KEY POINTS:
North Shore City Council will review its controversial growth-levies policy after a High Court judge found that it is based on errors of law.
But council leaders declined to comment on whether it had overcharged and would have to refund money to property developers who sought the judicial review of the development contribution policy.
Property Council national director Connal Townsend said the judgment of Justice Judith Potter "blew the whistle on widespread abuse" of local authorities' ability to charge contributions to recover growth-driven capital spending.
He said the court upheld the call of developers who challenged flaws in the complex formula for contributions and called for a fair policy.
"The policy has forced up the cost of new commercial and residential properties to a level that is unaffordable to thousands of young families," said Mr Townsend.
Local Government New Zealand chairman Basil Morrison said the judgment would be eagerly examined by all local authorities to check how it affected them.
When North Shore City Council brought in its policy in July 2004, it spearheaded national efforts to get a funding alternative to loans.
But property developers complained they were being levied unfairly to pay for community projects such as the Northern Busway and extending reserves at Long Bay.
Their arguments led last year to the judicial review request by Neil Construction, Cornerstone Group, Landco, Universal Homes, Symphony Projects and Bayswater Apartments.
The council is still pondering the effects of the 85-page reserved judgment.
Council strategic management committee chairman Gary Holmes said the judge had found the council made certain errors of law.
However, he said, the decision upheld the council's approach to development contributions for reserves.
The decision also did not invalidate the policy or its supporting documents, or prevent the council from requiring contributions on an ongoing basis.
However, Mr Holmes said, the council would review its policy to address issues Justice Potter had raised.
"We will be having dialogue with developers, as the judge invited us to do, to look for solutions to aspects of the policy that are in dispute.
"We will review the policy and once we have reviewed it we will be evaluating whether any refunds are appropriate," Mr Holmes said.
The council had budgeted for more than $300 million in contributions over a decade.
It has charged more than $40 million so far and put it towards the growth portion of providing new infrastructure worth about $236 million.
The Auckland City Council is planning to increase revenue from development contributions from $357 million to $733 million over 10 years.
Central-city developments will be targeted for $239 million over that time, citywide developments will be expected to pay $200 million towards the revised eastern highway over 20 years, and higher development contributions will be levied on the Tank Farm waterfront development.
Development Contributions
When are they paid?
* When owners subdivide or build a property, extend a non-residential property or change its use, connect to a service such as water or wastewater or build a granny flat.
What are they for?
* Parks, transport, water supply, wastewater and stormwater services, libraries and leisure centres.
How much?
* Calculated on expected capital expenditure to meet increased demand for services. Levies vary between areas of the city and may vary from residential to business.
