Notice of Meeting:

I hereby give notice that an ordinary meeting of the Hearings Committee will be held on:


Date:                                                    Tuesday 5 November 2019

Time:                                                   9.00 am

Venue:                                                Edinburgh Room, Municipal Chambers, The Octagon, Dunedin


Sue Bidrose

Chief Executive Officer


Hearings Committee

Agenda – Development Contributions Remission





Commissioner Jinty MacTavish





Senior Officer                                               Gavin Logie, Financial Controller


Governance Support Officer                  Wendy Collard




Wendy Collard

Governance Support Officer



Telephone: 03 477 4000





Note: Reports and recommendations contained in this agenda are not to be considered as Council policy until adopted.


Hearings Committee

5 November 2019



ITEM TABLE OF CONTENTS                                                                                                                                         PAGE


Part A Reports (Committee  has power to decide these matters)

1             Development Contributions Remission - 21, 25 and 27 Fryatt Street, Dunedin                               4    





Hearings Committee

5 November 2019


Part A Reports


Development Contributions Remission - 21, 25 and 27 Fryatt Street, Dunedin

Department: Planning





1          This report considers a request to the Dunedin City Council (the Council) for the remission of development contributions for the alteration and expansion of an existing building to accommodate commercial and residential/visitor accommodation activities at 21, 25 and 27 Fryatt Street, Dunedin.

2          The application has been considered under the six assessment matters for remissions in the Development Contributions Policy (the Policy). 

3          The applicant, Loan and Mercantile 2000 Limited, was charged a development contribution of $38,538.00 (excluding GST).

4          The Hearings Committee (the Committee) is asked to consider whether a remission should be granted, and if so to authorise the Financial Controller to remit a specified maximum amount.

5          The applicant wishes to be heard by the Committee.


That the Committee:

a)     Considers the application for a remission of development contributions levied to Loan and Mercantile 2000 Limited for the alteration and expansion of an existing building to accommodate commercial and residential/visitor accommodation activities at 21, 25 and 27 Fryatt Street, Dunedin.

b)     Authorises the Financial Controller to give the applicant a development contribution remission of a maximum of $38,538.00 (excluding GST), should the Committee decide to grant the application.



Purpose of Development Contributions

6          The purpose of development contributions is to enable the Council to recover from those persons undertaking development a fair and equitable portion of the costs of capital expenditure necessary to service growth over the long term (section 197AA Local Government Act 2002).  If development contributions are not collected then the growth has to be funded from other sources including rates and/or debt.

7          Under Clause 12 of the Committee delegations, the Committee has the power “to consider and determine applications for remission of a development contribution for an unusual development where the contribution is greater than $5,000 and less than $50,000”.

Assessment of Development Contributions for 21, 25 and 27 Fryatt Street

8          The assessment of development contributions payable in relation to 21, 25 and 27 Fryatt Street was made using the Policy, contained within the Long Term Plan 2015/16 - 2024/25.

9          The existing buildings, zoned ‘Port 2’ under the operative Dunedin City District Plan, are held within three titles, and have a combined land area of approximately 1,483m2. The current buildings are broken-down into the following:

·        21 Fryatt Street (held in Computer Freehold Register OT288/82), consists of a two storey (front) and single storey (rear) structure which is rated commercial, and has a Gross Floor Area (GFA) of 550m2, and Impermeable Surface Area (ISA) of 367m2. The ground floor of the building has been vacant for approximately 15 years, but the upper floor has been used more recently for an unconsented residential activity;

·        25 and 27 Fryatt Street (held in Computer Freehold Registers OT19C/133 and OTB1/293) consist of a commercial operation, being a bar and restaurant trading as the ‘The Wharf Hotel’.  Number 25 consists of two storey structure with a GFA of 707m2, and ISA of 653m2.  The adjoining building at number 27, is single level, and contains the restaurant associated with the business.  Both buildings are accessed internally.  The building at number 27 has a GFA of 162m2, and ISA of 162m2.

10        The development proposed by the applicant alters and expands the existing buildings at 21 and 25 Fryatt Street, to accommodate commercial and residential/visitor accommodation (commercial residential) activities, which involves the following:

·        The construction of an additional floor level (Second Floor), spanning the two buildings, with the additional floor having a GFA of 464m2;

·        Changing the use by converting the existing first floor into residential/commercial residential units;

·        On the ground floor of 21 Fryatt Street, creating a commercial retail and/or commercial office activity at the front, as well as a lobby to access the above units.

11        The ground floor of 25 and 27 Fryatt Street will continue to function as the public space of the Wharf Hotel.

12        The proposal is deemed to create an additional GFA of 464m2. This results in new Commercial GFA of 818m2, and ISA of 1045m2.  In addition, there is a change of use of the existing first floor to visitor accommodation (which is deemed to be the appropriate use), with a GFA of 1126m2, and ISA of 137m2.

13        The development contribution is payable for the additional demand being created by Loan and Mercantile 2000 Limited over and above the previous land use.  The development contribution was calculated as follows:

Water Supply










Community Infrastructure


Total Development Contribution excluding GST



14        This amount has not yet been invoiced.

15        The initial assessment for this development was $30,823.40. This has been increased to reflect changes in the building layer as per a building consent applied for on the 10 January 2018. As of today, the development contribution of $38,538.00 is payable for this development.

Remission Request Summary

16        Loan and Mercantile 2000 Limited has requested a remission of the development contributions charged to alter and expand an existing building to accommodate commercial and visitor accommodation activities on the property at 21, 25 and 27 Fryatt Street, Dunedin.

17        A full copy of the remission application is attached for the Committee’s reference.  The applicant wishes to be heard in support of the remission request.

18        The remission request is summarised as follows:

·        The development contribution assessment calculation is flawed;

·        The proposal should have been assessed as residential type accommodation, rather than a more intensive visitor accommodation when calculating the development contributions;

·        The capital expenditure outlined in the Policy’s ‘Detailed Supporting Document’ for wastewater appears to be incorrect;

·        Development contributions should not be charged, as this proposal creates no increase or only a negligible increase in the demand on the Council’s network (in particular for wastewater), when compared to a historical industrial use, and prior consents, and rates paid for the site;

·        Council should exercise its discretion and not charge development contributions for this project because of the positive benefits it brings to the waterfront area and the city.

19        The applicant wishes to be heard in support of the remission request.


20        The Policy states that six assessment matters are to be considered when considering a request for remission:

·        The Development Contributions Policy;

·        The DCC's Funding and Financial Policy;

·        The extent to which the value and nature of works proposed by the applicant reduces the need for works proposed by the DCC in its capital works programme;

·        The level of existing development on the site.  Where multiple existing and pre-existing uses can be established the DCC may have regard to the most intensive use(s) and the extent of time that has elapsed since those pre-existing uses existed;

·        Development contributions paid and/or works undertaken and/or land set aside as a result of:

·        Development Contributions

·        Agreements with the DCC

·        Financial Contributions under the Resource Management Act, and;

·        Any other matters the DCC considers relevant.


21        Each of these is considered below.

The Development Contributions Policy

22        The remission argues that the Policy is flawed, and that the demands generated by this proposal are in fact nil or negligible. The request also states the new units better align with a residential unit of use, rather than a more intensive visitor accommodation.

23        To assist in determining the proposed land use of the development, the resource consent decision states:

·        ‘The applicant seeks consent for a mix of residential and commercial residential activities in the ten upstairs apartments’

24        Under the Policy, the definition of a residential unit is as follows:

·        ‘A residential unit is defined as a residential activity which consists of a single self-contained household unit, whether of one or more persons, and includes accessory buildings and a family flat. For the purposes of this definition, residential activity means the use of land and buildings by a residential unit for the purpose of permanent living accommodation and includes emergency housing, refuge centres, halfway houses and papakaika housing if these are in the form of residential units’

25        Furthermore, the definition of a visitor accommodation under the Policy is as follows:

·        ‘Land or buildings used for the accommodation of people and which are or can be let on a commercial tariff, including boarding houses for six guests or more, and home stays for six (6) guests or more.  This category includes backpacker accommodation, motels, hotels, tourist lodges, holiday flats, tourist cabins, camp grounds, motor inns, and accessory buildings or ancillary activities on the same site.  Boarding houses for less than six guests and home stays for less than six guests will be treated as residential’

26        The Planner in the Resource Consents Department who processed the resource consent assessed the proposal as a commercial and/or visitor accommodation (commercial residential) use.  No conditions were imposed on the consent to limit the use of the new units to each activity.  Therefore, the units may be fully occupied as a visitor accommodation.

27        Where a resource consent does not limit the use of an activity, the expectation is that the Council will levy the maximum possible use of a development, which recognises the peak demand on infrastructure of a proposal (in this case, particularly in relation to wastewater). Therefore, the proposal was assessed as a visitor accommodation activity when calculating the development contributions.

28        The Policy is based on averages for typical developments throughout the city. Development contributions pay off growth-related debt (previously incurred by the Council for capital works to service this site or the wider area generally), or pay for growth related capital works now or in the future (for this site or for the wider catchment). Even if no specific works are required to service a particular site, this does not mean that the levying of development contributions is inappropriate.

29        In this case, the potential additional demand is being created with the change in use from commercial to visitor accommodation and with the additional GFA to be constructed.  The following table compares the additional Equivalent Household Units (EHUs) when using visitor accommodation compared to ten two-bedroom residential units:


Visitor accommodation

10 x residential units (2 habitable rooms)

Water Supply

2.92 EHUs

4.23 EHUs


7.04 EHUs

5.24 EHUs


0.00 EHU

6.87 EHUs


0.00 EHU

0.00 EHU


2.82 EHUs

7.50 EHUs

Community Infrastructure

6.38 EHUs

7.21 EHUs


30        If the proposal was to be assessed as creating ten residential apartments (each with two habitable rooms), then the development contribution required to pay would be $29,593.50 (excluding GST), compared to the $38,538.00 (excluding GST) currently levied.

31        The Policy is based on theoretical demand because it is not practicable to calculate the actual demand of every single development.  The Policy does provide for unusual developments to be individually assessed, but only where the development creates a significantly different demand on infrastructure.  In principle, the remission process could be used in a similar way to reduce the development contributions based on the known actual demand of a development.  However, the Committee would need to be satisfied that the actual demand was going to be less.

32        It is considered that the assessment of the proposed land use has been correctly made in accordance with the Policy in place at the time of the application.

33        The remission request suggested that there were errors within the ‘Development Contributions Policy Detailed Supporting Document’ (DCPDSD), particularly in relation to the ‘Capital Expenditure’ table for wastewater. These tables outline the growth related projects, which are then used to generate the development contributions levies. While they are not erroneous, it is acknowledged that the clarity of these tables could be improved.

34        As referred to earlier, development contributions pay off growth-related debt (previously incurred by the Council for capital works to service this site or the wider area generally), or pay for growth related capital works now or in the future (for this site or for the wider catchment). It is the writer’s understanding that in the case of the Tahuna Wastewater Plant a lot of headworks upgrades have already been completed. Development contributions are currently collected in some degree, to pay for work that was budgeted and spent under previous Long Term Plans.

35        Development contributions include debt funding/interest considerations in addition to capital costs and capital expenditure. Large infrastructure assets (such as the Tahuna) can be funded over 20-40 years; these can incur significant interest costs over the funding lifetime.

36        It is considered that there are no errors in the DCPDSD in relation to wastewater, and hence there is not a justification for the remission of development contributions for this reason. If the Committee requires a more in-depth analysis of the DCPDSD and how it relates to this site, then it may wish to seek external advice on this matter.


37        There are no known changes to the capital projects being funded by development contributions that could change the amount payable.  Consideration will need to be given as to whether the granting of a remission in this case would undermine the integrity of the Policy.

The Council’s Funding and Financial Policy


38        The role of development contributions in the Council’s financial strategy is to fund the growth portion of capital projects.  Should a remission of development contributions be granted for this development then the Council will require funding from rates or other sources for any shortfall in development contributions.

Contribution to Capital

39        The applicant has not proposed any capital works as part of this development that would replace the Council’s own capital works.

Demand Prior to Development

40        A remission could be considered if the Policy did not adequately recognise the previous land uses on the site in terms of demand.  The applicant has raised this as part of their remission request, stating that the proposed activity will have a much lower demand on the Council’s infrastructure, when compared to the previous use, and consents.  More specifically, it was argued that the first floor of the existing ‘Wharf Hotel’ should be given credits for visitor accommodation, with 21 Fryatt Street being treated as industrial to recognise its use a factory and processing facility for ‘Gregg’s Coffee Club’.

41        In regards to whether the existing ‘Wharf Hotel’ at 25 Fryatt Street, should receive credits for the resource consent applied for in 2006 to establish commercial residential units on the first floor, the resource consent decision states:

·        The 2006 building consent was to give effect to resource consent RMA-2006-0441 (now renumbered RMA-2006-370226) which gave planning permission for the alterations of the hotel within a heritage precinct and for new signage. The alterations were to provide 14 commercial residential bedrooms with en-suites and a self-contained manager’s flat. The consent had a lapse period of 26 July 2011. The lapse period of the consent was extended by LUC-2006-370226/A on 26 August 2011 for a further five years, resulting in a new lapse period of 26 July 2016. However, a site visit to the hotel has determined that the work has not been completed, and the consent is considered to have lapsed.

42        Furthermore, the consent mentions that:

·        There is no current authorisation for 15 commercial residential rooms at this address despite the applicant’s view. Likewise, there is no indication in Council records that the apartment with four bedrooms in the building of 21 Fryatt Street was lawfully established, and it has, in any case, been vacant for over 12 months, rendering any existing use rights that might have applied negated.

43        The resource consent clearly states that resource consent LUC-2006-370226 has lapsed and hence there is no valid resource consent to which visitor accommodation credits could be applied.

44        It is acknowledged that the ‘Wharf Hotel’ once existed as a visitor accommodation on the first floor, however, it is understood that this activity ceased many years ago, and in particular, prior to 1 July 2014, when the revised Policy first became operative. However, the Committee could consider and give weight to this, and rates paid in the past for that use, if it so wishes.

45        The application refers to the historic use of 21 Fryatt Street being an industrial activity, operating as a factory and processing facility for ‘Greg’s Coffee Club’. This activity is understood to have ceased operation in 1925, where the factory moved to its current location on Forth Street, and well before 1 July 2014, when the revised Policy first became operative.

46        More recent uses of the building have been commercial in nature, being a car parts business, offices and storage.  However, the building is currently vacant.

47        Whilst the subject site has a prior history as an industrial activity, the more recent activities are commercial in nature.

48        The site at 21 Fryatt Street has a current rating classification of Commercial, and land use description of ‘Commercial: Offices’.  This is deemed appropriate for carrying out a development contributions assessment under the Policy.   However, the Committee could, through this remission process, consider and give weight to the historical industrial land uses and rates paid by those uses if it thought it was relevant.

Previous Historical Contributions

49        Historical contributions on a site potentially could be used to offset a current development contribution assessment.

50        No historical contributions on this site have been identified.  Rates paid in the past are not considered relevant to this matter.

Other Matters

51        This criteria is broad and allows the Committee to consider any other matters relevant to the development and/or remission application.

52        It is a catchall and can be used to consider "other matters" raised by the applicant, evidence, submissions and staff reports and/or comments.  This could include items not previously considered under the other criteria above.

53        It should be noted that any decision under this criteria (or any of the other criteria for that matter) must not be arbitrary and needs to be justified.

54        The applicant’s remission application raised a matter which could be considered under this assessment criteria relating to economic development.

55        The applicant’s remission application included discussion about the Councils intention to redevelop the waterfront area, and that this proposal is the ‘only tangible evidence of anything actually being done in the area’

56        The sole purpose of the Policy is to recover from those undertaking development a fair, equitable, and proportionate portion of the costs of capital expenditure necessary to service growth, rather than being a tool for promoting and encouraging economic development


57        The Committee has three options. They could decline the remission request, grant a partial remission or grant a full remission.  The advantages and disadvantages of each option are outlined in the body of this report. 

58        The Committee now needs to decide which option it prefers.


59        The decision of the Hearing Committee will be communicated to the applicant, and staff will act upon the decision made.




Galina Usoltseva - Development Contributions Officer


Alan Worthington - Resource Consents Manager

Nicola Pinfold - Group Manager Community and Planning

Gavin Logie - Financial Controller






Aerial Photo and Street View



Building Plans



Remission Request



Development Contributions Assessment



Development Contributions Policy Detailed Supporing Document





Fit with purpose of Local Government

This report relates to providing local services and infrastructure that it is considered good-quality and cost-effective and contributes to community well-being in the present and for the future.

Fit with strategic framework




Not applicable

Social Wellbeing Strategy

Economic Development Strategy

Environment Strategy

Arts and Culture Strategy

3 Waters Strategy

Spatial Plan

Integrated Transport Strategy

Parks and Recreation Strategy

Other strategic projects/policies/plans


Within the Council’s financial strategy, the role of development contributions is to fund the growth portion of capital projects.

Māori Impact Statement

There are no known impacts for tangata whenua.


Long term consequences of undermining the integrity of the Development Contributions Policy from not recouping fully from developers the cost of those developments.

LTP/Annual Plan / Financial Strategy /Infrastructure Strategy

The collection of development contributions is included as a revenue line item in the Long Term Plan and forms part of the overall financial strategy.

Financial considerations

The collection of development contributions is included as a revenue line item in the Long Term Plan and forms part of the overall financial strategy.


The decision is assessed as low under the Council’s Significance and Engagement Policy.

Engagement – external

There has been external engagement with Utility NZ (Walter Clarke) in relation to application of the Policy.

Engagement - internal

There has been no internal engagement.

Risks: Legal / Health and Safety etc.

The decision could be challenged by judicial review.

Conflict of Interest

There are no known conflicts of interest.

Community Boards

There are no known implications for Community Boards.



Hearings Committee

5 November 2019


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Hearings Committee

5 November 2019


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5 November 2019


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Hearings Committee

5 November 2019


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5 November 2019


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