QLDC blamed for not collecting hundreds of millions in development contributions

By Amanda Robertshawe.

A former QLDC Councillor estimates the council has missed out on hundreds of millions of dollars in Developer Contributions to cover growth related infrastructure.

Rick Pettit, a Councillor for two terms between 2001 and 2007, was also Chair of the Finance Committee in his second term. He thinks elected members’ poor understanding of Developer Contributions under the Local Government Act, and a string of inexperienced CEO’s lacking appropriate Financial Planning expertise, are responsible for this loss of revenue.

Pettit says the Local Government Act 2002 is legislation specifically designed for recouping the cost of growth from developers.

However, in order to charge developers for financial contributions, Council is required to include any infrastructure requirements associated with predicted growth in the Long Term Plan. And this, says Pettit, is one area where QLDC has been falling short.

Pettit says if infrastructure projects are not included in the Long Term Plan then Council cannot charge developers for contributions for new infrastructure such as water supply, sewerage plants, and Council roading and bridges.

“Development Contributions which apply under the LGA2002 is Council’s only tool to tie growth to Development”, says Pettit.

“If you don’t collect Development Contributions from the Developers - then it falls back on ratepayers, through ballooning debt.”

• Former QLDC councillor Rick Pettit - “not collecting development contributions falls back on ratepayers through ballooning debt.”

Pettit thinks QLDC has missed out on hundreds of millions of dollars in Developer Contributions on account of poor planning over many years.

“What they haven't done is planned. What they haven't actually done is say, ‘we need this, or we need that bridge’, and then pick a date. ‘We need it by, say, 2030. Okay? So we put it in our Long Term Plan, and we start doing that in 2015’, for want of a date. ‘We then collect the funds so that when we want to build the bridge in 2030, we've got funds to do it’.”

When the Local Government Act 2002 (LGA) was introduced during his time on Council, Pettit thought it the perfect legislation for Queenstown.

“Because of our projected growth it was an ideal framework for us, in terms of being able to charge Developer Contributions.”

The underlying idea being ‘Growth pays for Growth’.

The LGA 2002 requires Councils to plan ten years ahead.

But, as Pettit points out, an amendment to the LGA2002 now requires District Councils to plan even further ahead. “The Government, in 2014, said that Councils should be looking at 20 - 30 year horizons for this very reason.”

During Crux’s Mayoral video debate last week, QLDC Mayor, Glynn Lewers, made references to growth and Developer Contributions. Lewers also mentioned a Court case regarding Developers Contributions.

Lewers said, “We've had to refine our Development Contributions policy to meet the requirements of the Court. It is conservative and, yes, there is economic leakage with development contributions. Growth is not paid by growth.”

Pettit is unreservedly critical on hearing further comments Lewers made during the debate. Comments such as stripping items from the Council’s Plan in an effort to contain Council outgoings.

“Firstly, you can only charge DC's if the project is in the Long Term Plan.

Lewers says he stripped out costs, and projects, from the Long Term Plan. This is the opposite of what QLDC should be doing”.

“Lewers says you can only get paid (by the developer) once the Council project is finished. That isn't correct. You can charge Development Contributions in advance of a project even being started.”

“Lewers says that Developer Contributions are paid at the time the 224C’s are issued. This is correct. But then he went on to say that this can only be done after the Council project is finished. Totally Wrong.”

“Developers Contributions are charged when the Developer’s project is finished –definitely not when the Council’s project is finished.”

“This clearly explains why our District is in such a mess...a complete lack of understanding by this Mayor, and, I would suggest, the previous Mayor, of how Development Contributions are planned, costed, included in our LTCCP and charged to Developers.”

“I have heard candidates, including currently sitting Councillors, say we have to consider Bed Taxes, and Visitor Levies, as our rates are too high etc.”

“The truth of the matter is that Development Contributions under the LGA2002 - are the only way you can pin the cost of growth on Developers. It is complicated but is totally doable. Under the LGA it is non-contestable - unless it is unlawful.”

“This community has lost the opportunity to charge developers for the cost of Growth, as I see it, for the last 15 years.”

“Developers are the beneficiaries of growth because of poor forward planning.

I believe it has cost our community $100m's of dollars in the last 15 years - we have failing infrastructure, district wide.”

“Growth is in QLDC's DNA – Developers have to pay significantly towards that.”