Developmt contributions: Court defeat for Council

Media Statement
22 March 2007

High Court upholds call for a fair development contributions policy; inflicts defeat on North Shore City Council

The High Court has ruled that North Shore City Council’s development contributions policy is inconsistent with the requirements of the Local Government Act 2002. The decision blows the whistle on widespread abuse of local government sector’s ability to charge development contributions for the purpose of recovering growth-driven capital expenditure costs.

In particular the Court found that North Shore City Council had: “… made an error of law in failing to ensure that its development contributions policy complies with the requirements of the Act to assess development contributions against a “development” (as defined as s197) that generates a demand for reserves, network infrastructure and community infrastructure."

“The [North Shore City] Council has made an error of law in adopting a narrow concept of economic efficiency in the causative approach it has applied to the assessment of development contributions, and excluding appropriate consideration of the distribution of benefits and equitable and proportionate allocation."

“It follows that the Council has made an error of law in failing appropriately to explain in its development contributions policy, as required by s106(2)(c) why in terms of s101(3) it has determined to use development contributions as a funding source."

Connal Townsend, chief executive of the Property Council of New Zealand, said the High Court decision against North Shore City Council is groundbreaking, but not surprising.

“The Property Council has long argued that North Shore City Council’s development contributions policy was both illegal and unfair. Sadly North Shore City Council ignored the advice of property industry representatives and pursued a policy that has forced up the cost of new commercial and residential properties to a level that is unaffordable to thousands of young families.

“As Justice Potter points out, development contributions charged by local authorities are invariably passed on to the purchasers of property. The purchasers become future ratepayers, but in relation to any development contribution required, they have no say through the ballot box. Couple that constitutional outrage with the fact that the developer who must meet the development contribution in the first place has no right of appeal against the local authority’s assessment.

“Since 2004 local authorities such as North Shore City Council has used development contributions as a means of gouging money out of young families who can ill-afford to pay the skyrocketing cost of compliance.

North Shore City Council might have thought their policy was bullet proof, but the decision by the High Court suggests otherwise.

“Local authorities who pursue a similar development contributions policy that contravenes the Local Government Act 2002 can expect to face the same fate as North Shore City Council,” Connal Townsend Said

ENDS

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