KEY POINTS:
The North Shore City Council wrongly billed property developers for most of the $82.5 million cost of building the five stations on its busway system, says a High Court judge.
The council sought 94.2 per cent of the stations' cost from developers through its development contributions, with the rest to come from general rates.
But a group of six developers protested it was an unfair share and was based on errors of law.
With no right of appeal to the council, the group sought a judicial review of the contributions policy, introduced by the council in July 2004.
The group said the busway was one of several projects that showed the distortion produced by the council's "narrow and misconceived interpretation" of the Local Government Act, which allows councils to levy developers for the effects of growth on community infrastructure.
In a reserved decision, Justice Judith Potter said the allocation of costs for the stations placed in sharp focus the council's exacerbator-pays/causation approach to development contributions.
The group's lawyer, Alan Galbraith, QC, said the approach meant developers, and through them their customers or future ratepayers, were subsidising existing ratepayers and residents.
They benefited from the increased level of service and the remedying of a serious traffic backlog that existed before the project.
Those benefits would continue for existing residents until congestion again reaches the levels of before the arbitrary date of January 1, 2003.
This was taken by the council as the date from which it calculated the future growth share.
The council said the main reason for the decision to proceed with the busway was growth, and developer contributions were $77.5 million or 18 per cent of the overall busway cost.
But Justice Potter said the council should have reasoned there would be benefits for existing users in the measures taken to reduce capacity.
The adoption of a causative approach which excluded consideration of the benefits did not comply with the act.
The sources of funding for the council's share of the busway project would need to be reconsidered by the council.
Justice Potter said she addressed the principles, and would leave it to the parties to negotiate.
The chairman of the council's strategic management committee, Gary Holmes, said last night councillors were waiting for a briefing by lawyers,
"We will take on board the points raised and are looking forward to working with the developers to try to find some solution."
Mr Holmes said he did not yet know the effect the ruling would have on the council's draft annual plan, which includes $21.7 million of development contributions.
Growth Levy Dispute
* Northern Busway's five stations cost the North Shore City Council $82.5 million.
* Developers were charged $77.5 million, (94.2 per cent of the cost) because the council said the project was driven by growth.
* Developers argued this share subsidised existing residents who also benefited from the work.
