Councils must decide which elements of the consent process are cost recoverable. Case law has also determined that a broad view should be taken of the parts of the consent activity that are able to be charged for. Cost recoverable consent activities should include:
Staff time, including planning, engineering, scientific and other 'in house' staff hours. This in turn may include:
costs of notification, such as advertising
meetings with the applicant
preparation and circulation of draft conditions
section 42A report writing
consulting with iwi and other interested or affected parties
consulting with submitters
consent process related administration.
Consultant costs, where they are used to process or monitor consents on behalf of council
Consultant reports commissioned under ss92(2), 41C or 42A to provide extra information not provided in an applicant’s AEE, or to peer review material supplied by an applicant
Disbursements, including photocopying, postage, travel costs (km travelled), advertising costs, and laboratory costs
Hearing costs, including councillor and/or commissioner costs, and venue hire
Administration costs associated with consent database management and compliance monitoring
The above list of activity areas / tasks (or as adjusted by the council) could usefully be used when recording time spent on timesheets of council processing staff.
Good practice recommendations for costs recovery for some of these activities are provided below.
Time spent by council staff discussing proposed applications with applicants or their consultants should be charged if an application is subsequently lodged. This pre-application activity is occasioned by the applicant and there is no reason for it being funded by the general community (through rates).
However if pre-application advice is given and an application is not subsequently lodged with the council, there is some uncertainty whether there are means to charge for pre-application advice under s36. We suggest councils seek legal advice on the legality of those charges if intending to charge for such advice.
Some councils provide for a small amount of 'free' pre-application advice (such as a half to one hour), and this is appropriate if a council has a policy of funding environmental or RMA advice in that manner.
It is also appropriate to charge for the reasonable costs of retrieving information from databases, records or files, as well as copying costs in order to provide any currently available information in respect of plans and resource consents requested by an applicant or their consultants prior to an application being received, as provided for by s36(1)(e).
It would not be appropriate to charge for the costs of undertaking the research, resource investigations or state of the environment monitoring as those costs are 'sunk', having already been funded from other sources. These costs are also not occasioned by the applicant and there is unlikely to be any direct benefit to them.
In many cases councils use external consultants to process or monitor consents. In some cases contracts are negotiated whereby the consultant’s charge-out rate is fixed at a level similar to that of equivalent internal council staff. However, an issue arises if a consultant has a higher charge-out rate than equivalent council staff. A decision needs to be made on whether or not to charge those higher costs to an applicant. This is where s36AAA(2) provides useful guidance in terms of 'reasonable' costs.
The additional costs of consultants (over and above equivalent council staff charge-out rates) should only be passed on to applicants where the applicant has occasioned the use of the consultant. Such situations would include:
the applicant has requested urgency in processing the application and additional external resources are required by the council to meet the applicant's deadlines
the application involves complex technical matters that are beyond the skill and expertise of council officers and the applicant agrees to the commissioning of a report under ss92(2) or 41C(4)
the applicant has provided technical information that is controversial or unorthodox and it requires external peer review to verify its authenticity.
A council should communicate with an applicant if a consultant is required to be used for any reason. In other situations, it is not good practice to charge the additional cost of consultants to applicants. Such situations would include:
council staff are fully committed to other work and external resources are required to meet statutory consent processing time frames
the regulatory arm of council has a conflict of interest because another arm of council (or a council-controlled organisation) is the applicant, or because council staff have shown bias or predetermination by making public statements on the consent.
In these situations the consultant's time should be charged out at the equivalent rate as for council staff.
Council staff will spend time managing consultants and undertaking consent processing tasks for which consultants do not hold delegated authority. Where a large amount of contracting out occurs this time commitment can be substantial. Decisions need to be made on whether or not to recover that time.
In terms of tasks for which consultants do not hold delegated authority, such staff costs should be recovered provided there is no 'double dipping', such as might occur where a staff member duplicates a task already undertaken by a consultant.
The criteria discussed above for managing consultant costs should also be applied to managing the costs of consultancy input to the consent compliance monitoring process.
In order to avoid penalising applicants and consent holders in outlying areas, it is not appropriate to automatically charge full travel costs and staff time for site visits or locally held hearings.
A 'reasonable' nominal travel and time cost should be charged based on what an average travel time within the region or district might be.
Councillor and commissioner fees
Where there is a hearing, the appropriate charge will depend on whether councillors or independent commissioner(s) are hearing and deciding the application, and whether a request was made under s100A by the applicant and/or submitter(s) for the application to be heard and decided by independent commissioner(s).
Where councillors hear and decide the application, the actual costs of councillors sitting as hearing committee members should be included in consent charges. The Remuneration Authority establishes resource consent hearing fees. These are set out in determinations each year (called Local Government Elected Members Determinations). These Determinations can be found on the New Zealand Legislation website. It is the hearing fee costs for councillors that are specified in regulation. These charges should be passed on to the consent applicant as they are occasioned by the need for a hearing.
Councils should develop policy which clearly outlines how the councillors’ hourly rate applies to ensure there is no confusion between time charged for the actual hearing, as opposed to preparation time (reading material), site visits, deliberations and travel time. Note the Remuneration Authority has stated it is not appropriate to pay separately for preparation time as members can take greatly different times to read the same material.
Where independent commissioners are used and their hourly rate is higher than that set by the Remuneration Authority for elected members, then a decision needs to be made on whether or not to pass on those additional costs to the applicant.
Where an applicant has made a request to have the application heard and decided by one or more independent commissioners under s100A, the additional charge should be passed on to the applicant as they have clearly occasioned their use. The charge is payable by the applicant even if one or more submitters also make a request for independent commissioners (s36(1)(aa)).
Where one or more submitters make a request under s100A but the applicant does not, they (the submitter) should be charged the additional costs of having the application heard by independent commissioner(s) over and above that if it was heard by councillors. If there is more than one submitter, the additional costs should be charged equally to each submitter (s36(1)(ab)).
There may be other situations where the additional cost of using independent commissioners should be passed on to the applicant. However, where an independent commissioner is required because of some issue related to decision-making on the council’s part (conflicts of interest, or lack of in-house expertise) then independent commissioners should be charged to consent applicants at the same hourly rate as elected members. Examples include where a councillor has some personal involvement in the application, or where the council was the applicant or a submitter.
Council staff can spend a significant amount of time organising councillors and/or commissioners onto hearings committees, or deciding the composition of committees. This may be time consuming due to internal 'political sensitivities' associated with ensuring an equitable spread of hearings amongst councillors. Such organisational activities are not directly occasioned by the applicant and should not be charged to them.
It is important that a council's method of allocating overheads and setting staff charge-out rates ensures that the costs charged to consent applicants are transparent, justified and lawful. The Court found that it is appropriate to charge a proportion of the overhead costs associated with running the Council’s Resource Consents Division (Barfoote Construction Limited v Whangarei District Council A80/01).
Any organisational or corporate costs included in staff overheads not relevant to the consents activity will need to be separated out and recovered elsewhere.
The recommended good practice starting point for determining staff charge-out rates is to use an annual number of chargeable hours that exclude annual leave, sick leave and general staff training. A commonly used number is 1560 hours based on a 40 hour week. The staff member's salary is then divided by this number of hours to derive a base hourly rate. Appropriate overheads are then added to the base rate.
Section 36(4)(b) provides that a council's overhead costs can only be recovered from consent applicants if they either occasion them, or they receive benefit from them distinct from the general community. For example, the lodging of a consent application causes a council to have to employ consent processing staff and provide office space, office equipment and other resources to enable those staff to do their job. These are legitimate overhead costs that are sanctioned by s36(4) of the RMA.
However, other overhead costs generated by a council that are not caused by consent activities do not fall within the bounds of s36(4). It is difficult to list such overhead activities with precision as they will be many and varied and described differently in different councils.
Some examples of activities that should not generally be included in consent staff overheads would include:
CEO support sections
financial services and financial management planning (non-consent related)
LTP and annual plan development
copy centres (non-consent related)
records management (non-consent related)
library (non-consent related)
customer service centres (non-consent related)
community or public relations
general environmental education (non-consent related)
human resource management activities such as leadership training
health and safety initiatives
business practice improvement initiatives
information technology management and development
general staff training
However, while such overheads may not be caused by the consent applicants, it is possible they might still receive some benefit from them distinct from the community as a whole. This might arise where the overhead activity results in a better quality consent process; in terms of timeliness, cost, or quality of outputs.
Each council overhead item or category should be passed through a two-stage test before being included in the charge-out rates for consents staff. The two-stage test is:
'is the overhead occasioned by the applicant or consent holder'
'does the overhead activity benefit the consent applicant or holder distinct from the community as a whole'.
This test will enable decisions to be made and recorded on which council overheads (and what proportion of them) should be included in the overhead component of the charge-out rates for consent processing staff. This will determine what actual overhead costs should be added to a staff member's base salary cost.
Decisions need to be made regarding the amount of staff management time recovered from consent applicants.
Time spent on general staff or team management activities are more akin to 'overheads' and are not directly occasioned by any one applicant. Such time should not be charged for. However, management time directly related to a specific consent, such as peer reviewing or checking a s42 report, is occasioned by an applicant and will often be of direct benefit to them. Such costs should be recovered.
Use of standard or council-wide salary multipliers
Some councils use charge-out rates solely based on standard or council wide multipliers of base salary costs. These multipliers typically range in value from around 1.8 to 2.9. It is not good practice to use this standard approach to setting charge-out rates for consents staff. The charge-out rate (and thence multiplier) should be determined on the basis of actual salary costs together with any overheads that meet the requirements of s36(4)(b). In that regard, the Environment Court stated in Wightman v Waipa DC A062/97 in relation to a council employee planning witness:
“The witness deposed that she understood the charge for her time at $50 per hour was intended to represent 2.1 times her salary, though she was not sure about that...we observe that a charge for planner's time at double the rate of her annual salary does not represent an actual cost, and we have no evidence on which to judge whether it is reasonable.”
If a multiplier approach to determine consent staff charge-out rates is used it should be a 'consent activity' specific value based on a robust determination of appropriate overhead costs that comply with s36(4). Caselaw supports this practice and the Environment Court stated in Harrison v Northland Regional Council W67/2003 that “it has long been accepted that consent authorities may apply on-cost multipliers to basic salary costs to cover the costs of a consents department”.
Discount Regulations and Section 357B objections
The Resource Management (Discount on Administrative Charges) Regulations 2010 and s36AA introduces a discount policy for late consent processing. The Discount Regulations require a discount of one percent per day for every day a resource consent is not processed within the timeframes up to a maximum of 50 days. Council may also adopt their own discount provided it is more generous than the Discount Regulations.
Section 357B of the Act also provides for consent applicants to lodge objections to additional charges (charges over and above fixed initial deposit charges) levied by councils under s36(5) in relation to resource consents in general or 149ZD(1) in relation to applications for proposals of national significance. Section 357B objection rights also apply to additional charges required by the EPA or Minister under s149ZD(2) to (4) with respect to applications to the EPA and costs incurred in relation to a board of inquiry.
It is good practice to use independent commissioners to hear and decide on s357B objections as opposed to council officers and councillors.
Decisions on s357B objections should be clearly based on the criteria set out in s36AAA and those criteria should be referenced in the written decision.
For s357 [to s357D] objections council’s obligations are more formal and are of a quasi judicial nature.
Charging for section 357 objections
General practice is that councils do not charge applicants to process s357 objections to resource consents. The councils function in considering an objection is not generally within the scope of s36(1)(b), (i.e. receiving, processing and granting of resource consents) or any other part of s36(1).
In spite of this, it may be possible for councils to charge for processing s357 objections if the requirements of s36 are met. Overall, given the situation is not clear, councils that intend to fix charges for objections should seek legal advice on the legality of those charges. The exception to this is the costs associated with the objection being heard and decided by a hearings commissioner (if requested by the objector), which can now be charged under s36(1)(af) RMA.
Section 127 applications and section 128 reviews
The Courts have determined that a broad view should be taken of the parts of the consent activity that are able to be charged for. In terms of s127 applications the matter is clear. The consent holder has, of their own volition, lodged an application and has occasioned the council to respond to that application. This is no different from a normal consent application lodged under s88 and the council's processing costs should be fully recovered.
Section 36(1)(cb) allows councils to charge for the undertaking of s128 reviews of consent conditions when:
such reviews are requested by the consent holder, or at times specified in the consent (s128(1)(a))
the supporting information for the original application was materially deficient (s128(1)(c))
the review has been required by an Order from the Court following a conviction for an offence that involved contravention of consent (s128(2)).
However, s36(1)(cb) does not provide for charging for reviews under s128(1)(b), (ba) or (bb), as these reviews are initiated in response to rules in operative regional plans or national environmental standards. In these cases the need for a review has not been occasioned by the consent holder, but by the council or central government. In such cases, it is unlikely the outcome of the review will be of more benefit to the consent holder compared to the community as a whole. Consequently, the council should bear the cost of such reviews.
The following approach to s128 reviews should be adopted:
the cost of processing applications under s127 and consent reviews initiated under either s128(1)(a)(i) to (iii), s128(1)(c) or s128(2) should be cost recovered from the consent holder in the same manner as primary consent applications received under s88
the cost of processing consent reviews initiated under s128(1)(b), (ba) or (bb) must be solely borne by the council.