Changes to Development Contributions Policy

Hamilton City Council will amend its proposed Development Contributions Policy to have developers pay for a large portion of growth-related costs, reducing the impact on rates.

On 31 May 2018, the Council approved changes to the proposed Policy, with a revised policy scheduled to be adopted at the 28 June 2018 Council meeting.

The Council’s proposed Policy sets out the rules and proposed charges for new developments in the city and has been drafted in parallel with the Council’s draft 10-Year Plan.

Development Contributions are a charge assessed on the likely impact a development will have on the Council’s network, where the development is located and growth infrastructure it benefits from.

The proposed policy will include calculating housing Development Contributions based on the number of bedrooms a dwelling will have. This is consistent with the proposed Policy which went out for public consultation, although is a change from the current operating Policy.

CBD remissions

The Council voted to phase out the Central Business District (CBD) remission across three years, ending in 2021.
Any development in the CBD will get a reduction of 66% of their Development Contribution levy until 1 July 2019 and a 33% reduction until July 2020.
A CBD remission is used to encourage development in Hamilton’s central city.

Capped charges

The Council voted to remove all caps from the draft Development Contributions Policy.
A cap is a specified maximum charge that will apply to a specified area or type of development. 

Collecting growth-related costs outside 10 years

The Council will continue to collect on specified projects planned for outside the 2018/28 10 Year Plan.
The Council is able to collect Development Contributions for major infrastructure costs which are scheduled to be constructed outside of the next 10 years.

Indexing Development Contribution charges

The Council voted to remove indexing charges from the draft Development Contributions Policy in response to submissions opposing the use of it.
Indexing is an adjustment in the Development Contributions Calculation Model, to account for the fact a dollar today is more valuable than the same dollar in 10, 20 or 30 years’ time. Under an indexed model, developers today will pay a slightly lower charge and developers further down the track will pay slightly more. Not including indexing means the Council will be in a better financial position from savings in interest in early years.

HUE threshold for remissions

The Council voted to lower the threshold where developers can request a remission, reducing from 10 Household Unit Equivalents (HUEs) to five.
This change makes remissions available for more developers when their developments have less impact on the city’s infrastructure than modelled.

Cost recovery

The Council will continue to have a clause in the proposed Policy which allows the Council to charge developers for staff time and resource taken to process a remission application.

Cost allocation

The Council voted to change the cost allocations for a bulk wastewater storage facility meaning Development Contributions will be collected and spread over a wider geographical area.

The combination of the above changes to the proposed Policy have created additional revenue for the Council and will have a positive impact on rates by around 0.5%.

The Council began deliberating the draft 10-Year Plan projects and policies as part of the 31 May 2018 meeting, those discussions will continue today (Friday 1 June).