals can be found in Attachment B to this report.

Tāmaki Stormwater Investment options

79. Feedback raised concerns about the level of investment required for the proposed extension and upgrade of the Tāmaki stormwater piped network and questioned whether the growth share has been appropriately assessed. Developers questioned whether these outcomes could be more effectively achieved through on-site mitigation measures. Additionally, some feedback highlighted potential overlaps between the council’s works programme and the infrastructure projects planned by Kāinga Ora. In response to this feedback, staff have conducted further analysis and developed alternative investment options for the Tāmaki stormwater pipe network, as outlined below.

80. The consultation proposal for stormwater investment in Tāmaki included:

· large catchment-scale stormwater projects to address major flooding, hydrological, and water quality impacts of growth

· upgrades and extensions to the piped drainage network across the catchment to enable growth by mitigating the impact of increased impervious surface area and to improve existing service levels by reducing the frequency of flooding.

81. No changes are proposed to the consultation proposal for large catchment-scale stormwater projects. These projects were included in the Long-term Plan 2024-2034 and are recommended for endorsement.

82. The need for new pipes and upgrades is driven by the increase in impervious surface area. Historically, Tāmaki has had around 45% impervious surface coverage, with a significant portion of the catchment relying on soakage pits rather than a piped stormwater network. Based on current redevelopment trends, average impervious surface coverage is expected to increase to 90%. Infiltration tests of the underlying geology indicate that soakage will not be able to absorb the additional runoff from intensified development. Additionally, existing pipes typically have the capacity to handle runoff from only a 50% Annual Exceedance Probability (AEP) event. Without additional stormwater infrastructure investment, the increased imperviousness in the catchment will lead to more frequent and severe instances of dangerous flooding on both private properties and public roads.

83. The 30-year work programme consulted on included $724 million to comprehensively upgrade the primary stormwater network in Tāmaki. This proposed a new piped network to drain areas currently reliant on soakage and upgrades to the existing network to reduce nuisance flooding on private properties and mitigate road hazards during storm events up to a 10% AEP. This level of service aligns with what would be required in a new greenfield area.

84. Submitters who commented specifically on the Tāmaki stormwater pipe drainage network proposal considered the level of investment too high. They suggested that the effects of development on stormwater could be managed more cost-effectively through on-site mitigation works delivered by developers.

85. Since consultation, further work has been undertaken to:

· develop an alternative service level model focused on prioritising pipe network upgrades that reduce hazards on main roads, rather than addressing nuisance flooding on all private properties. This still represents a significant improvement over the status quo, where the Council does not upgrade the primary network. (This option is referenced as Option 2: Upgrades prioritised for road safety (New option))

· estimate the total cost of developer delivered mitigation required under the different investment scenarios.

· develop allocation options that recognise sites where developer mitigation is required over the long term or commitments to infrastructure provision have been made

· identify planned investment by Kainga Ora in Tāmaki. $62 million of pipe network infrastructure has now been removed from the council work programme, on the basis that Kainga Ora have committed funding to deliver these works within the next three years.

· review the approach to allocation costs between growth and level of service.

86. While on-site attenuation can reduce nuisance flooding on a specific site or its immediate neighbours, it does not eliminate the increased runoff volumes entering the network. As these additional volumes accumulate, they create cumulative impacts downstream. There is also a significant risk of on-site devices failing over time if maintenance and renewals are not adequately managed.

87. The table below outlines the outcomes and costs to the council and developers for the different investment scenarios considered.

Option	Service Level Outcome	Developer’s onsite costs (Unescalated – today’s $)	Council Cost: Growth Escalated	Council Cost: non-growth Escalated
Option 1: Developers mitigate onsite (Status Quo)	Service level worse than at present or in other brownfield areas. Pipes have less than 10yr capacity Developers use tanks, overland flow aims to be ‘no worse’ than existing, but cumulative impact can increase depths. Dangerous depths on some roads, depth and extent will get worse over time. as climate changes High reliance on compliance More nuisance flooding.	$2,000m	$0m	$37m (renewals only)
Option 2: Upgrades prioritised for road safety (New option)	Service level superior to current level and major issues mitigated. Bigger pipes only where depth on roads is dangerous Developers upstream of new pipes use tanks, overland flow kept ‘no worse’ than existing Medium reliance on compliance	$566m	$283m	$194m
Option 3: All Primary Network Upgraded (Revised Consultation Proposal)	Consultation proposal has been revised to remove $62 million of pipe network infrastructure that KO have committed to deliver Service level equivalent to greenfield areas. Bigger pipes across the catchment Low reliance on compliance Higher funding commitment from Council 2034-2054 than under Option 1 and 2	Costs only where development is in advance of network provision	$388 m	$279 m

88. As part of the review of the scope of the Tāmaki pipe network programme, staff have reassessed the extent to which growth causes the need for, and benefits from, the new investment proposal. The table below shows the change in renewal, growth and level of service shares for the consultation proposal, the two revised options for investment.

Option	Renewal %	Growth %	LOS %
Option 2: Upgrades prioritised for road safety (New option)	8%	59%	33%
Option 3: All Primary Network Upgraded (Revised Consultation Proposal)	6%	58%	36%
Proposal as consulted on	5%	77%	18%

89. Staff recommend the inclusion of Option 2 in the 30-year work programme. This option adopts a risk-based approach, prioritising pipe upgrades for public safety and where upgrades will have the most significant impact. Additionally, because it involves lower costs for the council, it will enable the implementation of this improved service level in other parts of the city experiencing high levels of intensification. This option balances cost and safety improvements, benefiting the entire community through safer roads and better access during wet weather. The key benefits of this option are:

· lower capital cost for the council and less ratepayer investment than option 3

· lower DC cost for developers than option 3 but potentially higher onsite management costs

· lower overall costs for developers than under option 1 (the combination of onsite costs and DCs payable under option 2 are still below the estimated developers’ onsite costs under option 1)

· reduced risk of non-compliance and on-site device failure compared to the status quo (Option 1).

· improved catchment drainage.

· reduced road hazards during storm events up to a 1 in 10-year event.

90. A detailed analysis of the approach to assessing and costing the Tāmaki pipe network requirements can be found in Attachment D to this report.

Options for 30-year IPA investment programme

91. Options for the proposed 30-year work programme are as follows:

Endorse the attached 30-year programme with alternative Tāmaki stormwater investment (recommended option 2: Upgrades prioritised for road safety)

92. Under this option, the 30-year work programme is updated for the latest available information on project costs, including the reduced footpath investment in AHP area, and includes the investment to deliver upgrades to the stormwater piped network in Tāmaki prioritised for road safety, at a cost of $477m

IPA area	Recommended Investment in $ millions 2025-2054
IPA area	Transport	Stormwater	Parks and Community Facilities	Total
Inner Northwest	3,082	0	981	4,062
Mt Roskill	1,588	0	17	1,605
Tāmaki	580	548	95	1,223
Māngere	849	0	29	878
Drury: Existing Investment	1,627	0	705	2,332
Drury: New Investment	-72	37	196	161
Total	7,653	585	2,022	10,260

93. This option provides a reasonable balance between achieving the council’s required service levels and the cost of investment.

94. Endorsing the programme provided in Attachment A will confirm the council’s intentions for that investment. This will support better alignment of land-use decisions, including the phasing of development, and planning for other network infrastructure providers.

95. For the council, the increased detail will support funding and financing of the required investment utilising tools currently in use (including Development Contributions and rates) and potentially new tools such as targeted rates and those enabled under the Infrastructure Funding and Financing Act 2020. It will also support the use of any new mechanisms such as development levies that are proposed by central government to be introduced next year through their infrastructure funding and financing reforms.

96. Endorsing this 30-year programme will enable more transparency about the council’s intentions as it develops its next Infrastructure Strategy.

97. The council will continue to update both its 10-year Budget and Infrastructure Strategy every three years. The agreed 30-year capital expenditure programme for the IPA areas will be reviewed at the same time, to ensure that it reflects the latest information on central government investment, progress and nature of development in these areas and technological advances.

98. Endorsing a 30-year approach carries some risk of over or underestimating the scope and cost of investment that will be incurred in the future. There is a potentially a lower-level degree of certainty as compared to a 10-year programme. However, even under a ten-year policy, the precise scope and cost of investments towards the end of that period may not be certain. The recommended 30-year investment programme sets out the assets and work programmes the Council intends to provide over the next 30 years and can be endorsed as such. The programme can be revised and refined if circumstances change, in the normal way.

99. If development in an IPA is slower than projected, the council can make changes to the timing of its investment. If an area within an IPA is not rezoned to urban, and the development is no longer predicted, the required infrastructure can be reviewed through future plans and scaled back.

Endorse the attached 30-year programme with high Tāmaki stormwater investment option (not recommended)

Under this option, the 30-year work programme is updated for the latest available information on project costs and will include the investment to deliver full upgrades and extensions of the stormwater piped network in Tāmaki, at a cost of $667m.

IPA area	Recommended Investment in $ millions 2025-2054
IPA area	Transport	Stormwater	Parks and Community Facilities	Total
Inner Northwest	3,082	0	981	4,062
Mt Roskill	1,588	0	17	1,605
Tāmaki	580	738	95	1,413
Māngere	849	0	29	878
Drury: Existing Investment	1,627	0	705	2,332
Drury: New Investment	-72	37	196	161
Total	7,653	775	2,022	10,450

100. This option is not recommended by staff, as the alternative investment options that have now been developed can provide acceptable stormwater outcomes for a significantly reduced investment from the council and lower DC cost to developers.

Defer endorsing the extended 30-year work programme

101. The council could defer the endorsement of the full infrastructure programme pending further, more specific information on growth projections, projects and costs.

102. The degree of certainty about growth projections, project scope and costs will always improve with time, but in any forward planning exercise uncertainty cannot be entirely eliminated. Officers consider that at this time there is sufficient certainty to endorse the programme as that which the council group intends to deliver and the capital expenditure it expects to incur.

103. The Development Contributions Policy 2025 proposed for adoption as the next agenda item is based on a 30-year work programme. If the Governing Body does not endorse the 30-year work programme today, then the Adoption of Development Contributions Policy 2025 report next on the agenda will be withdrawn. Deferring the endorsement of the full programme will also mean that these investments will not qualify for inclusion in the council’s Development Contributions Policy. This would mean that earlier developers would not contribute to their costs, which would most likely have to be covered by ratepayers from across the region. A revised development Contributions Policy 2025 updated only for changes to investment included in the Long-term Plan 2024-2034 will need to be prepared and submitted to a subsequent meeting. Direction should also be given as to further work on the 30-year investment programme.

104. Not endorsing a 30-year work programme for other IPAs would place the 30-year work programme for Drury included in the council’s existing contributions policy at risk. The 30-year programme in Drury was adopted in the expectation that work would be carried out to investigate using the same approach for other IPAs, and it could be seen as unfair if Drury remains the only IPA with a 30-year horizon and where DCs reflect a 30-year programme of investments. Staff would provide advice on options for removing this programme, the expected reduction in infrastructure investment, development contributions, central government funding and the impacts for Drury growth as part of reporting on a revised development Contributions Policy 2025.

Conclusion

105. In 2021 the council recognised that its capacity to support growth across the region with infrastructure was limited and decided to focus its investment in the IPAs.

106. Extensive work has been undertaken by the council group, alongside partners in central government, to identify the infrastructure required over the life of the development to support a well-functioning urban environment.

107. Endorsing the 30-year programme for the IPAs and the updates to the investments planned in Drury that will support the full buildout will provide for better transparency around the nature, cost and phasing of investment, as well as improved alignment of funding sources to the cost drivers and beneficiaries.

108. Staff consider the proposed programme of infrastructure investment is required to support the development forecast for the identified IPAs in Auckland and can be endorsed as such. To the extent there is some inherent uncertainty in this longer-term planning, it can be managed through the three-yearly review of our infrastructure planning priorities and funding through the council’s long-term plan.

Climate impact statement

109. Planning now for the funding of investments to support growth, particularly transport investment, will ensure that the council is better able to deliver the infrastructure required for development to connect to the rest of the city with a reduced climate impact. The detailed investment identified in this report provides for the delivery of an enhanced public transport network, which should reduce the negative climate impact of development in the IPAs through mitigating some of the expected additional transport emissions. Early introduction of public transport services to new growth areas is important to support the establishment of multi-modal travel habits.

110. Similarly, early integration of public transport in a development can encourage property developers to create transit-oriented communities, reducing car dependency and promoting designs that prioritise walkability and access to public transport over private vehicle use. This would contribute to reducing emissions.

111. Based on the above, better planning of public transport investments would contribute to mitigating the transport greenhouse gas emissions from the future users of the development (compared to a scenario without a public transport network where users would be generating higher transport emissions). A reduction in embodied emissions from the development could also be noted from the lower investment in roading infrastructures and reduced building footprint design.

112. On the opposite side, if roading infrastructure is brought forward in a development, it can lead to increased car dependency, shaping travel behaviour towards greater reliance on private vehicles over the short to long term (even if public transport infrastructure is put in place later). This can also discourage property developers from creating transit-oriented, sustainable designs, resulting in developments that are going to generate higher transport emissions compared to a public transport orientated scenario.

113. Provision of facilities such as community centres, aquatic centres and libraries aligned with public transport considerations in brownfield growth areas and greenfield areas may reduce travel needs for residents who would otherwise need to travel further to reach them. These steps may reduce reliance on private vehicle usage and have potential to reduce emissions from travel. Investment in reserves and greenway connectors encourages residents to participate in active recreation locally, thereby reducing travel. The planting and additions to the tree canopy reduces air temperature and absorbs more carbon compared to housing and pavement.

114. The IPA’s focus on walking, cycling and public transport provisions could provide potential reductions in carbon emissions, which would work to offset emissions associated with the development of infrastructure.

115. The facilities and prioritisation of sustainable modes of transport mentioned would allow residents of brownfield areas to adapt to lifestyles that are less impactful on the climate.

116. In addition, the planned stormwater investments in Tāmaki aim to ensure that development in the priority growth areas is sufficiently resilient to the expected impacts of climate change.

117. Improved stormwater systems in brownfield areas offer greater resilience for new and existing infrastructure to current and future extreme weather events that may result from climate change.

118. Investment in IPAs located in both greenfield and brownfield areas enable Auckland’s population to grow more sustainably, with reduced climate impact and greenhouse gas emissions.

119. In brownfield areas decisions have been made around development to enhance existing infrastructure (such as footpaths) to encourage sustainable modes of transport, rather than redeveloping completely. These efforts to enhance, rather than create, reduce the impacts of development on greenhouse gas emissions.

120. Developments in brownfield and greenfield areas may serve future needs for climate-related relocation, which may increase Auckland’s adaptability to climate change.

Council group impacts and views

121. The advice in this report was developed in conjunction with the following council-controlled organisations and council units:

· Auckland Transport

· Public Law

· Planning and Resource Consents

· Service Strategy and Partnerships

· Policy Department

· Watercare Services Limited

· Healthy Waters and Flood Resilience

· Chief Economists Unit

· Spatial Analysis and Modelling.

Financial implications

122. A significant portion of the proposed investment is growth-related and qualifies for funding from development contributions. Endorsing the programme now and setting contribution levels in order to spread the cost of all the infrastructure across all the expected development, ensures that the costs of growth are appropriately recovered, and do not place an undue impact on ratepayers across Auckland.

123. The Long-term Plan 2024-2034 assumes development contributions revenue of $2.0 billion. This is based in part on including in the Contributions Policy 2025 investments required to provide for growth in the IPAs planned for delivery beyond 2034.

Risks and mitigations

124. Forecasting the pace and scale of growth and hence the required infrastructure investment and DC charges over a longer time period presents risks to the council. There is also some uncertainty associated with the cost forecasts over such a timeframe. These can be managed through our triennial long-term plan and adjusting the investment plans if necessary, however the fact there is inherent uncertainty may create a risk of complaints that the investment programme and associated costings are not sufficiently robust.

125. Particular areas of uncertainty with the infrastructure planning in these spatial areas relate to Kāinga Ora development intentions and availability of the Housing Acceleration Fund to support infrastructure requirements, the National Land Transport Fund funding allocations, and the update to the 2016 Whenuapai Structure Plan which is currently underway. If changes are made to these projects or council funding requirements as a result of government decision making, including funding decisions which make them unviable, the investment programme will be revised accordingly.

126. When the council adopted the 30-year programme of investment in Drury in April 2023, it signalled there would also be provision for the long-term planning for the delivery and funding of investment in the other IPAs. If these investments are not endorsed there is the risk that the council would need to reconsider its decisions in relation to Drury.

127. As noted above the recommend option for stormwater investment in Tāmaki relies in part of on-site mitigation. There is the risk that a failure for property owners to properly maintain onsite systems will place the achievement of the target service standards at risk in the long-term.

Tauākī whakaaweawe Māori

Māori impact statement

128. Seven submitters on the proposed infrastructure works programme identified as Maori. Of these, a majority did not support the proposal, with 57% opposed, 29% support, and 14% other. None of these submitters provided specific feedback on the investment programme.

129. Māori will have views on the kinds and forms of infrastructure solutions that are required to meet community needs while mitigating any significant negative environmental impacts to the extent possible.

130. The purpose of developing a 30-year infrastructure programme is to give a greater level of certainty about the council’s intentions, to support further decision-making. As is normal, the investment programme will be reviewed and if necessary revised over time as further information becomes available. Projects within the programme will go through the council and Auckland Transport’s consultation, engagement and partnership processes, including with Māori, before developing and agreeing final design solutions.

Ngā whakaaweawe ā-rohe me ngā tirohanga a te poari ā-rohe

Local impacts and local board views

131. This report sets out proposed 30-year infrastructure investment in IPAs located in:

· Drury, located in the Franklin local board area

· Inner-Northwest, covering parts of the Henderson-Massey and Upper Harbour local board areas

· Māngere, in the Māngere-Ōtāhuhu local board area

· Mt Roskill, covering parts of the Albert-Eden, Puketāpapa and Whau local board areas

· Tāmaki, in the Maungakiekie-Tāmaki local board area.

132. Local boards received a briefing on 30 September 2024 on this topic. Local boards received a memo updating them on the proposed 30-year infrastructure investment programme, the review of the contributions policy, and the feedback from public consultation on the issues. 18 local boards accepted an offer for workshops which were held in March 2025.

133. Nineteen local boards provided feedback on the infrastructure investment and the draft Contributions Policy 2025 through their March 2025 business meetings. Local board resolutions on these issues are in attachment I to the report Contributions Policy 2025 Adoption next on the agenda for this meeting.

134. Nine local boards explicitly resolved feedback supporting the 30-year investment programme; no boards opposed the proposal. Seven boards wanted the 30-year investment programme extended to their board area, or to the region as a whole. Common themes included the need for investment that keeps pace with growth, greater responsiveness to local needs and requests for increased investment in local infrastructure.

Ngā koringa ā-muri

Next steps

135. The next item on the agenda for this meeting is to agree the Contributions Policy 2025 for adoption. The recommendations for the Contributions Policy 2025 anticipate a decision to endorse the 30-year capital expenditure programme as part of this item but can be updated if this decision is not made.

136. The 30-year capital expenditure programme for IPAs will be subject to review at least every three years as part of the development of future Auckland Council long-term plans (which include the Infrastructure Strategy), the development and on-going review of the Future Development Strategy, and Regional Land Transport Plans. Work is already underway on the following proposed amendments to the capital expenditure programme:

· stormwater investments required in Mt Roskill and Māngere, which will be considered for consultation later in 2025

· additional investments in Drury to support areas around Opaheke and parts of Drury West as well additional investments in items such as the Drury stations. These will be considered for consultation later in 2025

· investments in the City Centre, which will be considered for consultation later in 2025.

· response to the Whenuapai Structure Plan. This structure plan guides the layout of urban residential and business zones, open space, and infrastructure for urban development in the Whenuapai area, and is currently being updated

137. Staff are continuing to work with Kāinga Ora and central government to enable further investment in the Auckland Housing Programme areas using the Housing Acceleration Fund, additional National Land Transport Funding, and development contributions.

Ngā tāpirihanga

Attachments

No.	Title	Page
a ⇨	30-year investment programme for Infrastructure Priority Areas (Under Separate Cover)
b ⇨	Active Mode Corridor (Drury Central Station to Drury Station West): Technical Assumptions (Under Separate Cover)
c ⇨	Auckland Housing Programme Development Contributions Policy – Footpath Widening Assessment (Under Separate Cover)
d ⇨	Brownfield Stormwater Methodology (Under Separate Cover)

Ngā kaihaina

Signatories

Authors

Beth Sullivan - Principal Advisor - Fin Policy

Andrew Duncan - Manager Financial Policy

Authorisers

Michael Burns - General Manager Financial Strategy

Ross Tucker - Group Chief Financial Officer

Phil Wilson - Chief Executive

Governing Body

29 May 2025

Contributions Policy 2025 Adoption

File No.: CP2025/05729

Te take mō te pūrongo

Purpose of the report

1. To decide whether to adopt the proposed Contributions Policy 2025 which updates the policy for infrastructure investment decisions in the Long-term Plan 2024-2034, adjusts investments beyond 2034 in Drury, and extends the policy to cover investments beyond 2034 in other Investment Priority Areas (IPAs).

Whakarāpopototanga matua

Executive summary

Contributions Policy 2025 at a glance

2. The purpose of development contributions is to enable the council to recover a fair, equitable, and proportionate portion of the total cost of capital expenditure necessary to service growth over the long term from those undertaking development.

3. Contributions policies are required to be regularly reviewed. This revision of the Contributions Policy:

· Updates the council’s planned investments across the region based on the decisions made in the Long-term Plan 2024-2034

· Adds investments planned in the IPAs following a detailed analysis of the transport, stormwater and community infrastructure required over the whole lifecycle of the buildout of these areas.

4. The draft Contributions Policy was subject to extensive public consultation. Officers have carefully considered the feedback received and key changes made following consultation are:

· Levels of investment have been revised downwards in some areas

· New recommended options for:

o Tāmaki stormwater investment with officers recommending a revised level of investment with a partial piped stormwater system focussed on reducing flooding on key arterial routes

o Development contributions pricing with officers recommending a lower price initially which increases over time by two per cent annually (based on projected movements in CPI) rather than fixed pricing over time.

Introduction

5. Development contributions (DCs) help recover a portion of the costs of the infrastructure required to support growth in Auckland. Growth, both now and into the future, benefits from and creates the need for the infrastructure that makes Auckland a well-functioning and vibrant city. To serve this growth the council will need to make investments now and over the coming decades. These investments are reflected in the council’s long-term and annual plans and longer-term commitments to investment. As these plans are updated over time the council needs to update its Contributions Policy (including the schedule of charges) to ensure that DCs reflect the latest investment plans.

6. The current Contributions Policy 2022 Variation A provides for the recovery of DCs for the investments in 10 years covered by the Long-term Plan 2021-2031, adopted in June 2021, and over a thirty-year period for Drury, decided in April 2023. The contributions policy now needs to be updated to reflect the investment decisions in the Long-term Plan 2024-2034 and updates to the investments planned for Dury over the next 30 years.

7. When the Council committed to longer term investments to support growth in Drury, and included these in the Contributions Policy 2022 Variation A, it noted that officers intended to propose further amendments to the Contributions Policy to add investments beyond 2031 in the other IPAs identified in the 10-year Budget 2021-2031 (specifically Inner Northwest, CRL stations, and Auckland Housing Programme (AHP) areas - Tāmaki, Māngere, and Mt Roskill).

8. In the previous item on this agenda the Governing Body was asked to endorse the 30-year programme of proposed works for the Inner Northwest and the AHP areas. That report also recommended changes to the investment plans for Drury. The recommendations in this report assume that the Governing Body decides to do so. If the Governing Body decides not to adopt officers’ recommendations for the alternative stormwater option for Tāmaki in the previous report on this agenda but prefers the option consulted on, revised to reflect committed investments from Kainga Ora, then the recommendation for this item will need to be revised to note this amendment is to be made to the policy before adoption.

9. Note that, unless stated otherwise, references to DC prices, or charges, in this report are per household unit equivalent^{^[3]} (HUE).

Consultation proposal

10. The council consulted on its review of the DC Policy, including proposed changes to the policy to reflect the updates for LTP amendments and for longer-term investment in the IPAs, for seven weeks from 30 September 2024 to 15 November 2024. This was extended until 20 December 2024 to allow submitters extra time to review additional supporting models. The key proposed changes are set out below. The combined impact of the changes proposed raise the average contributions price from $30,000 to $50,000.

LTP amendments

11. The draft policy included new information to reflect:

· capital expenditure decisions made in the Long-term Plan 2024-2034

· updated forecasts for growth and interest rates

· updates to the costs of projects in the existing policy.

12. Updating the DC policy to reflect these changes was assessed to raise the average contributions price from $21,000 to $30,000.

Growth and investment in the IPAs

13. The proposal included extension of the approach applied to Drury to four of the five IPAs identified in the Long-term Plan 2024-2034 (Inner Northwest and the AHP areas) with the City Centre (City Rail Link (CRL) stations at Maungawhau and Karanga-a-Hape to be addressed later in 2025). This means including intended capital expenditure over a longer horizon (30 years) for these areas.

14. Red Hills, Westgate and Whenuapai in the Inner Northwest are forecast to grow to around 38,000 households and 38,000 employees over the next 30 plus years, while the AHP areas at Tāmaki, Mt Roskill, and Māngere could provide up to 40,000 additional dwellings by 2060. Drury is expected to grow by around 22,000 houses over the next 40 years.

15. The preceding report on this agenda recommends the council endorse the $10.260 billion infrastructure programme ($877 million in the Long-term plan period) needed to support this growth in the Inner Northwest, Drury and AHP areas. This report recommends that $4.8 billion of this is funded from developers through DCs.

16. A number of more minor changes were also included in the draft policy to ensure the fair allocation of the costs of infrastructure to serve growth between ratepayers and developers and between developers in different locations.

Consultation and feedback

17. Two webinars and two face to face events were held along with an opportunity for interested parties to present directly to councillors on 14 November 2024. One hundred and forty-seven submissions were received, 46 of which were from or on behalf of an organisation. Submitters were asked four questions. The questions and responses are set out below.

Question	Support	Do not support	Other
1. Considering our proposed investments over the next 10 years, and the impacts of those investments, what do you think of our proposed changes to the Contributions Policy 2025?	30	53	17
2. What do you think of our proposal to add projects to the Investment Priority Areas beyond the next 10 years?	30	56	12
3. What do you think of our proposed changes for the Drury area?	35	38	27
4. What do you think of our other proposed changes?	31	31	38

18. Key issues raised in feedback included:

· uncertainty and fairness of planning over a 30-year time frame and impact of cost escalation

· impact of higher DCs on house prices and the pace, location and nature of development

· consideration of other sources of funding.

19. During and following the consultation period, staff have engaged with submitters and carefully considered all material provided. Notably, concerns raised during consultation about the fairness and impact of a fixed DC price led officers to identify alternative options.

Response to feedback and alternatives considered

20. Developers considered that there was too much uncertainty in the future scale, pace, and location of growth and the costs of infrastructure over a 30-year period for the growth-related share of these costs to be reflected in DCs under the policy. Planning and setting DCs for such planning over a 30-year was said to be too uncertain and unfairly imposed higher costs on early developers. Developers supported retaining the status quo 10-year investment horizon, which extends by three years at each triennial update of the contributions policy following the long-term plan cycle. Officers do not recommend this approach because it would impose additional cost on future general ratepayers across the city as a result of the revenue not collected from early developers. The council is committed to supporting growth in the IPA areas and can adjust the investment plans and DC prices at each triennial review of the LTP and DC policy or sooner depending on the issue. The Local Government Act 2002 (LGA) permits the council to apply DCs to assets other than those in the DC Policy, so long as they have the same general function and purpose and the DC Policy is updated, which it would be if the investment plan is adjusted.

21. Submitters expressed concern the higher DCs would lead to higher house prices. Officers note that the purpose of development contributions is to recover a fair, equitable, and proportionate portion of the cost of growth rather than being a policy instrument to achieve broader housing outcomes. Higher DCs reflect the cost of the infrastructure required to serve the growth that benefits from and causes the need for the investment.

22. Our economic analysis shows that higher DCs do not generally lead to higher house prices as these are determined by the wider housing market and generally higher DCs flow back into lower pre-development land prices. Even if higher DCs did lead to higher house prices this would not be a sufficient reason in and of itself to set lower DCs, as this would require general ratepayers across the region to meet the cost of the foregone revenue.

23. Feedback received from developers included seeking more consideration of alternative funding tools like targeted rates and the use of levies to fund third party financing under the provisions of the Infrastructure Funding and Financing Act 2020. Officers consider that at this time DCs are the most appropriate tool to fund the growth share of the cost to provide the infrastructure required to support the projected growth in the IPAs over a 30-year time horizon. These alternative funding tools are still able to be considered in the future alongside consequential adjustments in the DC policy.

24. Staff considered an option of allocating the transport investments in the Inner Northwest to three funding areas (Redhills and Westgate, Whenuapai South, Whenuapai North) to reflect the higher interest cost incurred by later development in Whenuapai. This option would result in a lower price for Redhills and Westgate but significant increases to the DC price for the Whenuapai areas. Staff consider that further consultation would be required before this option could be implemented. Staff consider that in any event, a single funding area for the Inner Northwest is reasonable and recommend adopting it at this stage. If the Governing Body wishes to formally consider the option of three funding areas it should provide direction to staff to undertake consultation on this issue. This option will not be required if an alternative to a single DC price is adopted as set out below.

25. Officers have also considered two alternatives to setting a single DC price to be paid irrespective of whether the payment is made now or many years in the future. Under the single DC price consulted on, early developers pay a price calculated on the basis that DC prices remain constant over the funding period, despite the increase in infrastructure costs due to inflation over that period, and the interest benefit to the council of their early payment. The proposed policy used for consultation did not discuss alternatives to a single DC price, but feedback questioning the fairness of a single DC price has been received; and a similar option was considered, but not adopted, when amendments were made to the DC policy for Drury in 2023.

26. All of the options, including a single price, would fully and appropriately account for inflation and recover the same share of costs from developers over time with no extra burden on ratepayers. Both the alternatives would have a lower initial price and higher prices over time. Both alternatives below, to a single DC price, would involve the policy providing for a lower DC price for payments made initially, but then rising each financial year based on:

a) projected movements, 2 per cent. in the Consumer Price Index (CPI), or

b) the council’s interest cost.

27. The first alternative option reflects the rising cost of infrastructure investments over time, although at a lower rate than those increases, and looks to better reflect the cost to developers over time in real terms. For this option the mid-point of the Reserve Bank of New Zealand’s target range for the Consumer Price Index of 2 per cent is used. The second alternative option reflects the benefits the council receives from interest earned on early payments before investments are made and the interest costs incurred from payments received later after investments are made. Both options reduce the council’s initial cash flow. They also mean that the ratepayers bear the risk that the pace of growth and hence revenue will be lower. However, both approaches better reflect the actual costs that the council incurs and share these more fairly between earlier and later payers.

28. Officers recommend that the council adopt the first alternative option of prices increasing at 2 per cent per annum, as it strikes a balance between managing the council, and hence ratepayers, risk of cost increases, as well as increasing fairness as between early and late developers.

Updates to the proposal as consulted on

29. The draft Contributions Policy 2025 consulted on has been updated to reflect changes in the investments proposed in the IPAs and updates to investment in Drury endorsed by the Governing Body in the resolutions in the last item on this agenda. This includes the decision on the level of stormwater investment in Tāmaki recommended by officers in that report.

30. The intended infrastructure work programme and therefore the draft policy has also been updated to reflect current economic conditions and forecasts, government decisions on their investment in Auckland, the council’s response to Government decisions on the amount of National Land Transport Funding and the projects eligible for it, feedback from consultation, and refinement following additional analysis conducted by officers. Key changes are as follows:

· reduction in transport projects with a growth component of $295m in the period 2024/2025 to 2026/2027 and an associated reduction of $265m in NLTF funding. Absent further Government direction these projects are treated as being delivered in 2027/2028 with NLTF funding at the level in the LTP of 51 per cent

· removal of duplicated parks and community facility projects that were double counted in the consultation proposal, resulting in a $474m reduction of investments in the LTP period

· reduction of $226m in Eke Panuku investment in the LTP period as further analysis shows some projects are not growth related and some projects not sufficiently defined to include at this stage

· increasing the share of investment attributable to growth in the AHP areas following a correction to growth forecasts modelled for consultation and adjusting the basis for attribution to better reflect the drivers of that growth

· prices set to increase annually by projected movements in the CPI

· adjusting the DCs for stormwater in Tāmaki to differentiate the price between those connecting directly to the network and those providing onsite mitigation

· a number of other changes to the investments and the calculation of DCs.

31. The changes noted above to investments within the period of the Long-term Plan 2024-2034 mean the DC policy will include capital investment with a growth component of $2.0 billion which will be recovered by DCs. As a result of this, the average contributions price, presented as a single price for comparative purposes, across the region for investment over the LTP period would move from the current $21,000 to $23,000 (compared to $30,000 in consultation). The recommended option, with the price increasing by the projected CPI, is $20,000 for the 2026 financial year. This is lower than the average price under the current policy.

32. The changes to investments in Drury over the next 30 years endorsed in the previous report on this agenda means the DC policy will include capital investment with a growth component of $1.6 billion which will be recovered by DCs. The impact of the changes, presented as a single price for comparative purposes, would raise the average contributions price in Drury from $70,000 to $79,000 (compared to $83,000 in consultation). The recommended option, with the price increasing by the projected CPI, is $64,000 for the 2026 financial year.

33. The changes to investments in the IPAs (excluding Drury) over the next 30 years means the DC policy will include capital investment with a growth component of $2.9 billion which will be recovered by DCs. The table below shows the average DC charges for each IPA area (except Drury) relative to those proposed in consultation and the charge in the current policy. Combined with the changes to DC calculations noted above, the average contributions price, presented as a single price for comparative purposes, would rise in the IPAs from $24,000 to $57,000 (compared to $65,000 in consultation). The recommended option, with the price increasing by the projected CPI, is $45,000 for the 2026 financial year.

IPA	Current operative 2022 policy per HUE	2024 consultation per HUE	Single price based on change in final proposal for comparison	2025 final Proposal DC Price in 2026 financial year (increasing by 2 per cent each year)
Inner Northwest	$25,167	$98k ($89k to $102k)	$94k ($93k to $104k)	$72k ($69k to $85k)
TāmakiTāmaki	$31,157	$119k	$83k (with access to a stormwater connection) $59k (without access)	$71k (with access to a stormwater connection) $51k (without access)
Mt Roskill	$20,406	$52k ($46k to $80K)	$41k ($34k to $69k)	$33k ($27k to $56k)
Mangere	$18,123	$29k ($28k to $30k)	$32k ($31k to $33k)	$27k ($26k to $27K)

34. All the changes discussed above, presented as a single price for comparative purposes, will raise the average contributions price across the region from $21,000 to $41,000 (compared to the $50,000 price we consulted on). The recommended option average price, increasing by the projected CPI, is $33,000 for the 2026 financial year.

Government infrastructure funding and financing reforms

35. On 28 February 2025, central government announced plans to improve infrastructure funding and financing to support urban growth as part of the Going for housing growth policy program. The enabling legislation for these tools is planned to be presented to parliament by September this year, enacted in mid-2026, and to come into effect in 2027. The exact form the reforms take will only be confirmed once legislation has passed. Until then, DCs will remain the council’s primary mechanism for charging new development for growth. 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.

Conclusion

36. The purpose of DCs set out in section 197AB of the LGA is to enable territorial authorities to recover from those persons undertaking development a fair, equitable, and proportionate portion of the total cost of capital expenditure necessary to service growth over the long term.

37. Officers recommend adoption of the Contributions Policy 2025, including the amendments recommended in this report. This will ensure that the policy reflects the updated capital investment decisions in the LTP 2024-2034. This will also ensure that the council follows through on its commitment to plan for the financing and funding to support the investment required to support growth in the IPAs.

38. Providing for the inclusion of longer-term investment in the IPAs in the policy will ensure that early developers in these areas make a fair, equitable and proportionate contribution to the funding of infrastructure that they, along with other development, create the need for, as well as benefit from. Without this funding there is the risk of infrastructure shortfalls and/or an unfair cost burden on the rest of the city’s ratepayers. Development contributions are the best option to recover these costs at this time. Delaying a decision would provide uncertainty for landowners and developers in the IPAs while ratepayers would bear the cost of foregone DC revenue from development that occurs in the meantime.

Next steps

39. If the recommendations of this report are agreed, the Contributions Policy 2025 incorporating the amendments as set out in Attachments A and B will come into effect on 1 July 2025. Over the next 15 months officers will work on the inclusion of projects beyond 2034 in City Centre/CRL stations IPA.

Ngā tūtohunga

Recommendation/s

That the Governing Body:

a) tuhi ā-taipitopito / note that the purpose of development contributions is to enable the council to recover a fair, equitable, and proportionate portion of the total cost of capital expenditure necessary to service growth over the long term from those undertaking development;

b) tuhi ā-taipitopito / note its endorsement of the 30-year programme of proposed works for the Inner Northwest (at Red Hills, Westgate, and Whenuapai) and the Auckland Housing Programme areas at Tāmaki, Mangere, and Mt Roskill, and the updates to investment in Drury, as referred to in its previous resolution;

c) tuhi ā-taipitopito / note the feedback received through consultation on the proposed amendments to the Contributions Policy, and the officer comments and recommendations in response to that feedback;

d) whakaae / agree that development contributions are the appropriate funding source for the growth share of capital expenditure the council intends to incur set out in the Long-term Plan 2024-2034 to meet increased demand for stormwater, open space, community facilities and transport infrastructure in Auckland;

e) whakaae / agree that development contributions are the appropriate funding source for the growth share of capital expenditure the council intends to incur over a 30-year period (including the 20 years beyond 2034) to meet increased demand for open space, community facilities and transport infrastructure in Drury, the Inner Northwest (at Red Hills, Westgate, and Whenuapai), and the Auckland Housing Programme areas at Tāmaki, Mangere, and Mt Roskill, and for stormwater in Tāmaki;

f) tuhi ā-taipitopito / note that the proposed Contributions Policy shown in Attachments A and B include a decrease to the average contribution price for Drury to $64,000 for the 2026 financial year rising at 2 per cent per annum (as compared to the average single fixed price consulted on of $83,000);

g) tuhi ā-taipitopito / note that the proposed Contributions Policy shown in Attachments A and B include a decrease to the average contribution price for the other IPA areas to $45,000 for the 2026 financial year rising at 2 per cent per annum (as compared to the average single fixed price consulted on of $65,000);

h) tuhi ā-taipitopito / note that the proposed Contributions Policy shown in Attachments A and B include a decrease to the average contribution price over the whole region to $33,000 for the 2026 financial year rising at 2 per cent per annum (as compared to the average single fixed price consulted on of $50,000);

i) whakaae / agree that it is satisfied that the proposed Contributions Policy:

i) accord with the purpose of development contributions in section 197AA and have been prepared taking into account the development contributions principles in section 197AB of the Local Government Act 2002;

ii) comply with the relevant requirements for a contributions policy in the Local Government Act 2002;

j) whai / adopt the proposed Contributions Policy 2025 shown in Attachments A and B to come into effect on 1 July 2025;

k) tautapa / delegate the authority and responsibility for making any required minor changes to the Contributions Policy 2025 shown in Attachments A and B to the Mayor, Deputy Mayor and the Group Chief Financial Officer prior to the policy coming into effect;

l) tuhi ā-taipitopito / note that officers intend to propose further amendments to the Contributions Policy to add investments beyond 2034 in the City Centre/CRL stations Investment Priority Area identified in the 10-year Budget 2021-2031 as well as proposing further amendments for the addition of investments for Drury West and the addition of stormwater investments for Mangere and Mt Roskill.

Horopaki

Context

40. Auckland Council uses development contributions (DCs) to ensure an appropriate share of growth-related investment in infrastructure is recovered from those that create the need for, and benefit from, the investment.

41. The contributions policy sets out the costs of this infrastructure and how these are translated into contribution charges in different parts of the region. The policy is regularly updated to reflect new information on growth projections, planned investment, or policy decisions.

Growth and infrastructure investment

42. 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^{^[4]}. Providing infrastructure such as parks, community facilities, stormwater systems, and transport networks to support this growth is a key council function.

43. Rapid growth is creating substantial demand for infrastructure investment in both brownfield (previously built on) and greenfield (never built on) areas. This includes private plan changes outside the scope of the council’s Future Development Strategy and infrastructure planning focus. Significant investment in infrastructure is required to cope with the cumulative impacts of growth expected over the next 30 years.

44. The infrastructure we provide not only enables development to occur (through the provision of services such as transport and stormwater) but also ensures communities have access to the activities and services at parks, libraries, and other community facilities that Aucklanders expect.

45. Over the 10-year period 2024-2034 we will be investing around $39.3 billion in our capital investment programme which includes $9.8 billion of growth-related investment of which $2.0 billion are recoverable by DCs. The council’s financing and funding capacity to support growth with infrastructure is limited and we need to prioritise our investment.

46. Through our Future Development Strategy, Long-term Plan 2024-2034 (LTP), and 30-year Infrastructure Strategy, we identified a few key locations to focus our limited resources. These are all joint priority areas with government and include the Auckland Housing Programme areas (Mt Roskill, Māngere, and Tāmaki), the Inner Northwest (including Red Hills, Westgate and Whenuapai), Drury, and the City Centre (CRL stations at Maungawhau and Karanga-a-Hape). We refer to these areas as Investment Priority Areas (IPAs).

47. Development in the IPAs will continue beyond ten years. Our plans include $9.4 billion of investment in Drury, the Inner Northwest, and the AHP areas over a thirty-year period. Analysis of the investment required in the City Centre IPA is planned for 2025. Development occurring now in these areas will benefit from and create the need for investments we will make over the next three decades.

Economic context

48. Development in IPAs will take a lot longer than ten years and our plans noted above for the IPAs now include investment over a thirty-year period. These investment plans are based on the investments required to service the IPAs once they are fully built out. Build out of the IPAs will continue well after our investments are fully delivered, and investing earlier allows delivery at lower cost and is also required to meet the needs of the population as it grows and to allow development to proceed. The early development occurring now in combination with future development generates a cumulative demand for infrastructure well in excess of that required by each development individually.

49. The current Contributions Policy 2022 – Variation A, with the exception of Drury, only recovers the growth share of investments within the ten years of the Long-term Plan 2021-2031. Therefore, the DC price for new developments outside of Drury does not reflect the full programme of infrastructure investments that development already occurring creates the need for and will benefit from. As a result, external the price currently being paid for development land in the IPAs other than Drury does not reflect the cost of the infrastructure required.

50. Without a change to the contributions policy, a significant portion of the growth share of the cost of investments after 2034 will fall on ratepayers, as the foregone revenue from early developers cannot be recovered from future developers. None of the council’s current funding tools (targeted rates, DCs, or IFF levies) would allow the council to charge the full long-term growth share of the cost of future investments as assessed today, 2025, to those developing from 2034 and beyond. This foregone share of the cost attributable to growth in the period 2025 to 2034 would fall on general ratepayers who do not create the need for, and in general receive little or no benefit from, these investments. Non-growth-related costs, meanwhile, will be met by general ratepayers.

51. Liability for DCs is determined based on the policy in force at the time a consent for the development (accompanied by all required information) is lodged. As such, it is very difficult to recover the full growth share of the investment costs from developments which have been consented prior to the DC Policy including those full costs. This is a key driver for making the changes to the DC policy to include full growth-related infrastructure costs as soon as reasonably possible.

52. Extending our funding horizon to 30 years ensures the council can deliver on its endorsement of the 30-year programme of capital expenditure for the IPAs. Without the revenue generated from the proposed changes to the DC policy, there is a risk that:

· future investments may not be able to be delivered, or

· the level of investment delivered will not meet the standards the council has set for a well-functioning urban environment, including the passenger transport and active mode infrastructure required to manage the climate impacts of growth.

Funding context

53. The council funds infrastructure investment through a mix of rates, central government grants and DCs paid by developers.

54. DCs are charges that recover from new developments a fair, equitable and proportionate share of the cost of this investment in infrastructure. The amount to be paid by new development is determined by the Contributions Policy. This policy ensures the cost of new infrastructure is fairly shared between developers and other members of the community who benefit from the infrastructure and create the need for the infrastructure.

55. In the past the Contributions Policy has only looked at future investment for the next ten years. The long timeline for infrastructure provision in some development areas and cumulative nature of infrastructure requirements, however, meant that early developers were not helping fund all of the investments that they have created the need for and benefited from. To ensure the costs of investment are fairly shared between all developing landowners and ratepayers the council has been working through a process of extending the time horizon for intended growth-related infrastructure investment in the priority growth areas. Including all this investment will result in a fairer balance of funding between developers in these areas and ratepayers across Auckland. This process began with the addition to the Contributions Policy of longer-term investments in Drury in 2023.

56. On 28 February 2025, the central government announced plans to improve infrastructure funding and financing to support urban growth, as part of its Going for Housing Growth policy. This announcement included plans for four key changes to infrastructure funding settings:

· replacing Development Contributions with a Development Levy System

· establishing regulatory oversight of Development Levies to ensure charges are fair and appropriate

· increasing the flexibility of targeted rates

· improving the Infrastructure Funding and Financing Act.

57. The enabling legislation for these tools is planned to be presented to parliament by September this year, to come into effect in 2027. Detailed information on how the Development Levy and other mechanisms are to be implemented is not yet available. Staff across the council have and will continue to work closely with the Department of Internal Affairs on the development of these funding mechanisms.

58. It is expected that the earliest Auckland Council would be able to implement new infrastructure charges under the proposed legislation will be 2027. Until then, DCs will remain the council’s primary mechanism for charging new development for growth-related capital expenditure.

Legal requirements and analytical criteria

59. Decision making on the Contributions Policy 2025 is made in the context of the provisions set out in the LGA. Officers have reviewed the proposal and considered the matters raised in submissions. Consideration has been given to the legislative requirements, including specific content requirements for development contributions policies, and the council’s Revenue and Financing Policy. The following sections of the report show how these requirements have been met.

Tātaritanga me ngā tohutohu

Analysis and advice

60. The following sections set out:

· analysis of the options for funding growth-related infrastructure investments beyond the current 10-year horizon

· details of the proposal

· consultation process

· feedback received on the proposal

· alternative DC options considered

· updated methodology and proposal

· conclusions and officers’ recommendations

· next steps.

Analysis of funding tool options

61. The council has the following options for funding the cost of growth-related infrastructure:

· general rates

· targeted rates

· levies under the Infrastructure Funding and Financing (IFF) Act

· DCs.

Officers note that these options are not mutually exclusive as a matter of principle, however the council cannot of course use different mechanisms to fund the same expenditure. Some options could potentially be used in tandem, structured so as to ensure no payee was charged twice for the same expenditure. They also do not need to be introduced in parallel but could be progressively applied.

62. Officers do not recommend the option of establishing Specified Development Areas (SDAs) through the Urban Development Act for the IPAs as the process of establishing an SDA would take considerable time and requires government approval. A further loss of time before the issue of funding was resolved would continue uncertainty for developers in the IPAs and present financial risk for general ratepayers across the city in terms of foregone revenue from early developers. If SDAs were established then Kainga Ora would have the same funding options listed above available to it, with the exception of general rates. Kainga Ora would be required to assess the choice of funding option(s) against the same criteria as the council and apply them within the same legal rules that govern local authorities.

Options

63. The key features that differentiate each of the options are described below.

General rates

64. General rates are applied to all rateable properties across the Auckland area from Wellsford in the north to Waiuku in the south. Revenue from the general rate is used to fund the council activities that are deemed to benefit Aucklanders across the district, and activities (or share of activities) not funded by other sources. The general rate includes both a fixed charge and a non-fixed portion based on capital value and applied differentially based on location and use of land. The differentials reflect the council’s general view of the relative demand land uses place on council services and their relative affordability to ratepayers.

Targeted rates

65. The key distinction between targeted rates and general rates is that targeted rates are set in relation to a specific council activity or activities. Targeted rates can be applied geographically to recognise the benefits received, or the costs imposed, by a specific group of ratepayers in respect of the relevant activity. Targeted rates differ from DCs in that targeted rates are payable by landowners irrespective of whether, or when, they wish to develop. Targeted rates can be structured to be paid over time, which could be 30 years or more, but can also provide for an earlier lump sum payment if the council chooses.

66. A targeted rate and an IFF levy provide the infrastructure financier (the council for a targeted rate and a Special Purpose Vehicle for an IFF levy) with a more secure revenue stream as they are payable whether or not development occurs. A targeted rate is also more easily adjusted than a DC in response to changes in infrastructure scale, scope, investment timing, and cost. Targeted rates also provide greater certainty of payment as the charges are ultimately secured against the land.

Levies under the IFF Act

67. Levies under the IFF Act apply in the same way as targeted rates but require the prior approval of the levy by Order in Council, meaning the council does not have full control over this funding source.

Development contributions

68. The DC regime in the LGA has been specifically designed to allow recovery of the growth share of infrastructure investment from developers. DCs are assessed based on the policy in force at the time a complete resource or building consent application is lodged. The charge calculated under that policy applies even though the consent may not be implemented until several years later.

Assessment of options against funding source criteria in the LGA, s101(3)

69. When determining the funding sources it will use for its activities, a local authority must consider the matters set out in s101(3) of the LGA. The discussion below assesses the options for funding the growth component of the transport, stormwater, community facilities and reserves activities against those criteria. The key points in the assessment are similar for each activity, and so a separate analysis is not included for each activity. A section 101(3) analysis focusing on the funding of infrastructure in the IPA areas beyond 2034 is set out in Attachment C: Consideration of activity funding.

Community outcomes

70. The community outcomes sought are the delivery of the infrastructure to provide a well-functioning urban environment, and to manage the climate impacts of development. All the funding options are able to deliver these community outcomes. However, the council’s preference for lower general rates increases is likely to place pressure on the ability to fully fund the required investment if using general rates alone.

Distribution of benefits

71. There are various benefits of capital expenditure on growth-related infrastructure. Land value increases are experienced by all landowners (developers and non-developers alike) in the area that is or will be served by that infrastructure, because of access to the services the infrastructure provides or will provide. Developers receive a particular benefit because the investment in infrastructure facilitates the development (or more intensive development) of their land, with the benefits that brings to the developer. There are several district plan provisions applicable across the city and in the IPA areas, including Drury, which make the provision of major infrastructure a precondition to further development of land, or at least provide for a simpler consenting pathway once that infrastructure has been provided. More generally, development is less “consentable” if basic infrastructure required to service that development (only some of which is provided by developers themselves) is not available. The provision or availability of infrastructure therefore “unlocks” the development potential of land. DCs are directly linked to this benefit because they are triggered when relevant consents to develop land are granted. The infrastructure also provides benefits to residents and businesses occupying completed residential and commercial developments associated with the use, or availability to use, the infrastructure once delivered.

72. General rates across the city are an appropriate funding source for the share of the growth-related infrastructure costs required to renew any existing assets that would be replaced. General rates are also appropriate to fund the benefits to existing properties of service level increases arising from investment in growth-related infrastructure. However, general ratepayers across the city do not generally benefit from the provision of the growth component of this infrastructure. In principle, DCs, targeted rates, and IFF levies can all be set to apply to those properties that are benefiting from the infrastructure. Targeted rates and IFF levies could also be applied to existing developed properties to recover the costs of the share of the investments that they will benefit from in excess of the service level that would otherwise have been available.

73. However, current rating legislation does not readily accommodate the use of targeted rates to specifically recover only growth-related costs. Therefore, there are likely to be challenges in structuring such a rate in a way which fairly differentiates between undeveloped, partly developed, and fully developed land. This issue is difficult in greenfield areas, like Drury and Inner Northwest, where there is already some development, and even more difficult in brownfields areas where there is already substantial development. The problem does not arise for DCs, which are triggered by actual development because under the LGA, they can only be required when consents are granted.

Period over which benefits are expected to occur

74. Landowners benefit from growth related infrastructure, through an increase in land value because of their land’s access or proximity to the services and amenities which are provided, or will be provided, by that infrastructure. That land value increase starts as council planning makes provision for development, with its promise of infrastructure, when infrastructure is provided and (other things being equal) continues as further infrastructure and services become available.

75. Developers realise the benefit from growth related infrastructure when they develop their land. This benefit occurs initially at the time they are granted consents to subdivide or develop, which allows actual development of the land to proceed; and then when connections are made to roading infrastructure in particular in greenfield areas and other community facilities become available. Development is already occurring and expected to occur for a further 30 – 40 years in the IPA areas. This type of benefit to developers will occur for the duration of development in these areas.

76. The “usage” benefit provided by growth related infrastructure accrues over the period that the infrastructure is in service and used by households and businesses. Council provided infrastructure that supports growth has very long useful lives, often in excess of 50 years.

Groups or individuals contributing to the need to invest

77. General ratepayers across the city do not create the need for investment to service growth. That need is created by the development which is occurring or envisaged. DCs, targeted rates, and IFF levies can all be set to apply to those properties where the growth will occur, however only DCs target the development that actually occurs and when the landowners realise the benefit by development.

Transparency of funding

78. The use of DCs, targeted rates, and levies under the IFF Act all make the cost of investment to support growth more transparent, representing an advantage of each of these funding tools when compared to general rates. The use of general rates would not provide for any additional transparency beyond the council’s usual planning and reporting requirements.

Conclusion

79. After weighing the factors above, the advantages and disadvantages of each funding source and the overall impact of the various funding options on community well-being, officers consider that DCs continue to be the most appropriate tool to fund the share of costs of growth-related infrastructure that benefits growth, or which growth creates the need for. This is the case for proposed expenditure in the IPA areas beyond the horizon of the Long-term Plan, as well as within that period. General rates across the city are appropriate to fund the share of the cost in the growth-related investment required to renew or replace any asset, and any benefits to existing properties in the area. DCs are the appropriate funding source for growth related infrastructure in the IPAs at this time and their use is consistent with the Revenue and Financing Policy.

80. As explained, there are complications with using targeted rates to recover growth-related costs in a way which appropriately recognises the different circumstances of each property and (potentially) ratepayer. Substantial further work would be required to support decision making on their use. This work would need to consider the options for timing and incidence of the application of a targeted rate given it could apply to all land that benefited from the investment whether or not the landowners intended to develop or if they intended to develop now or much later.

81. Officers understand that the use of an IFF levy would require more certainty from potential financiers about the cost of the investment than is required for the application of DCs or targeted rates. Like a targeted rate, the development of an IFF levy proposal would also require consideration of the timing and incidence of the levy. An IFF levy also requires, ultimately, government approval, which provides less certainty as to the availability of this funding mechanism.

82. DCs are the bespoke funding tool provided in the LGA for growth-related capital expenditure and are well understood by the developer community. The council has now endorsed its intended investment programme for the IPAs and has the necessary information to support the proposed changes to DCs for the IPAs. Officers consider DCs are the most appropriate tool for funding growth related investment in the IPAs both within and beyond the 10-year planning horizon and for the investments across the rest of the city in the Long-term Plan 2024-2034.

Details of the proposal consulted on

83. In September to November 2024, the council consulted on a proposal to adopt a new policy which updated the current policy with:

a) new information to reflect:

i) capital expenditure decisions made in the Long-term Plan 2024-2034

ii) updated forecasts for growth and interest rates

iii) updates to the costs of projects in the existing policy

iv) updates to the longer-term investments in Drury

b) extension of the approach applied to Drury to the other IPAs identified in the Long-term Plan 2024-2034. This means including intended capital expenditure over a longer horizon (30 years) for the Inner Northwest (at Red Hills, Westgate and Whenuapai) and the AHP areas at Tāmaki, Māngere and Mt Roskill

c) a number of more minor changes to ensure the fair allocation of the costs of infrastructure to serve growth between ratepayers and developers and between developers in different locations.

84. In the draft Contributions Policy 2025 consulted on, inclusion of Long-term Plan 2024-2034 projects would have raised the average contributions price from $21,000 to $30,000. The table below shows the DC price for the development of a standard house in the IPAs (showing range for different component funding areas) to recover the growth share of the $8.9 billion the council will invest in these areas over the next 30 years.

Area	Current DC charge	Total proposed DC (as per consultation)
Drury	$70k ($59k to $91k)	$83k ($74k to $113k)
Inner Northwest	$25,167	$98k ($89k to $101k)
Māngere	$18,123	$29k ($28k to $30k)
Mt Roskill	$20,406	$52k ($46k to $80k)
Tāmaki	$31,157	$119k

85. In combination the changes to the IPAs beyond 2034, including the changes to Drury in this period, would have raised the average contributions price from $30,000 to $50,000.

Consultation process

86. Consultation took place for seven weeks between 30 September and 15 November 2024. To support the consultation a number of documents were made available on the council’s website. A full description of the consultation process along with the documents provided are set out in Attachment D Summary of feedback received.

87. The consultation was promoted to previous submitters and through Our Auckland and media releases. Two online and two face to face events were held and officers also attended meetings with developers and their representatives at their request. An opportunity for developers to present their submissions directly to the Governing Body was provided on 14 November 2024 to which 7 organisations presented.

88. On 22 November the DC models^{^[5]} were provided to submitters. Those who wished to amend or supplement their submissions after reviewing the models were advised that they could present an updated submission to the council by 20 December. Submissions received to 20 December have been incorporated into the feedback summary.

89. Officers consider that the information made available to support consultation was sufficient to enable interested or affected persons to engage meaningfully via the consultation process. As such, reasonable access to relevant information was provided as part of the consultation, however additional project specific information was also made available in response to requests.

Feedback received on the proposal

90. One hundred and forty-seven submissions were received, 46 of which were from or on behalf of an organisation. The submissions received in the consultation are available to elected members on the council’s meeting management system Nexus. Submitters were asked four questions. The questions and responses are set out below.

Question	Support	Do not support	Other
Considering our proposed investments over the next 10 years, and the impacts of those investments, what do you think of our proposed changes to the Contributions Policy 2025?	30	53	17
What do you think of our proposal to add projects to the Investment Priority Areas beyond the next 10 years?	30	56	12
What do you think of our proposed changes for the Drury area?	35	38	27
What do you think of our other proposed changes?	31	31	38

91. The Analysis of feedback section of this report summarises the key points made in submissions. These include:

· Impact of higher development contributions on the house prices and the pace and nature of development

· Uncertainty and fairness of planning over a 30-year time frame and impact of cost escalation

· Scale of stormwater investment in Tāmaki

· Delayed timing of investment required to allow development

· Consideration of other sources of funding

· Lack of and transparency of information provided

· Specific issues with funding areas and projects

Impact of higher development contributions

92. Developers’ submissions suggested that higher DCs, particularly in the IPAs would:

· lead to higher house prices as developers seek to recover the increased costs.

· unfairly disadvantage developers who have already purchased land, as the increased DCs have not been included in the costs of their development and some may go out of business

· not flow through to land prices in brownfield areas like Tāmaki and the other AHP areas where existing use can be equally as economic as intensification

· discourage the construction of affordable housing as developers seek to recover higher costs with more expensive developments

· redirect development to other areas of the city with lower DC prices

· encourage land banking in IPAs until house prices rise further or the policy changes.

93. These are matters for elected members to consider, noting that similar points were made in submissions on the earlier change to the Contributions Policy to ensure DCs in Drury reflect the costs of infrastructure provision over a 30-year horizon. Officers note that the purpose of development contributions is to recover a fair, equitable, and proportionate portion of the cost of growth rather than being a policy instrument to achieve broader housing outcomes. Higher DCs reflect the cost of the infrastructure required to serve the growth that benefits from and causes the need for the investment.

94. While developers may seek to recover higher DCs through higher house prices, economic research and independent economic advice (theoretical and empirical), is that house prices are set by supply and demand and higher DCs will not raise house prices but will lower the price developers pay for land. This is also consistent with recognised international land valuation guidelines for developable land. While the market for housing and land in Auckland is very competitive it is not a perfectly competitive market, and it will take land prices some time to adjust. The conclusions from the economic analysis apply at a broad level to the IPA areas and Auckland markets. Individual market transactions may diverge from this outcome as they do in other parts of the real estate market reflecting the particular preferences of buyers and sellers in regard to individual properties. Officers also note that it is expected the developers would seek the highest price for a property they sell irrespective of their costs.

95. Even if higher DCs did lead to higher house prices in the IPAs this would not be a sufficient reason in and of itself to set lower DCs, as this would require general ratepayers across the region to meet the cost of the foregone revenue. In forming these views officers, including the Chief Economist’s Unit, have reviewed our previous work, the submissions from developers, and all the economic evidence they provided.

96. In addition, higher DCs in the IPAs may mean some development is diverted to other areas of the city until a new equilibrium is reached, and some development in the IPAs is delayed but will still occur (noting, however, that the full development of the IPAs is anticipated to take several decades). Given the large amount of developable land in Auckland this should not impact on the overall scale of development in the region as development can occur elsewhere.

97. The higher DC will impact on the expected profitability of development in the IPAs for those developers who have already purchased land. Although, as already discussed, the planned new infrastructure to be funded by the DCs will provide benefits including an uplift in land value, some developers may no longer be able to make a profit depending on what they paid for the land. Officers consider that this is one of the risks associated with land purchasing, and the risk should be borne by the purchaser and not passed to general ratepayers across the region. It is also noted that a proposed shift to a 30-year investment programme in the IPA areas was signalled two years ago, when that change was made in Drury. Officers also note the DCs set for development in key greenfield areas of Hamilton, which range up to $100,000, are comparable to those proposed in the IPAs.

98. In the event that some development is not viable, officers consider that the use of a subsidy from general ratepayers across Auckland to make the development viable would not be an appropriate policy response.

Complexity and inequity associated with a 30-year time frame

99. Some of those who opposed the proposal suggested that there is substantial uncertainty with investment plans beyond 2034 as growth forecasts, infrastructure needs, and costs may change over time. It was said that this risks over-recovery of costs due to significant margins of error and uncertainty in the calculations of DCs. The submitters claimed that the need for further work signalled to establish stormwater investment in Mangere and Mt Roskill exacerbates the uncertainty. It was also unclear how the developers who pay development contributions now would be traced and refunded if required. In addition, some submitters suggested it was inequitable that early developments pay DCs now for investments they won’t receive the physical benefits of for many years.

100. A key role of Auckland Council is to plan for the future infrastructure needs of the city. The council cannot predict with certainty future costs and growth. As new information becomes available the council updates its growth forecasts, capital expenditure plans, and accordingly the contributions policy plans at least every three years, and more often if required. Even under a ten-year policy, the precise scope and cost of investments towards the end of that period may not be certain. Regardless of whether the contributions policy covers 10 or 30 years, if growth doesn’t eventuate and planned infrastructure is not provided, the level of DCs can be lowered, and developers may in some circumstances be entitled to refunds as provided for under the LGA. It is noted that in the reverse scenario, where the capital works programme needs to be increased or actual costs are higher than forecast, there is no mechanism for recovery from early developers even though they will not have paid their “fair share”. These costs will therefore fall to ratepayers.

101. As noted in the previous report on this agenda it has been possible to determine and cost the council’s intended infrastructure investment in the IPA areas with sufficient certainty to enable formal endorsement. Officers are confident that forecasts are sufficiently robust for these intended investments to be included in the DC policy.

102. Even under a ten-year policy, physical benefits, at least from some capital expenditure that is funded by development contributions, will often take many years to accrue to a particular development. Those developing now benefit much earlier than later developers from the increase in land value from the council’s plans to invest in infrastructure. Properties developed now will benefit from the services provided by infrastructure when it is built. Aside from benefits, the need for infrastructure included in the 30-year investment programme is created by early development as much as by late development.

103. Analysis from a number of submitters argued that the benefits of infrastructure relate to its use and it would be incorrect to assess the impact that the provision of infrastructure has on house prices or land prices. However, the LGA does not limit the benefits to be considered from providing infrastructure to those directly associated with use of that infrastructure, and benefits in the form of increased land value can also be taken into account by the council. The types of benefit from infrastructure investment are discussed in detail under the heading Distribution of benefits in the section entitled Assessment of options against funding source criteria in the LGA, s101(3) above.

Consultation and transparency (accuracy of assumptions and level of detail provided)

104. Submitters considered that:

· insufficient information has been provided to establish the basis for higher DCs. This includes a lack of information on:

- the location, scope, timing, and inflated cost of investments

- what proportion of each investment will be provided by developers or funded by third parties

- the basis for allocating the remaining cost between ratepayers and developers

- how the proposed DCs for each funding area are calculated

· there was a lack of transparency or accounting of what infrastructure will be developer provided, versus what work the council will undertake

· the DC Models were not made available during the consultation period and/or were not directly useable.

105. A formal review was undertaken of the methodology the council used to set DC charges to support the advice on the adoption of a 30-year view of the investments required to support growth Drury and the consequent DCs. This included a review by three external advisors of the methods for growth forecasting, cost estimation, and how beneficiaries are assessed. The recommendations of the reviews were incorporated into the council’s methodology. The costs included in the proposal do not include local roads or the mitigation works developers are expected to be required to provide as a condition of resource consent.

106. Submitters were concerned that insufficient information was provided to enable them to understand how the proposed investments link to growth and the basis for the other assumptions used.

107. In depth detailed information was provided to support the consultation and this is described in the sections that cover the history of the consultation and its detail above and in more detail in Attachment D: Summary of feedback received. Additional project specific information was also provided in response to requests.

108. The level of detail provided to support the changes proposed exceeds the level used to include projects in the later years of an LTP in the current and past contribution policies. This additional layer of detail has been provided to developers, given the nature of the changes proposed and their impact on developers, landowners, and ratepayers. Officers consider that the level of detailed analysis is appropriate and sufficient for forecasting the cost of investments over a 30-year time horizon. The detailed designs and project-by-project costing using quantity surveyors urged by some submitters is more appropriate for shorter time horizons. The council will undertake analysis at this level as the time for each project investment approaches and make any amendments to our long-term plans and contributions policies at that time.

109. Officers have considered Auckland Council’s obligations under sections 82 and 106 of the LGA and consider that sufficient relevant information has been provided.

Consideration of other sources of funding

110. Several submitters considered the council should have given more consideration to alternative funding mechanisms before deciding to impose DCs, such as targeted rates, congestion charging, Special Purpose Vehicles funded by a levy under the Infrastructure Funding and Financing Act 2020 (referred to as IFF levies).

111. Congestion charging is not presently available. Targeted rates and IFF levies have the same effective revenue for the council and cost for developers and landowners (the net present value is the same). While the time of payment of these charges differs from DCs, they all impact on the land value as noted earlier. However, as discussed in the analysis of options section above, there are complications and uncertainties surrounding the use of targeted rates and IFF levies. On the other hand, DCs are a presently available option, and already the primary means by which the council funds the cost of growth-related capital expenditure across the city. Officers note that these options are not mutually exclusive, could potentially be used in tandem, and progressively applied. Officers consider DCs are the most appropriate tool for funding growth related investment in the IPAs.

112. Some submitters also noted that implementation of higher DCs should wait until there is clarity around the government financing and funding reforms. The council is continuing to work with government on its programme of work to review the financing and funding of infrastructure. This future possibility is not a reason for deferring the amended DC Policy in the meantime. If those reforms proceed, the council can then consider what impact they have on DCs.

Funding areas and projects

113. Feedback related to projects included in the 30-year work programme, and staff’s response to this feedback, can be found in the report preceding this item on the agenda.

114. Several submitters requested a review of funding areas, for example:

· that the area south of the Upper Harbour Motorway included in the Whenuapai funding area be removed from the 30-year work programme

· that more local funding areas in the Northwest for transport infrastructure are investigated similar to Drury

· that the Auranga town centre is different to other developments in the proposed Drury area and should be removed from the Drury IPA area

· that changes should be made to the Reserves funding area due to development timing and Hingaia should be separated from Paerata.

115. Staff consider that the basis for the current funding areas for Drury, Paerata and Hingaia was sufficiently explored in the development of the current contributions policy and remains reasonable and appropriate. There have been no substantive changes that warrant further consideration of this issue.

116. Staff have undertaken further work on transport funding areas in the Inner Northwest, to determine if smaller local funding areas would be more appropriate than a single funding area. This is discussed under the alternative options section below.

117. Adjustments have been made to the proposal where appropriate. The key changes are set out in the Updated proposal section below. Maps outlining the funding areas can be found in Attachment F Funding area maps Contribution Policy 2025.

Adjusting the DC price over time

118. The proposal consulted on was for a single, “flat” DC price, meaning the 2025 DC prices were calculated on the basis that DCs prices would remain the same in nominal terms over the funding period until the policy is amended. This is the approach taken in the current Contributions Policy 2022. In calculating the single price, the council takes into account the:

· cost escalation that applies to projects that will be undertaken in the future

· interest revenue that the council will receive from contribution charges received before incurring capital expenditure on these projects, and

· interest costs the council will incur from the time capital expenditure on these projects has been incurred, until the debt that has funded the project has been fully repaid.

119. This approach reflects that under Schedule 13 of the LGA, the methodology for calculating DCs refers to the total cost of the capital expenditure that the local authority expects to incur, which allows for inflation and interest costs to be reflected in DC prices.

120. Consultation on amendments to Drury in 2022 included an option to provide for prices changing over time (reflecting the time value of money) but this was not adopted. Consultation on the draft contributions policy 2025 did not expressly include an option to adjust DC prices over time. Some feedback has suggested that given the level of escalation of infrastructure costs over time and consequent higher DC prices, particularly for early developers relative to later developers, that this should be considered.

121. Feedback noted that having a single price was unfair to early developers because early developers would pay more in real terms than later developers. It was seen as inconsistent for the DC model to escalate project costs and take this into account when calculating DCs, but not to escalate DC revenue over time, and suggested that this would effectively mean early developers were paying escalated future capital expenditure costs in 2025 dollars.

122. Officers have therefore considered two alternatives to setting a single DC price. All options would recover the same share of costs from developers over time with no extra burden on ratepayers. Under both alternative options set out below the 2025 policy would have a lower total initial DC price set for payments received in the 2026 financial year than was proposed in the policy consulted on (which would benefit developers with developments assessed under that policy) and prices increasing over time. The policy would provide for the price for payments received in subsequent years to rise as set out in the options below.

123. While the impetus for consideration of these options was feedback in the context of the longer time period for the investments in the IPAs, the same argument could be made in favour of indexed (as opposed to single or “flat”) DC prices for other parts of the city where contributions are calculated based on a 10-year programme of investments. An issue of fairness as between early and late developers also arises in those areas, although not to the same degree because the difference in real terms between DCs paid at the at the start and the end of period (10 years as opposed to 30 years) is less. The alternative approaches set out below would therefore apply to all DCs not just those in the IPAs.

124. The alternative options^{^[6]} are to set a lower DC price in the 2025 policy for payments received in the 2026 financial year that increases annually for payments in each subsequent financial year based on:

a) projected levels of inflation, or

b) the council’s interest cost.

125. Under both options a developer’s liability for DCs would be assessed under the policy in force at the time their consent application was lodged. The assessment would set out the DC charge they would be required to pay based on the year in which they were invoiced. The DC policy would have a schedule of prices payable in each financial year rather than single fixed price for the duration of the policy. This ensures that developers can have certainty about the DC they will pay at the time they lodge their consent. The prices payable on invoicing would be transparent for the developers. Developers are invoiced for DCs at the time they apply for a certificate of title, for a consent to subdivide, or code of compliance certificate, for a building consent application. In some cases, this could be several years after they have lodged their initial consent.

126. These two alternatives to a single DC price are discussed below. Both options would set DC price in the 2025 policy lower than under the single price approach in the draft contributions policy 2025, with the adjustments provided for annually ensuring the full cost of the growth share of the infrastructure investments would be recovered.

127. Under the first alternative option prices would be set so that they increase annually by an inflation factor. Officers recommend the use of the mid-point of the Reserve Bank of New Zealand’s target range for the Consumer Price Index (CPI).

128. By setting prices to increase in this way the price paid by developers would be the same in real purchasing power terms.

129. The council’s investment programme does not project the costs of infrastructure to increase at the rate of the CPI. A large share of the cost of infrastructure is land purchases and these have been shown to increase more quickly, particularly as development is enabled. Construction costs also tend to increase at a higher rate than CPI. CPI is, however, a commonly understood measure of inflation and the RBNZ target range is fixed. Therefore, it is recommended that the midpoint of this range is used, despite the effect of narrower range of prices over time (higher in early years but not increasing by as much in outer years) compared to other inflation measures.

130. Under the second alternative option DC prices would be increased annually for the council’s interest cost based on the council’s weighted average cost of capital. This would reflect the:

· interest benefit that the council receives from early developers who will pay before many of the investments are made, and

· additional interest costs the council will incur before DCs are received from later developers after investments are made.

131. Under either of these options, the developer would pay the incremented charge that applies at the time they pay, as set out in the policy that was operative at the time they lodged their consent. To illustrate the relative impact of these the table below shows the impact for the Northwest, Drury, Māngere, Mt Roskill, Tāmaki IPAs, and the citywide average. The prices are based on the cost and timing adjustments set out in the preceding section. The table shows the fixed price and the prices under options 1 and 2 for payments in the 2025 and 2060 years.

Funding Area	Consultation Proposal: Fixed Price per HUE	Option 1: Price adjusted annually for CPI Price per HUE		Option 2: Price adjusted annually for council interest cost Price per HUE
Funding Area	2025-2060	2026	2060	2026	2060
Drury	$83,000	$64,000	$125,000	$48,000	$219,000
Inner Northwest	$98,000	$72,000	$142,000	$50,000	$230,000
Māngere	$32,000	$27,000	$52,000	$20,000	$92,000
Mt Roskill	$52,000	$33,000	$65,000	$24,000	$112,000
Tāmaki	$119,000	$71,000 (with access to a stormwater connection) $51,000 (without access)	$142,000 (with access to a stormwater connection) $102,000 (without access)	$57,000 (with access to a stormwater connection) $42,000 (without access)	$274,000 (with access to a stormwater connection) $202,000 (without access)
Citywide average	$50,000	$33,000	$65,000	$25,000	$114,000
Note that under all options, the prices will be subject to review at least every three years as a part of a general review of the Contributions Policy

132. The single price and the two alternatives produce the same net revenue for the Council. In all cases contribution charges are assessed so that total expected DCs to be collected covers the growth share of the cost of investment plus interest costs for payments received after the investment is made, less the interest on payments received early. However, by charging less in the early years to reflect cost escalation, or interest savings to the council, the cashflow in early years would be lower than with a single price for both the alternative options. Under the first alternative option it is estimated that this could require around $75-$100 million of additional debt in the first three years, ($300 to $350 million over the period of the LTP) noting that this debt would still be serviced by DCs so would not impact rates. Under the second alternative option the additional debt would $200-$250 million higher in the first three years and $650 to $750 million over the LTP period. The council has limited capacity for additional borrowing and needs to consider this when making these decisions.

133. A single price means early developers are paying the same price that later developers will pay. Early payment means the council will incur lower interest costs on investment it has already made and may earn interest on the proportion of the DC price to fund future investments. Later payments mean the council will incur the interest costs on investments made before payment is received. The single price does not allocate interest costs between early and late developers as fairly as if the price is adjusted annually. Under a single price early developers are paying the full costs in today’s dollars whereas future developers will pay the same price in future dollars, effectively a lower price in real terms.

134. Under the two alternative options the council, ratepayers, will bear the risk of lower cash flow in the early years, and higher debt, if the pace of growth is lower than forecast. The higher debt would ultimately be funded by subsequent DC receipts.

135. Given the above issues, officers on balance recommend that the council adopt the first alternative option and set a price that is increased each financial year for movements in the CPI. This option balances the lower cashflow for lower prices in the early years and risk of slower growth and further lowering of cash flow for the council, and therefore ratepayers, with the benefits to early developers of a lower initial price that treats them more fairly in relation to later developers. This approach provides for a price that better reflects the relative real value of the payments early and late developers make. It also recognises some of the interest cost benefits early payments provide to the council. The lower price for early payments cushions the large increase in DC prices for developers in the IPA areas arising from the inclusion of in the policy of projects to be delivered beyond 2034.

Alternative DC options considered

136. Consideration was given to a number of alternative approaches to the amendment of the DC policy including maintaining the status quo. Each of these is discussed below.

Status quo

137. The status quo option would be to make none of the changes proposed. The sections below discuss the impact of not updating the policy for each of the changes consulted on.

Updates to reflect investments in the LTP 2024-2034

138. At present the council updates its contributions policy at least every three years alongside the development of its long-term plan and infrastructure strategy. Each three years the policy is updated to reflect the:

i) payments it has received for investments it has already made

ii) changes to the investments planned in the previous LTP, in this case the LTP 2021-2031

iii) investments for the three years beyond the timeframe of the previous LTP encompassed in the timeframe of the new LTP in this case those now planned in the period 2031 to 2034, therefore adding a further three years of investments.

139. Officers do not recommend the status quo option (i.e. maintaining the Contributions Policy 2022 Variation A) given the changes proposed to investments planned within the period of the LTP. Maintaining the status quo would not be legally compliant, as given the changes to i) and ii) above developers would be charged incorrectly. In addition, not adding the projects beyond 2031 to the policy would mean that developers who are causing the need for the investment and/or would benefit from it would not contribute to the costs. As a result, the entirety of the cost would fall on ratepayers who are not the sole driver of the need to invest nor the only beneficiary of it.

Inclusion of investment over 30-years in the IPAs

140. The status quo for longer-term investment in the IPAs would be to add these projects in three-year increments following the adoption of future LTPs. The contributions policy will next be updated to add investments beyond the period of the LTP 2024-2034 following adoption of the long-term plan 2027-2037 in June 2027.

141. This timing would reduce the impact of a higher DC price on current developers and landowners. It could also reduce but not eliminate the potential for higher DCs to shift the location of growth from the IPAs to other areas with lower DCs as the land price equilibrium adjusted to the new DCs.

142. However, the status quo does not address the underlying infrastructure funding challenge. This option is estimated to impose a minimum of around $858 million additional cost on general ratepayers across the city over time being the loss in contribution from early developers.

143. The council indicated that it would take a similar approach to Drury in the other IPA areas when it added projects to support growth in Drury planned for delivery beyond 10-years to the DC policy in April 2023. If the policy is not updated to reflect longer term investments required to support growth in the other IPAs, the council would need to reconsider the approach taken for Drury.

144. Officers do not recommend the status quo option for DCs for the IPA areas as it does not fairly allocate the costs of growth to those who benefit from and create the need for the infrastructure.

Updates to investments in Drury

145. Not amending the policy to reflect the updates proposed for Drury would maintain the current pricing for the projects planned in Drury for delivery beyond 2034. As a result, the average DC for Drury would remain at $70,000.

146. Officers do not recommend this as it would result in the growth share of the additional costs forecast for the intended investments to support growth in Drury falling on ratepayers.

Inner Northwest Transport Funding Area

147. The draft Contributions Policy 2025 proposed a single funding area for local transport infrastructure in the Inner-Northwest. In response to submissions, see above, staff undertook analysis of the impact of dividing this area into smaller funding areas. This work confirmed the view that from a transport planning perspective the network is designed to connect the entire area and wasn’t developed in three parts.

148. However, a substantial component of the cost is the interest incurred by the council until DC payments are received. Redhills/Westgate is developing now, with Whenuapai developing later and over a longer timeframe. This means that the interest cost incurred is lower for Redhills/Westgate and higher for Whenuapai. Dividing the Inner Northwest into three funding areas would shift the level of the DC prices between the sub-areas. The table below shows the change in DC price between consultation and the indicative price for the sub-areas.

Funding Area

Inner Northwest (Recommended proposal)

Redhills

Westgate

Whenuapai

North of SH18

Whenuapai

South of SH18

DC Price:

$94k

$84k

$110k

$107k

149. Staff recommend that the contributions policy be adopted with a single transport funding area for the Inner Northwest. This is because the transport investments were designed to operate as a single network, serving the whole area, and the impact of the higher interest costs incurred for Whenuapai are mitigated by the recommended pricing option (increasing annually by CPI). If the Governing Body would like to consider the option of dividing the Inner Northwest into smaller funding areas, then further consultation would likely be required.

Stormwater Investment in Tāmaki

150. The report preceding this item on the agenda considered options for the level of investment in Tāmaki stormwater infrastructure as shown in the table below:

Investment Option	Service Level Outcome	Recommendation from preceding report	Total Cost to be funded from Rates and DCs
Status Quo: Developers mitigate onsite	No upgrades or extension to existing network Service level worse than at present or in other brownfield areas. Pipes have less than 10yr capacity Developers use tanks, overland flow aims to be ‘no worse’ than existing, but cumulative impact can increase depths. Dangerous depths on some roads, depth and extent will get worse over time. as climate changes High reliance on compliance More nuisance flooding.	Not Recommended, due to increased dangerous flooding impacts	$37m (renewals only, no DCs)
Recommended Option: Upgrades prioritised for road safety (New option)	50% of neighbourhood serviced by new or upgraded pipe network to enable growth Service level superior to current level and major issues mitigated. Bigger pipes only where depth on roads is dangerous Developers upstream of new pipes use tanks, overland flow kept ‘no worse’ than existing Medium reliance on compliance	Recommended as it balances cost and safety improvements, benefiting the entire community through safer roads and better access during wet weather.	$477m
Revised Consultation Proposal: All Primary Network Upgraded	94% of neighbourhood serviced by new or upgraded pipe network to enable growth Service level equivalent to greenfield areas. Bigger pipes across the catchment Low reliance on compliance Higher funding commitment from the council 2034-2054 than under Option 1 and 2	Not recommended. While this option results in greater benefit to Tāmaki through the reduction of nuisance flooding it has a higher level of council investment and a higher DC price	$667m

151. As part of the review of the scope of the Tāmaki pipe network programme, staff have reassessed the extent to which growth causes the need for, and benefits from, the new investment proposal. The table below shows the change in renewal, growth and level of service shares for the consultation proposal, the two revised options for investment.

Option	Renewal %	Growth %	LOS %
Option 2: Upgrades prioritised for road safety (New option)	8%	59%	33%
Option 3: All Primary Network Upgraded (Revised Consultation Proposal)	6%	58%	36%
Proposal as consulted on	5%	77%	18%

152. Under both the recommended and revised consultation options there is differentiation in the DC price between properties that are in areas that are able to connect to a new pipeline included in the policy and those in areas that cannot.

153. Developers are required to deliver on-site mitigation works where there is insufficient capacity in the existing stormwater network to support their development. In areas subject to a stormwater DC charge developments that occur in advance of delivery of the upgraded network can be required to deliver mitigation works due to lack of existing capacity. These developments are required to pay a stormwater DC charge on the same basis as later developments that are able to connect directly to the upgraded network.

154. In Tāmaki we consider it reasonable for the developments in the area that will not receive the upgraded pipe network to pay a lower differential DC charge, compared to the serviced area. This is because the unserviced area as a whole will contribute less to the demand for the pipe network, relative to the serviced area. However, developers within serviced areas that choose to develop in advance of the upgraded network will need to deliver on-site mitigation, as well as pay the higher stormwater DC charge.

155. If the approach recommended for Tāmaki is adopted then officers will review the approach taken to the assessment of stormwater DC charges in the remainder of the city to consider whether it would be appropriate to apply this more widely.

156. The table following sets out for each of the above options, the total cost of developer mitigation works required, the share of costs between DCs and rates, and the DC price for properties able to connect to the network. In consultation the DC price for stormwater in Tāmaki was $79,000.

Option	Estimated developer onsite costs (Unescalated $)	DC funded	Rates funded	Tāmaki Stormwater DC Price (Single price)
Status Quo: Developers mitigate onsite	$2,000m	$0m	$37m (renewals only)	$0
Recommended Option: Upgrades prioritised for road safety (New option)	$566m	$283m	$194m	$56,479 per HUE (a $23,276 discount will be applied to properties not serviced by the new pipes, which is expected to be 50 per cent of the properties.)
Revised Consultation Proposal: All Primary Network Upgraded	Costs only where development is in advance of network provision	$389 m	$279 m	$59,319 per HUE (a $24,696 discount will be applied to properties not serviced by the new pipes, which is expected to be 6 per cent of the properties.)

157. The status quo option is not recommended because it will lead to increased and more dangerous flooding, while imposing more costs on the developers than the recommended option. The recommended option adopts a risk-based approach, prioritising pipe upgrades for public safety and where upgrades will have the most significant impact. This option balances cost and safety improvements, benefiting the entire community through safer roads and better access during wet weather.

158. The proposed Contributions Policy 2025 for adoption attached to this report has been prepared on the basis that the recommended investment option was agreed for the preceding item on this agenda. If one of the alternative options was instead agreed, the Contributions Policy 2025 will be amended in accordance with this decision. This will require a short delay in the implementation of the policy beyond 1 July 2025.

Transition

159. The council could adopt the proposal but gradually phase in the new DC prices over three years to give the land markets time to adjust to the new DC price. It would also reduce the impact of higher DCs on those developers who had immediate, rather than long-term, plans to proceed with their developments. This approach could be adopted for some or all of the proposed changes.

160. Phasing the change in DCs prices in over three years is estimated to lead to $100 million less revenue being collected in this period (or $122 million if a single price is adopted). This foregone revenue by setting a lower price for early developers would have to be made up by general ratepayers across the city.

161. Officers note that our resource and building consent teams advise that they have had a large number of consents lodged in the last few months for developments in the IPAs, as developers try to avoid higher DC charges under the 2025 DC Policy. The estimated number of new residential builds (in HUEs) that will pay DC charges under the existing policy are:

· Redhills, Whenuapai, Westgate: 4,900

· Tāmaki: 3,500

· Mt Roskill: 4,600

· Mangere: 4,700

· Drury: 7,200

162. Liability for DCs for these developments will be assessed under the current policy. Because proposed price increases in the IPAs were signalled through the release of the draft policy for consultation in September 2024, this effectively provides a form of transition (of approximately 9 months) between the current and proposed policy. More generally, amendments to the Contributions Policy to add investments beyond 2031 in the IPAs has been foreshadowed since 2022 (see paragraph 4 above).

163. It is our understanding that this early lodgement of consents (while the current policy is still on force) has primarily been undertaken by larger developers.

164. Officers do not recommend this option as it does not fairly allocate the costs of growth to those who benefit from and create the need for the infrastructure.

Updated proposal

165. The final proposal is based on the council’s methodology for setting DCs as updated by further work undertaken to refine the methodology. To finalise the proposal officers have reviewed the project lists, updated forecasts for the latest economic conditions, and considered feedback from the consultation. A full description of the methodology, changes to its application, and other key changes is set out in Attachment E: Methodology for calculating DCs. This section sets out at a high level the methodology used to calculate DCs, how this approach complies with the principles for setting DCs in the LGA, and how this has been updated.

Methodology for calculating DCs for IPAs

166. The calculation of DCs follows the process set out in general terms below

i) establish project cost based on land area required and its current valuation and standard construction costs escalated appropriately to the point when the land is planned to be purchased and construction commenced

ii) subtract cost of renewals based on standard construction costs

iii) subtract share of cost that will be met by developers as a condition of resource consent – referred to as developer mitigation

iv) subtract third party funding – primarily NZ Transport Agency funding of qualifying roading projects

v) establish share of costs attributable to growth

vi) share the cost attributable to growth for each project across the forecast growth in the relevant funding area. This is adjusted for the forecast timing of payment of DCs as growth occurs in the funding area. The DC price is set to cover interest costs incurred by the council on payments received following the planned time of land purchase and construction of the project net of the interest benefit received from payments made before the investment.

Changes to the proposal since consultation

Updates to the 30-year Infrastructure Work Programme for IPAs

167. The proposal has been updated to reflect the changes to the investments for the IPAs, endorsed in the previous report on this agenda.

168. Officers have considered the feedback from consultation, undertaken further work to refine the methodology and its application, reviewed the project lists, and updated forecasts for the latest economic conditions, and the Government’s investment decisions and decisions on the size of the NLTF and projects for which it can be used.

169. Interest rates, construction and land price escalation inputs have been refreshed for all asset types following updated economic analysis from the Chief Economist’s Unit.

170. Key changes to the 30-year work programme based on the recommendations in the previous report on this agenda are:

· reduced Tāmaki stormwater network upgrade programme that prioritises investment where there is hazardous flooding on main roads to reduce flooding related to existing and new development. This reduces the cost of the proposed network to be included in the Council 30-year investment programme from $798 million, to $547 million. Further work also noted in the previous report has adjusted the share of the cost of the Tāmaki stormwater network allocated to growth and existing properties. A greater share of the cost is now allocated to existing properties to reflect the benefits they receive from the upgrades to the existing pipe network

· widening existing footpaths in the Auckland Housing Programme areas, rather than full replacement. This reduces the cost of upgrading footpaths to the 1.8m standard, from $407 million to $165m million. The timing of the widening would most likely be in conjunction with, or after, reinstatement or renewal of existing footpaths

· reduction of cost for the Drury Active Mode corridor, which provides walking and cycling connectivity between Drury Central and Drury West, from $65 million to $20 million, following a revision of the design and land requirements and the apportionment of costs between it and the adjoining rail corridor 4 tracking project

· refreshing construction and land price escalation inputs for all asset types following updated economic analysis from the Chief Economist’s Unit.

171. For the full programme of investment included in the proposed policy the following changes have been made:

· updating interest rate forecasts

· rephasing of projects across the programme to ensure alignment with LTP budgets, and efficient sequencing of works

· a range of other smaller updates and adjustments.

Changes to growth share and differential DCs for Tāmaki stormwater investment

172. The DC price for stormwater in Tāmaki has been adjusted to reflect the updated investment programme recommend in the previous report on this agenda. As part of the review of the Tāmaki pipe network programme, staff also reassessed the extent to which growth causes the need for, and benefits from, the new investment proposal. The table below shows the change in renewal, growth and level of service shares between the consultation proposal and the revised proposal.

Option	Renewal %	Growth %	LOS %
Consultation Proposal	5%	77%	18%
Adoption Proposal:	8%	59%	33%

173. Under the revised proposal the adjusted price is set differentially for those properties which cannot connect to the upgraded council network, to around half the cost that those properties which can connect will pay (see table later).

174. The reduced Tāmaki stormwater network upgrade programme means around half the forecast development will not be able to connect to the upgraded council pipe network. These properties will be required to invest in onsite mitigation or build new pipelines for their stormwater flows. However, these properties will still cause the need for, and benefit from, the downstream investments in the upgraded network. Accordingly, they will be required to pay a DC but at lower level than connecting properties. The specific properties that will benefit from new council stormwater pipes can vary over time as development plans and project designs evolve, adjustments to the properties qualifying for the differential will be updated accordingly.

Changes to growth allocations in the Auckland Housing Programme areas

175. The approach to allocating costs for transport projects in the Auckland Housing Programme areas has resulted in the following adjustments to growth share:

· adjustments to the growth shares applied to Mangere and Mount Roskill to more fairly share the costs between ratepayers and developers. This has resulted in an increase in the amount of capex allocated to growth of $116 million for Mangere, and $14 million for Mount Roskill

· attributing causation for footpath widening and local safety projects to be 100 per cent growth, as these projects would not be delivered in the absence of growth. (The benefit of these projects continues to be apportioned between growth and level of service.) This change has increased the share of cost allocated to growth for these projects by $37 million for Mangere, $28 million for Mount Roskill and $7 million for Tāmaki.

176. These adjustments to growth share have been included in the Contributions Policy 2025 recommended for adoption. Officers consider it appropriate to include these changes to ensure a correct and consistent approach to determining growth allocations, in accordance with the methodology used for projects in the Contributions Policy 2025.

Removal of duplicate and non-growth projects

177. Due to a coding error, a number of parks and community facility projects were double counted in the consultation proposal. These duplicate projects have now been removed, resulting in a $474 million reduction of investments in the LTP period.

178. Investment for Eke Panuku in the LTP was also reduced by $226m following further analysis that shows some projects are not growth related and others not sufficiently defined to include in the policy at this stage

179. A full description of the methodology, changes to its application, and other key changes are set out in Attachment E: Methodology for calculating DCs.

Kainga Ora Reset

180. Officers have also considered the potential impact on the scale and pace of growth expected in the AHP areas following the Government’s recent announcement of a reset for Kainga Ora (KO). Growth forecasts for the AHP areas were originally informed by advice from KO in 2024 on their direct growth and their view on likely market growth stimulated by their activity. Following the reset KO has continued to be positive about the scale of development they expect to deliver, and stimulate, in the short/medium term and out to 2034. The Government’s reset does not provide an absolutely clear direction beyond 2034. However, they imply very limited growth in state owned social housing.

181. Officers understand that there may be further government decisions forthcoming on KO development and Government investment to support development in the AHP areas using funding from the Housing Acceleration Fund.

182. Officers have discussed the growth forecasts for the AHP areas with KO. At this time there is insufficient information about the exact impact the reset will have on development in the medium to longer term. Until further Government announcements are made officers have continued to use the current forecasts as while KO direct growth is an important driver of potential growth in these areas, they are not the only developing landowners. KO have a large portfolio of land available for development by others if not them, and our current forecasts are much more conservative than those previously provided by KO.

Changes to NLTF funding for transport

183. The draft Contributions Policy 2025 used for consultation was based on the transport investments in the LTP 2024-2034. Since then, the Government has reduced NLTF funding for the 2024/2025 to 2026/2027 period by $569m. This also made changes to the projects that would be eligible for NLTF funding in that period.

184. In October 2024 the council agreed to reducing the transport capex budget by the amount of the reduction in the NLTF for those years. The Auckland Transport board set a revised transport budget for that period on 29 October based on the council’s decision. The Government hasn’t provided direction on the size and use of the NLTF beyond 2026/2027. The council hasn’t amended the LTP and RLTP. The AT Statement of Intent reflects the council decision above for next three years.

185. The revised transport budget reduces the projects with a growth component in the period 2024/2025 to 2026/2027 by $295m. The change to the projects in this period that are eligible for NLTF funding reduces the NLTF funding for projects with a growth component by $265m. The DC policy has been adjusted for these budget changes. The reduction in NLTF funding for the transport projects with a growth component in this period raises the share of the costs of these investments to be recovered by DCs $25m. The net impact on DC prices is $200 for the city wide average.

186. The Government hasn’t provided direction on the size of the NLTF and the projects which would be eligible for funding beyond 2026/2027. The Council has not amended the LTP or the RLTP for the period beyond 2026/2027. For the purpose of setting DCs officers have treated the projects deferred from 2024/2025 to 2026/2027 as being delivered in 2027/2028 with NLTF funding at the 51% rate contained in the LTP. The impact of this treatment does not have a material impact on DCs. For the period beyond 2027/2028 no changes have been made to the NLTF assumptions, the investments proposed or their funding.

Amended proposal

187. This section sets out the key financial elements of the amended proposal reflecting the combined impact of the changes made since consultation discussed above.

LTP amendments

188. The table below shows the amount and funding source for investments with a growth component, taking into account the decisions made in the Long-term Plan 2024-2034, and compares the proposal for consultation with the present amended proposal.

Activity	Consultation				Amended proposal
Activity	NLTF	Rates	DCs	Total	NLTF	Rates	DCs	Total
Transport	3,569	3,072	893	7534	3,444	3,290	916	7,650
Stormwater	n/a	463	309	772	n/a	521	355	876
Community facilities	n/a	301	127	428	n/a	189	115	304
Parks (acquisition and development)	n/a	557	1,005	1,562	n/a	328	662	990
Total	3,569	4,393	2,334	10,296	3,444	4,393	2,334	9,820

189. If updates were only made for investments in the 10-year period of the LTP the average DC price (if set as a single price) would move from the current $21,000 to $23,000 (compared to $30,000 in consultation). The price increasing by the projected CPI would be $20,000 for the 2026 financial year.

Growth and investment in the IPA’s

190. The table below shows the funding source for the investments in the IPAs, comparing the proposal for consultation and the present amended proposal. These include the investments within the LTP period and those beyond 2034 as agreed in the previous paper on this agenda.

IPA area Infrastructure types	2024 consultation			2025 final proposal
$ millions	NLTF	Rates	DCs	NLTF	Rates	DCs
Inner Northwest	1,219	790	2,556	1,381	572	2,109
Māngere	315	558	108	324	308	246
Mt Roskill	613	739	382	644	593	368
Tāmaki	202	915	532	217	452	554
Drury	736	276	1,748	653	272	1,568
Total	3,085	3,278	5,326	3,219	2,195	4,846

191. The table following shows the DC price for the development of a standard house in the IPA areas (showing range for different component funding areas) to recover the growth share of the $10.25 billion the council will invest in these areas over the next 30 years, comparing the current DC charge with the proposal for consultation and the present amended proposal:

Area	Current DC charge	2024 consultation proposed DC	2025 final proposal DC Price in 2026 (then increasing by 2 per cent each year)
Inner Northwest	$25,167	$98k ($89k to $102k)	$72k ($69k to $85k)
Tāmaki	$31,157	$119k	$71k (with access to a stormwater connection) $51k (without access to a stormwater connection)
Mt Roskill	$20,406	$52k ($46k to $80K)	$33k ($27k to $56k)
Mangere	$18,123	$29k ($28k to $30k)	$27k ($26k to $27K)
Drury	$70k ($59k to $91k)	$83k ($74k to $113k)	$64k ($53k to $86k)

192. All the proposed changes, presented as a single price for comparative purposes, would raise the average contributions price across the region from $21,000 to $41,000 (compared to the $50,000 price we consulted on). The recommended option average price, increasing by the projected CPI, is $33,000 for the 2026 financial year.

193. The methodology for calculating DCs for the IPAs in the proposed Contributions Policy 2025 complies with the relevant provisions of the LGA. How the policy meets the purpose of development contributions in section 197AA, and how the development contribution principles in section 197AB have been taken into account in preparing the proposed Contributions Policy 2025, are set out in Attachment G to this report.

194. The policy must also comply with the various other LGA provisions, in particular sections 106, 201, 201A, 202, 202A and Schedule 13. Officers have reviewed the proposed amendments to the policy against the matters set out in these sections to ensure that the updated policy is compliant.

195. An analysis of the section 101(3) funding options is set out earlier in this report and in Attachment C: Considerations of activity funding.

Conclusion and officers’ recommendations

196. The purpose of development contributions set out in section 197AB of the LGA is to enable territorial authorities to recover from those persons undertaking development a fair, equitable, and proportionate portion of the total cost of capital expenditure necessary to service growth over the long term. Officers consider it fair that developments creating the need for and benefiting from future infrastructure contribute an appropriate share of the costs of the infrastructure needed to support growth. Growth is unable to proceed without plans in place for the funding and delivery of infrastructure. If current and near-term developers do not contribute to future capital investment from which they benefit, the shortfall will lead to higher costs and/or service level problems for future generations of residents and ratepayers.

197. At this point in time DCs are the best tool to recover from developers the growth share of the long-term cost of infrastructure to support growth. Other tools like targeted rates and IFF levies are not an established method for funding growth related capital expenditure, involve some complications and uncertainties, and are less obviously suitable than DCs.

198. The council has updated its investment plans for Auckland over the period to 2034 in the Long-term Plan 2024-2034. Officers recommend that the contributions policy is updated to reflect the revised plans. This will ensure that developers are correctly charged to reflect the changes in the nature, scale, cost, and location of investments that have been made since the Long-term Plan 2021-2031 was adopted and to reflect the latest plans for future investment. It will also ensure that the costs of delivering these investments are fairly shared between developers and ratepayers. In addition, officers recommend including in the policy a number of more minor changes that were consulted on to ensure the fair allocation of the costs of infrastructure to serve growth between ratepayers and developers and between developers in different locations.

199. Officers also recommend that the policy be updated to include the investments required to service growth in the two decades beyond 2034 for the IPA areas in the Inner Northwest, Mangere, Tāmaki, and Mt Roskill. This also ensures that these IPA areas are treated in the same way as Drury, in accordance with the intent expressed when the amendments to investment and DCs were made for Drury in April 2023.

200. This reflects the council’s long-term commitment to support growth in the IPA areas. The potential diversion of some growth from the IPAs to other areas of the city on account of the higher DCs in the IPAs is a short-term issue in the context of the long-term planning horizon for infrastructure with a life of 50 years plus that will serve growth over a similar period.

201. Officers have considered the overall impact of the proposal on the allocation of liability for revenue needs on the current and future social, economic, environmental, and cultural well-being of the community. Developers have expressed concern that the scale of the DC increase will mean that their plans for development are no longer viable. Even if that is the case (and officers do not have information about the financial position of individual developers), officers consider that the use of a subsidy from general ratepayers across Auckland to make the development viable would not be an appropriate policy response.

202. The higher prices may however, impact on some developers’ ability to make a profit. This will depend on when they purchased land and at what price. Developers are only required to pay DCs if they choose to develop. However, the higher DCs will be reflected in the price they can recover from the sale of their land if they decide to not to proceed with development.

203. As noted earlier the cost to general ratepayers across the city of not proceeding with the proposal to include investment in the IPA areas beyond 2034, whilst spread over a much larger group, is $700 million over the LTP period, being the loss in contribution from early developers.

204. Overall, officers consider that it is appropriate for the growth share of the cost of infrastructure to be met by developers rather than general ratepayers. Officers note that the purpose of development contributions is to recover a fair, equitable, and proportionate portion of the cost of growth rather than being a policy instrument to achieve broader housing outcomes.

205. Increased development contributions under the proposed policy may impact on the viability of some development and may make development unaffordable for some developers and landowners, they may accordingly decide not to develop their land. However, if they choose to develop, it is appropriate they the bear the cost of these investments through development contributions given the benefit they receive from these investments, rather than general ratepayers across the city bearing the costs (noting that they have no choice but to pay rates). General ratepayers receive little or no benefit from, nor create the need for, the growth component of the investment. General ratepayers are also facing affordability challenges in terms of likely short- and medium-term higher rates increases to fund in part historic infrastructure shortfalls and to fund their share of the costs of servicing future growth.

206. The approach to providing for infrastructure to respond to growth over the last 30 years has failed to deliver a city resilient to the demands of growth and a changing climate. The costs of growth have not been shared fairly between developing landowners, ratepayers, and residents. Ratepayers and residents are now bearing the brunt of those choices that are manifesting themselves financially and in service delivery.

207. A movement towards a new approach that more fairly shares the costs between developing landowners, current ratepayers, future ratepayers, and future residents may lead to some disruption while the city’s land markets transition to a new equilibrium. However, this should be considered in the context of the significant wider benefits of shifting to longer-term infrastructure planning and funding.

208. Officers have considered the overall impact of the costs of growth to be funded by DCs, and the DC charges, in light of matters such as fairness and affordability, and consider the proposed DC charges to be appropriate. However, elected members should stand back and make their own assessment.

209. Officers also recommend making the changes to DCs for Drury reflecting the amendments to the timing and cost of the investments agreed to in the previous report on this agenda. This will ensure that the growth share of the costs of investments in Drury continue to be fairly shared between developers in the area and between these developers and ratepayers.

210. Officers also recommend that the DC price be adjusted annually for projected movements in the CPI. The initial DC price would be lower than a single price but set so that over time the full growth share of the cost of investments in infrastructure was recovered from developers. Under the single DC price consulted on, early developers pay the same nominal price as those paying in 10 years or 30 years, while the recommended option adjusts this so that they pay the same in real terms.

211. Officers recommend that the council adopt the Contributions Policy 2025, incorporating the proposed amendments as shown in Attachments A and B, as a step in the council’s wider strategy to address the long-term infrastructure challenge. It will also give the government confidence in the council’s planning to support growth in the IPAs where they are also investing.

Implementation and future policy work

212. The new policy will formally come into force on 1 July 2025 allowing time for the council’s systems to be updated to reflect the exact detail of the decisions.

213. The adoption of the proposed amendments recommended above is the second step in implementing the council’s decision to include projects planned for delivery beyond the ten-years of the Long-term Plan 2024-2034 in the DC policy for the IPAs. This is part of the wider strategy to address the future infrastructure challenge facing a growing Auckland.

214. The next steps in that strategy are to:

· complete the analysis of the infrastructure requirements for the remaining IPAs, the City Centre/CRL stations, Drury West, and stormwater for Mt Roskill and Mangere, and develop a proposal to amend the contributions policy to include the required projects

· the council will continue to work with the government on their investment programme in the IPAs the New Zealand Upgrade Programme and on the Housing Acceleration Fund in the wider Auckland region to support development in the IPAs and alongside Kainga Ora as part of the Auckland Housing Programme

· work will also continue with government on its programme to review the financing and funding of infrastructure

· in addition, officers will work with developers where there are opportunities for them to deliver infrastructure earlier than presently planned.

Climate impact statement

215. Greenfield development in Auckland is correlated with an increased use of private vehicles, potentially leading to an increase in vehicle kilometres travelled and higher transport emissions. This has been derived from mode share data from the 2018 census for journeys to work and education, with the commuting mode share from areas of greenfield development compared against the Auckland average. The findings show the use of sustainable modes of transport for travel to education and work is less in recent areas of greenfield development than the rest of Auckland. This finding is consistent with research from Australia which found proximity to the centre to be a stronger predictor of average household vehicles kilometres travelled than proximity to good public transport or density of urban development.

216. Development in the greenfield IPAs is expected to result in an increased use of private vehicles and higher overall vehicle kilometres travelled and a likely increase in transport emissions. Decisions on plan changes to permit development in some of the IPAs have already been made. The recommendations of this report relate only to the funding of the necessary infrastructure investment.

217. Provision of facilities such as community centres, aquatic centres and libraries aligned with public transport considerations in brownfield growth areas and greenfield areas may reduce travel needs for residents who would need to travel further to reach them. These steps may reduce reliance on private vehicle usage and have potential to reduce emissions from travel.

218. Investment in reserves and greenway connectors encourages residents to participate in active recreation locally, thereby reducing travel. The planting and additions to the tree canopy reduces air temperature and absorbs more carbon compared to housing and pavement.

219. Improved stormwater systems in brownfield areas offer greater resilience for new and existing infrastructure to current and future extreme weather events that may result from climate change.

220. The scope of the IPAs has been adjusted to reflect recent evaluations of flood risks and other risks associated with extreme weather events caused by climate change.

221. Developments in brownfield and greenfield areas may serve future needs for climate-related relocation, which may increase Auckland’s adaptability to climate change.

222. As discussed in a separate report on this agenda, planning now for the funding of investments will ensure that the council is better able to deliver the infrastructure required for development in the IPAs 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.

223. Securing this revenue stream will ensure the council can meet its plans to make the investments required to deliver an enhanced transport network, which should reduce the negative climate impact of development in the IPAs through mitigating some of the expected additional transport emissions.

224. 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 in Drury, leading to an even greater negative climate impact.

225. If a greater share of funding for infrastructure is not secured from early developers, there would be an increased requirement for public funding and opportunity costs associated with the investment in terms of reduced public funding being available for investment in infrastructure upgrades in the existing urban area where it could be more effectively deployed to support and enable mode shift to sustainable transport.

Council group impacts and views

226. The information presented on the projects included in the proposed amendments to the Contributions Policy 2022 was developed in conjunction with the following council-controlled organisations and council units:

· Finance

· Auckland Transport

· Legal Services

· Planning and Resource Consents

· Service Strategy and Partnerships

· Policy Department

· Watercare Services Limited

· Healthy Waters and Flood Resilience

· Chief Economists Unit

· Spatial Analysis and Modelling.

227. The Chief Economist Unit and Research Investigations and Monitoring Unit provided advice on the growth and economic forecasts and on the impact of higher development contributions on the pace of development, and on land and house prices.

Financial implications

228. The 10-year budget assumes total development contributions revenue of $2.0 billion over the 2024 to 2034 period. Analysis on updated assumptions for consultation on the draft Contributions Policy 2025 in September adjusted the forecast to $2.4 billion. The modifications to the proposals recommended by officers in this report would slightly reduce the development contributions revenue over the ten-year period to 2034 from $2.4 billion to $2.1 billion.

229. As set out in the body of the report, a key financial implication of not agreeing the recommendations of this report would be an additional impost on general ratepayers across Auckland of at least $1.1 billion over the LTP period.

Risks and mitigations

230. Forecasting the pace and scale of growth and hence the required infrastructure investment and DC charges over a longer time period presents risks to the council and developers. There is also some uncertainty associated with the cost forecasts over such a timeframe. These can be managed through our triennial long-term plan and adjusting the investment plans if necessary, however the fact there is inherent uncertainty may lead to complaints that the investment programme and associated costings are not sufficiently robust. If investment plans change the DC policy can be amended accordingly, and if infrastructure is not provided then DCs can be refunded as provided for under the LGA. This is discussed in more detail in the relevant sections of the report.

231. Investment in development contributions funded growth-related infrastructure carries the risk that forecast development projections, and therefore development contributions revenue, are not met. These risks will be managed through monitoring consent applications and development contributions revenue.

232. The council is careful to ensure its contributions policy is compliant with legislation, taking into account guidance from court decisions. The recommendations in this report and the Contributions Policy 2025 and consultation document have been checked by Legal Services for legislative compliance. Nevertheless, given the level of increases in DCs for the IPAs and based on previous experience there is a high risk of legal challenge to the council’s decision-making in relation to the proposed amendments to the Contributions Policy 2025.

Tauākī whakaaweawe Māori

Māori impact statement

233. A development contributions policy must support the principles set out in the Preamble to Te Ture Whenua Māori Act 1993. The current Contributions Policy has been prepared on that basis. It is not considered that the proposed amendments to that policy give rise to any new or different issues which engage the principles in the Preamble to Te Ture Whenua Māori Act 1993.

234. 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.

235. 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 whakaaweawe ā-rohe me ngā tirohanga a te poari ā-rohe

Local impacts and local board views

236. The development contribution 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.

237. Local boards received a briefing on 30 September 2024 on this topic. Local boards received a memo updating them on the review of the contributions policy and the feedback from public consultation. 18 local boards accepted an offer for workshops which were held in March 2025.

238. 19 local boards provided feedback on the draft Contributions Policy 2025 through their March and April 2025 business meetings. All local board resolutions are appended in Attachment H to this report.

239. Of the 19 boards that provided feedback, 12 local boards supported the contributions policy. One, Papakura, only supports the policy if additional specified local projects are added.

240. Common themes included calls for more equitable investment, better alignment with local planning, suggestions for future capital projects and stronger local board involvement. Some boards highlighted the risk of impacts to housing affordability and the potential for higher development contributions in certain areas to shift development pressure to less-prepared areas.

Ngā koringa ā-muri

Next steps

241. If agreed, the amendments to the Contributions Policy 2025 will come into effect on 1 July 2025. Officers will write to all those who provided feedback advising them of the council’s decision. Further detail on the next steps is set out in the Next Steps section above.

Ngā tāpirihanga

Attachments

No.	Title	Page
a ⇨	Development Contributions Policy 2025 (Under Separate Cover)
b ⇨	Contributions Policy: Schedule 8 - Assets for which development contributions will be used (Under Separate Cover)
c ⇨	Considerations of activity funding (Under Separate Cover)
d ⇨	Summary of feedback received (Under Separate Cover)
e ⇨	Methodology for Calculating development contributions (Under Separate Cover)
f ⇨	Funding area maps (Under Separate Cover)
g ⇨	Application of purpose and development contributions principles (Under Separate Cover)
h ⇨	Local board views (Under Separate Cover)

Ngā kaihaina

Signatories

Authors

Beth Sullivan - Principal Advisor - Fin Policy

Andrew Duncan - Manager Financial Policy

Authorisers

Michael Burns - General Manager Financial Strategy

Ross Tucker - Group Chief Financial Officer

Phil Wilson - Chief Executive

Governing Body

29 May 2025

Allocation of decision-making responsibilities for council-controlled organisation activities coming in house

File No.: CP2025/06642

Te take mō te pūrongo

Purpose of the report

1. To approve the allocation of decision-making responsibilities between the Governing Body and local boards for inclusion in the Annual Plan 2025/2026, including changes required because of council-controlled organisations (CCO) reform.

Whakarāpopototanga matua

Executive summary

2. On 12 December 2024, the Governing Body agreed to bring urban regeneration, non-service property management, and economic development activities into Auckland Council by 1 July 2025. The reform programme aims to improve democratic accountability, strategic alignment, and the effectiveness of the Council Group.

3. As a result, activities previously governed by the boards of Eke Panuku Development Auckland and Tātaki Auckland Unlimited now require reallocation to the Governing Body or local boards in accordance with section 17 of the Local Government (Auckland Council) Act 2009 (LGACA). This will be recorded in the allocation of decision-making table (allocation table) included in the Annual Plan 2025/2026.

4. The following approach is recommended:

· For urban regeneration, the Governing Body is allocated responsibility for the overall programme and budgets, as well as the city centre and waterfront programme. Local boards would have decision-making responsibility for implementation of agreed priority location plans and local projects, which in practice will include new responsibilities to approve annual work programmes and project plans. These arrangements will apply to the existing programme to ensure continuity. Further work is planned on how to empower local boards and communities for future regeneration priorities.

· Non-service property management and marina management responsibilities are allocated to the Governing Body. Local boards retain their responsibility for local property.

· For economic development, retain the existing arrangements. This already reflects that regional strategies and Auckland-wide initiatives sit with the Governing Body, while local boards have responsibilities for local economic development plans and business improvement districts (BIDs).

5. Through the general delegations to the Chief Executive, some decisions on these matters are taken by staff. The Chief Executive will update staff delegations to ensure relevant parts of the council have the authority needed to effectively carry out these functions. These changes will be made in advance of changes coming into effect.

6. These proposals were reported to local boards in April 2025 and were broadly supported. The biggest area of feedback was concern about adequate resources and support being available to enable local boards to make decisions on local economic development, property and urban regeneration. Even where local boards can allocate funding, they require staff advice and resources to implement projects.

7. Staff acknowledge these concerns. While no additional resources are available from 1 July 2025, work is underway across several programmes to address the support and decision-making concerns raised by local boards. Further advice on these matters will be included in regular reporting to the Governing Body as part of the CCO reform programme.

Ngā tūtohunga

Recommendation/s

That the Governing Body:

a) whakaae / agree that in accordance with Section 17 of the Local Government (Auckland Council) Act 2009, allocates decision-making responsibility for activities currently governed by the Eke Panuku Development Auckland Board and the Tātaki Auckland Unlimited Board to either the Governing Body or local boards, as follows:

i) toha / allocate decision-making responsibility for the following urban regeneration activities to the Governing Body:

A) Auckland-wide urban regeneration programme outcomes and objectives

B) Urban regeneration in the city centre and waterfront

C) Overall funding plan for priority locations

D) Allocation of budget for priority location plans including sequencing of urban regeneration projects within annual budget envelopes

E) Identification of priority locations for urban regeneration programme

ii) toha / allocate decision-making responsibility for the following urban regeneration activities to local boards:

A) Implementation of priority location plans, within parameters set by the Governing Body

B) Local urban regeneration projects that are not part of the Auckland-wide urban regeneration programme, for example streetscape improvements or local service property optimisation projects

iii) toha / allocate decision-making responsibility for the following property management activities to the Governing Body:

A) Management of the non-service property portfolio and marina management

b) tuhi tīpoka / note that associated changes to the allocation of decision-making table will be recorded in the Decision-Making Responsibilities of Auckland Council’s Governing Body and local boards policy to be included in the Annual Plan 2025/2026.

c) tuhi tīpoka / note that further work is underway in relation to:

i) determining decision-making responsibility for future urban development activities

ii) clarifying decision-making responsibility for council-owned property

iii) improving support for local boards in exercising local economic development, urban regeneration and property responsibilities

and that progress on this work will be reported to Governing Body as part of reporting of the CCO reform programme.

Horopaki

Context

CCO reform decisions included moving urban regeneration, property and economic development activities in-house

8. The goals of CCO reform are to improve:

· democratic accountability over projects and services delivered to Aucklanders by CCOs

· strategic alignment between council decision making and what CCOs do for Aucklanders

· the effectiveness and efficiency of how the Auckland Council Group operates.

9. Decisions on CCO reform were made on 12 December 2024 (GB/2024/179) and included transferring and integrating urban regeneration, non-service property management and economic development activities into council. Key reasons for this integration include:

· Urban regeneration – strengthening council’s ability to coordinate planning, strategy and delivery in a place-based way, including around strategic growth opportunities, large-scale developments and urban regeneration.

· Property management – improving processes for buying, managing and selling council property assets and improving collaboration across the council group to achieve greater financial and strategic value from those assets.

· Economic development – increasing the council’s economic policy capability, identifying new opportunities and integrating advice on economic development issues into broader decision-making.

10. As a result, decision-making responsibility for activities that were previously governed by the Eke Panuku Development Auckland and Tātaki Auckland Unlimited Boards now need to be allocated to the Governing Body or local boards.

Legislation sets how decision-making is allocated, including the use of the subsidiarity principle

11. The basis on which decision-making responsibility is allocated is what is known as the subsidiarity principle, as set out in Section 17 of the Local Government (Auckland Council) Act 2009 (LGACA). This states that decision-making for the non-regulatory activities of the council should be exercised by local boards unless the nature of the activity is such that decision-making on an Auckland-wide basis will better promote the well-being of communities across Auckland because:

· the impact of the decision will extend beyond a single local board area, or

· effective decision-making will require alignment or integration with other decisions (that sit with the Governing Body), or

· the benefits of a consistent or coordinated approach across Auckland will outweigh the benefits of reflecting the diverse needs and preferences of the communities within each local board area.

12. The Governing Body is responsible for allocating decision-making responsibility for non-regulatory activities in accordance with the principles outlined above, after considering the views and preferences expressed by each local board. The allocation of decision-making responsibility is then recorded in the Decision-making responsibilities of Auckland Council’s Governing Body and local boards Policy, which is included in each year’s Annual Plan (or the long-term plan every third year). The core part of this policy is what is generally known as the allocation table, which lists the non-regulatory activities for which the Governing Body and local boards have decision-making responsibility.

13. The allocation table, with proposed changes shown is included at Attachment A.

14. These proposals were workshopped with the Governing Body on 26 March 2025 and formally presented to local board business meetings in April 2025. Resolutions from these business meetings are included at Attachment B.

Tātaritanga me ngā tohutohu

Analysis and advice

15. This section is divided into the three key activities being transferred to Auckland Council: urban regeneration, property management and economic development. It outlines where decision-making responsibility currently sits or is proposed to sit and the rationale. It also summarises local board feedback.

Allocation of decision-making responsibility for urban regeneration (new section in the allocation table)

16. While activities that enable urban regeneration (such as planning, development streetscape improvements) are already covered in the allocation table, staff are proposing identifying urban regeneration as a stand-alone activity to enhance clarity.

17. Given the complexity and advanced state of council’s priority location urban regeneration programme, there is a need to minimise the risk of implementation being slowed down. Staff propose that this change is managed using the following principles:

· delivery of approved urban regeneration programmes will continue, using current business cases and detailed budgets (approved by the Eke Panuku Development Auckland Board)

· the Governing Body will allocate budgets to these programmes

18. The proposed allocations relate to current programmes and in part are in recognition that these must continue without issues despite the structural change. Further decisions will need to be made for new programmes. This includes the governance and budget allocation of any new programmes.

Proposed additions to the allocation table

19. The principles set out in Section 17 of the LGACA (set out at Paragraph 11 above) have been applied to existing urban regeneration activities. Table 1 sets out the proposed additions to the allocation table, with the reasoning for Governing Body or local board decision-making set out below. Note that the high-level wording is consistent with conventions in the existing allocation table.

Table 1 – Proposed additions to the allocation table for urban regeneration

Proposed Governing Body decision-making

Proposed local board decision-making

· Auckland-wide urban regeneration programme outcomes and objectives

· Urban regeneration in city centre and waterfront

· Overall funding plan for priority locations

· Allocation of budget for priority location plans including sequencing of urban regeneration projects within annual budget envelopes

· Identification of priority locations for urban regeneration programme

· Implementation of priority location plans, within parameters set by the Governing Body

· Local urban regeneration projects that are not part of the Auckland-wide urban regeneration programme, for example streetscape improvements or local service property optimisation projects

Proposed allocation to Governing Body: decision-making over urban regeneration programmes

20. Decision-making responsibility for regional urban regeneration activities is proposed to be allocated to the Governing Body as follows:

· Auckland-wide urban regeneration programme outcomes and objectives – the overall programme has region-wide outcomes, such as commercial and housing development. Therefore, the Section 17 principles of taking a consistent and coordinated approach across Auckland and enabling alignment with other decisions that sit with the Governing Body, are considered to be met.

· Urban regeneration in the city centre and waterfront – these programmes are recommended to sit with the Governing Body because the scale, influence and impact of these programmes extend beyond just the Waitematā Local Board area. The success of the city centre is important for Aucklanders, New Zealanders and visitors as a regional destination.

· Overall funding plan for priority locations – the Governing Body will allocate overall funding for the lifetime of programmes, often over 10-20 years or more.

· Allocation of budget for priority location plans including sequencing of urban regeneration projects within annual budget envelopes - the nature of revenue and funding available for urban regeneration and the manner in which programmes progress, is based on elements such as market forces, and regulatory processes. This means that budgets cannot easily be apportioned to local boards and need to sit with the Governing Body, at least initially.

· Identification of priority locations for urban regeneration programme – decision-making over identification of priority locations for the overall programme is proposed to sit with the Governing Body as new locations and programmes will form part of the Auckland-wide network.

Proposed allocation to local boards: decision-making over urban regeneration programmes

21. Decision-making responsibility for the following activities are proposed to be allocated to local boards:

· Implementation of priority location plans, within parameters set by the Governing Body – this will include an annual work programme specifying projects, sites and/or activities in the local board area.

· Local urban regeneration projects that are not part of the Auckland-wide urban regeneration programme, for example streetscape improvements or local service property optimisation projects – these may be projects that a local board has identified as a local priority in its local board plan and has allocated local funding to.

Further work to be done to review urban regeneration decision-making activity

22. In alignment with the council’s direction to empower local boards to carry out their local leadership role, staff consider that it may be possible to allocate further responsibilities to local boards. Further work is required to test this and will be undertaken as part of work to inform the future work programme of the new urban development function

Practical application of decision-making for urban regeneration in 2025/2026

23. Table 2 outlines how the allocation of urban regeneration responsibilities would work in practice. The table also includes a column outlining the work and decisions that staff would undertake under delegation.

Table 2 – Proposed urban regeneration programme decision-making in practice

Governing Body (or Committee)

Local Boards

Staff via Chief Executive general delegation (from GB and local boards)

· Approves Auckland Plan, land use and infrastructure policy

· Approves urban regeneration investment through the LTP/Annual Plan, including:

o Urban regeneration budget

o Revenue target from asset recycling (property sales)

o City Centre Targeted Rate programme

· Approves new priority locations or regional urban regeneration programmes

· Approves parameters for investment in priority locations including strategic outcomes, high-level costs, benefits, and delivery timeframes.

· Decision-maker for city centre and waterfront programmes

· Approves acquisition of property

· Approves disposal of non-service property

· Consulted prior to LTP, annual plan, new priority locations and for city centre and regional programmes

· Endorses high-level programme business case for priority locations, including masterplan

· NEW Approves annual work programme specifying projects, sites and/or activities in the local board area

· NEW Approves annual placemaking and activation plans and budget for its area

· NEW Approves urban regeneration project plans within the parameters set out within approved programme business cases (i.e. scope, cost, location, benefits delivered)

· Provides advice to Governing Body and local boards to inform their respective decisions in relation to urban regeneration

· Implements approved urban regeneration programme business cases and projects in accordance with delegations

· Executes property transactions, including preparing go-to-market strategies for development sites (within parameters set by local boards)

· Provides regular delivery performance reporting to Governing Body and local boards

· Works closely with local boards, both formally and informally, from urban regeneration plans, to design of public realm projects to property optimisation, regular workshops, meetings and site visits

Local board resolutions on urban regeneration proposals and staff response

24. Local boards generally support or are neutral on the proposed allocation of urban regeneration activities. Nine local boards support the proposed allocation. Ten local boards did not take a specific position. Two local boards, Waiheke and Howick, oppose the proposed allocation as follows.

i) Howick reiterated its 2024 feedback opposing the transfer of urban regeneration to Council, on the basis that the CCO model provides valuable independence, however this decision has already been made.

ii) Waiheke noted that the allocations proposed don’t enable it to advance any new capital projects of scale to meet the changing needs of its community and visitors. This issue is part of a live discussion with the Waiheke Local Board on how its unique needs can be met.

25. The Waitematā Local Board asked that neighbourhood or building level regeneration in the city centre be the responsibility of the Waitematā Board. Staff need to better understand this request and its implications and consider it can be further investigated once the initial change is in place and operational.

26. Feedback from local boards sought further clarity on how these changes to decision-making will be implemented, including for new priority locations for urban regeneration. Staff will engage with local boards on these matters in the coming months as the activities transition into council. Some local boards resolved on outcomes they seek specific to their local area and staff will engage directly with those local boards on these.

Allocation of decision-making responsibilities for property and asset management

27. Auckland Council will become responsible for Eke Panuku Development Auckland functions including the management of non-service properties, property transactions (sales and acquisitions) and management of marinas.

28. Table 3 sets out proposed changes to the allocation table, which includes some clarifying edits to the local decision-making responsibilities.

Table 3 – Proposed additions to the allocation table for property and marina management

Governing Body decision-making

Local board decision-making

· Marina management

· Management of non-service property

· Acquisition of new local community facilities (including local libraries, local sport and recreation facilities, local parks and reserves), and their specific location, design, build and fit out within budget parameters agreed with the Governing Body

Governing Body decision-making over property and asset management

29. The Governing Body has an overarching statutory responsibility for managing the network of council-owned facilities and overall financial oversight of the council.

30. Decision-making responsibility for non-service property and marina management are allocated to the Governing Body because these properties are not delivering local council services and are an important financial contributor to council budgets. This means the impact of decisions extend beyond a single local board area, and effective decision-making will require alignment or integration with other decisions (that sit with the Governing Body).

Local board decision-making over property and asset management

31. Local boards oversee local activities including the delivery of council services (such as libraries and community services) within their local board area. Local activities take place over ‘local service‘ properties. Currently, this is the only category of council-owned properties that local boards have decision-making responsibility in relation to.

32. The Governing Body has delegated limited disposal decision-making to local boards, specifically the use of Service Property Optimisation which enables local boards to dispose local service properties and reinvest proceeds in specific outcomes. An example is merging two council services into one building and selling the other property.

33. Local boards also currently have allocated decision-making responsibility for the acquisition of new local community facilities including their specific location, design, build and fit out within budget parameters agreed with the Governing Body.

The Group Property Framework is intended to provide principles, guidance and recommendations which will assist in improving decision-making on council’s property portfolio

34. The Group Property Framework is intended to provide an overarching guide to the management of property across the council group, based on robust principles and agreed definitions. The scope of the group property review was agreed by the Revenue and Expenditure Committee in September 2024 and the draft framework will be going to that committee in May (link to scope).

35. Some local boards have previously expressed concerns about a lack of information and advice on local service and non-service properties, including how property classifications are changed. The framework is expected to include recommendations that may address these concerns, for example:

· clarifying whether properties are service, non-service, local and non-local to ensure that local boards are given clear advice and decision-making over service property optimisation opportunities.

· recommending matrix teams be established consisting of key property staff across council to present the full options to local boards for property optimisation options in their area.

Local board feedback on property and asset management proposals and staff response

36. Eight local boards support the proposed allocation of property management activities. Twelve local boards did not take a specific position on the proposed allocations

37. The Waiheke Local Board specifically opposed these proposals, requesting that all council property assets should be owned and governed through the local board to enable local trade-offs in capital utilisation. Staff recognise that Waiheke faces some unique challenges which are currently the subject of reporting to the Joint Governance Working Party and consider that to be the best forum discuss the local board’s concerns further.

38. Some local boards resolved on outcomes they seek specific to their local area and staff will engage directly with those local boards on these in the coming months.

39. Some local boards requested decision-making authority, or at minimum joint decision-making, over the disposal of non-service properties and requested that sale proceeds be retained by the originating local board. There were also concerns raised over the lack of a robust Asset Management Policy to guide property decisions and optimisation. This feedback highlights the need for clear direction from the Governing Body on the scope of its delegation to local boards, which does not enable local boards to dispose of non-service property.

40. Work is underway to improve clarity around the scope and parameters of local boards’ allocated and delegated authority over council-owned properties. This includes the acquisition of local service properties, and the limited disposal powers currently delegated to local boards under the Service Property Optimisation Framework approved in 2015 (before the conclusion of the Governance Framework Review).

Allocation of decision-making for economic development activities

41. Economic development activities currently delivered by Tātaki Auckland Unlimited are being transferred to Auckland Council. There are no substantive changes proposed for the decision-making responsibility for these activities, as reflected in Table 4.

42. While the allocation of decision-making is not proposed to change, council will need to make additional decisions on economic development initiatives, for example in areas such as the Auckland Innovation Network and the Te Puna creative precinct. This change will increase democratic accountability.

Table 4 – Economic development decision-making (no new allocations, some minor changes proposed)

Governing Body decision-making

Local board decision-making

· Regional economic development strategy and Business Improvement District (BID) Policy

· Auckland-wide and city centre economic development programmes and initiatives

· Business improvement district (BID) programmes including establishment of new BIDs within parameters set by the BID Policy and recommending BID targeted rates to the Governing Body

· Local economic development plans, projects and initiatives within parameters set by regional strategies, policies and plans

Business improvement district programmes

43. The BID Policy outlines key decision-making responsibilities that sit with local boards and recognises that within Auckland Council, local boards are the primary relationship lead with BID operating business associations.

44. Local boards may provide additional support to BID-operating business associations and BID programme delivery through their local board annual work programmes and budgets. Where there is no BID programme, some local boards actively partner with local businesses to develop or deliver initiatives that promote local economic development.

Local economic development plans and initiatives

45. Local boards want more support for developing and implementing local economic development initiatives in their areas. While there is currently no additional resource for local economic development activities, the new economic development function will provide a home for local economic development brokers funded by local boards.

Local board feedback on economic development proposals and staff response

46. Nine local boards passed specific resolutions supporting the proposed allocation of economic development activities.

47. Only the Waiheke Local Board specifically opposed these proposals. As with its resolutions on urban regeneration, the Waiheke Local Board does not support the allocations proposed as these do not enable it to meet the changing needs of its community, and those of its visitors. The board noted that these proposals continue to lock in regional economic development at a central level while census data demonstrates that the impacts of tourism and visitors to Waiheke, and housing costs, are not being addressed and resultant costs are left to the local board to address.

48. Staff recognise that Waiheke faces some unique challenges which are currently the subject of reporting to the Joint Governance Working Party and will discuss this matter further with the local board in the coming months.

48. The remaining local boards did not take a specific position on the proposed allocations, with many instead strongly supporting the reinstatement of local economic development plans, requesting increased funding, advice and support to effectively deliver economic development functions. Staff will engage directly with those local boards on these in the coming months.

50. Some local boards resolved on outcomes they seek specific to their local area and staff will also engage directly with those local boards on these in the coming months.

Other amendments to the allocation table

51. As shown in Attachment A, other changes to the allocation table are designed to enhance clarity. These include formatting changes that separate activities that have been, to date, clustered together in the allocation table e.g. separation of planning and development activities from economic development activities, creation of a facilities and asset management category/activity, incorporating the existing allocation of asset renewals and upgrade responsibilities (currently at the end of the table) into the facilities and asset management section.

52. The changes also include new explanatory notes for new activities e.g. clarification of the purpose of the urban regeneration programme and reference to the Group Property Framework where relevant definitions can be found.

Addressing local board support and clarity of responsibilities

13. As noted above, the biggest area of feedback was concern about adequate resources and support being available to enable local boards to make decisions on local economic development, property and urban regeneration

14. While no additional resources are available from 1 July 2025, work is underway across several programmes to address the support and decision-making concerns raised by local boards. This includes:

· 100-day transition work supporting new departments to establish processes aligned with their responsibilities, including work to consider decision-making responsibility for future urban development activities;

· implementation of the Group Property Review, which is preparing advice on improvements to decision-making and delegations for property acquisition and disposal;

· development of a more robust support model for local economic development through the new Economic Development Office.

15. Staff will report back to the Governing Body with further advice on these matters as part of regular reporting on the CCO reform programme.

Climate impact statement

53. No climate impacts have been identified as a result of the changes proposed in this report.

Council group impacts and views

54. The transfer of urban regeneration, property management and economic development activities to Auckland Council will have a range of impacts on the Auckland Council Group. These include direct political direction to staff, improved integration of activities and outcomes and efficiency gains.

55. While there are no new resources or budgets proposed as a result of the transfer of these activities, it is likely that demand for advice and support may increase with direct political decision-making.

56. The Governing Body will make a decision on the proposed allocation of decision-making responsibility for the transferred Eke Panuku Development Auckland and Tātaki Auckland Unlimited activities on 29 May 2025, and these will be reflected in the allocation table as part of Annual Plan 2025/2026.

Financial implications

57. No direct financial implications are anticipated from the reallocation of decisions to the Governing Body or local boards. Staff advice to support decision-making will continue, even if the decision-maker changes (for example some decisions made by the Eke Panuku Development Auckland Board will now be made by local boards).

58. There will be financial implications if new urban regeneration or economic development programmes or projects are started. Local boards wishing to undertake new programmes or projects will need to fund them.

59. The financial implications of integration of urban regeneration, property management and economic development functions into council (for example the dis-establishment of Eke Panuku Development Auckland as an entity) are being addressed by other workstreams under in CCO Reform programme.

Risks and mitigations

60. The proposals in this report are intended to ensure a seamless transfer of urban regeneration, property management and economic development activities into council. Any issues that arise are not anticipated to be significant and will be addressed on a case-by-case basis.

61. With activities coming in house, political scrutiny and oversight may increase and create the need to change direction. This is considered to be more likely with new programmes than with current programmes but will need to be monitored and managed. This risk is balanced against the benefits of improved democratic accountability.

62. As outlined in this report, a number of decisions will need to be made as existing urban development programmes advance to a point where resources are freed up to develop new programmes. As part of this it is anticipated that a review of current decision-making will be undertaken to ensure particularly local boards have the right degree of decision-making over local programmes and associated budgets. Staff consider there is time to manage this change and in terms of the allocation of decision-making, any further change can be reflected in Annual Plan 2026/2027.

63. A risk exists in relation to whether, when and how the organisation can respond to advice, support and resource issues identified by local boards in their feedback on this matter. Consistent themes in this feedback include a wish to have local economic development support, the ability to have town centre and streetscape upgrades, to have an enhanced role in property matters and for support, staff advice and resources to advance these. The report recognises work underway to find a solution to these issues within the 2025-26 year as the new structures are bedded in.

Tauākī whakaaweawe Māori

Māori impact statement

64. There are no specific Māori impacts identified with the proposals outlined in this report. Engagement with Māori in relation to urban regeneration, property management and economic development is expected to continue in line with current practices

Ngā whakaaweawe ā-rohe me ngā tirohanga a te poari ā-rohe

Local impacts and local board views

65. Existing urban regeneration, property management and economic development activities are coming in house from 1 July. The major change local boards will see, is where staff come to them seeking approval of urban regeneration activities, rather than support, endorsement, or for information.

66. As noted elsewhere in this report, when existing urban regeneration programmes are completed, new programmes and activities will be considered. It is expected that local boards will have a greater role in decisions on those.

67. Greater clarity around property management decision-making will be provided in the Group Property Framework.

68. Local economic development remains under local board decision-making responsibility. Until additional resource is provided, staff advice on new local economic development activity will not be possible, unless local boards fund this themselves.

69. Changes to decision-making may result in increased elected member workloads, which will be assessed as activities are integrated into council.

70. Local board views are summarised above and formal local board resolutions on these proposed changes are included at Attachment B.

Ngā koringa ā-muri

Next steps

71. Changes to the allocation table will be included in the Annual Plan 2025/2026, which is due to be adopted by the Governing Body on 26 June 2025.

72. Over the coming months staff will engage with the governing body and local boards, as urban regeneration, property and activities come into council and decisions come to elected members. This will include additional information on funding, resources and advice available to implement these changes.

Ngā tāpirihanga

Attachments

No.	Title	Page
a ⇨	Decision-making responsibilities for Auckland Council's Governign Body and local boards
b ⇨	Local board resolutions - allocation of decision-making

Ngā kaihaina

Signatories

Author

John Nash - Programme Manager

Authorisers

Alastair Cameron - Manager CCO/External Partnerships team

Max Hardy - Director Group Strategy and Chief Executive Office

Phil Wilson - Chief Executive

[1] The current population estimate is based on the most recent population estimates from StatsNZ. The post-covid period has been one of particularly high volatility with growth exceeding expectations. Future forecasts are based on the current ‘most likely’ Auckland growth scenario, AGS2023v1.1, These figures are the central scenario noting that the low and high are +/- 300,000 either side.

[2] The Auckland Transport Guide to Cost Estimation (May 2023) was developed by Auckland Transport through adoption of the Waka Kotahi NZ Transport Agency’s (Waka Kotahi) Cost Estimation Manual SM014, with amendments to reflect the specific circumstances of Auckland.

[3] The unit of demand on infrastructure representing one average detached dwelling unit used to determine the share of costs between developments of different type and scale.

[4] The current population estimate is based on the most recent population estimates from StatsNZ. The post-covid period has been one of particularly high volatility with growth exceeding expectations. Future forecasts are based on the current ‘most likely’ Auckland growth scenario, AGS23v1.1, These figures are the central scenario noting that the low and high are +/- 300,000 either side.

[5] Information identifying specific properties was redacted from the models released.

[6] Officers did not consider setting a price that adjusted annually for movements in the Producer Price Index as provided for in s106 (2C) of the Local Government Act 2002 because the escalation in costs over time is already included in the cost of the investments included in the policy.

Mayor	Wayne Brown
Deputy Mayor	Cr Desley Simpson, JP
Councillors	Cr Andrew Baker	Cr Mike Lee
	Cr Josephine Bartley	Cr Kerrin Leoni
	Cr Angela Dalton	Cr Daniel Newman, JP
	Cr Chris Darby	Cr Greg Sayers
	Cr Julie Fairey	Cr Sharon Stewart, QSM
	Cr Alf Filipaina, MNZM	Cr Ken Turner
	Cr Christine Fletcher, QSO	Cr Wayne Walker
	Cr Lotu Fuli	Cr John Watson
	Cr Shane Henderson	Cr Maurice Williamson
	Cr Richard Hills

Resolution Number	Item	Status
GB/2025/48	Western Springs Stadium expression of interest process - consultation on options	Consultation has commenced with regional organisations and interest groups sessions confirmed for 30 May 2025 and 9 June 2025.

	FY26 ($)	FY25 ($)
Board remuneration and expenses	884,963	862,534
Salaries	1,479,731	1,486,670
Expenses (including audit fees)	75,000	85,000
Legal, Planning experts for Māori Provisions in plans	80,000	80,000
Communications including websites, newsletters, brochures, translations, engagement and reporting to Māori Stakeholders	173,806	179,296
Māori expertise – includes marae development, climate change, rangitahi, sites of significance and cultural landscapes, Māori identity, data strategy, environmental management, water quality and issues of significance review.	320,000	320,000
Total direct OPEX funding	3,013,500	3,013,500

Date	Subject
29.4.25	Letter from David Seymour to Mayor Brown requesting support for improving school attendance rates

Climate impact statement guidance

Council group impacts and views guidance

Financial implications guidance

Risks and mitigations guidance

Tauākī whakaaweawe Māori

Māori impact statement guidance

Ngā whakaaweawe ā-rohe me ngā tirohanga a te poari ā-rohe

Local impacts and local board views guidance

Exclusion of the Public: Local Government Official Information and Meetings Act 1987

Author	Sarndra O'Toole - Kaiarataki Kapa Tohutohu Mana Whakahaere / Team Leader Governance Advisors
Authoriser	Phil Wilson - Chief Executive