Christchurch developers threaten legal action over council policy

Tuesday, 15 April 2025

Prominent property developers in Christchurch are threatening legal action and warning city councillors to get their facts straight before accepting proposed changes to a development contributions policy.

In the meantime, there is some appetite at the council table to rethink or even pause changes to the contributions, which would add thousands of dollars to home building costs.

Investor and developer Richard Peebles told councillors during draft annual plan submissions that proposed increases to how much developers pay towards infrastructure - in some areas tripling the cost - could be illegal, and described some calculations as “fanciful”.

“I’m not saying they’re [staff] doing anything wrong. I’d like to get down beside the guys … and say, how do you come up with these numbers?” Peebles said.

“There’s got to be a better way”.

Later in the same hearings session, Nikki Carter of the Carter Group said it could be illegal to deny developers the use of expired demand credits.

Demand credits recognise that if a development is just replacing another building on the same site, then there may not be additional demand on infrastructure. Several developers - including Carter - said the credits’ 10-year expiry date is unrealistic in the context of the earthquakes.

Carter said the charge was “fundamentally wrong” and “double dipping”.

Mayor Phil Mauger said whether the council pushes on with the draft policy or pauses the process is yet to be decided.

Mauger - who has previously worked in development - would not confirm whether he was swayed by submitters’ arguments at the meeting on Friday. He said he wanted to avoid the “rabbit hole” of legal action, but would need to discuss a potential pause with staff.

He said the charges needed to increase - rates would rise otherwise - but the charges could be more consistent, and he had questions for staff on how calculations were done.

The council has proposed to increase the amount developers pay the council to between $24,000 and $44,000 per new home.

That more than triples the cost in neighbourhoods like central Christchurch, where the charge would jump from $8126 to $29,562 per household unit.

The charges are intended to pay for new infrastructure, like bigger pipes or extra roading. They may not be used to maintain existing infrastructure.

Councillor and 2025 mayoral contender Sara Templeton said they are keeping an open mind during the submissions, and she and other councillors are concerned the proposed changes could deter central city development.

“We don’t want to have perverse outcomes, like accidentally incentivising developers to build on the fringes, rather than centrally where we want more people to live.”

Templeton said she has asked council staff for information on what pausing the increases would mean, especially with the Government putting together its own development levy framework.

“We always make changes based on the submissions - we need to hear from more people. One of the things we should look at is what the Government’s proposed changes might mean.

“We’re not sure when that might happen, and in the meantime we have to make sure development contributions are appropriate, so general ratepayers don’t foot the bill.”

Central city councillor Jake McLellan said he is also keen to make sure they are charging appropriately.

“I would like the cost of developing in the CBD, in particular, to be as small as possible.

“But we need a new DC (development contribution) policy. Population growth is less than we thought, that’s just a fact of life, and we need to keep the lights on and the water running.

“If developers want to pay less, the only way is to have the ratepayers subsidise the costs, and that’s pretty unacceptable.”

The council collected $35.2 million in development contributions in the 2023/24 financial year. John Higgins, the council’s head of strategy, planning and regulatory services, said the average annual capital cost of growth in the last two financial years was $64.6m.

Developers and interest groups told councillors during the hearings the proposed policy actually posed a risk to growth, particularly in the central city, because it could dissuade landowners from developing.

Peebles said the council was bound by law to ensure development contributions were fair, equitable and proportionate, and he believed the proposed increases failed to do that.

“I think you really need to think carefully about the legality, because I can assure you that given the increases … there will be a legal challenge,” he said.

“So you need to be very, very sure you have your basis covered.”

Tom Chatterton, representing the Property Council’s South Island committee, questioned why the city council was even reviewing the policy when the Government had announced an overhaul to contribution fees which could render the policy redundant later this year.

He said if the council did not pause its work, the uncertainty of moving to two new systems within one year - let alone the prospect of significant cost increases - could stop development in its tracks.

“Less development, less investment, less housing, and ultimately less revenue for council from the ratepayer base,” he said.