The Environment Court has overturned council commissioners’ rejection of Bunnings Ltd’s application for consent for a trade supplier warehouse on the Frankton Flats outside Queenstown.
The 69-page decision issued on Friday:
- goes into great detail on contentious planning issues
- raises serious questions about how industrial land supply & availability are counted, and
- questioned a council planning witness’s change in opinion after not disclosing that he’d originally supported the proposal.
Environment Judge Jon Jackson, Environment Commissioner Don Bunting & Deputy Environment Commissioner James Baines cancelled the Queenstown Lakes District Council decision on Bunnings’ application for consent for a trade supplier warehouse at 148-150 Frankton-Ladies Mile Highway, State Highway 6, granted consent subject to final checking and reserved costs.
Bunnings applied in April 2017 to develop the 1.62ha site, which council-appointed commissioners rejected in March 2018.
Bunnings sought consent for an 8100m² warehouse, including yards.
The court said the Frankton Flats area – the gateway to Queenstown – was undergoing development & urbanisation, with a variety of commercial, retail & light industrial developments either constructed, being built or recently consented.
These include a Resene ColorShop, an Armstrong Motor Group showroom & service hub, Mitre 10 Mega, Placemakers & Pak’n Save.
Bunnings had changed its design to use recessive colours & a natural palette of construction materials.
Judge Jackson noted: “By the time the appeal came to hearing, the disagreements between the parties over design, amenity & transport issues had resolved, so the only disputes were related to wider economic & planning issues. That is interesting because the hearing commissioners decided the latter in favour of Bunnings but turned the proposal down because of its effects on amenities & on the landscape.
Principal issue concerned industrial land supply
The principal issue for the court was: “What is the adverse effect of the proposal ‘on the supply of industrially zoned land in Queenstown’?”
Planners & economists in joint witness statements all agreed the development was classified as a retail activity, and that there were likely to be no more than minor retail impacts & distribution effects on any existing centre.
Benefits would include more trade supply, competitive pricing & more jobs.
The policy in the operative district plan includes provision for expanding Frankton’s industrial zone, “away from State Highway 6 so protecting & enhancing the open space & rural landscape approach to Frankton & Queenstown”.
However, Judge Jackson said this sat uncomfortably with the site’s zoning.
Judge Jackson said there was a tendency in district plans – as in the operative & proposed plans in Queenstown – to conflate land zoned industrial with supply: “That is a false equivalence….. Many other factors, usually reflected in the price at which particular land is put on the market, come into play when establishing supply as shown on a supply curve.”
Efficient use: Judge questions the definitions
Council planner Erin Stagg considered the Bunnings proposal would reduce land available for industrial activities and the council would therefore not meet the community’s reasonably foreseeable needs.
One council policy is to restrict establishment in industrial areas of activities likely to result in reverse sensitivity effects or inefficient use of industrial and or infrastructure.
The judge: “This policy is definitely incomplete &/or uncertain: what is an inefficient use of industrial land? In particular, is it ‘inefficient’ to use land zoned industrial for some other business activity if the land owner can obtain higher rents for it? It appears not, provided there is zoned capacity elsewhere in the region (or market) and there is no externality which needs to be taken into account and which, if uncosted, would lead to inefficiency.”
Under the council’s proposed district plan, the council intends to rezone 27.5ha nearby at Coneburn from rural to industrial.
A business development capacity assessment by Market Economics Ltd in 2017 concluded there was sufficient supply in the short, medium & long terms. In an alternative scenario assuming flexible multi-use zones won’t be used for industrial activity, the assessment concluded long-term supply would be insufficient.
How much that matters wasn’t clear, because the council now has to monitor supply every 3 years under the national policy statement on urban development capacity.
The council count
In evidence for the council, Market Economics associate director, economic modeller & land use analyst Derek Foy allocated 15.5ha of the 43.6ha Wakatipu vacant industrial and supply to non-industrial uses, based on highest value land use. Mr Foy then removed the 10.6ha mixed use zone (no-structure plan area) from his industrial estimate for a net 17.5ha because the landowner had told Queenstown Airport he didn’t intend to use the land for that purpose – reinforced by the airport’s masterplan, which had been abandoned.
After discounting a number of other areas, Mr Foy got available supply down to 10.2ha. Excluding the Bunnings site, he got it down to 8.5ha.
In contrast, planner Tim Heath for Bunnings estimated available industrial land at 56.8ha, plus 37.8ha at Wanaka.
“Carping criticism” becomes “You have a point”
Land across State Highway 6 from the Bunnings site is zoned business mixed use, and Mr Foy discounted its use for industrial activities, whereas Mr Heath considered it had potential for light industry.
Judge Jackson said the court at first ignored Mr Heath’s criticism as carping, but then saw some merit in it: “… the synergistic potential for light industrial activities to establish in mixed use zones should not be underestimated.”
Excluding Coneburn from the operative district plan supply, the court found Bunnings’ retail use would reduce available supply by 5.5%, a less than minor effect.
Mr Heath also told Commissioner Bunting that lower land prices at Cromwell could make it a development target for users of larger sites.
Judge Jackson said the court had found that Mr Foy incorrectly calculated the amount of industrial and which might be supplied, at unknown prices, and preferred Mr Heath’s calculations for 3 reasons:
- It preferred the evidence & expert opinion for Bunnings of Marketplace NZ Ltd director Mark Tansley, it had doubts about Mr Foy’s independence and, third, “We consider the council’s approach is unfair & unprincipled”.
Judge Jackson said in the decision: “It is not appropriate to zone land as industrial but then to say certain areas cannot be counted as industrial because it may be used for other purposes. While the Resource Management Act says nothing specific about the priority of competing claims to use a natural resource… there is a principle that first come is usually first served. That principle would be vitiated if the first comer at any point can be effectively turned down because other applications may be made (on other land), unless a district plan expressly states that to be the case.”
While Mr Foy told the court he hadn’t changed his position from what he wrote in the business development capacity assessment, it emerged in cross-examination that he’d supported the Bunnings proposal in his first advice to council planner Erin Stagg: “In my opinion, there is only one reason why the application may be declined on retail economic grounds, and that is that the application would make it more difficult for the council to meet its national policy statement obligations in regard to providing adequate industrial land.
“However, for the following reasons I recommend that the application be approved on retail economic grounds because:
- The extent to which the application worsens any undersupply of industrial land will be limited by virtue of taking up only around half a year’s growth of industrial land demand
- The council’s national policy statement obligations are unlikely to be met with or without the Bunnings [land] being developed
- There would, even with the Bunnings [land], be in the order of a decade of industrial land available in Queenstown.”
The judge said there was no harm in an expert changing his opinion for good reason, but Mr Foy hadn’t disclosed his original assessment, and this “throws some doubt on the objectivity & independence of his evidence”.
In turn, Ms Stagg’s evidence relied on Mr Foy’s.
Court rejects “advocacy” claim
In return, the council submitted that Mr Heath’s evidence “borders on advocacy”. Judge Jackson said the court didn’t accept that: “We consider his evidence should be given considerably more weight than that of Mr Foy in this case.”
After all that, the court concluded the Bunnings proposal would “only” reduce the quantity of industrial land capacity by 16% on Mr Foy’s calculations “which is still a minor effect in the circumstances”.
Just a big shop?
The court then examined whether the Bunnings proposal was contrary to the objectives & policies of the council’s operative district plan, and asked: “Is the Bunnings store just a big shop?… Or, at least in part, in a category of its own, not covered by the plan?”
Mr Heath said it wasn’t a retail store in commercial terms but a trade store, with a range of building supply & construction trade products. In his assessments for home improvement & building supply stores around the country over the last decade, in the majority of cases the trade activity contribution to total store sales was over 50%, and particularly so in high growth areas.
Mr Foy, on the other hand, visited a Bunnings store, observed “a large number of non-trade customers” and considered Bunnings “more a retail store than a trade store”.
Judge Jackson: “Mr Heath observed that Mr Foy appears to be able to customer profile and determine a ‘trade customer’ from the ‘general public customer’ simply by looking at them. We [the court] agree that is a casual & unscientific method of operating.”
In addition, Judge Jackson noted evidence that many trade customers ordered by phone or online and drove through to pick up orders or had them delivered.
Precedent effect versus plan integrity
While the council argued precedent effect if the Bunnings store was established, the court said the real issue was plan integrity. The court accepted that a large part of the business “is not retail”.
Evidence for Bunnings was that it carried 36,000 product lines for the home improvement, do-it-yourself & trade markets, didn’t operate centralised warehouses but effectively combined retail with industrial warehousing of stock. For the Queenstown proposal, the warehouse & bulk goods would represent over half the store footprint.
The court accepted that the proposal was more trade supply/industrial than retail, both by floorplan & sales.
Overall, the court found Bunnings’ proposal would have “an indirect & minor effect” on both the industrial land development capacity & the supply of industrial land in the district. The court accepted the proposal wouldn’t implement all the policies of the Frankton Flats business zone under either the operative or proposed plan, but would implement many of them, and it was consistent with the national policy statement on urban development capacity
Judge Jackson said amended designs had met the original hearing commissioners’ concerns and consent should be granted.
Attribution: Court decision.