Agpac Limited v Hamilton City Council

[2021] NZHC 2222

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2020-419-202

[2021] NZHC 2222

UNDER

the Judicial Review Procedure Act 2016 and the Declaratory Judgments Act 1908

IN THE MATTER

AND

of the development contributions provisions of the Local Government Act 2002

IN THEMATTER

of an application for judicial review and declarations regarding the Hamilton City Council’s development contributions policies and decisions made pursuant to those policies

BETWEEN

AGPAC LIMITED

Continued …

AND

HAMILTON CITY COUNCIL

Respondent

Hearing:

19, 20, 21, 22 and 23 April 2021

Appearances:

S J Simons and CDH Malone for the Applicants

A R Galbraith QC, L Muldowney and K Cornegé for the Respondent

Judgment:

27 August 2021

JUDGMENT OF GAULT J

This judgment was delivered by me on 27 August 2021 at 5:00 pm pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

……………………………………

AGPAC LTD v HAMILTON CITY COUNCIL [2021] NZHC 2222 [27 August 2021]

Continued…

CHEDWORTH PROPERTIES LIMITED EMPIRE CORPORATION LIMITED

FOODSTUFFS NORTH ISLAND LIMITED

GALLAGHER CHARITABLE TRUST GALLAGHER GROUP LIMITED HAMILTON HOMEZONE LIMITED JD & TD INGHAM FAMILY TRUST

J & G GALLAGHER MANAGEMENT LIMITED

MODERN TRANSPORT ENGINEERS LIMITED

OLD HQ DEVELOPMENT LIMITED PORTER PROPERTIES LIMITED TAPEX GROUP PTY LIMITED

TE RAPA GATEWAY LIMITED

THE NATIONAL TRADING COMPANY OF NEW ZEALAND LIMITED

TRISTAR GROUP LIMITED TRISTAR ONE LIMITED WAIMANA HOLDINGS LIMITED WOOLLEY TRUSTS PARTNERSHIP

Applicants

[1]                 Nineteen commercial entities that have carried out development in Hamilton over recent years seek judicial review of the development contributions policies of Hamilton City Council (HCC) and decisions made pursuant to those policies. Between them, the applicants advance seventeen different claims. Some claims relate to provisions of various of the HCC’s annual policies operative since mid-2015 and some claims relate to specific developments.

Background

[2]                 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. The Local Government Act 2002 (the LGA) provides a regime for the imposition of development contributions. Territorial authorities can only require a development contributions charge to be paid in accordance with a development contributions policy. Development contributions policies must be set and amended in accordance with the provisions of the LGA.

[3]                 In practice, HCC needs a 10-year Long-Term Plan and a 30-year Infrastructure Plan to decide what assets to include to assess the total expected capital expenditure necessary to service growth and then needs to decide how to divide that cost by units of demand. In order to allocate the capital expenditure cost, HCC’s development policies prescribe development charges per household unit equivalent (HUE), which is the demand for HCC services equivalent to that produced by an average (three bedroom) household, with conversion factors for non-residential or non-standard residential sites.

[4]                 HCC has been identified by central government as a growth council. It is required under the National Policy Statement on Urban Development Capacity to provide for 31,900 more homes by 2048, including 12,500 within the next 10 years, and to provide sufficient business land for the consequential growth in the retail, commercial and industrial sectors. Land has been zoned to meet these targets, but considerably more capital investment is required to ensure the land is ready for development.

[5]                 Ms Simons, for the applicants, accepted the growth context but emphasised that development has to be financially viable to occur and that development also benefits others. She submitted that, while it may be said that if HCC is not enabling, developers can go elsewhere, developers with a longstanding commitment to Hamilton had no choice but to challenge HCC. She submitted there was widespread concern that HCC was overcharging development contributions.

The claims

[6]                 It is convenient to deal with the claims in the categories and sequence adopted by counsel at the hearing rather than their pleaded order. The seventeen pleaded claims that need to be addressed are broadly categorised as follows:1

(a)threshold requirements for development contributions and low demand developments (third to seventh and twelfth claims);

(b)canopies included in gross floor area (eighth to eleventh claims);

(c)expenditure on intangible assets (thirteenth claim);

(d)stormwater development contributions based on bedroom numbers (fourteenth claim);

(e)arterial roads (fifteenth claim); and

(f)HCC’s development contributions model (first, second, seventeenth and eighteenth claims).

Judicial review principles

[7]                 The legal principles that apply on an application for judicial review of the exercise or purported exercise of statutory powers are well established and not in dispute. As Potter J said in Neil Construction Ltd v North Shore City Council,2 the

1      The sixteenth and nineteenth claims were not pursued.

2      Neil Construction Ltd v North Shore City Council [2008] NZRMA 275 (HC) at [15].

leading decision on development contributions, the legal test was summarised by Richardson P in Wellington City Council v Woolworths New Zealand Ltd (No 2):3

In summary, judicial review of the exercise of local authority power, in essence, is a question of statutory interpretation. The local authority must act within the powers conferred on it by Parliament and its rate fixing decisions are amenable to review on the familiar Wednesbury grounds. Rating authorities must observe the purposes and criteria specified in the legislation. So they must call their attention to matters they are bound by the statute to consider and they must exclude considerations which on the same test are extraneous. They act outside the scope of the power if their decision is made for a purpose not contemplated by the legislation. And discretion is not absolute or unfettered. It is to be exercised to promote the policy and objectives of the statute. Even though the decision maker has seemingly considered all relevant factors and closed its mind to the irrelevant, if the outcome of the exercise of discretion is irrational or such that no reasonable body of persons could have arrived at the decision, the only proper inference is that the power itself has been misused.

[8]                 Mr Galbraith QC, for HCC, acknowledged the more recent comments of Palmer J and Cooke J respectively regarding intensity of review or a “hard look” approach.4 I need not engage with that issue in this case given the applicants’ claims rest on strict compliance with the LGA.

[9]                 Ms Simons submitted that the key proposition the applicants rely on is that HCC’s policies and decisions to charge development contributions must comply strictly with the relevant provisions of the LGA. The applicants say each claim involves an error of law by HCC in breach of the LGA requirements – they do not plead failure to take into account mandatory considerations or unreasonableness as separate grounds of review – whereas HCC characterises some claims as more in the nature of unreasonableness. This reflects disagreement about the application of the key provisions of the LGA. It is common ground that HCC has to act lawfully, in compliance with the LGA. But Mr Galbraith emphasised that, while done to best professional standards, HCC’s work modelling growth and infrastructure demand involves estimates and uncertainty. The issue underlying many of the claims is whether the LGA requirements leave room for reasonable policy judgements.

3      Wellington City Council v Woolworths New Zealand Ltd (No 2) [1996] 2 NZLR 537 (CA) at 545.

4      See Hu v Immigration and Protection Tribunal [2017] NZHC 41, [2017] NZAR 508; Patterson v District Court, Hutt Valley [2020] NZHC 259; New Zealand Council of Licensed Firearms Owners Inc v Minister of Police [2020] NZHC 1456; Hauraki Coromandel Climate Action Inc v Thames- Coromandel District Council [2020] NZHC 3228, [2021] NZRMA 22; and Sweeney v The Prison Manager, Spring Hill Corrections Facility [2021] NZHC 181.

LGA development contributions regime

[10]             A local authority must, in order to provide predictability and certainty about sources and levels of funding, adopt funding and financial policies including a policy on development contributions or financial contributions.5 Section 106 of the LGA states, among other things, that such a policy must summarise and explain the total cost of capital expenditure the local authority expects to incur to meet increased demand for community facilities resulting from growth and state the proportion to be funded by development contributions.6

Key provisions

[11]             The purpose of and principles relevant to development contributions are set out in ss 197AA and 197AB of the LGA:

197AA Purpose of development contributions

The purpose of the development contributions provisions in this Act is to enable territorial authorities to recover from those persons undertaking development a fair, equitable, and proportionate portion of the total cost of capital expenditure necessary to service growth over the long term.

197AB Development contributions principles7

All persons exercising duties and functions under this subpart must take into account the following principles when preparing a development contributions policy under section 106 or requiring development contributions under section 198:

(a)development contributions should only be required if the effects or cumulative effects of developments will create or have created a requirement for the territorial authority to provide or to have provided new or additional assets or assets of increased capacity:

(b)development contributions should be determined in a manner that is generally consistent with the capacity life of the assets for which they are intended to be used and in a way that avoids over-recovery of costs allocated to development contribution funding:

5      Section 102.

6      Section 106(2)(a) and (b).

7      This is now s 197AB(1) following the insertion of subs 197AB(2) on 7 August 2020, by s 161 of the Infrastructure Funding and Financing Act 2020.

(c)cost allocations used to establish development contributions should be determined according to, and be proportional to, the persons who will benefit from the assets to be provided (including the community as a whole) as well as those who create the need for those assets:

(d)development contributions must be used—

(i)for or towards the purpose of the activity or the group of activities for which the contributions were required; and

(ii)for the benefit of the district or the part of the district that is identified in the development contributions policy in which the development contributions were required:

(e)territorial authorities should make sufficient information available to demonstrate what development contributions are being used for and why they are being used:

(f)development contributions should be predictable and be consistent with the methodology and schedules of the territorial authority’s development contributions policy under sections 106, 201, and 202:

(g)when calculating and requiring development contributions, territorial authorities may group together certain developments by geographic area or categories of land use, provided that—

(i)the grouping is done in a manner that balances practical and administrative efficiencies with considerations of fairness and equity; and

(ii)grouping by geographic area avoids grouping across an entire district wherever practical.

[12]             The reference in s 197AB(f) to development contributions being predictable and consistent with the methodology is a reference to the methodology in Schedule 13 of the LGA (referred to below).

[13]Development is defined in s 197 to mean:

(a)any subdivision, building (as defined in section 8 of the Building Act 2004), land use, or work that generates a demand for reserves, network infrastructure, or community infrastructure; but

(b)does not include the pipes or lines of a network utility operator

[14]Section 198(1) sets out when a development contribution may be required:

(1)A territorial authority may require a development contribution to be made to the territorial authority when—

(a)a resource consent is granted under the Resource Management Act 1991 for a development within its district:

(b)a building consent is granted under the Building Act 2004 for building work situated in its district (whether by the territorial authority or a building consent authority):

(c)an authorisation for a service connection is granted.

[15]Section 199 provides:

199     Basis on which development contributions may be required

(1)Development contributions may be required in relation to developments if the effect of the developments is to require new or additional assets or assets of increased capacity and, as a consequence, the territorial authority incurs capital expenditure to provide appropriately for—

(a)reserves:

(b)network infrastructure:

(c)community infrastructure.

(2)This section does not prevent a territorial authority from requiring a development contribution that is to be used to pay, in full or in part, for capital expenditure already incurred by the territorial authority in anticipation of development.

(3)In subsection (1), effect includes the cumulative effects that a development may have in combination with other developments.

[16]             Section 199A(1) provides for requests for reconsideration of development contributions on prescribed grounds:

If a person is required by a territorial authority to make a development contribution under section 198, the person may request the territorial authority to reconsider the requirement if the person has grounds to believe that—

(a)the development contribution was incorrectly calculated or assessed under the territorial authority’s development contributions policy; or

(b)the territorial authority incorrectly applied its development contributions policy; or

(c)the information used to assess the person’s development against the development contributions policy, or the way the territorial authority has recorded or used it when requiring a development contribution, was incomplete or contained errors.

[17]Section 199C provides for objections on the grounds set out in s 199D:

199D Scope of development contribution objections

An objection under section 199C may be made only on the ground that a territorial authority has—

(a)failed to properly take into account features of the objector’s development that, on their own or cumulatively with those of other developments, would substantially reduce the impact of the development on requirements for community facilities in the territorial authority’s district or parts of that district; or

(b)required a development contribution for community facilities not required by, or related to, the objector’s development, whether on its own or cumulatively with other developments; or

(c)required a development contribution in breach of section 200; or

(d)incorrectly applied its development contributions policy to the objector’s development.

[18]             A development contributions policy must also include a schedule of assets for which development contributions will be used.8

[19]Section 203(2) provides:

Development contributions for network infrastructure or community infrastructure must not exceed the amount calculated by multiplying the cost of the relevant unit of demand calculated under clause 1 of Schedule 13 by the number of units of demand assessed for a development or type of development, as provided for in clause 2 of Schedule 13, and as amended for any Producers Price Index adjustment adopted in a development contributions policy in accordance with section 106(2B).

[20]Schedule 13 provides:

Methodology for calculating development contributions

1Methodology for relating cost of community facilities to units of demand

(1)In order to calculate the maximum development contribution in respect of a community facility or an activity or group of activities for which a separate development contribution is to be required, a territorial authority must first—

8      In accordance with s 201A.

(a)identify the total cost of the capital expenditure that the local authority expects to incur in respect of the community facility, or activity or group of activities, to meet increased demand resulting from growth within the district, or part of the district, as the case may be; and

(b)identify the share of that expenditure attributable to each unit of demand, using the units of demand for the community facility or for separate activities or groups of activities, as the case may be, by which the impact of growth has been assessed.

(2)A territorial authority may identify capital expenditure for the purposes of calculating development contributions in respect of assets or groups of assets that will be built after the period covered by the long-term plan and that are identified in the development contributions policy.

(3)The total cost of capital identified in subclause (1) may in part relate to assets intended to be delivered beyond the period covered by a territorial authority’s long-term plan if—

(a)the assets concerned are identified in the development contributions policy; and

(b)the total cost of capital expenditure does not exceed that which relates to the period over which development has been assessed for the purpose of setting development contributions.

2Attribution of units of demand to developments

For the purpose of determining in accordance with section 203(2) the maximum development contribution that may be required for a particular development or type of development, a territorial authority must demonstrate in its methodology that it has attributed units of demand to particular developments or types of development on a consistent and equitable basis.

Neil Construction Ltd v North Shore City Council

[21]             Neil Construction Ltd v North Shore City Council is the leading decision on development contributions.9 In that case, Neil Construction relevantly alleged that the Council had made errors of law in:

(a)failing to ensure its development contributions policy complied with the fundamental statutory obligations to only assess the contributions against the development that generates a demand for reserves, network infrastructure or community infrastructure;

9      Neil Construction Ltd v North Shore City Council [2008] NZRMA 275 (HC).

(b)applying a narrow concept of economic efficiency as governing its approach in failing appropriately to consider distribution of benefits in equitable and proportionate allocation; and

(c)arbitrarily adopting an inappropriate reserves standard and the maximum rate of contribution.

[22]             In an overview and background section on development contributions, Potter J stated that a development contribution can only be imposed pursuant to clear and express words contained in a statute, and in accordance with the statutory powers and requirements.10 As Ms Simons emphasised, Potter J continued:

[48] The Act provides expressly for local authorities to require and impose development contributions. But a development contributions policy and the processes in relation to it, must comply strictly with the relevant provisions of the Act which are the sole source of a council’s power to exact development contributions.

[23]             Potter J summarised the threshold statutory requirements for requiring a development contribution,11 which are not in dispute:

The statutory “triggers” for requiring a development contribution are that a given project:

·is a “development” (s 197);

·which either alone or in combination with another “development” will have the effect of requiring expenditure on infrastructure (s 199); and

·is provided for in the development contributions policy (s 198(2)).

[24]             In relation to the first main allegation of statutory compliance, Potter J concluded by reference to the statutory provisions then in force that the LGA required that before a development contribution may be required by the council there must be a development and a direct causal nexus between that development and the demand

10  Neil Construction Ltd v North Shore City Council  [2008] NZRMA 275 (HC) at  [47], citing  Carter Holt Harvey Ltd v North Shore City Council  [2006] 2 NZLR 787 (HC) per Asher J. See also Domain Nominee Ltd v Auckland City Council [2009] 1 NZLR 113 (HC) at [54]-[56] per Winkelmann J.

11 Neil Construction at [116]. This approach to development was applied by the Court of Appeal in Beaumont Trading Co Ltd v Auckland Council [2016] NZCA 223, [2016] NZRMA 359 at [32]-[34].

for infrastructure it, either alone or jointly with another development, generates.  This necessarily required the council to determine as a preliminary point, on a case- by-case basis, whether a particular project was a development as defined. The council had erred in law in failing to ensure its development contributions policy complied with the statutory requirements.12

[25]             As to the economic efficiency: causation versus benefits debate, Potter J agreed that resolution was reached by a proper interpretation and application of the relevant provisions of the LGA. The causative approach adopted by the council had excluded appropriate consideration of, and allowance for, distribution of benefits between the community as a whole, and was inconsistent with the council’s obligations under the LGA.

[26]             In relation to the reserves issue, Potter J said this was essentially an allegation that the council had applied the wrong weight to the factors it was required to consider, but weight was a matter for the council. She concluded that the council had not acted arbitrarily or unreasonably in relation to development contributions for reserves.

[27]             Ms Simons submitted that Neil Construction is good law and that HCC is seeking to dilute its effect. Mr Galbraith acknowledged that Neil Construction is an important case but submitted it does not dictate the outcome here.

[28]            As the LGA and Neil Construction make clear, development contributions can only be charged when the threshold requirements identified by Potter J and summarised at [23] above are met. They are strict requirements. Further, s 197AA now expressly states the purpose of the development contributions provisions – that is, to enable territorial authorities to recover from those persons undertaking development a fair, equitable, and proportionate portion of the total cost of capital expenditure necessary to service growth over the long term – and s 197AB sets out the principles that must be taken into account when preparing a development contributions policy. As Mr Galbraith acknowledged, these legislative amendments are significant, but they do not affect the decision in Neil Construction.

12     Neil Construction Ltd v North Shore City Council [2008] NZRMA 275 (HC) at [120].

[29]             However, as Mr Galbraith submitted, provided the threshold requirements are met, Neil Construction and the concepts in ss 197AA and 197AB, including fairness, equity and proportionality, require (and leave room for) policy judgements to be exercised when preparing a development contributions policy. Those policy judgements include the proportion of capital expenditure on growth assets that is to be borne by way of development contributions, and how development contributions are to be allocated. The statutory purpose and principles that must be taken into account when preparing a development contributions policy are not to be converted into a test against which individual development contributions subsequently charged are measured based on information then known. This is consistent with, and not a dilution of, Neil Construction.

[30]I turn to consider the specific claims.

Threshold requirements and low demand developments

Actual demand remission applications – fourth claim

[31]             In this claim three applicants (AGPAC Ltd, JD & TD Ingham Family Trust and Woolley Trusts Partnership) challenge HCC’s decisions and policies in relation to remission of development contributions.

[32]             HCC charges development contributions for commercial and industrial development based on average demand for infrastructure using different conversion factors per 100m2 of gross floor area (GFA) depending on the type of infrastructure cost (transport, water, wastewater and stormwater) and the sector (commercial, industrial or retail).

[33]             HCC’s policies provide for remission applications to be made for commercial and industrial development when the actual demand for infrastructure is less than the average demand. HCC’s remission criteria in its relevant 2018/19 and 2019/20 policies provided that:

Actual demand remission

Development contributions are calculated based on modelled demand, measured in Household Unit Equivalents (HUEs). Council will consider a remission where actual demand is significantly lower than modelled demand.

Actual Demand Remission Criteria

In applying for a remission based on actual demand, the applicant must demonstrate to Council’s satisfaction on an activity by activity basis that:

a)the actual HUEs of demand generated by the development are materially lower than the HUEs of demand assessed under the methodology set out in the Policy and in any event lower than modelled demand by five or more HUEs of demand, and;

b)for an activity, the reduced HUEs create capacity in Council’s infrastructure network which Council is satisfied is material having regard to the nature of the development, its location, and implication for council’s infrastructure programme.

[34]             HCC has assessed remissions based on these criteria. It is unnecessary to detail the applicants’ individual development contributions given the common issues. Suffice to say, these developments may be described as industrial warehouses with below average demand for infrastructure. The applicants claim that when assessing development contributions for a site, and when reassessing as part of a remission claim, where actual site demand is known, development contributions should be assessed and payable based on that actual site demand. The central theme is that the outcomes are unlawful – contrary to the fairness and equity requirements of s 197AA and leading to over-recovery contrary to s 197AB(b).

[35]             In addition, the JD & TD Ingham Family Trust claims the outcome does not comply with ss 197AB(a) and 199(1) because the development did not create any demand for new infrastructure or infrastructure of increased capacity for transport as the site credits exceeded the demand in HUEs assessed by Mr Black (a transport engineer engaged by HCC).

[36]             The primary aspect of the complaint focuses on the materiality components of the remissions criteria. It is common ground that the development contributions charged even following remission were not based on the demand assessed by HCC’s consultants multiplied by the scheduled  charges  in  the  relevant  HCC  policy.  HCC does not calculate remissions based on actual demand unless both the five HUE

threshold is reached and the individual development has a material impact on the capacity of the infrastructure network. The applicants say this second limb is unlawful. Ms Simons submitted that HCC does not remit the full amount it was not entitled to charge, and that HCC knows its approach is inequitable because its own officer, Mr Carstens, recommended a separate category of low demand industrial in the development contributions policy in 2018. I note that HCC could have adopted that recommendation in its development contributions policy, but its decision against doing so is not itself challenged.

[37]             Mr Muldowney, who addressed these claims for HCC, accepted the conversion factors prescribed in HCC’s policies must be reasonably based but that is not in issue here. He submitted HCC’s conversion factors achieve the LGA’s requirements of attributing units of demand to developments on a consistent and equitable basis.     He submitted the LGA does not call for development by development assessment and the remissions policy is the mechanism for dealing with outliers. He also noted that “actual demand” in this remission context is still assumed demand; it is new and site specific but still not actual demand. He submitted the applicants’ complaint ignores the averaging approach and would lead to refunds for all below average modelled demand. He submitted that HCC’s materiality approach in its remission policies strikes an appropriate balance between the need to base development contributions on average demand and avoid site by site assessment on the one hand, and providing remissions for outliers on the other hand.

[38]             HCC’s approach to materiality involves assessing, based on specialist advice, which of the projects within the schedule of assets that contributed to the development contribution are materially impacted by the difference between modelled demand and actual demand (eligible projects), converting that to a percentage of the total charge and multiplying it by the percentage reduction in modelled demand compared with actual demand.

[39]             This materiality issue is but one example of the essential dispute between the parties as to the application of the requirements of the LGA. The applicants say the outcome is not a “fair, equitable, and proportionate portion of the total cost of capital

expenditure necessary to service growth over the long term” and is therefore contrary to s 197AA.

[40]             The LGA requires a development contributions policy to include the conditions and criteria (if any) that will apply in relation to remission,13 but does not prescribe any particular criteria. As part of the policy, remission criteria must be guided by the statutory purpose and principles relevant to development contributions. As indicated, s 197AA sets out the purpose of the development contributions provisions in the LGA; that is, to enable territorial authorities to recover from those persons undertaking development a fair, equitable, and proportionate portion of the total cost of capital expenditure necessary to service growth over the long term. Section 197AB then sets out the principles to be taken into account when preparing a development contributions policy, including that cost allocations used to establish development contributions should be determined according to, and be proportional to, the persons who will benefit from the assets to be provided (including the community as a whole) as well as those who create the need for those assets.14 Another relevant principle is that development contributions should be predictable and consistent with the methodology in Schedule 13 and schedules of the policy.15

[41]             The s 197AA purpose of development contributions and the s 197AB principles must be taken into account when preparing a development contributions policy but, as indicated, the concepts in ss 197AA and 197AB including fairness, equity and proportionality require policy judgements to be exercised when doing so. The purpose and individual principles do not provide a determinative test for assessing development contribution charges for individual developments based on actual – more accurately, site calculated – demand.

[42]             I accept that the materiality threshold that HCC has decided to include means that developers whose “actual” (site calculated) demand is below average will not receive remission fully reflecting that demand. Developers whose demand is below average are not necessarily outliers. But developers whose “actual” demand is above

13     Section 201(1)(c).

14     Section 197AB(c).

15     Section 197AB(f).

average do not get charged an uplift. If HCC remitted all development contributions where “actual” demand is below average, it would under-recover development contributions in total and the shortfall would have to be met by ratepayers, which would alter the intended proportion of capital expenditure to be funded by development contributions. The reference to over-recovery in s 197AB(b) is a principle to be taken into account when preparing development contributions policies. That principle is that “development contributions should be determined in a manner that is generally consistent with the capacity life of the assets for which they are intended to be used and in a way that avoids over-recovery of costs allocated to development contribution funding”. That means over-recovery in the aggregate; that is, recovery of more than the total intended proportion of the cost of the asset allocated to development contributions. That principle does not require remission of development contribution charges for individual below average demand industrial use developments based on site calculated demand if known. Nor do the statutory references to “fair, equitable, and proportionate”.

[43]             Also, as Mr Muldowney submitted, the statutory objection process envisages a materiality requirement. Section 199D(a) provides for an objection on the ground that a territorial authority has “failed to properly take into account features of the objector’s development that, on their own or cumulatively with those of other developments, would substantially reduce the impact of the development on requirements for community facilities” (my emphasis). HCC’s materiality approach in its remission policies is not inconsistent with the scheme of the LGA.

[44]             Even if HCC’s approach involves some element of cross-subsidisation between developers of low and high demand developments, that approach is a policy decision which is not challenged on the separate ground that it is one no reasonable decision- maker could have reached. Thus, it is not the Court’s role to assess the reasonableness of HCC’s decision based on the parties’ affidavit evidence. Instead of remissions,  Ms Simons submitted HCC should take a different approach, charging lower development contributions at the subdivision stage and more at the building consent stage. HCC could do so, but the LGA does not require that.

[45]             For these reasons, I do not consider HCC’s materiality threshold is unlawful. Nor are HCC’s calculated  remissions  based  on  its  assessment  of  materiality.  This applies to each of the three applicants albeit that the JD & TD Ingham Family Trust calculation is complicated by site credits.

[46]             The additional aspect of the JD & TD Ingham Family Trust complaint concerns the threshold requirement as to whether the development has the effect of requiring new or additional assets or assets of increased capacity resulting in capital expenditure on transport infrastructure, having regard to the site credits. This received little attention at the hearing. It is common ground that a development contribution can only be charged for a development that, either alone or in combination with other developments, has the effect of requiring new or additional assets or assets of increased capacity (growth assets) resulting in capital (not operating) expenditure on infrastructure or reserves. Thus, if the JD & TD Ingham Family Trust development did not create any demand for new infrastructure or infrastructure of increased capacity, development contributions could not be charged. That is a threshold or trigger requirement under s 199. However, the development did create modelled demand for such infrastructure. The existence of site credits did not negate that. They merely offset the modelled transport infrastructure demand.

[47]For these reasons, I decline to grant the relief sought in relation to this claim.

Site credits instead of refunds – third claim

[48]             HCC’s policies provide for development contributions to be required at the time a resource consent, such as a subdivision consent, is granted. This is frequently before the final type and scale of developments are known. The payment of development contributions assessed at the time of subdivision consent results in the creation of site credits, which are then available to be exercised for subsequent site development at the time of building consent when the final site demand is known.

[49]             The complaint is that as site credits can only be used, not refunded, they may become stranded, that is their value may be lost. Ms Simons submitted that (unused) site credits arise because certain well-known industrial land uses such as warehouses, bulk stores and self-storage facilities have low demand for transportation, water

supply, and waste-water collection, treatment and disposal compared with average demand. She submitted that HCC is aware that these types of land uses have low demand and that its policies are inequitable for that reason. She noted again that HCC staff recommended inclusion of a low demand industrial use. She submitted that providing site credits, but not refunds of overpayment of development contribution charges, is contrary to the fairness and equity requirements of s 197AA and results in over-recovery from individual developers contrary to s 197AB(b).

[50]HCC’s 2019/20 Development Contributions Policy relevantly states:

12.9For non-residential developments where development contributions are assessed on resource consents and the scale of the development is unknown, the assessment will be based on the type of development that most closely matches the zoning of the land.

12.10The gross-floor area of a non-residential development will be assumed to be a fixed percentage of the site area being 50% for retail developments, 30% for commercial, and 30% for industrial. These figures are conservative estimates of the floor-area to site-area ratio used in Council’s growth projections and historical development information.

12.11Such developments will be reassessed at building consent stage, and any additional floor area over and above that assumed and paid for at resource consent stage will be required at building consent stage.

12.12No refund will be given if a non-residential building results in a lesser amount of floor area than was assumed, but Council may consider a remission if the development meets its criteria set out in its remissions policy set out at section 18. Irrespective, a credit will be retained for the full amount of floor area that was paid for.

…

13.4 Credits for existing HUEs attach to the parent lot and are not transferable, unless all lots within the site are in common ownership, or if authorised by Council at its sole discretion.

[51]             Mr Muldowney acknowledged that HCC recognises that it needs to be more flexible and advised it was in the midst of a review. He advised the proposed policy removes the no refund provision (clause 12.12). Nevertheless, HCC does not accept that the earlier policies are unlawful, nor that site credits are valueless. Its evidence stated that site credits have value because they will be reflected by higher land price and will be credited to any further redevelopment irrespective of the development’s timing.

[52]             It is understandable that HCC wishes to charge for development contributions at the subdivision consent stage. The consequence, however, is that a refined calculation occurs subsequently, at the building consent stage. As HCC recognises, there are difficulties with a no refund approach. Site credits may not be useable as there may be no further redevelopment.

[53]Having said that, the relief sought is:

(a)A finding that the site credits provisions in the Policies enabled / enable the over-recovery of development contributions and, therefore, do not comply with the fairness and equity requirements of section 197AA of the LGA02 and the requirement of section 197AB(b) of the LGA02 to avoid over-recovery of development contributions; and

(b)An order that the Respondent amends the 2019 Policy as soon as reasonably practicable so that the payer of development contributions has the option to elect whether to have an overpayment of development contributions refunded or to have site credits applied to the site.

[54]             I do not consider that ss 197AA and 197AB(b) entirely prohibit the use of site credits instead of refunds, for the reasons already given in relation to the nature of those statutory provisions. However, HCC’s blanket policy that no refunds will be given if a non-residential building results in a lesser amount of floor area than was assumed is problematic. As HCC acknowledged, there should be more flexibility. Whether that goes so far as to give the developer the option to elect (in any circumstances) whether to have an over-payment of development contributions refunded or to have the site credits applied to the site is a different question. If relief were appropriate, I would require HCC to reconsider its no refund policy rather than dictate what the new policy should be. In any event, as that process has occurred, such an order is unnecessary. I understand that the no refund provision has now been removed from the 2020/21 policy. I expect HCC will now entertain requests for refunds.

[55]             For these reasons, I decline to grant the relief sought. I reserve leave, however, for further memoranda in the event of a dispute in relation to requests for refunds.

Tristar One – Mainfreight development site credits – sixth claim

[56]             This claim relates to an industrial subdivision in the Rotokauri growth area catchment16 – a greenfield development area within Hamilton City – that was subject to development contributions pursuant to the average demand provided for in the 2017 policy. That assumed 30 per cent site coverage. Prior to paying the development contributions, the developer applied for a building consent for a bulk store to be occupied by Mainfreight on one of the lots in the subdivision. HCC issued a development contributions notice pursuant to the 2018 policy. Based on information from Mainfreight regarding “actual” demand being  lower than  average demand,  the developer sought remissions. A building consent was then granted for a second bulk store of almost identical proportions, and the developer applied for a special assessment of the development contributions payable for the second bulk store pursuant to the 2019 policy. The remission policy criteria also apply to a special assessment.

[57]             Although involving site credits, this claim raises the same issue as the fourth claim, that is the impact of the materiality approach on the remission calculation.

[58]             In this context, Ms Simons did submit at one stage that it was an error not to have a low demand industrial catchment, although she also accepted that it was lawful for HCC not to have a low demand category if it had a proper remission policy without a materiality adjustment. The pleaded claim, however, focuses on the remission and special assessment provisions of the policies and the use of site calculated demand. In any event, while it would be open to HCC to use a different conversion factor for “low demand industrial” developments, I do not consider the statutory provisions require HCC to do so, let alone prescribe the cut-off for “low demand”. I consider it is lawful for HCC to address low site demand by way of its remission policy, for the reasons already given.

[59]For these reasons, I decline to grant the relief sought.

16     Variously described as the Rotokauri growth area, growth cell or catchment.

Five HUE remission threshold – seventh claim

[60]             In the context of this claim, the applicants acknowledge that assessing every development on the basis of “actual” demand is not required. They claim the five HUE remission threshold (in part (a) of the remission criteria referred to above at [33]) is not fair and equitable as it prevents remissions in circumstances where significant overpayments of development contributions have occurred. The most significant example involves development contributions in the Rototuna growth cell where a difference of 4.99 HUEs amounts to $119,503. Mr Muldowney submitted that reference to the maximum cost of 4.99 HUEs is misleading because remissions apply only to eligible projects, so an applicant would only get a proportion of the difference.

[61]             HCC acknowledges the sums are nevertheless significant but says they should be read in the context of the substantial costs associated with providing infrastructure to cater for growth. It says the appropriateness of the five HUE threshold is supported by looking at the scale of reduced individual (or cumulative) development demand required to materially impact infrastructure networks. For example, five HUEs of water represents demand of 3,000 litres per day, compared with the water treatment station’s peak demand of around 90 million litres of water per day and the wastewater treatment plant’s average flow of around 54 million litres per day. HCC says that a developer generating nearly 3,000 litres of water per day less than the modelled demand would see that reduction as significant, but in the context of public supply for Hamilton, a city of over 170,000 people and 15,000 businesses, it is most likely not. I consider this evidence is relevant to the part (b) materiality assessment rather than the initial five HUE threshold.

[62]             Ms Simons submitted the administrative burden of more applications is no answer since the applicant pays for the remissions process, including HCC’s costs,  so an applicant will not seek remission if the amount is not worthwhile. She submitted the five HUE remission threshold is unfair.

[63]             Mr Muldowney submitted the five HUE threshold in part (a) of the remission criteria is merely a filter to avoid carrying out the part (b) assessment. He submitted

that if the threshold was less than five, cases with a smaller reduction would never pass the part (b) assessment.

[64]             Having already upheld HCC’s materiality approach in the part (b) assessment, I do not consider the statutory provisions preclude a remission threshold of five HUEs, for largely the same reasons. Also, as Mr Muldowney submitted, it was open to HCC to decide that the initial filtering threshold is necessary for the practical administration of its remission policy. For these reasons, I decline to grant the relief sought.

Porter Properties Ltd subdivision – fifth claim

[65]             This claim relates to a subdivision in the industrial zone of the Rotokauri growth area. The developer (PPL) constructed and fully funded all stormwater, wastewater, water supply and roading infrastructure required to service the subdivision. This included connections to the roading network, so the subdivision does not need any of the yet to be constructed roading infrastructure in the Rotokauri growth area to the south and west of the Waikato Expressway.

[66]             The complaint is that, despite not creating any demand on infrastructure,  PPL has been charged development contributions for water, wastewater and transport. In relation to water and wastewater, PPL’s evidence is that the subdivision:

(a)does not create any demand for future water supply and wastewater projects in the Rotokauri catchment;

(b)created some demand for the four lengths of the central interceptor that traverses the subdivision; and

(c)created some demand for some historical water supply projects.

[67]             In relation to transport, PPL’s expert disputes an adequate causal connection between the largely industrial and commercial activity occurring within the industrial area and the need for local roading and wider roading connections within the rest of the Rotokauri catchment. Ms Simons submitted that HCC’s modelling is nothing more than a “build it and they will come” analysis – that is, an analysis of benefit in terms

of who may use the roads once they are constructed – and HCC does not address the question it should have asked itself: who creates the demand for the future roading network?

[68]Ms Simons submitted that this subdivision creates no demand for:

(a)the future roading network as it has perfectly adequate connections to existing transportation infrastructure and there is no causal connection with the future roading network;

(b)future water supply and wastewater projects in the Rotokauri growth area that are included in the schedule of assets to the 2018/19 development contributions policy.

[69]             Ms Simons submitted that the overwhelming majority of the charges (96 per cent) are not authorised by the LGA.

[70]             While the complaint and relief sought focus on the development contributions PPL was actually charged, I consider this complaint is best broken down into two issues:

(a)whether the threshold requirements for a development contribution charge are met; and

(b)whether HCC’s development contributions policies relating to the allocation of capital expenditure costs to developments in the Rotokauri catchment comply with the LGA.

[71]             In relation to the first issue, as already indicated, for a subdivision to qualify as a development under s 197 it must generate a demand for infrastructure.17 It is also common ground that a development contribution can only be charged for a development that, either alone or in combination with other developments, has the

17     See above at [13], [23] and [28].

effect of requiring new or additional assets or assets of increased capacity resulting in capital expenditure on infrastructure.18

[72]             In terms of these threshold requirements, a development that generates low (below average) demand on infrastructure still generates a demand and therefore qualifies as a development under s 197. A development contribution may be charged for a development that has the effect of requiring new or additional assets or assets of increased capacity resulting in capital expenditure on infrastructure, irrespective of the extent of that demand. The effect of a development in terms of requiring such growth assets resulting in capital expenditure includes the cumulative effects that a development may have in combination with other developments.19 I accept there must be a causative link between the development and the need for capital expenditure on growth assets but, at least for the purposes of the threshold requirements, it is not appropriate to isolate out the individual components of the network or community infrastructure for which the development generates direct demand and say that development contributions may only be charged in respect of those individual components. If such a breakdown is relevant, it is to the second issue. PPL cannot say its development, even in combination with other developments, requires no new or additional assets or assets of increased capacity resulting in capital expenditure on infrastructure. In that sense, its development is not self-sufficient.

[73]             Turning to the second issue, the complaint is essentially the way HCC’s policy allocates capital expenditure for projects between local and  broader catchments.  The applicants are not arguing that HCC needs to define catchments that precisely fit each growth project – Ms Simons acknowledged that it is not feasible for HCC to create too many different catchments to allocate the costs of different projects among different developers – but she submitted that HCC’s allocation means that it is not fair or proportionate to charge a developer who has fully funded the infrastructure costs of its subdivision the development contributions applicable for the Rotokauri catchment. She submitted PPL is subsidising development in that catchment.

18     Section 199(1); see above at [15], [23] and [28].

19     Section 199(3).

[74]             As indicated earlier, the s 197AA purpose of development contributions and the s 197AB principles must be taken into account when formulating a development contributions policy. But the allocation of the costs of capital expenditure projects in a development contributions policy involves strategic decision-making. Aside from the long-term planning, some capital expenditure costs may be appropriately allocated citywide, others to an identified smaller catchment area and others apportioned between the two,20 in accordance with a public infrastructure hierarchy adopted taking into account the statutory purpose and principles. As also indicated, the effect of a development in terms of requiring growth assets resulting in capital expenditure includes the cumulative effects that a development may have in combination with other developments. That recognises the nature of an integrated network. Also, the number and size of catchments are decisions for each council to make when developing a development contributions policy.21 It may or may not be feasible for a policy to have different catchments for different types of infrastructure, let alone individual capital expenditure projects. One of the s 197AB principles is that when calculating and requiring development contributions, territorial authorities may group together certain developments by geographic area or categories of land use; provided that the grouping is done in a manner that balances practical and administrative efficiencies with considerations of fairness and equity, and grouping by geographic area avoids grouping across an entire district wherever practical.22 The application of the policy in particular cases needs to be viewed in this context.

[75]As one of HCC’s consultants, Mr Akehurst, acknowledged:

While it is not administratively possible to align exact usage with [development contribution] charges, and because areas over time (say a 30 year horizon) tend to aggregate towards the average, an averaging process is often used in setting [development contributions] Policies and is generally appropriate. However, it is important that a council stands back from this process and assesses whether the act of averaging everything results in significant inequity and unfairness. They need to be able to identify groups within the community that are disadvantaged by the process (if they exist) and that this disadvantage may cause significant harm. If that is the case, they need to be able to adjust the [development contributions] Policy of funding to alleviate inequality.

20     See for example Guide: To developing and operating development contributions policies under the Local Government Act 2002 (New Zealand Department of Internal Affairs, 2019/20) at 60.

21     Guide: To developing and operating development contributions policies under the Local Government Act 2002 (New Zealand Department of Internal Affairs, 2019/20) at 48.

22     Section 197AB(g).

[76]             Here, I accept that PPL’s subdivision is low demand in the sense that it generates demand for infrastructure in the limited respects identified, albeit the evidence does not appear to address cumulative effects. I also accept that HCC’s development contributions policies relating to the Rotokauri catchment provide for PPL to pay development contributions calculated by reference to costs associated with projects that do not intersect with PPL’s land.

[77]             But the LGA requirements do not preclude HCC from deciding in its development contributions policy that some aspects of infrastructure should be allocated on a citywide basis. Nor do they preclude catchment area costs being allocated across the catchment rather than only to those developers whose land intersects with the particular project giving rise to the cost. Inherently, these citywide or catchment infrastructure projects are different from the local infrastructure required as a condition of a particular development consent. HCC acknowledges that if in a specific case there is a double up between what a developer is required to provide as a condition of consent and what is in the development contributions policy’s schedule of assets, a special assessment would make the appropriate discount or it would be addressed in the form of a payment from HCC to the developer under a private developer agreement. In PPL’s case, that occurred in relation to stormwater (with agreed 100 per cent remission) and transport (75 per cent remission).

[78]             Nor is a development contributions policy that is prepared taking into account the purpose and principles referred to in the LGA unlawful merely because a different allocation between catchments or different catchments would result in a lower development charge. As Mr Muldowney put it, it is not appropriate to ‘slice and dice’ in this way.

[79]             For these reasons, I am not persuaded that HCC’s development contributions policies relating to the allocation of capital expenditure costs to developments in the Rotokauri catchment fail to comply with the LGA requirements. Low demand on infrastructure may be relevant to remission but that is not the complaint in this claim. I decline to grant the relief sought.

Boulevard and Maui Street extension – twelfth claim23

[80]             This claim relates to charges for roading projects in the Rotokauri catchment when those roads are not located in that catchment. It is common ground that the Boulevard and Maui Street extension are physically located outside the borders of the Rotokauri catchment. HCC’s position is that there is no requirement for a project that benefits a development contributions catchment to be located within that catchment.

[81]             Mr Muldowney noted, for context, that the cost of these two roads is developer led with capital expenditure of $262,000 allocated for recovery via development contributions. The total transport capital expenditure in the development contributions model for the Rotokauri catchment is $88,179,000 and the total Rotokauri transport charge per HUE is $10,391. Together, these two roads make up only $30 of that charge.

[82]             Provided the threshold requirements for development contributions discussed above are met, I accept that there is no requirement for a project to be physically located within a catchment defined as an area on a map. But, as Ms Simons submitted, whatever catchment approach a council determines is right for the district, catchments should be unambiguously defined.24 She submitted HCC’s approach was arbitrary.

[83]             The Boulevard and Maui Street extension are not marked on the map of the Rotokauri catchment in Schedule 8 of the HCC’s development contributions policies. Mr Muldowney submitted the Rotokauri catchment for transport development contributions is defined according to the Rotokauri Structure Plan, which includes a series of maps dealing with infrastructure, including the Structure Plan – Staging and Transport Network. He submitted that while the Maui Street extension and Boulevard Road are physically located outside of the Structure Plan area, both projects are identified in the Structure Plan – Staging and Transport Network as collector roads for the Structure Plan area. The two roads are coloured on this map.

23     The applicants did not pursue the part of the claim relating to roading paid for by developers.

24     Guide: To developing and operating development contributions policies under the Local Government Act 2002 (New Zealand Department of Internal Affairs, 2019/20) at 50.

[84]             Ms Simons submitted it is insufficient for HCC to say these roads are shown on a Structure Plan in the District Plan for Resource Management Act 1991 purposes. I agree that reliance on a map in a District Plan that is not part of a development contributions policy would not assist. But the operative part of HCC’s policy states:

8.2Different areas of the city (“catchments”) have been allocated different amounts of growth-related capital expenditure as set out in the Schedule of Assets and are forecast to have different amounts of growth (see Schedule 7). Financing costs have been allocated to them in proportion to the balance of expenditure and growth within each area over time (see Schedule 2).

8.3It is not practical to define catchments that precisely fit each individual growth project that Council undertakes. Taking this into account, Council considers that it is most equitable to divide the city into catchments as is shown in the maps displayed in Schedule 8.

[85]             The costs of the two roads in issue are identified in HCC’s schedule of assets as being allocated 100 per cent to the Rotokauri catchment. Also, HCC’s policy states (at clause 10.52) that the “Peacockes, Rototuna, Ruakura, and Rotokauri greenfield catchments (refer Schedule 8) are based on Council’s District Plan structure plan areas”. Therefore, while the Rotokauri map in Schedule 8 of the policy should mark these roads outside the boundary of the catchment, I accept the policy is sufficiently clear.

[86]             The remaining question is whether developments in the Rotokauri catchment generate demand for this roading such that development contributions may be charged in respect of their capital expenditure cost. The applicants point to a statement by HCC’s strategic development manager that its position is that there is no requirement for a project that benefits a development contributions catchment to be located within that catchment. I do not read this statement as claiming that HCC can charge development contributions on the basis of benefit alone. As indicated, it is common ground that a development must generate demand.

[87]             HCC’s evidence indicates that HCC has developed a set of principles, based on transportation modelling, to determine how parts of the city transport network are allocated as between catchments, including the citywide catchment. Under these principles, collector roads are deemed to be area generated trips and are allocated 100 per cent to the area to which they relate. This allocation of collector roads reflects

the property access and local movement functions of collector roads. Direct property access is provided on collector roads with few restrictions and they provide for movements both within and through a catchment. The Boulevard and Maui Street extension have this localised characteristic. I accept that as collector roads they form a component of the overall Rotokauri transport network. Developments in the catchment generate demand.

[88]             For these reasons, I do not consider that HCC’s policies providing for the allocation of capital expenditure costs relating to the Boulevard and Maui Street extension to developments in the Rotokauri catchment fail to comply with the LGA requirements. I decline to grant the relief sought.

Canopies

Inclusion of canopies in GFA – eighth claim

[89]             HCC’s development contributions policies include “permanent outdoor covered structures” within the definition of GFA for the purpose of calculating development contributions charges. The essence of the complaint is that canopies in a development that are only provided for protection against inclement weather do not create any demand for new infrastructure assets or infrastructure assets of increased capacity, and therefore charging development contributions for canopies does not comply with s 197AB(a). In addition, the applicants say that charging for canopies results in over-recovery and does not comply with s 197AB(b).

[90]             Ms Simons submitted the issue is whether the canopies cause demand for infrastructure services. She submitted that HCC has not provided any evidence from a three-waters expert that the external canopies create any demand for new or additional assets or assets of increased capacity for three-waters infrastructure.  Based on the applicants’ evidence, she submitted they create no such demand. All of the external canopies are over impervious surfaces that already drain to the stormwater system, so they do not create any demand for stormwater infrastructure. Similarly, Ms Simons submitted that HCC has not provided any evidence from a transport expert that  the  external  canopies  create  a  demand  for  transportation  infrastructure.  She submitted they create no such demand.

[91]             Ms Simons submitted that the only independent expert evidence HCC has in support of charging development contributions  for  external  canopies  is  that  of  Dr Fairgray, an economist. Dr Fairgray says that development of canopies would have occurred only in the expectation that the activities undertaken on the sites would be able to operate at a higher and/or more efficient level than if the canopies were not present, and that higher levels of economic activity can be expected to have increased the demand for infrastructure such that there is a clear nexus between the development of canopies and utilisation of infrastructure for which development contributions may be charged.

[92]             Ms Simons submitted there needs to be direct causation between the canopy and demand for infrastructure. If the canopy does not cause demand, Ms Simons submitted that development contributions should not be set by reference to gross roof area, which is the effect of the extended definition of GFA. She accepted the policy is valid for small scale hospitality canopies but otherwise she submitted it is unfair, unreasonable, disproportionate and a contrivance to create a bigger footprint (except for stormwater).

[93]             There are canopies of different types in the relevant developments – including supermarket covered access, trolley storage and rear unloading areas, and warehouse canopies for loading/unloading. They range in size from little more than wide covered pedestrian access to a larger scale parts store canopy comprising over a third of the building.

[94]             On the basis of Dr Fairgray’s evidence, HCC characterises the critical question as being whether the canopy contributes to the scale of the activity. Ms Cornegé, who addressed these claims for HCC, submitted that activities are occurring under the canopies. HCC does not accept the premise that canopies are only provided for protection against inclement weather. There are different types of canopies.

[95]             I do not consider this issue relates to the threshold requirements for development contributions. Consistent with the reasons already given at [72], in terms of the threshold requirements it is the development that must generate demand for infrastructure resulting in capital expenditure, not each component of the

development. Rather, the issue here is whether HCC’s policies that automatically include canopies in the definition of GFA comply with the LGA requirements in     ss 197AA and 197AB.

[96]             For this purpose, evidence and submissions as to the actual demand on infrastructure (or lack of demand) and actual use of particular canopies in individual developments are of limited assistance. As already seen, development contributions policies necessarily charge on the basis of modelled rather than actual growth and infrastructure demand. There are limits to the level of certainty and precision. This is one reason why generic indicators of demand such as HUEs are used.

[97]             Data from various sources has been used to estimate the average demand placed on HCC infrastructure. To provide a common denominator calculating development contributions charges, HCC uses conversion factors to equate non- residential demand to residential demand. Those conversion factors estimate the number of HUEs of demand that non-residential sectors produce per 100m2 of GFA (except for stormwater, which is calculated per 100m2 of site area). This reflects an averaging approach. GFA is a measurement unit used in the allocation of the cost of capital expenditure to non-residential developments.25 It is a proxy used by HCC to assess the level of economic activity on a site (it is not the only basis for calculating HUEs). As Dr Fairgray explained, land development potential is driven primarily by the scale and nature of activity which can occur there, which is commonly expressed in terms of sustainable or likely employment. However, since development contributions are levied for development on the land, employment potential on the land area has to be expressed in terms of what development can occur there. This is commonly expressed in terms of potential built development area for businesses – commonly GFA – and dwelling numbers or housing units for residential.

[98]             In this context, Dr Fairgray’s evidence supports the use of an extended definition of GFA including canopies. Such a definition includes economic activity occurring under canopy. It is not a contrivance. Even assuming HCC used its District

25 GFA is also used in the prior assessment of infrastructure demand based on growth modelling including as to population, land use and employment, where employment projections are transformed into estimates of GFA by census area units, as Mr Akehurst explained.

Plan  definition  of  GFA  (excluding  canopies)  for  its  growth   assessments   as  Mr Mitchelmore claimed, demand assumptions are not built up using estimated GFA.26 A narrower definition of GFA in the development contributions policies would likely merely result in a higher charge per HUE and thus a reallocation of a portion of the cost to non-residential developments without canopies. It would be open to HCC to do that, or to amend its policy to distinguish between different types of canopies or otherwise define GFA. There are no doubt a range of options, evident in the different definitions of GFA or gross development area used by other councils. It may be that some canopies do not in fact generate additional economic activity – just as some buildings use floor space more efficiently than others. But in the context of estimating the number of HUEs of demand in HCC’s development contributions policies, I do not consider the LGA requirements preclude use of GFA including canopies. It does not lead to aggregate over-recovery or windfall for HCC.

[99]             Having said that, Mr Carstens’ evidence was that HCC includes outdoor covered structures in its policy definition of GFA where the activity under the canopy forms part of the principal activity on the site on the basis that it extends the scale of the principal activity and thereby generates additional demand for HCC services.   He gave examples of a covered outdoor decking area of a bar or restaurant, or a canopy which covers an area which can then be used to store goods and enhance distribution, both of which extend the principal activity. He also referred to examples of canopies that have been excluded from a development contributions assessment. These examples, where it has been accepted that the canopies are incidental and do not extend the principal activity, appear to involve a departure from HCC’s development contributions policies. The definition of GFA does not refer to including canopies where they extend the principal activity or excluding them where they are incidental. Although the inconsistency may buy into the applicants’ approach by considering actual rather than modelled demand, Ms Cornegé submitted HCC was being pragmatic, which was lawful and did not assist the applicants since HCC was being generous to developers in those other cases. I consider that these departures do not render the use of GFA including canopies unlawful and decline to grant the relief sought, but the policy should be transparent in relation to when canopies are included

26     The reverse is true; employment projections are transformed into estimates of GFA, as indicated at n 25 above.

and excluded – whether the distinction is between principal and incidental activity or otherwise.

Specific canopy development charges – ninth to eleventh claims

[100]         These are specific claims that relate to external canopies provided at Hillcrest New World, PPL’s headquarters and various developments that Te Rapa Gateway Ltd owns and leases to businesses. They raise the same issue as the eighth claim. For the same reasons, I do not consider the LGA requirements preclude use of GFA including canopies. I decline to grant the relief sought.

Expenditure on intangible assets – thirteenth claim

[101]         Ms Simons submitted there were 50 projects in HCC’s schedule of assets, totalling over $20 million, comprising programmes, plans and models that should not be included in the costs funded by development charges since they can only be charged in  respect  of  physical  assets  including  infrastructure,   not   intangible   assets. She submitted intangible assets are not infrastructure in terms of the LGA development contributions provisions. They do  not  provide  increased  capacity. The applicants claim these projects should be removed from the schedule of assets and development contributions charges in the 2019 policy should be amended accordingly.

[102]         A number of the 50 projects are Integrated Catchment Management Plans (ICMPs). An ICMP is essentially a concept design of the entire three-waters infrastructure network for a given stormwater catchment. These are studies and plans that provide local information on the performance of HCC’s three-waters networks and are used for the long-term management of the networks. HCC is required under its comprehensive stormwater discharge consent from the Waikato Regional Council to have stormwater catchment management plans. The Regional consent requires an integrated catchment management approach. The projects involve data collection, modelling mapping activities, and analysis of information to enable the preparation of concept designs. The other infrastructure plans challenged in this claim are HCC’s stormwater master plan, Hamilton transport model, wastewater master plan, water master plan, update water model and Rotokauri water network model.

[103]         It is common ground that these projects are intangible assets for accounting standards purposes. As Professor van Zijl and Mr Hogg stated, under the relevant financial reporting standard for tier one public benefit entities such as HCC,27 these project assets meet the definition of intangible asset, and the recognition criteria, in the standard.28 Therefore, the expenditure to acquire or generate the asset is capital expenditure (whereas expenditure on an item that does not meet the criteria is recognised as an expense).

[104]         The issue is whether the cost of these projects is capital expenditure on relevant infrastructure within the terms of the LGA. The development contributions provisions in the LGA relevantly use the terms “community infrastructure” and “network infrastructure”. These terms are defined in Part 8, subpart 5 of the LGA dealing with development contributions:29

community infrastructure–

(a)means land, or development assets on land, owned or controlled by the territorial authority for the purpose of providing public amenities; and

(b)includes land that the territorial authority will acquire for that purpose

network infrastructure means the provision of roads and other transport, water, wastewater, and stormwater collection and management

[105]         Ms Simons also referred to the plain meaning of the nouns “infrastructure”, “capacity”, “demand” and “service” used in the development contributions provisions of the LGA.30 In relation to infrastructure, Ms Simons referred to the Concise Oxford English Dictionary definition: “the basic physical and organizational structures (e.g. buildings, roads, power supplies) needed for the operation of a society or enterprise”.31

27 PBE IPSAS 31 Intangible Assets (New Zealand Accounting Standards Board of the External Reporting Board, 11 September 2014).

28 An asset meets the definition of intangible asset if it is identifiable, the entity controls it and it has future economic benefit or service potential: PBE IPSAS 31 at 7-8. The recognition criteria are that it is probable that the expected future economic benefits or service potential attributable to the asset will flow to the entity, and that the cost or fair value of the asset can be measured reliably: at 9.

29     Section 197(2).

30     Although I note “service” in s 197AA is used as a verb.

31     Concise Oxford English Dictionary (12th ed, Oxford University Press, Oxford, 2011).

[106]         I accept that the LGA’s definition of community infrastructure is limited to “land, or development assets on land”, which implies physical assets even though the term assets itself is not so limited. The definition of network infrastructure is potentially broader given the reference to “the provision of” roads and other transport, water, wastewater, and stormwater collection and management. Also, the plain meaning of infrastructure cited is not limited to physical assets. Section 201A, which sets out requirements for a schedule of assets, refers to “each new asset, additional asset, asset of increased capacity, or programme of works for which the development contributions requirements set out in the development contributions policy are intended to be used or have already been used”. The term “programme” might also suggest a broader meaning than physical assets.

[107]         Capital expenditure is also defined in subpart 5,32 but only to include any funding provided by a responsible levy authority to contribute to the construction costs of eligible infrastructure that has been, or is intended to be, transferred to the authority under s 90 of the Infrastructure Funding and Financing Act 2020.

[108]         In the absence of a more comprehensive definition in the LGA itself, I note that the  difference  between  capital  and  income  expenditure   is   well-established.  The contrast between the two forms of expenditure corresponds to the distinction between the acquisition of the means of production and the use of them; between establishing or extending a business organisation and carrying on the business; between the implements employed in work and the regular performance of the work in which they are employed; between an enterprise itself and the sustained effort of those engaged in it.33 This observes a demarcation between the cost of creating, acquiring or enlarging the permanent (which does not mean perpetual) structure of which the income is to be the produce or fruit and the cost of earning that income itself or performing the income-earning operations.34 As indicated, expenditure to acquire or generate project assets such as ICMPs is capital expenditure under the relevant financial reporting standard.

32     Section 197(1).

33     Commissioner of Inland Revenue v Trustpower Ltd [2015] NZCA 253, [2015] 3 NZLR 658 at [52], citing Hallstroms Pty Ltd v Federal Commissioner of Taxation (1946) 72 CLR 634 at 647.

34     Commissioner of Taxes v Nchanga Consolidated Copper Mines Ltd [1964] AC 948 (PC) at 960.

[109]         Returning to the LGA wording, ss 106 and 197AA refer to “the total cost of capital expenditure”. This might also suggest a broad rather than restrictive meaning of capital expenditure but may simply refer to aggregate capital expenditure.

[110]         Taking into account the LGA’s development contributions provisions, their purpose and the distinction between capital and income expenditure, I consider that even if the meaning of community infrastructure and network infrastructure in the development contributions provisions of the LGA were limited to physical assets, capital expenditure on such infrastructure includes the cost of planning and design work in anticipation of or preparatory to construction of the physical assets. I consider that capital expenditure on longer term and more general plans is little different. Such infrastructure planning and design is critical to delivering infrastructure for growth. New infrastructure must be designed with the strategic network in mind. HCC’s budget estimates for infrastructure are determined with expert consideration of investigation and reporting costs, designation or consent costs, detailed design costs, land procurement requirements, construction costs, and defects liability periods. Physical construction costs are only  part  of  the  cost  of  network  infrastructure.  As Mr Galbraith submitted, if there were no models or concept designs, there would be no infrastructure. They are building blocks in the development of infrastructure. This approach is consistent with the Infrastructure Funding and Financing Act 2020, which includes planning/design costs.35

[111]         Although these plans and models have been identified by HCC as separate projects, I consider they are part of the infrastructure cost. Consistent with the purpose of the development contributions provisions in the LGA, I consider that capital expenditure on infrastructure is not limited to the cost of physical assets but includes design costs whether for specific projects or wider infrastructure network planning.

[112]For these reasons, I decline to grant the relief sought.

35     Infrastructure Funding and Financing Act 2020, s 9(3) and (6).

Stormwater development contributions based on bedroom numbers – fourteenth claim

[113]         This claim relates to HCC’s method of calculating stormwater development contributions for residential developments. HCC’s 2019/20 development contributions policy contains a note in Schedule 5 dealing with residential demand conversion factors stating:

Stormwater HUEs are derived on the basis of the expected runoff from impermeable surfaces. A typical residential greenfield development on a 650m2 section is assumed to have a runoff coefficient of 60% and represents one HUE for a 2-year storm…

[114]         Ms Simons submitted this note correctly identifies a relationship between impermeable surface area and stormwater demand, but the conversion factors used in Schedule 5 are based on bedroom numbers:

Residential Development Type

Large Residential

Factor

1.290

Standard Residential

1.000

Two Bedroom

0.689

One Bedroom

0.477

[115]         Ms Simons submitted there is no relationship between bedroom numbers and impermeable surface area to justify the stormwater factors adopted. This claim seeks orders that development contributions for stormwater based on bedroom numbers do not comply with ss 197AA and 197AB(b), that such development contributions should be based on impermeable area and directing HCC to amend its 2019/20 policy accordingly.

[116]         HCC says that a residential development’s bedroom numbers are a good proxy for stormwater run-off, based on the logic that a dwelling with more bedrooms, on average, will be larger than a dwelling with fewer bedrooms and therefore have a larger impervious surface area than a dwelling with fewer bedrooms and on average a smaller footprint. Also, HCC says that calculating stormwater development contributions on impermeable surfaces would be too complicated.

[117]         The applicants dispute this logic, at least in relation to multi-level dwellings since a larger (say four bedroom) dwelling over two levels may have the same or even a smaller site coverage than a single level three bedroom dwelling. The applicants also dispute the complexity. They say that prior to adoption of the 2019/20 development contributions policy, HCC used to attribute one HUE of stormwater demand to every residential allotment other than for smaller size allotments located in areas identified for higher density development in the Hamilton District Plan, where

⅔ HUE was used. Other councils use a similar approach or apply defined demand factors to the impermeable surface area. Ms Simons submitted the only reasonable approach is to determine stormwater by reference to impermeable surfaces. Higher density developments will result in significantly disproportionate development contributions charges.

[118]         This claim too is pleaded as non-compliance with ss 197AA and 197AB(b). As already discussed, the s 197AA purpose of development  contributions  and the    s 197AB principles must be taken into account when formulating a development contributions policy but, in that context, the concepts in ss 197AA and 197AB such as fairness, equity and proportionality require policy judgements to  be  exercised.  They do not necessarily dictate a particular outcome. There may be a number of ways a council can structure its development contributions. In relation to stormwater for residential developments, it is common ground that demand for stormwater infrastructure depends on impermeable surface area. But development contributions are charged on the basis of modelled rather than actual demand. Various methods of modelling demand for stormwater infrastructure may be available. Impermeable surface area may not be known, and reasonable proxies may be used. HCC’s evidence acknowledges some anomalies but indicates there is a broad correlation between bedroom numbers and building footprint across the city’s dwelling stock. For these reasons, I do not consider that ss 197AA and 197AB(b) require stormwater development contributions for residential developments always to be based on impermeable area or preclude them being calculated by reference to dwelling bedroom numbers.

[119]         Having said that, I accept that HCC’s logic that a dwelling with more bedrooms, on average, will have a larger impervious surface area than a dwelling with

fewer bedrooms does not take into account multi-level dwellings. They are likely to become more prevalent with higher density developments. Also, while acknowledging the importance of administrative efficiency, I consider there would be available alternative methods of modelling demand that would not be too complicated. Although pleaded as non-compliance with ss 197AA and 197AB(b), the complaint was in effect pursued as one of unreasonableness – that no reasonable council could have decided to calculate development contributions for residential developments by reference to dwelling bedroom numbers. But even if that were the pleaded ground of review, the relief sought by the applicants would not be available. The most that would be available would be a direction that HCC reconsider its policy approach to stormwater development contributions for residential developments so as to take into account that dwelling bedroom numbers is not a good proxy for impermeable surface area in the case of multi-level dwellings.

[120]         Given the pleaded case and the evidence indicating that anomalies to date relating to multi-level dwellings have been relatively rare and/or minor,36 I decline to make a finding that no reasonable council could have decided to calculate development contributions for residential developments by reference to dwelling bedroom numbers. Mr Muldowney readily accepted that given density projections, anomalies may become more significant in the future and submitted there is opportunity to change. I expect HCC, as part of its annual review of its development contributions policy, will consider how best to address the prospect of greater anomalies in future as multi-level dwellings become more prevalent with higher density developments.

Arterial roads – fifteenth claim

[121]         This claim relates to the allocation of costs for arterial roading projects. HCC’s policy allocates these costs partly to the citywide growth catchment and partly to the local growth area catchment based on the benefit in terms of trip generation once the roads are built. The applicants do not dispute who benefits but say the allocation is unfair and these costs should be allocated 100 per cent citywide. They acknowledge

36 Over the last five financial years, most residential developments were one storey in the four catchments where stormwater development contributions make up over 10 per cent of development contributions.

there is no over-recovery but say HCC’s approach results in local growth areas paying twice for the same arterial roading capacity because they pay the local growth area development contributions charges for that capacity as well as the citywide growth area development contributions charges for the same capacity. They say the cost allocation methodology for arterial roads transfers development contributions benefits from development in growth cells to infill development, and that the cost allocation between the citywide and local growth catchments for major and minor arterial roads results in the disproportionate weighting of costs towards growth cells relative to other parts of Hamilton. They say these cost allocations result in significantly greater development contributions in local growth catchments compared with the citywide catchment. Ms Simons submitted this does not comply with the fairness and equity requirements of s 197AA.

[122]         I accept the partial allocation of the cost of an arterial roading project to a local growth area instead of citywide means that local growth area bears a greater proportion of the cost. I do not consider this involves double counting as the costs are apportioned. The applicants’ issue is with the apportionment. They say the calculation of the citywide demand should exclude the capital expenditure associated with the local growth catchment. Apart from its greater complexity, this is essentially an alternative allocation (assuming it  does  not  result  in  under-recovery).  In reply, Ms Simons submitted the applicants were trying to avoid money raised in the catchment being used elsewhere.

[123]         For the reasons already discussed in relation to earlier claims, s 197AA does not require the cost of arterial roading projects to be allocated 100 per cent citywide. As indicated above at [74], split allocation may be appropriate for some projects. HCC moved to that following submissions against citywide allocation in earlier versions of its development contributions policy. Grouping across an entire district is to be avoided wherever practical.37

[124]         Also, another of the s 197AB principles is that cost allocations used to establish development contributions should be determined according to, and be proportional to,

37     Section 197AB(g).

the persons who will benefit from the assets to be provided (including the community as a whole) as well as those who create the need for those assets.38

[125]         HCC’s allocation is based on expert transport advice as to the citywide and catchment-based benefits for traffic movements on major and minor arterial roads. HCC’s 2019/20 development contributions policy allocates costs as follows:

(i)Major arterials that provide limited land use direct access to a specific growth cell will be totally City wide based: Area=0%, City=100%.

(ii)Major arterials that provide a higher-level land use access to specific growth cells will be split: Area=50%, City=50%.

(iii)Minor arterials that service growth cells and link to strategic network will be split: Area=60%, City=40%.

(iv)Minor arterial improvements within infill areas will be split: Infill=50%, City=50%.

(v)Arterials such as the Ring Road that link growth cell areas forming part of the strategic network will be totally City wide based: Area=0%, City=l00%.

(vi)Collectors/local roads will be totally Area based: Area=100%, City=0%.

(vii)Public transport/ cycling/ walkways will be totally City wide based: Area=0%, City wide=l00%.

[126]         The LGA does not preclude this kind of allocation. The particular allocation appropriate in the circumstances is a matter for HCC provided it takes into account the statutory considerations including the purpose and mandatory principles and its decision is one that a reasonable decision-maker could make. Such separate grounds of review were not pleaded.

[127]For these reasons, I decline to grant the relief sought.

38     Section 197AB(c).

HCC’s development contributions model

Demand used in HCC’s model – first claim39

[128]         This complaint is that in HCC’s model for setting development contributions charges, it uses historical HUEs, not actual HUEs. Essentially, Mr Mitchelmore says that discrepancies  in  the  data  indicate  that  HCC  has  not  used  actual  HUEs.  For example, he says that the historical HUEs in HCC’s 2015 and 2018 policies are different so cannot be the actual HUEs. He says that, had the actual HUEs been used, the starting debt balances used to calculate the development contributions charges in the development contributions model would accurately reflect the cost of completed assets still to be recovered.

[129]         HCC disputes Mr Mitchelmore’s conclusion. Its evidence states that the HUEs in the model reflect the number of units of demand from which development contributions have been received. This can differ significantly from the level of building consents due to various factors, such as site credits, remissions, financial contributions paid in lieu of development contributions and self-provision of infrastructure. Further, some policy elements may have changed between policy iterations, which directly affect the calculation of historic HUEs, such as changes to conversion factors. Also, the information base underlying HCC’s development contributions policy has been continuously refined over the last 15 years.

[130]         In his reply affidavit, Mr Mitchelmore maintained his position. Based on his evidence, Ms Simons submitted that:

(a)other than for the year preceding the adoption of a development contributions policy, the historic HUEs should never change between model iterations;

(b)the model is not fit for purpose because the historic HUEs do change between model iterations; and

39     The part of this claim concerning interest rates was resolved.

(c)any changes in the historic HUEs between model iterations can adversely affect future development contributions charges in a manner that results in the over-recovery of development contributions imposed on future individual developments contrary to s 197AB(b); particularly in growth cells where the total HUEs available is relatively finite for recovering the total cost of the capital expenditure during its capacity life.

[131]         Dealing first with claimed over-recovery, I accept that HCC’s model cannot over-recover development contributions because the model stops collecting for any project when it is paid off (or its capacity life is realised). Rather, the issue is that discrepancies would affect the distribution of HUEs across different years.

[132]         Although HCC’s model includes historic HUEs, and I am not in a position to reconcile or fully resolve the debated discrepancies on affidavit evidence, I accept that historic HUEs make no difference to the setting of HCC’s development contributions charges. This is because the actual revenue collected in each historical year is known and fixed, and that is the input which affects the opening balance and therefore the charges for the next year, not historical HUEs.

[133]For these reasons, I decline to grant the relief sought.

Variable charges per HUE over time – second claim

[134]         This claim relates to the methodology for calculating development contributions prescribed by Schedule 13 of the LGA. Schedule 13 deals with calculating “the maximum development contribution in respect of a community facility or an activity or group of activities for which a separate development contribution is to be required”. The applicants say that methodology requires HCC to identify the total cost of the capital expenditure to meet increased demand by activity and catchment. They say that the total units of demand per catchment do not change, nor, at any given time when development contributions charges are being determined, does the total cost of capital expenditure to meet that demand. As a result, they say the methodology does not provide for charges per HUE to vary over time, whereas analysis of outputs from HCC’s model to determine the development contributions per

HUE in the 2019/20 policy show that for the citywide catchment the HUEs for reserves, transport, wastewater and water activities vary over time.

[135]         The key point of difference between the parties is whether the use of the term “activity” in the Schedule 13 methodology refers to the category of infrastructure (reserves, transport, wastewater and water being those in issue) or can apply to the individual projects that make up each category.

[136]         The reference to “an activity or group of activities” in Schedule 13 mirrors similar wording in s 106(2)(d), which states that a policy must:

identify separately each activity or group of activities for which a development contribution… will be required and, in relation to each activity or group of activities, specify the total amount of funding to be sought by development contributions…

[137]Also, s 201A(4) provides that the schedule of assets:

must group assets according to the district or parts of the district for which the development contribution is required, and by the activity or group of activities for which the development contribution is required.

[138]         It would be inconsistent with the principles in s 197AB if the Schedule 13 methodology required territorial authorities to recover all capital expenditure for each category of infrastructure (for example transport) across all HUEs in all years of the model. In his reply affidavit, Mr Mitchelmore acknowledged that HUEs can vary over time including as assets reach the end of their capacity lives, new assets are introduced and other updated inputs.

[139]         The definition of “activity” in the LGA is broad and does not indicate that it refers only to the category of infrastructure rather than individual projects.40 I do not consider that Schedule 13 or the other references to “activity or group of activities” in the LGA preclude HCC from disaggregating its charges by project if it considers it appropriate to do so, for example where different infrastructure has a different capacity life. The total charges for each catchment and category of infrastructure in the relevant period are simply the aggregate of the catchment charges for each project in that

40     Section 5(1).

category. The statutory requirements can be met whether or not charges for each catchment and category of infrastructure are further broken down by project. This is consistent with the Department of Internal Affairs’ guidance.41

[140]For these reasons, I decline to grant the relief sought.

Indexing of development contributions – seventeenth claim

[141]         This claim relates to the lawfulness of indexing – development contributions charges increasing over time – that was proposed in HCC’s draft 2019/20 policy. But indexing was not included in HCC’s final policy. Accordingly, the issue is moot – whether or not HCC’s  model allows for indexing to be “switched on” in the future.   I see that the Department of Internal Affairs’ guidance envisages indexed charges adjusted annually by inflation,42 but it is unnecessary and would be inappropriate to determine the lawfulness of indexing in the abstract.

Use of under-recovery factor – eighteenth claim

[142]         This claim relates to whether HCC could include an under-recovery factor in its development contributions model enabling the annual HUE projections for every catchment to be reduced to compensate for expected under-recovery based on under- recovery of average revenue in prior years. This under-recovery factor was included in an algorithm disclosed to a working group when the 2015/16 policy was current. The quantum of the under-recovery factor was not referred to in the policy. HCC used an under-recovery factor until 2018. It was discontinued following submissions on the proposed 2018/19 policy.

[143]         HCC maintained that calculation of development contributions charges must reflect any and all factors that cause rates of development contributions payments to fall short of the corresponding rates of growth/construction. It says that to ensure a fair sharing of costs between various stakeholders, the calculation of development

41     Guide: To developing and operating development contributions policies under the Local Government Act 2002 (New Zealand Department of Internal Affairs, 2019/20) at 67.

42     Guide: To developing and operating development contributions policies under the Local Government Act 2002 (New Zealand Department of Internal Affairs, 2019/20) at 66.

contributions must incorporate adjustments to HUEs to align them with the expected profile of development contributions payments.

[144]         Ms Simons submitted that such an under-recovery factor was not justified. She acknowledged, however, the issue is moot given the factor’s discontinuance. It is therefore unnecessary to determine the lawfulness of an under-recovery (or recovery) factor in the abstract or grant the relief sought. Suffice to say that having regard to the purpose of the regime I can see how systemic under-recovery may well lead to inequities between developers over time, as development contributions charges are updated following policy review, or to unplanned reallocation to general ratepayers by way of rates funded debt. Also, no over-recovery can occur for the reason already given.43 But, if an under-recovery factor is permissible, any use of one should at least be transparent.

Conclusion

[145]         For the reasons given, I decline to grant the relief sought in relation to each claim.

Result

[146]The application for judicial review is dismissed.

[147] I reserve leave, as indicated at [55] above and in the event of an issue arising in relation to my other expectations as to HCC’s reconsideration of its development contributions policy.

Gault J

43     At [131] above.

Solicitors / Counsel:

Ms S J Simons and Mr CDH Malone, Berry Simons, Solicitors, Auckland Mr A R Galbraith QC, Barrister, Auckland

Mr L Muldowney, Barrister, Hamilton

Ms K Cornegé (respondent’s instructing solicitor), Tompkins Wake, Solicitors, Hamilton