High Court decision gives developers an $18.6m refund

North Shore City Council refunded $18.6 million to developers after a High Court decision found errors in law in its growth levies policy.

The case brought by Neil Construction and five other big property firms resulted in their negotiating a revised level of development contributions for the Northern Busway and other projects during 2004-06.

The new formula for council costs allocated to growth was extended to include small-scale subdividers.

A year ago, the council estimated a refund of $10 million for 4000 assessments. But provisions in the draft city plan reveals the cost was higher, and about 6000 refunds were made.

The policy amendment brought new rules and charges, said the council's group manager of development initiatives, Patrick Cleaver.

The council also had a clearer picture of upcoming works it was expected to provide to cater for new developments.

Estimated income from development contributions for 2010-11 is $23 million or about 19 per cent of capital works spending in the draft city plan.

Budgeting for paying the refund over several years had avoided a "big hit" on ratepayers, said council strategy and finance chairman Grant Gillon. Deferment of some capital works also helped.

The court case had a positive result.

"We can say this policy is fair and is justified not just on speculation but on a rational formula."

Most city councils have adopted policies for collecting developer levies under the 2002 Local Government Act.

Contributions of about $30,000 each for house sections are common, according to the Property Council.

But the Auckland City Council has also been tested in court.

It refunded $1.7 million to developers after a 2008 court decision on its seeking " top up" payments during a transition from one growth levy policy to another in 2006-07.

Mr Gillon said a "massive job" lay ahead to merge seven councils' policies into one for the Super City.

The third Auckland bill before Parliament proposes that the policies for each council should stay in place for their areas until the Auckland Council comes up with a new policy from July 1, 2012.