A significant case in relation to development contributions was recently decided by the High Court, in relation to Hamilton City Council’s (HCC) development contributions policy (DC policy) and its application.
Development contributions are a funding tool for territorial authorities to charge those undertaking developments a portion of the capital expenditure cost necessary to service growth over the long term, for big ticket items such as three waters infrastructure, roading and other amenities required for growing communities. The Local Government Act 2002 (the LGA) sets out what is required by councils in order to impose development contributions, which must be done through setting a development contributions policy, and then requiring development contributions in accordance with that policy.
An application for judicial review was brought against HCC by a group of developers who were essentially claiming that HCC’s DC policy was not compliant in a number of respects with the provisions of the LGA, which was resulting in significant overcharging of development contributions.
The decision includes significant findings on development contributions. We have summarized the key findings below:
- When considering remissions relating to the reduced demand of a particular development, the DC policy requires that the reduced demand must create material future capacity in the Council’s infrastructure network. The Court considered that this was allowed under the Act, and not every development that had reduced demand for infrastructure should receive a remission. The Court found that the LGA’s references to the avoidance of ‘over-recovery’ of development contributions was meant in an aggregate sense, rather than in relation to specific developments.
- A claim was made in relation to the unreasonableness of the Council’s ‘no refunds’ policy where there was an overcalculation of development contributions, which happened relatively often due to the contribution being required at the resource consent stage. HCC’s policy where there was an overpayment was to provide the developer with ‘site credits’, which were able to be exercised for subsequent site development or redevelopment, meaning if further development did not occur the funds were essentially lost. At the hearing, HCC recognised this issue and had already removed its ‘no refunds’ policy from its 2020/21 DC policy. In these circumstances, the Court declined to grant the relief seeking that the Council reconsider its ‘no refunds’ policy.
- Another claim related to an industrial zone subdivision, which constructed and fully funded all three waters and roading infrastructure to service the subdivision and therefore claimed that it did not create any demand on infrastructure. HCC relied on the need for local roading in the wider catchment as justification for requiring contributions. The Court held that as long as a causative link can be established between the development and infrastructure demand, development contributions are still attracted, and it is not appropriate to isolate individual components of infrastructure for which a development generates direct demand and only charge development contributions in respect of those individual components.
- The Court also found that where a development contributions policy identifies catchments for various development contribution fees, it is not essential for projects that are funded by that specific fee to be located within the catchment, as long as there is a causal link i.e. that developments within that catchment create demand for a particular project.
- A claim was also brought against a part of the policy which calculated stormwater infrastructure development contributions for residential developments based on the number of bedrooms in a dwelling. Given that stormwater infrastructure generally relates to the size of an impervious surface, this method of calculation did not make sense for multi storey developments. The Court declined to find this method of calculation ‘unreasonable’ but did provide some informal direction to HCC to reconsider this in light of the increasing prevalence of multi-storey, high density developments.
Overall, this decision will be a relief to HCC due to the sheer scale of claims made against its policies. The overarching theme of the judgment is that councils cannot be reasonably expected to calculate personalised development contribution figures for each development taking into account its precise features. While it can be a blunt tool, a calculation based on floor area is considered appropriate, although it may result in some unfairness at a granular level and remissions may not be readily provided.
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Another RMA amendment – freshwater and other matters
Another amendment Act, in a long line of RMA amendment Acts, came into force on 24 October 2024. The Resource Management (Freshwater and Other Matters) Amendment Act 2024 (Act) makes the following key changes to the RMA:
Freshwater
The “hierarchy of obligations” in clauses 1.3(5) and 2.1 of the National Policy Statement for Freshwater Management 2020 (NPSFM) are no longer considerations for resource consent decisions. This applies to resource consent applications lodged before commencement if the consent authority has not, before commencement, served notice of its decision on the application.
Provides that councils are not to notify “freshwater planning instruments” (giving effect to the NPSFM) before the a new NPSFM has been published or the end of 2025. This is a year later than the RMA previously required. Exemptions from this delay can be sought in certain circumstances.
Section 107 of the RMA has been amended to clarify that councils can grant resource consent for discharges that would result in significant adverse effects, provided conditions reduce effects over time. This is a direct response to the Environmental Law Initiative’s successful judicial review of a discharge permit in mid Canterbury.
Freshwater / Farming
The Act removes the use of low slope maps under the Resource Management (Stock Exclusion) Regulations 2020 that restricted the grazing of beef, cattle and deer on low slope areas near water bodies. Low slope maps are to be replaced with freshwater farm plans and/or regional plans wherein Regional Councils can determine where stock grazing needs to be excluded on a case-by-case basis.
Further, the Act repeals the permitted and restricted discretionary activity regulations and associated conditions for intensive winter grazing in the National Environmental Standards for Freshwater (NES-F). The Act replaces these with standalone regulations on riparian setback and critical source areas.
Significant Natural Areas
Local authorities have an obligation in the National Policy Statement for Indigenous Biodiversity (NPS-IB) to identify and include new significant natural areas (SNA) by 4 August 2028. These identification and incorporation requirements are suspended for three years by the Act which amends the timing provisions for when councils must publicly notify a proposed plan or plan change that gives effect to the NPS-IB. This change seeks to provide sufficient time for Government to undertake a thorough review of how SNAs operate.
Coal Mining
The NPS-FM, NPS-IB and the NES-F all provide a consent pathway for mining activities in or near wetlands and SNAs, except for new coal mining activities. The Act aligns the consenting pathway for new coal mining activities with the pathway for other mineral extractive activities across the NPS-IB, NPS-FM and the NES-F.
National Direction
The Act enables the Minister for the Environment to amend national direction (excluding the New Zealand Coastal Policy Statement) without using the standard process where the amendment is for a range of purposes including to give effect to international obligations and to change timeframes.
Fast-track Approvals Bill – Select Committee report back
On Friday 18 October 2024, the Environment Committee reported back on the Fast-track Approvals Bill which was introduced on 7 March 2024. We take a look at what’s changed, what stays the same, and the road ahead.
What’s changed?
The Environment Committee has recommended the following key changes.
The purpose of the Bill has been re-framed as “to facilitate the delivery of infrastructure and development projects with significant regional or national benefits”.
Timeframes are amended slightly to provide the Expert Panel with 10 working days (rather than five) from their appointment to issue an invitation for written comments, and to provide those invited to comment with 20 working days (rather than 10) to provide those comments.
Expert Panels no longer include an iwi appointee. However Expert Panels must include at least one member who is suitably qualified in te ao Māori and Māori development.
The Expert Panel (not Ministers) will make final decisions on substantive applications.
When considering applications, the Expert Panel must give the “greatest weight” to the purpose of the Bill.
The Expert Panel may decline an approval if it forms the view that the activity or activities for which the approval is sought would have one or more adverse impacts, and those adverse impacts are sufficiently significant to outweigh the purpose of the Bill even after any conditions that the panel may set in relation to those impacts are taken into account.
The lapse provisions have been amended to allow some discretion. Lapse periods must be at least two years, and if not specified, a default lapse period of five years will apply.
What’s stayed the same?
The Bill is still an ‘omnibus’ bill which covers a wide range of processes, not just resource consents.
A person who has applied for an approval under another Act must withdraw that application before lodging a substantive application that seeks a corresponding approval under the Bill for the same, or substantially the same, activity.
The Expert Panel still has a window of 25 working days from the closing date for comments to issue its decision, which is significant given the scale and complexity of many of the projects listed (although suspensions are provided for and there is the ability to extent that timeframe).
Appeal rights are available to the High Court on a point of law only. Rights of judicial review are not affected by the Bill.
The road ahead
The Bill still refers to Schedule 2A and 2B (with provisions for Part A listed projects and Part B listed projects), despite the Minister’s announcement on 6 October 2024 that “Because of the unprecedented level of interest in this process, it became clear that so many projects were suitable for 2A that having a separate list for Schedule 2B became unnecessary, so it will be deleted from the Bill.” Presumably this will be amended as the Bill progresses through Parliament.
For listed projects, the immediate issue will be resourcing the processing of those. With 149 projects selected for listing in the Bill, it remains to be seen how many will convert into lodged applications (and how quickly). There is also a mandatory requirement to consult specified persons before lodging the substantive application with the EPA.
Once applications are lodged, Experts Panels will need to be formed to process applications. Overall, the fast-track process is likely to be resource intensive for all participants.
Seeking referral for fast tracking is still possible (as was the case with the COVID-19 (Fast-track) Consenting Act 2019). However, the question will be the extent to which there is capacity within the system for the processing of referral applications, and referred projects, in light of the volume of listed projects.
The Bill is expected to become law before the end of the year.
For any questions, please contact one of the below who all have experience with fast-track applications.
Phase three of the Resource Management Reforms
Last week, the Government has announced that two new laws are to be developed to replace the Resource Management Act 1991 (RMA), with the enjoyment of property rights as their guiding principle.
Replacement of the RMA is part of the final phase (phase three) of the Government’s reform of our resource management system.
The Government’s intention with a property rights focused system is to allow people to do more on their own property more easily, so long as it does not harm others. Where harm to others results from an activity, the intention is that the new system should step in to protect a property owner’s rights from being compromised by unreasonable activities occurring around them.
Cabinet has agreed on ten core design features of the new resource management system. These features are still at a high level and more detail will be required before the effectiveness of these methods can be assessed in achieving the Government’s aspirations. The ten features are as follows:
Narrow the scope of the resource management system to focus on managing actual effects on the environment.
Establish two acts with clear and distinct purposes – one to manage environmental effects arising from activities and the other to enable urban development and infrastructure.
Strengthen and clarify the role of environmental limits and how those are to be developed.
Provide for greater use of national standards to reduce the need for resource consents and simplify council plans.
Shift the focus away from consenting before activities can get underway, and towards compliance, monitoring and enforcement of activities’ compliance with national standards.
Use spatial planning and a simplified design process to lower the cost of infrastructure.
Realise efficiencies by requiring one regulation plan per region, jointly prepared by regional and district councils.
Provide for a rapid low cost resolution of disputes between neighbours and between property owners and councils, with the potential for a new Planning Tribunal (or equivalent).
Uphold Treaty of Waitangi settlements and the Crown’s obligations.
Provide faster and cheaper processes with less reliance on litigation, contained within shorter and simpler legislation that is more accessible.
An expert advisory group has been appointed to assist with the development of the new system, whose expertise includes resource management law, planning and te ao Māori. The Government expects key aspects of the new system to go before Cabinet for agreement before the end of the year with the intention for legislation to be passed before the next election.