Growth Issues – The Broader View
Planning Framework
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Growth Management Strategy
Ten Year Plan
Annual Plan
Level of Sophistication – Shift Over Time
Information
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Levels of service clearly defined
Infrastructure Projects
o Direct linkage to Growth Management Strategy
o Clearer project definition
o More accurate tracking of growth projects against actual costs and
what is physically completed
o Accuracy of costing significantly improved; forward planning more
robust
o Asset management planning is improving and better linkage now to
structure plans
o Knowledge of quantum of surplus capacity in the network and required
timing of new investment has improved.
Robust LTCCP processes supported by comprehensive LIPS system.
Understanding of market issues improving:
o Neil Gray work on density and market economics of residential
development
o CB Ellis work on impact of development contributions on financial
viability of development.
Causes and quantities of under-collection of growth costs through DC’s
understood.
Approach
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Resourcing increased; now dedicated key person, policy project team, finance
staff actively working on Council wide long term financial implications.
Cost of capital and impact of growth on debt now able to be modelled. Able
now to take this into account when making infrastructure investment
decisions.
Court cases and legal advice have provided more clarity on legal interpretation
and have assisted in development of cost methodology and rationale.
Cost methodology and rationale determined and consistently applied (mainly
via the Wairakei work).
Improved consistency in approach across DC UGA and Infill areas.
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Cost/benefit assessment of growth infrastructure and funding now directly
impacting on plan change matters. (Transport workshop example)
Stronger linkage to procurement specification and timing (eg decision re first
1000 lots at Wairakei). Opportunity for further improvement through
procurement project.
Recognition of the need for planning land use, infrastructure and funding in
parallel within a concept of a workable market model. (Density which is of a
level that enables economic market development while also funding
infrastructure).
TCC Approaches to Growth
Issue
Past
Present
Future
Growth Management
No growth strategy, many growth fronts open at
once.
Comprehensive growth management strategy supported by
Regional Policy Statement & City Plan.
Continual refinement and on-going implementation
of growth management strategy.
Growth Area Planning
Land use, infrastructure planning and funding
considered separately and in different timeframes.
Land use, infrastructure planning and funding considered in
parallel and through an iterative process.
Best practice guides together with continued
refinement.
Growth Rate
Average 2 – 3% per annum
1% per annum
Average 2 – 3% per annum
Capacity in network infrastructure
Incomplete information on quantum of surplus
capacity.
Good knowledge of quantum of surplus capacity in network &
required timing of new investment (modelling output).
Continual improvement in capacity information.
Benefit of unallocated surplus capacity funded by
previous ratepayers.
Minimal surplus capacity available
Significant surplus capacity due to investment in new
infrastructure.
Council Debt
04/05 $125 million
09/10 $330 million
14/15 $450 million.
Access to Finance for developers and
home buyers
Relatively easy access to finance
Finance market has significantly tightened – focus now on
ability to repay debt.
Likely to ease slightly but still harder to access than
in the past.
Ability to charge growth costs
RMA processes – practical approach taken and
reductions incorporated due to cost and time delays
of RMA legal processes.
LGA processes enable frequent updates to costs and timely
implementation of defined charges.
Mix of both LGA and RMA (Plan Change 51).
Some legal challenges on issues (eg retirement villages,
schools).
Increased likelihood of further legal challenges as
charges increase and profitability reduces.
Infrastructure Projects
Lack of consistent alignment between infrastructure Direct link to growth management strategy & structure plans
project planning & growth.
Stronger linkage to procurement specification & timing.
Continual improvement.
Processes & Resources
TYP and DC information managed in Xcel
spreadsheets. No integrated systems.
Robust and integrated processes & systems (including LIPS &
DC sub-module).
Continual refinement of systems.
Part-time FTE working on DC’s.
Increased resourcing.
Financial projection ability significantly improvement,
particularly in respect of debt projections.
DC calculations & Collection:
Shortfalls acknowledged but not quantified
Cause and quantity of under-collection of DC understood
Information used as input into policy decision
making.
- Cost of Capital
Not included.
Included
Included
Included
Included
Policy decision to recognise the benefit to the
community of additional ratepayers in terms of
rating base and economic growth.
- Inflation
Not included
Issue
Past
Present
Future
- Project cost estimates
Generally on lower side as planning not to required
level of detail at early stage
Accuracy improving and more realistic (higher) project costs
included.
Long term planning & accuracy between predicted
and actual project costs continue to improve.
- Actual Costs updated in timely
manner
Higher actual costs (than projected) not always
reflected in timely manner due to lack of
sophistication of systems and inability to track
individual project information.
Actual costs updated on annual basis through LIPS system.
Continual improvement, but already well managed.
- Cost allocation rationale
Minimal legal precedent, inconsistent approach,
documentation light.
Court cases & legal advice assisted in development of cost
methodology / rationale.
Continual improvement.
Internal policy team has developed strong rationale and now
well documented.
Improved consistency
Affordability
Not a major issue for developers or purchasers.
No affordability adjustment on DC’s
Affordability a significant issue for both developers &
purchasers.
Interim affordability adjustment on West Bethlehem
Affordability unlikely to improve unless section
prices reduce significantly and high density
development occurs.
Affordability adjustment options include discounted
DC charges and targeted rates. These would provide
some recognition of the benefits growth brings to
overall financial sustainability.
Understanding of market issues
Minimal
Improving particularly through:
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Neil Gray work on density & market economics
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CB Ellis work on impact of DC’s on financial viability
of development.
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Development Working Party.
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Housing for Future Working Party.
Further work required in this area.