Part of that response is the first draft of the proposed National Policy Statement on Urban Development Capacity (pNPS) released on 2 June 2016.
It is not yet operative but has simply been released for consultation. The pNPS aims to provide direction to decision makers under the Resource Management Act 1991 (RMA) on urban planning, with a particular focus on ensuring that planning enables development through providing sufficient development capacity for housing and businesses, both in the short (3 years), medium (10 years) and longer term (30 years).
An NPS has teeth
It is what is known as a “higher order” document. It sits above regional and city plans and by virtue of section 55 of the RMA, local authorities are required to amend their planning documents to include specific objectives or policies where directed to do so by the NPS, together with making all other amendments in their plans required to give effect to the NPS. In this way, an NPS can stand on its own (by publishing in the Gazette). However, in the case of this particular pNPS, accompanying amendments to the RMA are also proposed. As part of the Resource Legislation Amendment Bill 2015, it is proposed to include references to “development capacity” to strengthen the effect of the pNPS.
The language in the pNPS is, at times, strongly directive, which, if retained, will make it difficult for local authorities to fudge compliance with it as a higher order document. As currently drafted, it will require almost all local authorities and regional councils to make changes to their planning documents as well as significantly increasing their monitoring and research functions in respect of household and business land demand. The direction for local authorities to ensure/enable sufficient development capacity is supplemented by the requirement for local authorities to maintain and update accurate data to inform and support how it achieves those targets.
The pNPS uses four categories of objectives and policies to “enable urban development” and “reduce the barriers to increasing housing supply”. The four categories and the focus of their application are set out in further detail in the tables below.
The first category sets out the outcomes for decision making by all local authorities. These generally relate to and supplement a requirement on local authorities to provide at all times sufficient residential and business development capacity in the short (3 years), medium (10 years) and long terms (30 years). The terms in bold are defined quite comprehensively, with “development capacity” incorporating the term “demand” which is also defined. Demand refers to the short, medium and long term, having particular regard to:
- Total numbers of dwellings required to meet projected household growth;
- Demand for different types of dwellings;
- Demand for different locations within the urban area; and
- The demand for different price points.
The reference to demand relating to different price points will be of interest given the significant media attention recently towards the lack of housing and particularly affordable housing for the most vulnerable. While there is no explicit direction in the pNPS relating to the provision of affordable housing, the Government contemplates that the pNPS will result in the reduction of consenting barriers and the subsequent increase of housing supply to assist in driving down the price of housing (in conjunction with other measures).
The second category relates to evidence and monitoring to support decision making and the third category contains directions relating to co-ordination of evidence and implementation between local authorities and infrastructure providers. The fourth category is responsive planning. Some of the strongest language is used in the fourth category with the objectives being to ensure that planning decisions enable urban development and ensure that in the short and medium terms, local authorities adapt and respond to market activity. The policies require local authorities to consider specific measures at their disposal under the RMA to address development capacity where a short-fall is anticipated by the assessments the local authorities are required to carry out. While the choice of which mechanism the local authorities use is ultimately theirs, the pNPS requires active consideration, in some instances, of specific mechanisms under the RMA.
The pNPS also adopts a tiered approach to the application of the policies in the four categories, depending on whether the local authority has a Medium Growth Urban Area or a High Growth Urban Area within their jurisdiction. These urban areas are defined by reference to Statistics New Zealand data included in the pNPS. The tiered approach ensures that the centres experiencing the highest levels of growth are subject to the more stringent requirements under the pNPS particularly in relation to target setting and responsive planning. Currently there are 5 urban areas which would qualify as High Growth Urban Areas – Auckland, Tauranga, Hamilton, Christchurch and Queenstown.
The Government is proposing a package of non-statutory guidance to assist local authorities in implementing the pNPS. The requirement to provide development capacity to meet demand in 3, 10 and 30 years time, and to enable competitive operation of the land and development markets are two examples of the more challenging aspects of this pNPS which will require further clarification. There will undoubtedly be instances where increasing development capacity in high growth areas facing high demand will not be possible (i.e. constraint on land because of existing development), or at least, incapable of being addressed under the RMA. It must be remembered that neither central government nor local government have particularly large landholdings in the high growth area and as such providing sufficient land depends heavily on the private sector. If holders of rural land are not interested in conversion to business or residential it is difficult to see whether the courts will be prepared to uphold rezoning of their land anyway In those instances, there is a question of whether local authorities and decision makers will be able to comply with the pNPS.
The Government has consistently flagged its intentions to develop and use National Policy Statements to address some of the broader concerns with the RMA. This pNPS, as currently drafted, will provide the development community with a strong tool to challenge Council decisions to refuse applications for new housing developments or the intensification of existing developments. The quality of the information gathered and used by the local authorities to make decisions as required under the pNPS and how local authorities are responding to short-falls in development capacity will likely also be subject to challenge.
The pNPS is scheduled to become operative in October 2016. A number of requirements to develop a more comprehensive evidence base and setting minimum targets must be implemented within three years of the pNPS becoming operative. Consultation on the pNPS is now open with submissions closing at 5:00pm on Friday 15 July 2016.
This is a significant document – perhaps one of the most significant National Policy Statements to have been issued under the RMA.
Lauren Semple is a partner at Greenwood Roche, project lawyers. She is based in Christchurch. You can contact her here.
6 Comments
Fudging is easy, it has already occurred.
Auckland has created an over supply of land and restricted urban development. Large areas supplied at Auckland's exurban towns provides a planned over supply of land. Meanwhile suburban development is severely curtailed and the resulting high Auckland city land costs restrict urban development.
In local government we don't call it "fudging" we call it "compliance". The councils will tick all the boxes if they have to but all it will achieve is that councils get very good at ticking the boxes. Whether the NPS will have any effect in real life is very, very uncertain. It is worth noting that Auckland Council and LGNZ have declared that councils are already compliant with these directives.
I drove past a herd of cows grazing in central Christchurch today. They are grazing a massive block of land in the heart of inner city residential land that has been empty for years since the Christchurch MED closed down its depot on that site (before the earthquakes). No idea why the site remains undeveloped but it's a lovely reminder of the gulf that exists between real life and what's in plans.
Before the NPS has any measurable impact on the speed of building new dwellings there are lots of things that can derail it.
Firstly as Ms Semple says and backed up by my herd of cows: declaring that land can be built on does not force anyone to do so.
Secondly we have a long way to go before we even know whether the pNPS will survive in its current form. What we are waiting for are the public law experts like Mai Chen or Andrew Geddis to go through it in detail and offer an opinion on its legality. Last year Nick Smith tried to pull a legal swifty with respect to disposal of Crown land in Auckland. That scheme fell through with the first threat of court action to test its legality. No reason why this should be any different. I am particularly interested in the requirement for councils to commit to providing core network infrastructure to the newly zoned land. It just doesn't feel right in the context of the RMA. Not only is Smith jamming some LGA stuff into this pNPS and hoping to get away with it but actually councils aren't currently required to provide that infrastructure to anyone; it's just a convention.
Finally it could be a grand waste of time if it doesn't work.
The intent will be undermined by councils complying with the letter but ignoring the intent. Auckland Council have a 30 year development plan in place that the government have signed onto. Admittedly councils tend to use non-statutory development strategies to give future guidance but it is not a big matter to formalise those strategies by putting them into district plans. And they already have a statutory obligation under the LGA to have a 30 year infrastructure strategy in place. As for the monitoring requirement: think more staff funded by your rates to help put the fig leaf over what they were going to do anyway.
While Ms Semple is right that the development community will have more tools to challenge council decisions remember that it will take an individual developer to take a council to court, by themselves, to find out whether the NPS is being complied with. The government will have no right to challenge a council or take them to court. And on a related note this government has a long history of not following up. It is unlikely that anyone will go around the councils checking on compliance let alone doing anything about it. Our councils know this.
Most importantly this pNPS doesn't solve the real problem. Our problem is not the total supply of land over time it is the nimbleness with which we respond to changing demand. By further entrenching the current system of carefully staged forward planning this NPS most likely would make the housing crisis worse.
In Auckland Super City the RUB provides land such that Warkworth grows 150%, Silverdale 50%, Kumeu 200%, Pukekohe 80%, but Auckland City only Auckland grows 7%. As you can see Auckland is much restricted and this makes land prices in Auckland go up. A restricted 7% only growth of Auckland City is a clear indication that buying Auckland land is the best investment around.
Increasing the rate at which this plan is carried out (as the NPS proposes) will not make any difference, because it is a bad plan.
Does it mean that supply is the only solution.
Please read below article which many so called experts are missing n falling to govt smoke screen to do nothing but to try n show thst are serious n foing something. However reality is total different.
http://m.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=11649…
" The direction for local authorities to ensure/enable sufficient development capacity is supplemented by the requirement for local authorities to maintain and update accurate data to inform and support how it achieves those targets."
In Lauren's commentary, I believe the quoted phrase is the key.
TLA's, hitherto completely unschooled in any vestige of economic theory as it relates to property development and markets, are going to have to learn it, apply it, and be prepared to defend it in court.
TLA's are innocent of the basic Time=Money equation. Consider that application for building consent, languishing in their in-box, while they think of the latest 'question' to ask you and thus stop the 20-day clock, and ask - whose money is on the line here?
TLA's are an unregulated local monopoly: can you, for example, hire a contractor (as one can in Queensland) to certify your proposal? Thought not.
In forcing TLA's to confront the five core economic aspects of building and development - total elapsed time, WACC, material costs, land costs, and regulatory costs - as a pre-condition to complying with the NPS, the Government is effectively putting them through an ECON101 boot camp. And as the grades thus handed out will be subject to legal challenge, the usual 'attendance certificate = a full pass' ain't gonna cut it.
I expect anguished cries from TLA's to the effect that, as they are almost totally economically clueless at present, there will be much time, much ratepayer-funded costs, and gosh, all this is in Election Year! - needed to get them to the point the NPS demands.
Bring popcorn.
All This is nothing but propaganda by the government to spread the lie that supply is the only solution. Government has something to hide otherwise why would they not act and put a comma if no full stop to the growing house bubble. Government is not at all interested in taking real step to atleast try and stop but will use media and experts to spread that supply is the only thing that would help. How wrong as now everyon understand as to what the government is upto though the so called experts try to put a positive seal to government lie.
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