visionary thinking

Development Agreements Underlying Principles for Land and Subdivision

Undertaking land development and subdivision has its challenges. One way of reducing those challenges is resolving implementation issues up front through Development Agreements and here are some of the underlying principles and structures.

Development Agreements between Public and Private Agencies have three drivers;

1. To shift the funding responsibility (i.e. debt) from the public sector onto the private sector

2. To ensure access to all necessary parts of the development infrastructure to ensure land development and subdivision can proceed unhindered.

3. To enable developers to proceed to a schedule that works for them, for funds to be available and where one developer has paid more than their share for infrastructure for those funds to be recovered

Development Agreements are typically structured as follows

1. Background - the reasons that give rise to the need for a Development Agreement

2. Precedent Conditions - often for example; the agreement is in place prior to a new zoning being operative or a resource consent issued. If the event the agreement has been put in place for does not eventuate then the agreement become void.

3. The obligations of each party

4. What happens if things go wrong - dispute resolution

5. Termination - how the agreement ends

6. The Schedules

  • Schedule 1 - The land the agreement relates to
  • Schedule 2 - The money
  • Schedule 3 - The projects or works agreed to be undertaken
  • Schedule 4 - The exceptions
  • Schedule 5 - Cost in Relation to Time

Difficulties arise on two counts

1. The extent to which Council is willing to exercise its powers, in particular with access to land for the provision of roads and stormwater infrastructure where individual landholdings within a development area are for some reason not available.

2. The recovery of capital expenditure where the cost of funding development infrastructure is not equally distributed.

These difficulties arise because Council is generally reluctant to use its powers at a local level. For example Council will use its designation powers for an arterial road to service a district but will not use those powers for a collector road that only services a neighbourhood.

And where the provision of infrastructure, such as a road or park, is predominantly located on a small landholding, the development of that small landholding does not generate sufficient revenue to cover the development expense and/or where the benefits of that infrastructure flow to other adjacent land.

The projects divide into three categories

1. District Level Projects - such as arterial roads, libraries, community centres and sports parks

2. Neighbourhood Level Projects - such as collector roads, neighbourhood parks and stormwater management areas

3. Local Level Projects - such as local roads, stormwater, walking and cycling paths

The categories are established by the nature of the project. Where the project falls within a developer's land or a neighbouring property it is easier for the developer to take responsibility for funding and building. Where the project falls outside land under the developer's control the project is best provided through a public agency such as Auckland Council or Auckland Transport.

The navigation of these land development and subdivision hurdles is difficult but not impossible. With enough willing developers and a supportive Council, Development Agreements can be completed and lead to successful developments.