Financial Contributions

Under s108(2)(a) of the RMA, financial contribution conditions can be imposed. Such conditions must be in accordance with the purposes specified in the plan and the level of contribution needs to be determined as set out in the plan. Note however that financial contributions policies in proposed plans (or proposed plan changes) do not have legal effect until a decision on submissions has been made and notified (s86B).

Financial contribution conditions either require a contribution of money or land, or can be a combination of the two (s108(9)). Financial contributions can assist with the costs of providing infrastructure for developments and providing for the recreational needs of the community. Funds can also be used to provide upgraded or additional servicing or to acquire or enhance land or assets for recreation and community purposes. Councils must specifically use these monies collected for the purposes they are intended.

Financial contributions can be taken to provide off site ‘offset’ mitigation, eg, where the adverse effects of replacing a bridge on a riverbed habitat cannot be avoided or satisfactorily mitigated, a financial contribution could be used to improve the riverbed habitat elsewhere as part of a wider riverbed restoration programme.

Financial contributions are not the same as development contributions. Development contributions are authorised under the Local Government Act 2002 through long term council community plans (LTCCP) or conditions of consent attached under s220. Such contributions are based on a new developments demand on council’s network infrastructure, which can include community infrastructure, open space and reserves. Great care is needed to ensure that a financial contribution is not imposed on a development for the same purpose as a development contribution.

Councils should ensure that the wording of any financial or development contribution condition is legally reviewed prior to it being included on a resource consent (unless it is a standard condition that has already been legally reviewed before). This will help ensure that the condition is legally robust. It can also be helpful to show the calculation of a financial or development contribution as an advice note so the consent holder can clearly see how the contribution was calculated.