Lakes developer Grasshopper Farms (in receivership) is accusing Tauranga City Council of unfairly charging it for development contributions.

The resumption of Ten Year Plan discussions on Tuesday begins with Grasshopper Farms accusing the city council of failing under the Local Government Act to apply its own policy fairly, consistently or equitably in the Pyes Pa Urban Growth Area.

The Lakes.

The issue is costs of capital. Some parts of the urban growth area are subject to costs of capital and some are not.

There's an agreement between Grasshopper and the council for Grasshopper to undertake works in lieu instead of paying subdivision impact fees.

The agreement stipulated the costs of capital, interest costs Grasshopper incurs in relation to the delivery of works in lieu will be paid by Grasshopper.

A few years after the agreement was made, council changed its development contributions policy, introducing inflation and cost of capital into development contribution calculations.

This increased the SIFs payable by Grasshopper for SIF projects in the balance of the land in Pyes Pa West, land not owned by Grasshopper.

Grasshopper delivered works in lieu projects to the value of $19.7m much of

which relates to lead infrastructure like water and wastewater trunk mains from the city boundary, that were required to commence development in Pyes Pa West, plus an extension of Route K to provide access.

Against the $19.7m, $4.1m of impact fees that would have been payable was offset to give a current balance of $15.6m.

The council's business services manager Dean Riley's report states the amounts show Grasshopper is incurring significant interest costs, estimated by council staff to be about $4500 per lot.

'It is also clear that Grasshopper is in a significantly worse financial position than it would have been in if the works in lieu projects were instead delivered through the standard SIF funding approach – ie. developer builds, council reimburses and then recovers costs through charging SIFs with interest costs previously ratepayer funded and now incorporated into the SIFs,” says Dean.

For two years now Grasshopper has been asking council to review the works in lieu agreement to allow it to collect some of the interest costs through SIFs collected from development that occurs in the ‘balance' land within Pyes Pa West.

This is about 30 per cent of the land at The Lakes urban growth area not owned by Grasshopper.