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Hearings Committee
5 November 2019
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Part
A Reports
Development Contributions Remission - 21, 25
and 27 Fryatt Street, Dunedin
Department: Planning
EXECUTIVE SUMMARY
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.
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RECOMMENDATIONS
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.
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BACKGROUND
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:
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Water Supply
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$6,484.80
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Wastewater
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$30,520.00
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Stormwater
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$0.00
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Transportation
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$0.00
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Reserves
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$1,149.20
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Community Infrastructure
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$384.00
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Total Development Contribution
excluding GST
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$38,538.00
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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.
DISCUSSION
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:
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Visitor
accommodation
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10 x residential units (2 habitable
rooms)
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Water Supply
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2.92 EHUs
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4.23 EHUs
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Wastewater
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7.04 EHUs
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5.24 EHUs
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Stormwater
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0.00 EHU
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6.87 EHUs
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Transportation
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0.00 EHU
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0.00 EHU
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Reserves
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2.82 EHUs
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7.50 EHUs
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Community Infrastructure
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6.38 EHUs
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7.21 EHUs
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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
OPTIONS
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.
NEXT STEPS
59 The
decision of the Hearing Committee will be communicated to the applicant, and
staff will act upon the decision made.
Signatories
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Author:
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Galina Usoltseva - Development Contributions Officer
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Authoriser:
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Alan Worthington - Resource Consents Manager
Nicola Pinfold - Group Manager Community and Planning
Gavin Logie - Financial Controller
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Attachments
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Title
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Page
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⇩a
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Aerial Photo and Street
View
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15
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⇩b
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Building Plans
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16
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⇩c
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Remission Request
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26
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⇩d
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Development
Contributions Assessment
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33
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⇩e
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Development Contributions
Policy Detailed Supporing Document
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34
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SUMMARY OF CONSIDERATIONS
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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.
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Fit with strategic
framework
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Contributes
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Detracts
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Not applicable
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Social Wellbeing Strategy
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☐
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☐
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☒
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Economic Development Strategy
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☒
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☐
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☐
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Environment Strategy
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☒
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☐
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☐
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Arts and Culture Strategy
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☐
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☐
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☒
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3 Waters Strategy
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☒
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☐
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☐
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Spatial Plan
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☒
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☐
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☐
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Integrated Transport Strategy
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☒
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☐
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☐
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Parks and Recreation Strategy
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☐
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☐
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☒
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Other strategic projects/policies/plans
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☒
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☐
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☐
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Within the Council’s financial strategy, the role of
development contributions is to fund the growth portion of capital projects.
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Māori Impact
Statement
There are no known impacts for tangata whenua.
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Sustainability
Long term consequences of undermining the integrity of the
Development Contributions Policy from not recouping fully from developers the
cost of those developments.
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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.
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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.
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Significance
The decision is assessed as low under the Council’s
Significance and Engagement Policy.
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Engagement –
external
There has been external engagement with Utility NZ (Walter
Clarke) in relation to application of the Policy.
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Engagement -
internal
There has been no internal engagement.
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Risks: Legal /
Health and Safety etc.
The decision could be challenged by judicial review.
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Conflict of
Interest
There are no known conflicts of interest.
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Community Boards
There are no known implications for Community Boards.
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