Plan changes could come at $14.7m cost

Hastings Mayor Lawrence Yule.

Changes to the District Plan could cost Hastings District Council an extra $14.7 million, placing the authority at greater financial risk.

The alterations were presented to council at last week's planning and regulatory committee, with chief financial officer Bruce Allen alerting councillors to the potential financial implications of the variations that will begin to come before council.

"This issue arises from the number of variations to the District Plan that could have significant financial implications on council's indebtedness and potentially the level of development contributions required to fund the infrastructure requirements for these development areas," he said in his report.

The changes are that Omahu and Irongate developments are no longer being released in two stages but one, and with the odour issues plaguing Havelock North the Arataki expansion has to be reassessed by council.

After the meeting, Mr Allen said the increase in cost was a gap between what the council's growth debt was forecast to be in 2021 and what those proposed changes would make.

He said the cost was two-fold: increased upfront capital expenditure and the impact of slower development contributions - which would have come at the end of each 10-year stage - but repayments were now pushed out to between 20 and 27 years as the development was occurring all at once.

Mr Allen said the council would "wear the gross loans" and that those loans would be repaid from the development contributions.

"So it doesn't impact on rates, it is the development community that will repay that debt."

He said the risk came in because council was opening up more land and the timeframes around developing that land may take longer.

He explained that the money had been spent and the infrastructure was in place - but if development of the land did not take place as forecast it would mean the council would not have the money to repay the loans.

"The only mechanism we have got at the moment to repay that debt is development contributions," he said.

"So the interest cost is compounded, which may mean the development contributions will have to increase to cover that and that is the risk."

Mayor Lawrence Yule said while the change was slightly riskier, it meant the council had significantly reduced the development costs to the developers.

"They are happy with this approach," he said. "We have got an upturn in the economy, a significant demand for that land and we think it is appropriate, and the council has resolved until now, that it is appropriate that we take that step."