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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Fast-track Approvals Bill passed into Law
The Government is aiming to deliver on its promise to deliver a new fast-track consenting regime before the end of 2024. The Fast-track Approvals Bill has passed through its third reading in Parliament on 17 December 2024 and we would expect it to be given royal assent before the end of 2024 meaning that it will become law.
At the committee of the whole house stage the Minister Responsible for Resource Management Reforms, Chris Bishop, introduced an amendment paper which tabled various substantive amendments to the bill. These amendments were incorporated into the bill through the committee of the whole house stage with little amendment. The amendments are largely favourable to applicants.
The significant changes that have been made to the bill since the Select Committee’s report are as follows:
The listed projects have now been included in Schedule 2. The projects listed were not a surprise as they has been previously announced by the Government towards the end of the Select Committee stage.
There are new provisions that allow the Minister for Infrastructure (currently Minister Bishop) to determine that a project is a ‘priority project’. An applicant can apply to the Minister for its project to be given priority, or the minister can make this decision of their own initiative. Panels must be set up for priority projects before non-priority projects.
Applications cannot be lodged before 7 February 2025.
There are some changes to the information requirements, with a focus on providing information to show how a project is consistent with the purpose of the bill (i.e. to facilitate delivery of infrastructure and development projects with significant regional or national benefits).
Before declining an application, a panel must provide its draft decision to the applicant before it is finalised. At this stage, the applicant can propose modifications or conditions to its application which functions as a pseudo ‘second chance’ to adapt an application to address a panel’s concerns.
The scope for the reasons for declining an application has been expanded to include where there is a breach of s 6 of the Resource Management Act 1991 (which relates to Treaty settlements).
The timeframe in which a Panel must make its decision has been increased from 25 working days to 30 working days from the date specified for receiving comments, but the power for a panel to extend the timeframe for making a decision beyond 30 working days from the date comments were to be received has been removed. However, the panel convener can set a timeframe that is longer than 30 working days if they consider that to do so is appropriate given the scale, nature and complexity of the approvals sought.
The eligibility criteria for the panel convener has changed so that it can now be a senior lawyer with expertise in resource management. There is no longer a requirement for the panel convener to be a retired or active judge.
As set out above, applicants will have to wait until 7 February 2025 to lodge an application with the Environmental Protection Authority. It will then be interesting to see how quickly panels are set up. 2025 is sure to be an interesting year for consenting in New Zealand, with many complex and exciting projects included in Schedule 2.
Resource Management (Consenting and Other System Changes) Amendment Bill
In keeping with its promise to introduce further changes to the resource management system before the end of 2024, the Government has introduced the Resource Management (Consenting and Other System Changes) Amendment Bill (Bill). The Bill proposes to make changes to the Resource Management Act 1991 (RMA) to advance key Government policies as part of stage three of its RMA reforms and is intended to go before Parliament for its first reading this week.
These changes can be separated into five categories which are in keeping with the Government’s ‘packages’ that it announced in late August 2024.
Infrastructure and Energy
Consent Timeframes: Renewable energy generation consents would be required to be decided within one year. For geothermal and hydro schemes this timeframe must be extended if a request is made by the applicant or a specified group (such as treaty settlement groups, customary marine title groups and iwi authorities).
Consent Durations: Consents for renewable energy and long-lived infrastructure have a default duration of 35 years, unless:
the applicant requests a shorter period;
a National Environmental Standard, National Policy Statement or National Planning Standard expressly provides for a shorter period; or
it is required after consideration of submissions by relevant groups (such as treaty settlement groups, customary marine title groups and iwi authorities).
Lapse: Lapse periods for renewable energy projects have doubled from five years to 10 years.
Designating Authorities: Requirements and costs for designating authorities are simplified by restricting when an assessment of alternatives is required and simplifying other assessments and information requirements.
Port Coastal Permits: Each port company’s coastal permit will be automatically extended to 30 September 2046 (the conditions of which will also be extended automatically). A port company’s permit must be reviewed by the relevant consenting authority no later than 30 September 2027 to identify:
Any adverse environmental effects of the occupation of the coastal marine area; and
Whether conditions need to be imposed or amended to avoid, remedy or mitigate those effects.
Requiring Authority Status: Port companies are to be given requiring authority status for landward operations.
Discharges: Amendments to s 70 RMA are proposed to amend the scope of discharge rules to enable regional councils to include permitted activity discharge rules where performance standards will contribute to a reduction in adverse effects over time.
Housing Growth
Medium Density Residential Standards: Flexibility will be provided to territorial authorities to enable them to opt out of the Medium Density Residential Standards if they demonstrate that they have at least 30 years of planned housing growth capacity. This exemption applies even if the medium density residential standards have since been incorporated into that territorial authority’s district plan. Specified territorial authorities are no longer required to incorporate the medium density residential standards into residential zones.
Minister’s Powers: The Bill provides the Minister for the Environment with new powers to ensure compliance with national direction, including housing and business development assessments. The Minister for the Environment can direct councils to prepare or amend documents in accordance with national direction and to direct what type of plan change is used to give effect to national direction.
Heritage Buildings: The process for listing/delisting heritage buildings and structures has been simplified.
Farming
Fishing: The Bill defines the interaction between the RMA and fishing activities under the Fisheries Act 1996. The intent is to ensure that where new rules are introduced, they go through a pre-notification process with the Director-General of the Ministry for Primary Industries, have their effects on fishing assessed, do not raise new restrictions in unexpected areas (reduced scope of submissions), do not add to the regulatory burden on fishers, and do not apply to Māori customary non-commercial fishing rights.
Farm Plan: Part 9A of the RMA is amended to make farm plan certification and audit services more practical and cost effective by allowing industry organisations to deliver those services.
Wood Processing: To reduce delays in consenting, the Bill requires resource consents for wood processing facilities to be decided within one year of application.
Natural Hazards
Plan Changes: Any plan changes introducing new natural hazard rules will have immediate legal effect.
Consenting: The Bill strengthens a consenting authorities’ powers to decline a land use consent application if it considers that the activity will create a significant risk from natural hazards, increase an existing risk to become significant, or increase an existing significant risk.
Emergency Response: New powers are to be given to the Governor General (on the recommendation of the Minister) to make regulations that respond to natural hazards and enable recovery efforts.
System Improvements
Penalties: Penalties for offences under the RMA are proposed to be changed as follows:
For private individuals – maximum imprisonment decreased from two years to 18 months and maximum fine increased from $300,000 to $10,000,000.
For a non-natural person (e.g. a company) the fine is increased from $600,000 to $10,000,000.
Insurance: The Bill removes the ability for parties to insure against penalties and makes it unlawful. Fines are introduced for persons who enter into insurance contracts to indemnify parties for offences under the RMA (a maximum of $50,000 for an individual and $250,000 for any other person).
Clarity: Changes are proposed to simplify the consenting regime by clarifying the scope of further information requests, allowing applicants to review consent conditions before a decision and enables cost recovery for consent reviews due to national direction.
Conservation Act 1987: The Bill proposes changes to the Conservation Act 1987 to make technical amendments to the Department of Conservation functions to align their ability to manage discharges with the proposed changes to the RMA.
Holland Beckett is experienced in providing advice to clients on the current reforms to New Zealand’s resource management system. If you have any questions about these reforms, please feel free to contact us.
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.