Draft Development and Financial Contributions Policy

We’re proposing changes to our policy on development and financial contributions

Southland District Council is consulting on proposed changes to the policy on development and financial contributions in conjunction with the preparation of our Long Term Plan 2024-2034.

Our policy on development and financial contributions determines how Council will recover development and financial contributions to cover the cost of capital expenditure which is necessary to service growth and associated demand for development in the Southland district.

We are required to review this policy every three years with Council’s last review completed in 2021.

Below we have provided further background information on the policy along with the changes are proposing, and how you can make a submission.

We are keen to receive feedback on the draft policy, with public consultation running from 9am on Wednesday 5 June 2024, to 12pm on Friday 5 July 2024, alongside consultation on our Long Term Plan 2024-2034.

Download the draft Policy on Development and Financial Contributions.

Why have a policy on development and financial contributions?

Population and business growth can create the need for new subdivisions and developments, which can place increasing demands on the assets and services provided by Council. Significant investment in new or upgraded assets and services can therefore be required when increased demands from growth are expected to exceed the capacity which Council can provide.

The Local Government Act 2002 (LGA) requires Council to have a policy on development contributions or financial contributions. Such a policy helps ensure we are able to recover from those persons undertaking development a fair, equitable, and proportionate share of the total cost:

• of capital expenditure necessary to service growth over the long term; and
• to deal with the adverse environmental effects of new development in the district.

The LGA allows development contributions to be used to fund the costs of infrastructure, reserves, or other community facilities arising from new housing or commercial developments.

Financial contributions are established under the Resource Management Act 1991 (the RMA) and are a capital charge which can be imposed to cover works undertaken to mitigate the environmental effects of subdivision, land use and development.

Our current policy

The policy sets out how and when Council will use development contributions and financial contributions, what they fund, and why.

The policy allows financial contributions for reserves and roading to be imposed as a condition of resource consents granted under the Southland District Plan.

Development contributions are currently included within the policy to help cover Council’s water, wastewater (sewerage) and community, infrastructure capital expenditure costs when required. Council ceased collecting development contributions in 2015 they were put into general remission under the policy. This change was made for the purpose of encouraging development in the Southland District, recognising that this will benefit the community as a whole. This remission remains in place today.

Proposed changes to the policy

The draft Policy on Development and Financial Contributions (the draft policy) can be found here

Under this proposal:

• financial contributions will continue to be required through the Southland District Plan to contribute towards:
  • the development, maintenance and upgrading of roading infrastructure that serves a subdivision; and
  • additional, or minor improvements to, reserves required in connection with subdivisions and contributions towards reserves based on additional residential units and non-residential buildings.
• development contributions continue in remission under the draft policy on the basis that Council would like to continue to encourage growth and development in the District. Council can review this remission clause at any time. A change would require consultation with the community(s) affected.
• catchments have been added for DC funding stormwater projects which are split by ward, in alignment with community infrastructure catchments. Catchments for stormwater have previously been overlooked.
• changes to support the principles set out in the Preamble to Te Ture Whenua Maori Act 1993 have been introduced including:
  • the purpose is amended to include that Council support the principles set out in the Preamble to Te Ture Whenua Maori Act 1993
  • Council recognises that land is a taonga tuku iho of special significance to Māori and is committed to promoting the retention of, and facilitating the occupation, development, and utilisation of Māori land in the hands of and for the benefit of its owners, their whānau, and their hapū and to protect wāhi tapu.
  • Council will consider remission of both development contributions and financial contributions for Māori Land concerning the occupation, development, and utilisation of that land for the benefit of its owners, their whānau, or their hapū.
• Include various other minor updates within the policy which include:
  • Updated growth assumptions and estimates in the District.
  • updating the financial data including qualifying capital expenditure and updated calculations based on this.
  • Infrastructure and/or projects which would qualify under the draft policy if it were in full effect (and development contributions were not in remission) updated within Schedule 1 of the draft policy.

• Further minor changes and updates to dates, content, and structure.

Reason for the proposal

The LGA requires we review our policy every three years. In doing so we aim to ensure our approach to development and financial contributions is clear.

The key reasons for this proposal are:

1. Requirement for growth

Development contributions should only be assessed where there is projected growth that is likely to increase demand for services/activities and where capital expenditure is planned to meet this additional demand.

Council’s is forecasting over the 2024-2034 Long Term Plan period for growth to be low, with District population forecast to grow by approximately 2,000 people over this period, or 0.63% annually. Council does recognise that there is expected to be some variability between different parts of the District, with Te Anau and Riverton forecast to experience more growth, and other areas less.

To cater for the low forecast growth Council is planning, low levels of demand related capital expenditure projects are planned within the District which would qualify for funding from development contributions.

Council are therefore proposing that development contributions remain in remission within the policy to continue to encourage development.

2. Financial contributions

Council is proposing that Financial Contributions continue to remain operative within the policy as potential remains that the costs of roads and reserves required to serve any substantial development could affect the level of rates unless funded by financial contributions.

3. Supporting retention and use of Māori Land

By recognising existing rating law could be a barrier to the development of Māori land, the Local Government (Rating of Whenua Maori) Amendment Act 2021 has been implemented which requires Councils to support the principles set out in the Preamble to Te Ture Whenua Maori Act 1993 (the TTWMA) within their policies on rating and funding.

The Preamble to TTWMA acknowledges that as land is taonga tuku iho - of special significance to Māori passed down through generations, it is important to avoid further alienation of land and enable its development for the benefit of the landowners, their hapū and whānau.

The changes require Council to review how, under its policies, it can support Māori to retain and use Māori land, enabling its occupation, development, and utilisation for the benefit of the landowners.

To help achieve this, Council has proposed in the draft policy that it consider remission of both development contributions and financial contributions in relation to Māori Land.

Financial impacts

The draft policy retains the existing approach to development contributions and financial contributions.

Development contributions and financial contributions have not historically been a significant revenue stream for Council. The table below presents a summary of those collected by Council since inception, approximately 30 years and the accompanying graph shows this over time.

Funding obtained through financial contributions is difficult to forecast, but is likely to be similar to what is currently collected by Council. The revenue collected will be dependent on the economic cycle and trends in development. Council forecasts minimal revenue from financial contributions, so any reduced revenue associated to remission of financial contributions on Māori Land is expected to be negligible.

Council’s proposal is for development contributions to remain in remission, development contributions will not be collected to help cover any of the District’s capital expenditure costs for water, wastewater (sewerage), and community, infrastructure which are attributed to growth. Council activities where capital expenditure projects are identified as meeting demand of growth total $7.8 million during the 2024 to 2034 Long Term Plan period, of which $2.6m would be recoverable from new development occurring in the Long Term Plan period if collection of development contributions was not in remission. Full details are set out in Schedule 2 of the draft policy and are proposed to be funded from alternative sources such as rates.

Options considered

Council currently has two reasonably practicable options, it could adopt the proposals in the draft policy, or it could adopt a revised version of the draft policy (which would include considering any feedback received through the consultation process). These options are set out below and broken down by key elements of the proposal:

Option 1 – adopt the draft policy

Option 2 – adopt a different approach to the draft Policy

Timetable for consultation

Consultation on the draft policy will run alongside consultation on the 2024-2034 Long Term Plan.

The dates below outline the timetable for this consultation process. Any changes to these dates will be publically advised on Council’s Facebook page and website.

How to have your say

Anyone can make a submission on the draft policy by:

1. completing the online submission survey on this site
2. emailing a submission form to submissions@southlanddc.govt.nz
3. posting a submission form to: Southland District Council, PO Box 903, Invercargill 9840 ATTN: LTP 2024-2034
4. delivering a submission form to Southland District Council, head office, 15 Forth Street, Invercargill, or at any Southland District Council area office.

Download a printable submission form

Submission forms will also be available during normal office hours from Council Offices. Find the closest office location to you.

Want to know more? 

If you have any questions, or would like a little more information, about the submissions process or the proposal, please email: submissions@southlanddc.govt.nz