The Government released a discussion document on introducing urban development authorities yesterday, as recommended last year by the Productivity Commission.
Consultation on the document closes on 19 May.
Building & Construction Minister Nick Smith said the proposed legislation would fast-track the redevelopment & regeneration of urban areas to better meet housing & commercial needs.
Under funding & financing, the discussion document, issued by the Ministry of Business, Innovation & Employment, proposes that an urban development authority will be able to:
- buy, sell & lease land & buildings in a development project area
- receive & issue grants from the Crown & others, and
- borrow from private lenders or banks, issue bonds or shares, create joint venture or co-investment arrangements, and enter into funding contracts.
Outside the ambit of this proposal are:
- the planning & consenting system as a whole, and
- any ability for urban development authorities to access powers under the Building Act & Building Code.
What it could (but probably won’t) do
The greatest service the Government could do to the country would be to cut out the cost escalation from land acquisition through preparation of a serviced site. In the normal course of subdivision, a developer will factor in various elements of risk and returns on various stages, starting with a return on land purchase. Changing the way those elements are priced could bring dramatic change to the eventual cost of a house or, for an urban development authority, a regeneration project.
This document, however, appears to stick with the norm – the cost-plus mentality – instead of presenting options on finance.
It says the Government proposes that “the costs of developing new infrastructure be passed on to the eventual purchasers of individual properties and to any existing properties that benefit from the upgraded services within the development project area, either in the sale price or through a separate, targeted, property-based infrastructure charge.”
Looking for comparisons, it says: “Apart from taxation powers, the ability to acquire, repackage & sell or lease land is another method used overseas to pay for the infrastructure required to support the development. The ability to use land as security to borrow or the ability to pre-sell sections or building space can release capital to pay for infrastructure without necessarily having to take on large amounts of debt. Consequently, an urban development authority needs access to powers to independently fund new, and to upgrade existing, infrastructure systems & services, either directly or under contract with others.”
It’s about speed – or catchup
The Government proposal is about speed, to “allow nationally or locally significant urban development projects to be built more quickly. It is proposing a toolkit of enabling powers that could be used to streamline & speed up particular largescale projects, such as suburb-wide regeneration.
“Only land that is already within an urban area, or that is sufficiently close to an urban area that it may in future service that area, will be affected by the proposed legislation.
“The projects would be planned & facilitated by publicly controlled urban development authorities, potentially in partnership with private companies &/or landowners.
“The Government would decide which enabling powers could be used for particular projects; not all powers would be granted for all projects. Central government & territorial authorities would have to work together to identify & agree on urban development projects and would consult the public before granting the relevant enabling powers.”
The powers potentially available for an urban development project would relate to:
- Land – powers to assemble parcels of land, including existing compulsory acquisition powers under the Public Works Act
- Planning & resource consenting – powers to override existing & proposed district plans & regional plans, and streamlined consenting processes
- Infrastructure – powers to plan & build infrastructure such as roads, water pipes & reserves
- Funding – powers to buy, sell & lease land & buildings; powers to borrow to fund infrastructure; and powers to levy charges to cover infrastructure costs.
An urban development authority would not have building consenting powers. None of the proposed powers would override any Treaty of Waitangi settlements. National environmental standards would also have to be met. The relevant powers would only apply to a particular project and would expire when the project is completed.
For Auckland, Dr Smith turned the proposal into part of the series of Government measures to get more housing. Auckland Council, though, has already taken a measured approach to the wider context of urban regeneration, starting in 2012 with the formation (with the Government) of the Tamaki urban redevelopment company. Then, in 2014, deciding to combine its successful waterfront development organisation with the council arm that had been tasked with rationalising the council’s own property holdings.
The result of that is Panuku Development Auckland, an organisation which still does the rationalising, and has public works well under way in the Wynyard Quarter and is in charge of organising land development in that precinct, where it holds the land titles.
But Panuku has gone on to greater things, tasked with a programme of urban regeneration (see the links below).
Dr Smith put the emphasis of the new proposal this way: “New Zealand needs urban development authority legislation to enable faster & better quality regeneration in our major cities. These new authorities need the power to assemble parcels of land, develop site-specific plans, reconfigure infrastructure and to construct a mix of public & private buildings to create vibrant hubs for modern urban living.
“These reforms are part of the solution to Auckland’s growth pressures over housing & infrastructure. Urban development authorities would enable major redevelopment projects like those proposed or under way in areas such as Hobsonville, Tamaki, Three Kings & Northcote to occur 3-5 years faster.
“The international experience in cities like London, Melbourne, Sydney, Toronto & Singapore is that urban development authorities can create vibrant new suburbs with greater gains for housing, jobs & amenities than through usual incremental, piecemeal redevelopment.
“The key to the success of urban development authorities is in how they interact with councils & businesses. We are proposing a model of urban development authorities which requires the support of both central & local government, and one that maximises the role of the private sector in development.
“This proposal for urban development authorities was recommended by the Productivity Commission. It is part of the Government’s wider range of reforms to grow housing supply and will complement initiatives such as the Housing Infrastructure Fund, reforms to the Resource Management Act, the national policy statement on urban development capacity, the Crown land programme and the KiwiSaver HomeStart scheme.
“The growth of New Zealand cities has historically been dominated by new greenfield developments on the perimeter of our cities. This reform is about providing new tools to enable redevelopment of existing areas in cities like Auckland & Wellington in a way that provides more housing, better infrastructure and a stronger community.”
MBIE, 14 February 2017: Urban development authorities, draft discussion document
Productivity Commission, 19 August 2016:
What would a high-performing planning system look like?
Urban planning: What’s broken and how to fix it
Better urban planning, draft report
Related story today:
Steamrolling & funding
22 August 2016: Productivity Commission urban planning report blunt, measured & perceptive
Commission sees government change as essential for urban planning
Commission says everything English wanted on planning
13 July 2016: Deal on supermarket land opens way for Old Papatoetoe mall revamp
27 June 2016: Institute suggests competing urban development authorities
16 May 2016: Council & Government join forces to redevelop Northcote land
9 March 2016: Takapuna & Northcote first up for revitalisation
6 December 2015: How Panuku proposes to lead transformation of Auckland
4 December 2015: Manukau & Onehunga earmarked for transformation
28 November 2014: Slim council majorities say no to caps & funding referendum, urban development authority supported
20 June 2014: Council property company’s greater development role approved – but it won’t be a development company
18 June 2014: Council property arm proposes expanded housing & regeneration roles
25 July 2012: Government & council agree to form Tamaki urban redevelopment company
Attribution: Discussion document, ministerial release.