Council considers the use of the Development Contributions mechanism under the Local Government Act 2002 to provide a fair more robust means of recovering the cost of growth as compared to charging ratepayers. The purpose of the development contributions is to recover an appropriate proportion of the costs of growth-related capital expenditures from participants in the property development process, rather than from general rates or any other indirect funding source. The full policy is included in the LTP. Charges are calculated for each catchment and each activity on the basis of: • The expected scale and timing of capital works required to service growth. • Expected rate and timing of developments for which the works are required. The drivers for capital works projects are categorised into growth, improvement/maintenance of the level of service and renewal of existing capability. The costs and source of funding the work is proportioned accordingly. The Marlborough development contributions policy is currently under review following the changes introduced in the Local Government 2002 Amendment Act 2014 that was enacted in August 2014. The review will also take into consideration the latest growth projections for the district. 5.3 Valuation Forecasts 5.3.1 Asset Valuation The asset valuation has been undertaken annually since 2008. The asset register of stormwater reticulation consists of nearly 7,000 pipes with individual age, length, diameter and life expectancy characteristics. A data set has been collected of the outturn costs of sewer and stormwater pipeline renewal contracts. From this data set a cost curve has been established and unit rates for pipelaying estimated. The rates are reviewed and updated each year and used in the re-valuation. A summary of recent valuations is shown in Table 10. 5.3.2 Depreciation Methodology The Gross Replacement Cost is the sum of the replacement costs of each of the components if it is replicated with modern equivalent asset and recognises the use of modern materials, standards and installation techniques to replicate the existing system. The Depreciated Replacement Cost distributes the value of the asset across its useful life. “The way in which depreciation is allocated over the life of the asset must reflect the pattern in which the assets’ future economic benefits are expected to be consumed by the entity.” (NZIAS16). In recognition of the above straight line depreciation is considered appropriate for the assets included in this valuation. The Depreciated Replacement Cost has therefore been calculated by: • Depreciated Replacement Cost = Replacement Cost x (Remaining Life/Life Expectancy). • The Annual Depreciation (Decline in Service Potential) spreads the current value of the asset across the remaining life of the asset. Depreciated Replacement Cost /Remaining Life. Page 55