|
|
Home
| Databases
| WorldLII
| Search
| Feedback
New Zealand Journal of Environmental Law |
Last Updated: 31 January 2023
Facilitating the Provision of Affordable Housing:
An Analysis of the Affordable Housing: Enabling Territorial Authorities Act 2008
Louise Cooney*
A decrease in housing affordability in New Zealand has prompted the recent enactment of the Affordable Housing: Enabling Territorial Authorities Act 2008. The Act provides local government with a mandate to use the planning system to facilitate the provision of affordable housing. This paper discusses territorial authorities’ ability under the Act to regulate land use and to offer incentives to developers to increase the supply of affordable housing, and also considers comparable United Kingdom legislation and policy guidance. It is concluded that the Act will assist those territorial authorities that choose to use the powers provided to address housing affordability. However, it is acknowledged that implementation costs, intraregional variation in territorial authorities’ uptake of the powers, and the ability of New Zealand’s non- profit sector to capitalise on development opportunities may affect the utility of the powers provided by the Act.
1. INTRODUCTION
Home ownership is an important tenet for many New Zealanders. However, home ownership rates have been decreasing since their peak in 1986, when
*LLB, BSc (Victoria University of Wellington). This paper was originally prepared for The University of Auckland’s postgraduate Resource Management Law course.
New Zealand Journal of Environmental Law
per cent.5The government has attempted to address the issue of declining housing affordability, as it believes home ownership can promote both family and community stability, and can provide a buffer against poverty.6 Affordable housing is also “important for people’s wellbeing”, as high housing costs can impact on households’ ability to meet their basic needs such as food and medical care.7
The Affordable Housing: Enabling Territorial Authorities Act 2008 (“the Act”) seeks to increase the supply of affordable housing by providing terri- torial authorities with the legislative means to require an affordable housing contribution from a developer undertaking development activity.8 This is achieved through the planning system, by regulating land use, and by offering development incentives. Land use is regulated by the following “planning tools”:9
October 2008).
Affordable Housing 243
Territorial authorities may also offer incentives, including:10
This research paper begins by considering the background to the legal sanctioning of these planning tools and development incentives, followed by an outline of the Act which permits their use. Since the legislation’s development was largely informed by overseas experiences, the paper will then outline how legislation and policy in the United Kingdom permits its planning system to facilitate the provision of affordable housing. Taking into account both the Act and the United Kingdom’s equivalent legislation and policies, the potential effectiveness of planning tools and incentives will be considered in the New Zealand context. The Act’s alignment with both the Resource Management Act 1991 (“RMA”) and the Local Government Act 2002 (“LGA”) will then be considered, following a discussion of the decision to enact special purpose legislation. The final section of the paper will consider initiatives additional to this Act, which currently seek to address the issue of housing affordability, as well as potential future initiatives.
10 Ibid, at 22–23.
New Zealand Journal of Environmental Law
2. BACKGROUND
Both local and central government discussed the utility, and the legal ability, to apply planning tools and development incentives for affordable housing aims prior to this enactment, as outlined below.
2.1 Selected Local Government Initiatives
In February 2001 a report prepared for Auckland City Council considered the use of various policy mechanisms to ensure the provision of affordable and low-cost housing.11 In particular, “land use” techniques such as inclusionary zoning and density bonuses were discussed, as were financial incentives, and techniques for retaining affordable housing.12
In March 2003 the Auckland Regional Council released the Auckland Regional Affordable Housing Strategy. This document discussed the promotion of affordable housing through incentives such as density bonuses, streamlining the planning processes, reducing financial contributions, guaranteeing loans for social housing developments, and providing land to the third sector.13 Inclusionary zoning was also considered, but its legality was questioned:14
Auckland City Council has undertaken some investigation of inclusionary zoning as a technique and received a legal opinion to the effect that it would be possible to construct a justification under the Resource Management Act. Legal challenge would be almost inevitable, however, and the justification would have to be very robust to withstand this challenge.
Queenstown Lakes District Council commissioned a report on the nature and scale of housing affordability issues in the district, which was presented in June 2004.15 This report was the first in a four-stage project for developing a
11 Hill & Mead, supra note 9. 12 Ibid, at 22–23.
The “third sector” is “not-for-profit, non-governmental community groups and organi- sations including iwi and Ma¯ori community groups”, as defined in Housing New Zealand Corporation, Building the Future: The New Zealand Housing Strategy (May 2005) 76.
Affordable Housing 245
housing affordability strategy, with the second-stage report identifying planning incentives and development contributions for affordable housing as possible options.16 The stage three report of February 2005 discussed the potential for introducing “inclusionary zoning or bonus type provisions” into the district plan.17 The Queenstown Lakes District Affordable Housing Strategy was not adopted until June 2005,18 but Queenstown Lakes District Council had already negotiated from the landowner of the Jacks Point development a contribution to affordable housing of 5 per cent of the development’s value “in the form of land, housing and cash”.19 Central government referred to this negotiated agreement when it signalled its interest in planning instruments in an April 2004 discussion document, as discussed further below.
2.2 Central Government Initiatives
Central government formally conveyed the potential use of planning tools for providing affordable housing in the April 2004 discussion document entitled Building the Future: Towards a New Zealand Housing Strategy.20 The development of the New Zealand Housing Strategy was intended to “provide an overall direction for housing for the next 10 years”, with the improvement of housing assistance and affordability proposed.21
The ability of local government to influence the supply of affordable housing through planning mechanisms was discussed in the document, with reference to overseas use of such tools. Queenstown Lakes District Council’s negotiation of an affordable housing contribution was provided as a local example:22
Lakes District (Auckland, June 2004), at <http://www.qldc.govt.nz/Documents/ ContentDocuments/Affordable%20Housing%20Final%20Report.pdf> (accessed 22 October 2008).
Housing%20Stage%203%20report.pdf > (accessed 22 October 2008).
New Zealand Journal of Environmental Law
The Queenstown Lakes District Council has already entered into an agreement with the developer of the Jacks Point area, to set aside land for affordable housing provision.
The document then included a proposal to “[t]rial the use of planning and zoning instruments, such as inclusionary zoning and developer incentives” to increase the affordable housing supply for rental and purchase.23
Following on from the discussion document, Building the Future: The New Zealand Housing Strategy was released in May 2005.24 The document stated:25
... there is potential for planning mechanisms like inclusionary zoning to address local shortages of affordable housing, by requiring developers to make some provision for affordable housing.
The role of local government in managing housing growth is critical. Central government will work with local government to promote optimum solutions.
The strategy also noted the potential for waiving or reducing development contributions, although this was in relation to promoting social housing outcomes.26 As a medium-term (three-to-five-year) initiative, the strategy proposed to “[t]rial the use of planning and zoning instruments, such as inclusionary zoning and developer incentives, to increase the supply of affordable housing in high pressure areas”.27
By 30 June 2006 central government had obtained legal advice on “possible mechanisms open to territorial authorities wanting to encourage affordable housing”.28 Presentations made at the National Summit on Affordable Housing held in Wellington on 30 October 2006 evidence further discussions of using planning tools to increase the supply of affordable housing.29 Chris Carter, who was then Minister of Housing, addressed the summit and identified five categories of planning mechanism for potential local government use.30 These
Affordable Housing 247
were: inclusionary zoning, financial contributions by developers, density bonuses, linkage fees, and planning incentives (such as waiving consent fees). Carter stated that if local government decided to use such planning mechanisms, “central government may need to review what needs to be done to the regulatory framework to facilitate such an approach”.31
2.3 Development of the Affordable Housing: Enabling Territorial Authorities Bill
The Affordable Housing: Enabling Territorial Authorities Bill 2007 (“the Bill”) was developed by Housing New Zealand Corporation (“HNZC”) “in collaboration with the Department of Internal Affairs and the Ministry for the Environment”. The Department of Building and Housing and the Ministry of Social Development were also involved in the Bill’s drafting.32
In addition, HNZC held a “targeted workshop” with territorial authorities to “inform the development of the Bill”.33 The targeted workshop involved representatives from six city councils, one regional council, Local Government New Zealand, and a consultant engaged by Queenstown Lakes District Council. Attendees were consulted on “policy options that underpin the Bill” in the following manner:34
The Corporation engaged an independent consultant to facilitate the workshop. The local authorities were provided with a background document setting out key questions, which was covered in the workshop. The workshop focused on specific options, implementation issues and compliance costs.
Local Government New Zealand (“LGNZ”) described the document provided at the August 2007 targeted workshop as outlining “the pros and cons of each tool [available for affordable housing] along with an assessment of how it would fit with current legislation”.35
A draft Bill was considered by the Cabinet Policy Committee on 29 October
the National Summit on Affordable Housing, Wellington, 30 October 2006), at <http:www. Beehive.govt.nz/speech/interventions+stimulate+affordable+housing+supply> (accessed 18
August 2008).
New Zealand Journal of Environmental Law
2007.36 Maryan Street (who succeeded Chris Carter as Minister of Housing) introduced the Bill to the House of Representatives on 4 December 2007. The Bill had its first reading on 11 December 2007, and was then referred to the Local Government and Environment Committee (“LGEC”). Submissions closed on 29 February 2008, with 78 submissions received.37 The Select Committee reported back on 7 July 2008, and recommended that the Bill be passed, with amendments. Urgency was accorded on 2 September 2008 to the Bill passing through its remaining stages,38 with the Bill having its second reading on 4 September 2008, and its third on 5 September 2008. The Bill was enacted as the Affordable Housing: Enabling Territorial Authorities Act 2008 on 16 September 2008.
3. OUTLINE OF THE AFFORDABLE HOUSING: ENABLING TERRITORIAL AUTHORITIES ACT
3.1 Purpose and Scope of the Act
The broad objective of the Act is “to promote the provision of affordable housing”,39 which s 4 defines as follows:40
affordable housing means housing that—
(a) is for persons living in households that—(i) have low to moderate income; and(ii) have no, low, or moderate legal or beneficial interests in property; and
(b) is priced so that the persons are able to meet—
(i) their housing costs; and(ii) their other essential basic living costs; and(c) is within the regulatory criteria for determining what affordable housing is, if regulations setting criteria exist
Environment Committee on the Affordable Housing: Enabling Territorial Authorities Bill 2007 (No 189-1) (29 February 2008) 14.
incoming-minister.htm> (accessed 22 October 2008).
Affordable Housing 249
The Act’s purpose is to enable territorial authorities “to require persons doing developments to facilitate the provision of affordable housing”.41 Section 5 contains a second purpose of voiding covenants that have a purpose of stopping the provision of affordable housing.42 The powers contained in the Act are enabling rather than mandatory, as the Act provides “those territorial authorities who wish to address problems of housing affordability in their districts with regulatory tools that assist them to do so”.43The powers provided in the Act are also only “one of a number of tools that will be necessary to address the housing affordability problem”.44 In particular, the Act’s scope is restricted to supply-side measures within a territorial authority’s influence, being land use regulation, as well as financial incentives. Supply-side interventions “attempt to either reduce the cost of housing and/or directly or indirectly increase the supply of affordable housing”45. The Act does not delve into demand-side measures, which “look to increase the ability of people to rent or purchase affordable housing”,46 but which do not increase the supply of housing stock.47
The following outline of the Act begins with the housing needs assess- ment that a territorial authority may undertake. The development, adoption, and implementation of affordable housing policies are then outlined, followed by the appeals procedure prescribed by the Act. The voiding of particular land covenants will then be discussed, as well as the relationship between this Act and both the RMA and the LGA.
3.2 Housing Needs Assessments
Territorial authorities may undertake housing needs assessments at any time, if they “want to find out whether there is enough affordable housing in their districts”.48 Section 8 of the Act requires the territorial authority to choose a method for its housing needs assessment that gives results which include a
48 AH:ETAA, ss 6(1) & 7.
New Zealand Journal of Environmental Law
description of the balance between supply and demand in the housing market, the identification of land available for housing development, and current and future households’ needs for affordable housing. Since affordable housing policies may only be made if the assessments show that there is “not enough affordable housing in their districts”, a housing needs assessment must be undertaken first.49
3.3 Affordable Housing Policies
Starting the process of adopting an affordable housing policy is not mandatory, but those territorial authorities that do begin the process are required to draft a policy “containing provisions that reflect sections 9 to 15”.50
Section 9 requires that an affordable housing policy “state clearly the outcomes and objectives that the territorial authority wants to achieve by way of the policy”. Section 10(1) requires that an affordable housing policy “state the criteria that determine which developments the policy applies to”.51 Section 10(2) provides an inclusive list of criteria that the territorial authority must consider including in its affordable housing policy.52
An affordable housing policy can require particular actions by a developer under s 11, while the actions of a territorial authority remain discretionary.53 In particular, an affordable housing policy must “state what the territorial authority requires a person to do to facilitate the provision of affordable housing, if the person is doing a development to which the policy applies”.54 Subject to the affordable housing policy adopted, options available to the territorial authority include requiring a developer to provide a proportion of affordable housing, which may be of a particular kind of housing, in the development or in another development.55 Other options are giving the territorial authority some land in its district, or an amount of money.56
Although s 12 is headed “[a]ctions required of territorial authorities”, an affordable housing policy need only state “what the territorial authority may
49 Ibid, s 6(2).
50 Ibid, s 16(3)(a).
51 Ibid, s 10(1).
52 Ibid, s 10(2).
53 Section 11(1) of the Act provides that the policy “must state what the territorial authority requires a person to do”, while section 12(1) states that the policy “must state what the territorial authority may do to help a person to facilitate the provision of affordable housing” (emphasis added).
54 AH:ETAA, s 11(1).
55 Ibid, s 11(2)(a) to (c).
56 Ibid, s 11(2)(d) & (e).
Affordable Housing 251
do to help a person to facilitate the provision of affordable housing”.57 Subject to the affordable housing policy adopted, a territorial authority may give the developer a density bonus, financial assistance under an applicable funding or financial policy, rates remission or rates postponement, or may excuse the developer from paying its development contribution.58Section 13 requires an affordable housing policy to “state the criteria to be applied to decide who is to be allocated affordable housing”.59 An affordable housing policy is required by s 14(1) to “state how affordable housing is to remain subject to the affordable housing policy”.60 Section 14(2) lists five possible methods of retention, including selling or renting to a person who fits the criteria of s 13, the person allocated the housing selling it back to the territorial authority (which may then sell it to another person who fits the criteria of s 13), use of occupation right agreements, and joint ownership.61
Affordable housing policies are adopted using the “special consultative procedure”.62 Before considering this procedure, it is noted that the statement of proposal required by the procedure must include a draft of the policy and a summary of the way in which the draft policy affects “the policies the authority has adopted under the Local Government Act 2002”, as well as its effect on “the authority’s district plan”.63
“Special consultative procedure” is defined in s 4 of the Act with reference to the LGA, s 5 of which defines it as “the procedure set out in section 83”.64 Section 83 of the LGA requires the statement of proposal (containing the draft policy) to be included on the agenda for a local authority’s meeting.65 It must also be available for public inspection, and public notice must be given of the proposal and consultation being undertaken.66 Section 83(2) prescribes “a period of not less than 1 month” in which submissions may be made to the local authority on the statement of proposal.
Substantial amendments to an affordable housing policy, once adopted, are also subject to the special consultative procedure.67 Minor amendments
57 Ibid, s 12(1).
58 Ibid, s 12(2).
59 Ibid, s 13.
60 Ibid, s 14(1).
61 Ibid, s 14(2).
62 Ibid, s 16(2).
63 Ibid, s 16(3)(b).
64 Local Government Act 2002 (“LGA”), s 5. 65 Ibid, s 83(1)(b).
66 Ibid, s 83(1)(c) & (e).
67 AH:ETAA, s 16(5).
New Zealand Journal of Environmental Law
“must follow section 156(2) of the Local Government Act 2002 as if the policy were a bylaw”.68 A review of the adopted policy must occur “after identifying community outcomes under section 91” of the LGA.69
Once an affordable housing policy is adopted, the territorial authority “must give public notice of the adoption of the policy”.70 Further, the territorial authority must inform applicants for building consents and/or resource consents of the affordable housing policy.71 Where a territorial authority decides that its affordable housing policy applies to a development, the authority must tell three categories of persons (who are discussed below under the heading “Objections and Appeals”) about its decision and how the persons can object to the decision.72
Section 20 requires a territorial authority to give notice to any person affected by the territorial authority’s decision “under any of the provisions of its affordable housing policy that reflect sections 11 to 14”.73 The notice given must tell the person about the decision and how the person can object to the decision.74
Having adopted and communicated an affordable housing policy, ss 25 to 28 provide for the policy’s implementation. Section 25 allows a territorial authority to require a person who is obliged to do an action under the territorial authority’s affordable housing policy “to make a binding commitment to it that the person will take all practicable steps to ensure that the action is done”.75 The provision is intended to provide flexibility in negotiating how an agreement will be entered into.76 This binding commitment may be required when a person applies for a building consent and/or when a person has been granted resource consent.77
Section 26 provides that a territorial authority is not liable to pay compen-
68 Ibid, s 16(6).
69 Ibid, s 16(4).
72 Ibid, s 19(2).
73 Ibid, s 20(1).
74 Ibid, s 20(3).
75 Ibid, s 25(1)(b) & (2).
76 “An overview of the Affordable Housing: Enabling Territorial Authorities Act 2008”, supra note 8, at 15.
77 AH:ETAA, s 25(1)(a).
Affordable Housing 253
sation, as land is not “taken or injuriously affected” only because an affordable housing policy exists, or because of a provision in an affordable housing policy, or because a territorial authority requires a person doing a development “to do an action under the authority’s affordable housing policy”.78A territorial authority is given powers in s 27 “to deal with land or money given to it under its affordable housing policy by a person doing a devel- opment”.79 These powers are set out in subsections (3) to (8),80 and include the ability to use the land or money “to provide affordable housing” and “to offset the loss of the development contributions of other persons doing developments to which the policy applies”.81 Subsection (9) provides a territorial authority with the power to deal with land owned by it for providing “affordable housing as part of its social policy”. However, a territorial authority must amend its policies under s 102(4) or (5) of the LGA to use such a power.82
3.4 Objections and Appeals
Objections and appeals are dealt with in ss 21 to 24. Where a territorial authority decides that an affordable housing policy applies to a development, this decision may be objected to by three categories of persons. First, the person doing the development may object to the decision on any ground.83 The owner of the land, and the owners of land bordering the land proposed for development, may also object to that decision on any ground.84 These two categories of persons may also object on the specific ground that the decision “renders the land incapable of reasonable use; and places an unfair and unreasonable burden on the person”.85 The three categories of persons also have the right to object to “a provision in the territorial authority’s affordable housing policy on any ground”.86
Section 21(3) provides that a person affected by a decision made under any of the provisions of an affordable housing policy that reflect ss 11 to 14 may object to the decision on any ground, and may object to a provision in the
78 Ibid, s 26(1)(2) & (3).
79 Ibid, s 27(1).
80 The section 27(1) reference to powers “in subsections (4) to (8)” may be an error, instead of “subsections (3) to (8)”.
81 AH:ETAA, s 27(3) & (4).
82 Ibid, s 28(2).
83 Ibid, s 21(1)(a).
84 Ibid, s 21(2)(b). Section 21(2)(b) provides that the decision may be objected to “on any other ground”, in reference to the ground already provided in section 21(2)(a). In combination, the objection rights in s 21(2)(a) & (b) allow the decision to be objected to “on any ground”.
85 Ibid, s 21(2)(a).
86 Ibid, s 21(1)(b), (2)(c) & (3)(b).
New Zealand Journal of Environmental Law
territorial authority’s affordable housing policy on any ground. Section 21(4) provides that no person may object “to the existence of the policy”.Section 22(1) requires the objection to be made “to the territorial author- ity”.87 After receiving the objection, the territorial authority must dismiss it, partly uphold it, or wholly uphold it.88
An appeal to the Environment Court, against the territorial authority’s decision, is permitted for the same categories of persons who objected under s 22.89 The court is required to “hear the appeal on the merits of the case” and to “have regard to the decision that is the subject of the appeal”.90 The court must dismiss, partly uphold, or wholly uphold the objection.91
Section 24 prescribes the effect of objections and appeals on an afford- able housing policy. The effects prescribed include requiring the continued application of the policy, or requiring an amendment to a provision in the policy.
3.5 Land Covenants
Section 30 voids a covenant over land “if one of its purposes is to stop the provision of affordable housing or social housing on the land”.92 As such, stopping the provision of affordable or social housing does not have to be the covenant’s main purpose for it to be void. Section 30 is not retrospective.
3.6 Relationship with Resource Management Act 1991 and Local Government Act 2002
If a specified person identifies a conflict between a territorial authority’s affordable housing policy and its district plan, s 29 applies. Once the territorial authority receives notice of the potential conflict under subsection (3), the territorial authority must consider whether or not there is a conflict.93 If it considers that a conflict exists, s 29(4) requires the territorial authority to “make every reasonable effort to resolve it”.
Section 29(6) allows the person who gave notice of the conflict to “apply to the Environment Court to resolve the conflict”, but not earlier than 90 days after the territorial authority received the notice. In resolving the conflict, s 29(7)(a) requires the Environment Court to take into account Part 2 and s 74 of the
87 Ibid, s 22(1).
88 Ibid, s 22(3)(b).
89 Ibid, s 23(1).
90 Ibid, s 23(3)(a) & (b).
91 Ibid, s 23(3)(c).
92 Ibid, s 30(1).
93 Ibid, s 29(3) & (4).
Affordable Housing 255
RMA. The Environment Court must also take into account s 10, s 14 and ss 76 to 81 of the LGA.94The Environment Court is required by s 29(8) to amend the policy and/or amend the plan, if it decides that there is a conflict. Section 29(9) prescribes that Part 11 of the RMA and regulations under that Act apply to proceedings under s 29.
3.7 Housing New Zealand Corporation’s Role
Section 37 amends the Housing Corporation Act 1974 to add to HNZC’s objec- tives the arrangement of “appropriate advice and information” for receipt by territorial authorities applying the Act.
4. THE USE OF PLANNING OBLIGATIONS IN THE UNITED KINGDOM
The United Kingdom was one of at least six jurisdictions whose use of planning tools to provide affordable housing was considered by HNZC in developing the Act,95 and clause 8(3) of the Bill was “based on guidance contained in legislation in the United Kingdom”.96 The following section will consider how “planning obligations”, the use of which broadly corresponds to the tools sanctioned in New Zealand, operate to provide affordable housing in the United Kingdom.
4.1 Statutory Basis of Planning Obligations
The statutory basis for using “planning obligations” to provide affordable housing is contained in the Town and Country Planning Act 1990 (UK) (“TCPA”), which was largely amended by the Planning and Compulsory Purchase Act 2004 (UK). Part III of the TCPA concerns development control, including the requirement to obtain planning permission “for the carrying out of any development of land”.97 In determining an application for planning permission, the local planning authority “shall have regard to the provisions
94 Ibid, s 29(7)(b).
256 New Zealand Journal of Environmental Law
of the development plan, so far as material to the application, and to any other material considerations”.98If the local planning authority grants planning permission, it may do so “either unconditionally or subject to such conditions as they think fit”.99 Where a development proposal cannot be made acceptable through the use of planning conditions, but can be made acceptable through planning obligations, the latter may be used.100 These are usually negotiated by a developer and a local planning authority in the context of a planning application.101 Section 106(1) of the TCPA provides that a person may enter into a “planning obligation”, which comprises:102
(a) restricting the development or use of the land in any specified way;
(b) requiring specified operations or activities to be carried out in, on, under or over the land;
(c) requiring the land to be used in any specified way; or
(d) requiring a sum or sums to be paid to the authority on a specified date or dates or periodically.
A planning obligation (which may also be termed a “section 106 agreement” or a “developer contribution”) “can be used to prescribe the nature of a develop- ment by requiring the inclusion of a given proportion of affordable housing”.103 However, planning obligations are also used for other purposes, including securing a contribution from a developer to compensate for loss or damage created by a development.104 Planning obligations may also be used to mitigate the impact of a development by securing contributions towards, for example, a new access road.105 The use of planning obligations is intended to result in the
98 Ibid, s 70(2).
99 Ibid, s 70(1).
(accessed 14 October 2008).
Facilitating the Provision of Affordable Housing 257
proposed development’s consistency “with published local, regional or national planning policies”.106
4.2 Policy Guidance on Planning Obligations
ODPM Circular 05/ 05 entitled “Planning Obligations” contains the Secretary of State’s policy for planning obligations, including the five tests that planning obligations must satisfy:107
A planning obligation must be:
(i) relevant to planning;(ii) necessary to make the proposed development acceptable in planning terms;
(iii) directly related to the proposed development;
(iv) fairly and reasonably related in scale and kind to the proposed development; and
(v) reasonable in all other respects.
To be “necessary to make the proposed development acceptable in planning terms”, what is sought or offered in a planning obligation should bring the development in line with the planning system’s principal objective of sustainable development, as set out in local, regional and national planning policies.108 The importance of development plan policies is emphasised as a “pre-determinant in justifying the seeking of any planning obligations since they set out the matters which ... are agreed to be essential in order for development to proceed”.109
A fundamental principle set out in ODPM Circular 05/ 05 is that “plan- ning permission may not be bought or sold”.110 This means that benefits or inducements offered as planning obligations, which fail to make an unacceptable development acceptable in planning terms, are not permitted. Also, using planning obligations “purely as a means of securing for the local community a share in the profits of development” is prohibited.111 The ODPM Circular 05/ 05 further states that planning obligations are unlikely to be required for all developments, but there are no strict rules about the size and type of development to which obligations should apply.112
The use of standard agreements is encouraged in the interest of speeding
258 New Zealand Journal of Environmental Law
up the planning obligations process, with a model s 106 agreement having been produced by the Law Society’s Planning and Environmental Law Committee.113 Since ODPM Circular 05/ 05 is directed at planning obligations generally,the following section will consider policy guidance on affordable housing, and how these policies work to enable affordable housing to be provided through planning obligations.
4.3 Policy Guidance on Affordable Housing
The government’s national planning policy framework “for delivering the Government’s housing objectives” is contained in Planning Policy Statement 3 (PPS3): Housing.114 It is worth noting that local planning authorities are required to have regard to the statement “as a material consideration when making decisions on planning applications” from 1 April 2007.115
PPS3 defines “affordable housing” as follows:116
Affordable housing includes social rented and intermediate housing, provided to specified eligible households whose needs are not met by the market.
PPS3 refers to strategic housing market assessments, which estimate the need and demand for affordable and market housing. Local authorities are encouraged “to assess housing need and demand in terms of housing market areas”, as the strategic housing market assessment is intended to be relevant at the regional, subregional and local levels.117 To this end, local authorities in an identified housing market area are encouraged to undertake the strategic housing market assessment together.118 A strategic housing market assessment
pdf/151600.pdf > (accessed 18 October 2008).
Affordable Housing 259
is required to provide prescribed minimum results, which include an estimate of the current number of households in housing need, and an estimate of future households that will require affordable housing.119Strategic housing market assessments are used by local planning authorities to inform the policies in local development documents, which must set out the “likely overall proportions of households that require market or affordable housing”, and the “size and type of affordable housing required”.120 Local development documents are also to include a “target for the amount of affordable housing to be provided”.121 This target should draw on “informed assessments of the likely levels of finance available for affordable housing including public subsidy and the level of developer contribution that can reasonably be secured”.122
Local development documents must set out the approach to seeking devel- oper contributions to “allow developers to predict as accurately as possible the likely contributions they will be asked to make through planning obligations”.123 The presumption is that affordable housing will be provided on the application site “so that it contributes towards creating a mix of housing”.124 Off-site provision or a financial contribution in lieu of on-site provision may be accepted “where it can be robustly justified”.125 Local planning authorities may also set minimum site size thresholds lower than the national indicative minimum site size threshold of 15 dwellings, “where viable and practicable”.126
Guidance on how to use planning obligations to deliver affordable housing is contained in Delivering Affordable Housing, which is to be “read in conjunction with ... PPS3 ”. Delivering Affordable Housing states that “[w]here housing commands much higher prices there is greater scope for securing affordable housing through ... ‘planning obligations’”.127 Broadly, the “[e]ffective use of planning obligations to deliver affordable housing requires good negotiation skills, ambitious but realistic affordable housing targets and thresholds given site viability, funding ‘cascade’ agreements in case grant is not provided, and
New Zealand Journal of Environmental Law
use of an agreement that secures standards”.128 The provision of grants is mentioned in this list, and will briefly be discussed below.
4.4 Planning Obligations and Social Housing Grant
Delivering Affordable Housing discusses the Housing Corporation’s approach to paying social housing grant on sites subject to planning obligations.129 This is relevant because the statement notes that “[i]n 2004–05, it is estimated that 46 percent of all affordable housing delivered on sites supported by social housing grant included a developer contribution through planning obligations”.130
4.5 Retaining Affordable Housing
Delivering Affordable Housing also discusses how to retain affordable housing, the definition of which encompasses homes funded with or without government grant.131 The Housing Corporation ensures that persons who receive homes partly funded by social housing grant are subject to eligibility criteria, and criteria are imposed on both the initial purchase price and resale price.132 The grant obtained by the developer must also be reinvested upon sale.133
Local authorities are responsible for ensuring grant-free affordable houses remain affordable. This may be achieved through a provision in the planning obligation requiring the property to be transferred from the developer on completion to a Registered Social Landlord, which may be required to “retain the unit as affordable housing or recycle any receipts for affordable homes”.134 Another option is for the local authority to permit a private company to own and manage affordable housing, but the planning obligation or another legally binding document is used to ensure the housing remains affordable.
An example of retaining intermediate affordable housing can be illustrated
Affordable Housing 261
through the New Build HomeBuy scheme, launched in April 2006.135 An eligible household can purchase a share of a newly built property, paying rent on the remainder.136 When the first purchaser wishes to sell their share, provisions in the shared ownership lease allow the Registered Social Landlord to nominate future purchasers.137 If an eligible purchaser cannot be nominated within a specified period, the property may be sold on the open market, with the Registered Social Landlord reinvesting its share of the sale proceeds.138 Another possible option under the New Build HomeBuy scheme is the first purchaser increasing their ownership shares over time, until they own 100 per cent of the home. When the first purchaser wishes to sell, an affordable housing provider may have the first opportunity to buy the home back and resell on shared ownership terms.139
4.6 Appeals and Modifications or Discharges of Planning Obligations
If a local planning authority “seeks unreasonable planning obligations in connection with a grant of planning permission”, the applicant can choose not to enter into the obligations.140 Planning obligations are negotiated, and the applicant cannot appeal against the planning obligation sought by the authority. This is one reason why conditions, the imposition of which can be appealed to the Secretary of State, are preferred over planning obligations.141 However, a decision not to enter into the obligation may lead to the local planning authority’s refusal to grant planning permission, which is a decision that can be appealed to the Secretary of State under s 78 of the TCPA.142 “Such appeals will be considered in accordance with the advice given in this Circular”, indicating that the Secretary of State will take into account the five tests that planning obligations must satisfy in ODPM Circular 05/ 05.143 Section 79(1) of the TCPA allows the Secretary of State to allow or dismiss the appeal, or to dismiss or vary any part of the local planning authority’s decision. The Secretary of State’s decision on such an appeal “shall be final”.144 This does not prevent the validity
139 Ibid, at 16–17.
144 TCPA, s 79(5).
New Zealand Journal of Environmental Law
of the Secretary of State’s decision being challenged on an application for judicial review.145Appeals can also arise in the context of modifying or discharging planning obligations, under ss 106A and 106B of the TCPA.
4.7 Summary of Use of Planning Obligations to Deliver Affordable Housing
Planning obligations are sanctioned by s 106 of the TCPA, with policy state- ments providing detailed guidelines on their use. Planning obligations are negotiated, but the agreement reached may require developers to provide afford- able housing on-site, or otherwise off-site or as a financial contribution.
To allow developers to predict the likely contributions they will be asked to make through planning obligations, local planning authorities must set out their approach to seeking developer contributions. This will be informed by the assessment of the need and demand for affordable housing, and the target set by local planning authorities for the amount of affordable housing to be provided. It is noted that the legislation and policy statements do not provide for developers to receive any incentives (such as density bonuses), or subsidies.
Rather, the provision of affordable housing through planning obligations often works in conjunction with grants from the Housing Corporation.
Affordable housing may be retained by transferring units to Registered Social Landlords or other bodies for management. Where affordable housing is sold, the sale proceeds are recycled for further investment in affordable housing funds. Providing Registered Social Landlords or local planning authorities with the first right of refusal to affordable housing which has been on-sold is another method of reacquiring affordable housing.
When an applicant chooses not to enter into a planning obligation, and plan- ning permission is subsequently refused, an appeal to the Secretary of State may be made. An applicant may also appeal a local planning authority’s refusal to modify a planning obligation. The Secretary of State’s determination in either case is final, but judicial review proceedings are still available.
5. UTILITY AND EFFECTIVENESS OF PRESCRIBED PLANNING TOOLS IN NEW ZEALAND
Having outlined the contents of the Act and the use of similar tools in the United Kingdom, further consideration will be given to the utility and potential effectiveness of the tools and incentives sanctioned by the Act in New Zealand.
145 For example, see Tesco Stores Ltd v Secretary of State for the Environment and others
[1995] UKHL 22; [1995] 2 All ER 636 (HL).
Affordable Housing 263
5.1 Land Use Planning Regulation
The actions that s 11 permits an affordable housing policy to require of a developer include the provision of affordable housing, land and/or money. Despite the provision not using planning terminology, s 11 enables territorial authorities to apply inclusionary zoning, linkage zoning (or “linkage fees”), and to require financial contributions.146
Inclusionary zoning is the setting aside of a certain proportion of a development for affordable housing.147 The housing may be provided in that development (s 11(2)(a)), or “in another development that the person is doing or is to do” (s 11(2)(b)). An affordable housing policy may require affordable housing to be provided in the development, rather than in another development, to enable some affordable housing to be situated in upmarket housing developments, instead of developers locating them in lower-cost developments. This approach may further “the desirability of the community having a variety of housing sizes, tenures, and costs” under s 5(a)(ii). This is because the development itself, not just the wider community, would then contain a variety of housing sizes, tenures and costs. The English planning policy statement on housing also encourages “on site” affordable housing, by only permitting the provision of affordable housing off site “where it can be robustly justified”.148 Another variation is to set aside building sites in a development, rather than houses, with third sector housing providers potentially buying those sites.149 This variation may fall within s 11(2)(d). Section 11(1)(c) contemplates specifying the particular kind of affordable housing, such as two-bedroom units, to be provided.
Linkage zoning, which may also be termed “linkage fees” or “impact fees”, is the linking of an affordable housing contribution with the impact of a development on housing need.150 An example of linkage zoning is where a
New Zealand Journal of Environmental Law
person developing a site to accommodate a large business (i.e. a commercial development) is required to provide some affordable housing.151 Section 10(2)(b) confirms this potential, as whether the development is “commercial, industrial, or residential, or a sub-group of commercial or industrial” is a possible criterion for determining which developments an affordable housing policy applies to. In addition, s 10(2)(c) includes “the potential of the development to generate a need for affordable housing” as a possible criterion for determining which developments an affordable housing policy applies to.Requiring employers to provide employee housing is not new, as “Queens- town hotels used to be required to meet the housing needs of their workers”.152 However, requiring affordable housing contributions from “incoming employers and local employers expanding their businesses” may cause employers to seek existing premises, or may attract growth elsewhere.153 Seeking existing premises would appear to be an efficient use of resources, while the risk of employers turning to areas in which an affordable housing policy does not apply may be a valid concern.
Section 11 permits the provision of money “to facilitate the provision of afford- able housing”.154 This is supported by subsections (3), (4), (7) and (8) of s 27, which set out how a territorial authority may use the money given to it under its affordable housing policy by a person doing a development.
Similar to the restriction on providing affordable housing “off site”, financial contributions may be accepted in lieu of providing affordable housing in England “where it can be robustly justified”.155 Section 11 does not contain this restriction, but a territorial authority’s affordable housing policy will
Housing and Urban Research Institute, June 2008), 32, at <http://www.ahuri.edu.au/ publications/search.asp?ShowSearch=False & Search=Properties & Keywords= & Year= & Ce ntre= & Search-Title= & Search-Summary= & Search-Author= & PublicationType=fr & Sort=S earch-Title & Direction=ASC#results> (accessed 16 August 2008). The positioning paper, which preceded this final report, was used as one of the two reports from which the costs and benefits of the Affordable Housing: Enabling Territorial Authorities Bill 2007 (No 189-
<http:www.odt.co.nz/your-town/queenstown/17717/affordable-housing-shortage-affecting- tourism> (accessed 20 September 2008).
154 AH:ETAA, s 11(1).
155 PPS3, supra note 114, at 11.
Affordable Housing 265
determine whether financial contributions from developers will be accepted. Similarly, HNZC states that territorial authorities can stipulate that financial contributions “will only be accepted as a last resort”.156
5.2 Development Incentives
Section 12 prescribes the actions that a territorial authority may do to help a person doing a development to facilitate the provision of affordable hous- ing. Although an affordable housing policy may state that no help will be provided, HNZC suggests building in “a degree of flexibility to provide room for negotiating with a developer” over incentives.157 Section 12(2) allows a territorial authority to waive a development contribution, give the developer financial assistance, or to give the developer rates remission or postponement. These are all financial incentives.158
A territorial authority may alternatively, or additionally, give the developer a density bonus. Since the list contained in s 12(2) is merely inclusive, it is considered that transferable development rights and fast-tracking resource consents may also be used as incentives.
Section 12(2)(a) allows an affordable housing policy to excuse a person “from paying some or all of the person’s development contribution”. The s 4 definition of “development contribution” refers to s 197 of the LGA. Broadly, it is a contribution comprising land and/or money, which is provided for in a development contribution policy contained in a territorial authority’s long-term council community plan. A development contribution may be required if the development’s effect is to require either new, additional or increased capacity assets, and the territorial authority incurs expenditure providing for reserves, network infrastructure and/or community infrastructure.159
Due to the significant cost of a development contribution, offering relief may be worthwhile.160 However, it may also result in the cost being transferred to current ratepayers or to future generations.161
159 LGA, s 199.
New Zealand Journal of Environmental Law
“Density bonus” is not defined in the Act, but has been described as the allow- ance of a higher density of development than permitted by the zoning rules, for the provision of a certain percentage of affordable housing.162
The use of density bonuses has been questioned, due to the environmental cost of exceeding set limits.163 Christchurch City Council also suggested “residential amenity” would be lost by using density bonuses.164 The setting of artificially restrictive environmental limits, to provide room for negotiating density bonuses, has also been criticised for its wastage of development space where density bonuses are not sought.165 HNZC accepts that density bonuses “will be precluded in some District Plans”.166
Transferable development rights have the potential to ensure density bonuses are of use, despite being precluded in some areas, as noted above. Transferable development rights allow for additional development potential if this potential is transferred from lower-density areas to higher-density areas.167 Density bonuses may be treated as a development right that is transferable to another project that complies with the designated zone.168
Since the Act contains no definition of “funding or financial policy”, it is con- sidered that the financial assistance allowed under s 12(2)(c) applies to the funding and financial policies in s 102 of the LGA. Section 102(4) of that Act lists six policies: revenue and financing, liability management, investment, development contributions or financial contributions, partnerships between the local authority and the private sector, and the remission and postponement of rates on Ma¯ori freehold land.169 Section 102(5) also allows a local authority to adopt a rates remission policy and/or a rates postponement policy.
168 “Part One: clause by clause analysis”, supra note 96, at 38. 169 LGA, s 102(4).
Affordable Housing 267
It is considered that the most likely use of s 12(2)(c) will be to allow an affordable housing policy to state that the territorial authority may give a developer financial assistance under the local authority’s policy on partnerships with the private sector. Section 12(2)(a) already refers to the territorial authority’s development contributions policy, and s 12(2)(d) and (e) refer to the territorial authority’s rates remission and rates postponement policies respectively.
The effectiveness of reduced rates in encouraging affordable housing has been described as “more symbolic than real”.170 It has been argued that increased development costs are more affected by the land holding costs caused by uncertain time periods for obtaining consents.171 However, rates remission and rates postponement are possible incentives for territorial authorities to consider.
5.3 Effectiveness of Planning Tools and Development Incentives
Having discussed the specific planning tools and development incentives sanctioned by the Act, the circumstances in which they are most effective will now be considered. This will incorporate consideration of planning tools’ validity, the impact of their mandatory or voluntary nature, and the effect of the development approval process. The importance of the third sector, market conditions, and territorial authorities’ anticipated uptake of powers along with regional variation will also be discussed.
The former President of the Planning Institute of Australia outlined the appro- priate role of the planning system in encouraging affordable housing:172
Firstly, the planning system needs to be respected for what it is; a land use regulatory regime intended to optimize environmental values and maintain efficiency in urban development and resource usage. It should not be seen as a general taxing device, because this runs the risk of supplanting sustainability driven planning principles with revenue generation objectives.
New Zealand Journal of Environmental Law
The above author also considered that planning tools must be seen to be “applied fairly and consistently”.173 The size of the development or the project proponent’s capacity to pay was not considered a reason to discriminate between developments through the use of planning treatment.174 In New Zealand, the provisions of an affordable housing policy will determine whether developers are treated fairly and consistently. HNZC states that documentation of the decision to apply the policy to a development, the criteria, and how the criteria were applied will be important if an objection or appeal is lodged.175 It is therefore considered that strong evidence should inform the development of criteria such as locations in which the policy will or will not apply. The results of the housing needs assessment is intended to provide this evidential basis.Many of the developers that made submissions on the Bill considered that affordable housing was a central government responsibility, and an unfair burden would be placed on property developers.176 HNZC considers that “[l]ocal government is responsible for planning and should have the tools available to provide affordable housing within certain communities”.177 HNZC noted that research has shown that developers are able to factor in the cost of an affordable housing contribution when bidding for land.178 However, HNZC also referred to other international research that found the provision of affordable housing may decrease developer profits.179
The effectiveness of planning tools is influenced by their mandatory or volun- tary nature. Although the decision to use the powers in the Act is voluntary, the powers enable territorial authorities to apply mandatory schemes, by developing affordable housing policies that require actions from developers.180 Mandatory affordable housing requirements may produce more affordable housing units than voluntary schemes that are based only on incentives or concessions.181
173 Ibid.
174 Ibid, at 16–17.
179 Ibid, at 17.
180 AH:ETAA, s 11(2).
181 Gurran et al, supra note 150, at 106.
Affordable Housing 269
However, the take-up of financial incentives “appears to be much greater in jurisdictions where mandatory inclusionary requirements or targets apply”.182 Territorial authorities may need to consider this factor, as the Act enables both the use of mandatory affordable housing requirements and incentives.Affordable housing contributions negotiated under mandatory schemes also exceed contributions negotiated under voluntary schemes, even where significant incentives or concessions are offered.183 The United Kingdom’s use of planning obligations to require the provision of affordable housing is an example of mandatory negotiated contributions. They are mandatory, because they are “necessary to make the proposed development acceptable in planning terms”.184 However, affordable housing contributions are also negotiated, as they must be “fairly and reasonably related in scale and kind to the proposed development”, and they must be “reasonable in all other respects”.185 For example, where a proposed development becomes economically unviable, but is needed to meet the aims of the development plan, the ODPM Circular 05/05 states:186
... decisions on the level of contributions should be based on negotiation with developers over the level of contribution that can be demonstrated as reasonable to be made whilst still allowing development to take place.
Another example is Queenstown Lakes District Council’s negotiations with parties involved in district plan changes “to make provision for affordable housing through stakeholder deeds that are a side agreement between the land- owners and the Council”.187 The affordable housing contributions obtained by Queenstown Lakes District Council are negotiated under voluntary agreements. Despite their voluntary nature, four stakeholder deeds had been executed by November 2007 “delivering approximately 72 sections to the [Queenstown Lakes Community Housing] Trust”.188
186 Ibid, at 10–11.
New Zealand Journal of Environmental Law
The effectiveness of particular planning tools is influenced by the process for obtaining development approvals.189 Broadly, planning approvals in the United Kingdom are negotiated, leaving scope for density or open space concessions as leverage for obtaining affordable housing contributions.190 In contrast, the United States applies a “highly codified system of development ‘entitlements’”, which explains “why fixed planning incentives or bonuses are widely used in North America to secure new affordable housing or to offset the financial impact of mandatory inclusionary schemes”.191
New Zealand operates “a permissive planning system”, meaning that “it is for the proponent of any particular project to decide where a project should go provided the zoning is such as to permit that project in the chosen location”.192 Section 9 of the RMA reflects this position by providing for restrictions on the use of land, with the necessary implication that if no restriction applies, the activity is permitted. Resource consents are required for controlled activ- ities, restricted discretionary and discretionary activities, and non-complying activities.193 As an example, resource consent for a “controlled activity” must be granted subject to conditions over matters which the plan has reserved control.194 This indicates the inability to negotiate resource consents, suggesting that fixed affordable housing contributions may be of more use in the New Zealand context than negotiated contributions. However, negotiations may occur around district plan changes, as discussed in relation to Queenstown Lakes District Council, with incentives potentially being of use if voluntary affordable housing contributions are sought.
The importance of having a non-profit affordable housing development sector has been emphasised, to “capitalise on opportunities secured through the planning system”.195 Section 27 allows a territorial authority to give the land it receives under its affordable housing policy, or to sell the land cheaply, “to a person who agrees to build affordable housing on it” or “to a body to use to
=0.19931166837252945&bhcp=1> (accessed 23 October 2008).
195 Gurran et al, supra note 150, at 105.
Affordable Housing 271
provide affordable housing”.196 Also, money received by a territorial authority under its affordable housing policy may be given “to a body to use to provide affordable housing”.197 These powers will be of importance to those territorial authorities that do not wish to develop affordable housing themselves. The government has also recently sought to increase “third sector” involvement in housing.198 Chris Carter (then Minister of Housing) gave a speech to the National Summit on Affordable Housing on 30 October 2006, in which he noted the high costs for groups entering into housing provision, before stating that:199
In recognition of this, the Government has set up the Housing Innovation Fund to provide seed money to build capacity in the third sector, and provide a financial leg up to councils and trusts to get more involved in housing.
He further stated that:
It is not unusual for housing organisations overseas to represent a blurring of public and private. In some countries, local councils invest the fees for affordable housing earned from leveraging planning mechanisms in the organisations, and some councils also vest existing housing stock in them alongside the assets of other private third sector partners.
As an example, Queenstown Lakes Community Housing Trust received “seed money” of $2 million from the Housing Innovation Fund in 2006.200 In addition, “the Trust is receiving contributions of land, building and/or funds from developments who have committed support for community housing as part of that development’s stakeholder deed with the Council”.201 It uses these amounts for its “shared ownership” programme, where a homeowner contributes 60 to 85 per cent of the home’s value, while the Trust contributes 15 to 40 per cent. This outcome is consistent with Carter’s further comment that the introduction of a shared equity scheme by central government “may provide a tool for larger housing trusts if they evolve”.202 The government’s shared equity scheme is discussed separately later in this paper.
196 AH:ETAA, s 27(5) and (6).
197 Ibid, s 27(7).
New Zealand Journal of Environmental Law
Therefore, the potential to obtain housing, land and/or money from terri- torial authorities that implement affordable housing policies may add to the resources available to third sector housing providers. In conjunction with grants from the Housing Innovation Fund, and the ability to implement shared equity schemes, it is considered that the third sector’s size and their role in providing affordable housing may gradually increase.
“[T]he specifics of particular housing markets and the stage of the property cycle” affect the provision of affordable housing.203 Phil Heatley, Member of Parliament for Whangarei, considered the legislation had come “6 years too late”, as “property prices have pretty much stabilised right across New Zealand”.204
Although the legislation has been enacted, it is still useful to consider “the market conditions in which different planning measures for affordable housing are likely to have the greatest impact”.205 Planning tools’ ability to effect affordable housing is influenced by: “the overall value of the market, the available opportunities for housing development ..., and the amount of development activity within a locality or region”.206 These variables are discussed below.
The overall value of the market refers to housing price points, and reflects whether there is high or low market demand for housing. The second variable depends on “the availability of greenfield, brownfield, or infill development sites for new or rehabilitated housing developments”.207 The third variable ranges from significant rates of new housing development to stagnation, with limited development activity tending to prevent planning mechanisms alone yielding significant new affordable housing opportunities.208 However, limited
Affordable Housing 273
market activity may also provide opportunities to support third sector housing providers.209In New Zealand, the value of the housing market is no longer increasing, with sale prices beginning to show small decreases. The median house price of $340,000 in June 2008 was a decrease of 2.2 per cent from June 2007.210 “With the exception of February 2008, this is the slowest annual growth rate in median house prices recorded since January 2002.”211 Overall, “the value of New Zealand’s total housing stock increased from $611 billion in the September 2007 quarter, to $614 billion in the December 2007 quarter, to $616 billion in the March 2008 quarter”.212
In terms of new housing development, inflation-adjusted residential build- ing work (being an estimated gross value of actual building work undertaken) shows a decrease for the last two quarters.213 Also, consent data for residential buildings, which provide an indicator of future building work, “has continued to decline from its peak since August 2007”.214
Taking these current trends into account, incentives such as density bonuses and discounts on development contributions “are particularly effective within high value markets where development opportunities are limited”.215 However, density bonuses do require a degree of development activity in an area to be particularly effective.216 Discounts on development contributions are “likely to be attractive across all markets, depending on the value of the discount”.217 Since the New Zealand housing market is continuing to maintain a relatively high value (despite small decreases in sale prices), with development still occurring, incentives are likely to have a beneficial effect in attempting to increase the supply of affordable housing.
A rising market may sustain a higher level of mandatory affordable hous- ing contribution (i.e. from inclusionary zoning and linkage zoning) than a falling market.218 In a high-value market with few development opportunities, mandatory approaches are important as opportunities would otherwise be difficult to access for affordable housing.219 Also, the inclusion of mandatory
214 Ibid, at 19–20.
New Zealand Journal of Environmental Law
affordable housing ensures that “social equity objectives are maintained” in high-value redevelopment contexts.220 Again, New Zealand’s current main- tenance of a relatively high-value housing market indicates that mandatory schemes will be particularly useful.
Based on territorial authorities’ anticipated take-up of the available powers, the provision of 1000 affordable houses per year has been estimated.221 However, the number of territorial authorities intending to use the legislation “cannot be predicted with certainty”, and affordable housing policies may “vary across the country”.222
(a) Regional variation
A regional approach to housing need ensures that “local authorities all meet their ‘fair share’ of affordable housing, and that developers cannot ‘cherry pick’ for a more liberal planning regime”.223 One submitter on the Bill suggested that affordable housing policies needed to be consistent across the Auckland region due to the number of territorial authorities, and to prevent price increases in certain areas.224
HNZC guidance material encourages a collaborative approach, by stating that territorial authorities may undertake a housing needs assessment in con- junction with each other.225 Consistent with s 37, HNZC’s guidance material is only advisory.226 English practice guidance also encourages local authorities “to undertake the strategic housing market assessment together and set up a housing market partnership”.227 However, English policy guidance is more than advisory; it is acknowledged as a material consideration to take into account in determining planning permission applications.228
Since the Act is enabling, there is a risk that one territorial authority will use the Act’s powers, while the neighbouring territorial authority will not. The
Affordable Housing 275
support or opposition territorial authorities gave to the Bill in their submissions to the LGEC may indicate their intention to use the Act, while acknowledging that their views may have altered following changes to the Bill. However, it is noted that Waitakere City Council was the only city council in the Auckland region which supported the Bill following its first reading.229
(b) Effect of territorial authorities’ concerns on projected uptake of powers Territorial authorities’ uptake of powers may be affected by their particular concerns with the prescriptive nature of the Bill, and the costs involved.
Seven submitters expressed concern over the level of prescription in clause 8(3), which listed nine results to be obtained from an affordable housing needs assessment.230 As noted earlier, clause 8(3) was based on United Kingdom guidance material, but HNZC considered that “a broader set of guiding prin- ciples” could be developed.231 HNZC also recommended omitting clauses 8(2) and 8(4) “as they are replicated in the Local Government Act 2002”.232
Consistent with this, the LGEC recommended a number of deletions from clauses 7 and 8 to also make the Bill less prescriptive.233 Similarly, clauses 9 to 15 were recommended to be “shortened to include only key provisions, making them less prescriptive”.234 Submitters were concerned with the criteria listed in clause 13(2) for determining who is to be allocated affordable housing.235 This resulted in the removal of these criteria from clause 13, and the retention of a “high level statement”236 requiring an affordable housing policy to state “the criteria to be applied to decide who is to be allocated affordable housing”.237
HNZC and the LGEC recommended the same significant changes to the clauses governing the process of making and updating affordable housing policies. HNZC recommended “a suitable remodelling of clauses 16 to 19, 32 and 33 into a single clause on the process of making, reviewing and amending an affordable housing policy”.238 The LGEC described this consolidation as “simplifying the bill”, and more closely aligning the Bill with the LGA.239 The Bill’s relationship with the LGA is discussed later in this paper.
229 (2008) 649 New Zealand Parliamentary Debates 18454 (Sue Bradford). 230 “Part One: clause by clause analysis”, supra note 96, at 23.
New Zealand Journal of Environmental Law
In terms of cost, HNZC considered the cost of developing and implementing an affordable housing policy “similar to costs that territorial authorities would incur in developing policies under section 102 of the Local Government Act”.240 HNZC noted that territorial authorities had “estimated the costs of undertaking a housing needs assessment to be $15,000 to $20,000”.241Consistent with s 37, HNZC is to provide guidance material to territorial authorities in how to undertake a housing needs assessment, how to create an affordable housing policy, and further matters including methods of retaining affordable housing.242 It is intended that these “toolkits” will help lower the likely costs to territorial authorities.243
Another cost discussed by LGNZ was the potential loss of revenue from offering incentives to developers.244 In response, HNZC noted that the Bill “leaves the consideration of incentives to the discretion of the territorial authority”.245 However, it does contend that development contribution waivers may be structured in a cost-neutral manner:246
For example, territorial authorities may choose to collect money for a development under a certain threshold size (for example, 20 houses) and require a portion of affordable houses to be built within a development above this size. A territorial authority can use money collected from a development of less than 20 houses to offset the costs of providing a development contribution waiver for developments above 20 houses.
Section 27 governs the territorial authority’s use of money given to it, with subsection (4) expressly permitting the offsetting of an amount collected under an affordable housing policy against the amount of a waived developer contribution.
Affordable Housing 277
5.4 Conclusion on Potential Use of Planning Tools and Development Incentives in the New Zealand Context
The Act enables territorial authorities to require developers to provide affordable housing, land and/or money, effectively sanctioning the use of planning tools such as inclusionary zoning and linkage zoning. Territorial authorities may offer incentives to such developers in the form of a density bonus (which may be treated as a transferable development right), faster consent approval, a development contribution waiver, rates remission or postponement, and/ or financial assistance under an applicable funding or financial policy. These planning tools and incentives must be applied fairly and consistently, in line with the relevant affordable housing policy. In particular, the results from the housing needs assessment should inform the development of the criteria contained in the policy for determining to which developments the affordable housing policy applies.
Based on Australian research, the combination of a mandatory scheme (requiring actions of developers) with the use of incentives is likely to pro- vide more affordable housing units than a solely incentive-based scheme. In addition, with the value of the New Zealand housing market still high, mandatory affordable housing contributions will be useful in ensuring access to affordable housing. The current slowdown in development activity may provide opportunities for non-profit housing providers to step in.
However, the usefulness of these planning tools may be affected by regional variation in territorial authorities’ take-up of the powers in the Act. It is con- sidered that territorial authorities’ concerns regarding the prescriptive nature of the legislation have largely been addressed, but the cost of implementing the powers under the Act may be too great for some territorial authorities.
6. SPECIAL PURPOSE LEGISLATION
The provision of affordable housing through the use of planning tools has occurred widely overseas, with the power to use these mechanisms often incorporated into existing planning legislation.247 Here, the decision to enact special purpose legislation was a major theme raised by submitters, who considered that an amendment to the RMA, or to the LGA, would be more appropriate.248
247 See s 106 of the Town and Country Planning Act 1990 (UK), discussed above. 248 “Part One: clause by clause analysis”, supra note 96, at 1.
New Zealand Journal of Environmental Law
6.1 Need for Legislative Mandate
The potential for Australian planning legislation to incorporate inclusionary zoning has been discussed as follows:249
Although there is currently no mechanism in planning legislation in most Australian jurisdictions to cover Inclusionary Zoning, I believe the present objects of most planning acts would support the creation of such a mechanism. This is because these acts generally direct planning authorities to give equal value to social and cultural factors in assessing and preserving environmental values.
In contrast, “New Zealand no longer has a planning [A]ct which could embody clauses to achieve affordable housing objectives”.250 As noted earlier, Auckland City Council received a legal opinion stating that it would be possible to construct a justification for inclusionary zoning under the RMA, but the advice provided also expected such justification to be legally challenged.251 Auckland Regional Council considered linkage fees would also need “careful justification”.252 The justification required by New Zealand’s Resource Management Act 1991 has been contrasted with overseas planning legislation’s explicit inclusion of social goals.253
In recognition of the need for legislative endorsement of the use of planning tools to provide affordable housing, HNZC stated that “legal mandate should be clear” for local government involvement.254
HNZC sought a legal opinion from John Hassen on whether the matters sought to be achieved by the Act could be incorporated into the RMA.255 John stated
Affordable Housing 279
that “[t]he RMA does not preclude a district plan from including objectives, policies and rules, to facilitate development of affordable housing in a com- munity”.256 However, he went on to acknowledge that:257
The purpose and principles of the RMA are materially different from the purposes of the AHETA Bill. In particular, although the RMA’s references to enabling people and communities to provide for their social wellbeing may provide some scope for affordable housing initiatives, the RMA provides no weighting in favour of such initiatives;
He expanded further on this point, as follows:258
... nothing in Part 2 of the RMA elevates affordable housing for special consideration (by contrast, for example, with the various matters section 6 requires to be ‘recognised and provided for’ and section 7 requires to be given ‘particular regard’). Therefore, Part 2 of the RMA does not give councils any sure mandate or direction to give any particular emphasis to the delivery of affordable housing. Any initiatives for the delivery of affordable housing would simply stand or fall on their merits, when tested against competing considerations under the RMA.
The LGEC’s recommendation to use special purpose legislation was consistent with this opinion:259
... we were advised that at present the RMA provides no weighting in favour of social initiatives, and that substantial changes would be required to the mechanisms and philosophy of the Act in order to use it to implement the purposes of this bill.
As such, the Bill was “deliberately not aligned to the purpose and principles of the Resource Management Act 1991”.260
It is noted that LGNZ drafted an alternative bill, as part of its submission
New Zealand Journal of Environmental Law
to the LGEC, to operate as “parallel legislation” sitting alongside the RMA.261 Clause 7 provided that in achieving the Resource Management Act’s purpose, regard may be had to the need for affordable housing, in addition to the matters set out in s 7 of the RMA.262 The alternative bill allows affordable housing requirements to be included in regional and district plans, and regard is had to affordable housing need when considering an application for resource consent.263 A discussion of these considerations is undertaken below, as part of how the Act interacts with the RMA.
Similarly, the LGEC gave three reasons for recommending special purpose legislation over incorporating the policies for the provision of affordable housing into the LGA:264
The bill provides detailed guidance to councils on the development of an affordable housing policy. While the LGA specifies various policies that local authorities must develop, it does not provide a similar level of detail, meaning that affordable housing would appear disproportionately important if it were included in the Act. Further problems of interpretation might arise because the bill’s appeals and objections process is drawn from the RMA, and does not apply to any other policies developed under the LGA; and affordable housing principles would not fit within the structure of the Act, which has been designed to help territorial authorities understand their legal duties.
6.2 Interaction between the Act and the LGA and RMA
Having considered the reasons for enacting special purpose legislation, rather than incorporating the Act’s provisions into the RMA or LGA, the next issue is how the Act interacts with each of these two Acts.
(a) Special consultative procedure and the long-term council community plan Although minor amendments to an affordable housing policy do not trigger the special consultative procedure,265 s 16 provides that the special consultative
section 83”.
Affordable Housing 281
procedure must be used to adopt an affordable housing policy, and to amend the policy in a substantial way.266 The review of an affordable housing policy also occurs “after identifying community outcomes” under s 91 of the LGA.267 The references to the LGA in adopting, amending and reviewing an affordable housing policy illustrate that these processes are largely drawn from that Act.Originally, an affordable housing policy was to be included as an optional funding and financial policy under s 102 of the LGA, and would be adopted as part of a long-term council community plan.268 However, s 102(6) prescribes that “[a] policy described in this section may be amended only as an amendment to the long-term council community plan”, which requires use of the special consultative procedure.269 Therefore, s 38 now only requires a summary of the affordable housing policy in the long-term council community plan.
The Bill also referred to the housing needs assessment occurring in con- junction with the use of the special consultative procedure to adopt a funding or financial policy, or to adopt or amend a long-term council community plan.270 This caused submitters to question whether a territorial authority’s decision to undertake a housing needs assessment needed to follow the special consultative procedure.271 HNZC clarified that “[t]he housing needs assessment is separate from the special consultative procedure”.272 This resulted in s 7 merely stating that a territorial authority may “decide to assess the need for affordable housing in its district at any time”, rather than in conjunction with the adoption or amendment of other policies.
(b) Principles of LGA, s 14
Section 6 sets out what the Act does about affordable and social housing, and requires territorial authorities taking action to “observe all the principles in section 14 of the Local Government Act 2002”.273 The Bill originally gave first priority to s 14(1)(e) of the LGA, to allow territorial authorities to develop joint
266 AH:ETAA, s 16(2) & (5).
267 Ibid, s 16(4).
268 Affordable Housing: Enabling Territorial Authorities Bill 2007 (No 189-1) cl 42. The “long- term council community plan” is defined in s 5(1) of the LGA as meaning “a long-term council community plan adopted under section 93”.
269 LGA, s 93(5).
282 New Zealand Journal of Environmental Law
housing needs assessments and affordable housing policies.274 However, this priority was removed following consideration of submissions such as Auckland City Council’s, which stated that “[t]his conflicts with the LGA guidance on the hierarchy of principles, which promotes open, transparent and accountable decision-making”.275
(c) Effect of affordable housing policy on policies adopted under the LGA Section 16(3)(b) requires a summary of the draft affordable housing policy’s effect on policies adopted under the LGA to be included in the statement of proposal for adopting an affordable housing policy using the special consultative procedure.276 However, this does not appear to address the submission that no guidance is given over the priority to be accorded to the various policies, such as those included in the long-term council community plan.277 Section 28 provides for the amendment of policies under s 102(4) and (5) (for example, the development contributions policy) to enable territorial authorities to use land or money to offset the loss of development contributions.278 However, s 29, which deals with conflicts between an affordable housing policy and a district plan, does not extend to LGA policies.279
(d) Affordable housing contributions versus development contributions Submitters suggested that the provisions in subpart 5 of the LGA concerning development contributions could be amended to also apply to affordable housing contributions. However, HNZC considered this would be “inconsistent with the purpose of development contributions which are solely a mechanism to enable territorial authorities to recover the capital costs incurred by them in providing infrastructure for new developments”.280 In addition, there is no right of appeal against development contributions, as they are a “cost recovery mechanism”.281
276 AH:ETAA, s 16(3)(b).
Facilitating the Provision of Affordable Housing 283
(a) Interaction between an affordable housing policy and district plan
It is not necessary to amend district plans to “specifically refer to the affordable housing policy”, though this will provide greater certainty to developers.282 Regard may be had to an affordable housing policy when considering a resource consent application, as a s 104 matter that is “relevant and reasonably necessary to determine the application”.283 Provided the district plan is broadly worded, consent may be granted with a density bonus, taking into account the affordable housing policy. To incentivise developers, a predictable and certain benefit from the density bonus is desirable.284 For example, the district plan may state which activities are eligible for floor area bonuses. A density bonus will be precluded from some district plans,285 meaning that “it is more likely that provision for density bonuses would be built into district plans at the time of a plan change”.286
Some district plans may need to be amended for affordable housing policies to be taken into account in relation to “restricted discretionary activities”, if affordable housing is not listed as a matter “to which the territorial authority has restricted its discretion”.287
(b) Conflict between an affordable housing policy and district plan
Section 29 sets out the process for the Environment Court to resolve conflicts between a territorial authority’s affordable housing policy and its district plan. However, HNZC considers that s 29 will rarely be used, due to the development of affordable housing policies occurring through the special consultative procedure, and the express requirement in s 16(3)(b) to summarise how the draft policy affects the district plan and policies adopted under the LGA.288
Auckland City Council identified a number of issues with clause 34 of the Bill, which became s 29. It submitted that little guidance was provided to the Environment Court on how to reach a resolution, given that the purpose and principles of the RMA would need to be balanced against the principles
287 “An overview of the Affordable Housing: Enabling Territorial Authorities Act 2008”, supra note 8, at 9.
284 New Zealand Journal of Environmental Law
of local government under the LGA.289 However, HNZC considered that the Environment Court judges “are experienced with these issues”.290Auckland City Council also noted the inability of the Environment Court to provide relief in the event of a conflict.291 The LGEC ultimately recommended a new clause to require the Environment Court to amend the policy and/or the district plan, if it decides there is a conflict.292 Regarding timeframes, the LGEC also recommended new clauses to ensure any potential conflict is dealt with by the territorial authority before the matter is appealed to the Environment Court, to ensure that no person could appeal to both concurrently.293
(c) Objections and appeals process
It is noted that the objections and appeals process contained in the Act is drawn from the RMA. The LGEC recommended that the Environment Court hear appeals from territorial authorities’ decisions, to provide “more expedient decision-making and lower costs for parties making appeals”.294 It also took into account “the specialist expertise of the Environment Court” and “the Environment Court’s capacity to undertake this work and deal with cases more quickly than the High Court”.295 Similarly, HNZC stated that “[t]he Court will consider the purpose of the bill and related matters and with suitable expertise should be more than adequate to the task”.296
The process differs from that contained in the LGA due to the effect this Act may have on property rights.297 In contrast to the RMA, “the owners of land bordering the land on which the person proposes to do the development” have the right to be notified that an affordable housing policy applies to the development, and have objection rights to this decision under s 21(2).298 HNZC states that “[t]he objection process needs to balance the rights of property owners with wider public interest goals of the territorial authority’s affordable housing policy”.299 With this in mind, incentives such as density bonuses are acknowledged to have “significant implications for owners of land bordering the land in question”.300
298 AH:ETAA, s 21(2).
299 “Part One: clause by clause analysis”, supra note 96, at 59.
Affordable Housing 285
(d) No compensationSection 26 provides that land is not taken or injuriously affected, and therefore compensation shall not be paid, only because an affordable housing policy exists, or only because of a provision in an affordable housing policy, or only because a developer is required to act under an affordable housing policy.301 This has the same effect as s 85 of the RMA.302
6.3 Conclusion on Special Purpose Legislation and Alignment with RMA and LGA
Special purpose legislation was enacted due to the RMA providing no weighting in favour of social initiatives, while incorporation into the LGA was also viewed as inappropriate. This decision enabled the Act to draw on relevant processes from both the RMA and the LGA. In particular, the Act draws on the policy- making process from the LGA, by requiring the special consultative procedure to be used when adopting and substantially amending an affordable housing policy. The Act has largely drawn its objections and appeals process from the RMA, rather than the LGA, due to the Act’s effect on property rights.
The Act requires consideration of the way in which a draft affordable housing policy affects both the territorial authority’s district plan, and the policies a territorial authority has adopted under the LGA. However, a process for resolving conflicts between an affordable housing policy and a territorial authority’s district plan is provided for in the Act.
7. ADDITIONAL INITIATIVES TO ADDRESS HOUSING AFFORDABILITY
The following section considers how the Act fits into the assortment of current solutions seeking to address the issue of housing affordability. The second part of this section considers selected initiatives which the government, and other groups, may undertake in the future.
New Zealand Journal of Environmental Law
7.1 Current Initiatives
The government launched a two-year “Shared Equity” pilot scheme on 2 July 2008, for home buyers in Auckland, Wellington, Nelson, Christchurch and Queenstown.303 A home buyer must contribute a 5 per cent deposit, with Kiwibank providing the buyer’s home loan, and HNZC providing a “top up” interest-free loan of between 5 and 30 per cent.304 This reduces the amount that a person needs to borrow from the bank.
The Shared Equity scheme can only be used for houses priced at 90 per cent or less of the lower quartile house price for the relevant regions, and the gross income of households applying must fall within $55,000 to $85,000.305 HNZC must be repaid when the house is sold or the loan term ends, and any increase or decrease in the home’s value is shared between the homeowner and HNZC.306 The $35 million scheme allows up to 700 loans, but applications will be balloted if demand exceeds the loans available.307 However, applications to buy or build new homes will bypass the ballot, “to help increase the new supply of
affordable homes”.308
Welcome Home Loans enable modest income earners, who are outside standard lending criteria, to obtain a home loan with little or no deposit.309 This is achieved by HNZC providing mortgage insurance to the lender; HNZC does not insure the borrower.310 The maximum amount of a Welcome Home Loan is
$280,000, and a household income for one to two eligible borrowers is capped
October 2008).
Facilitating the Provision of Affordable Housing 287
at $85,000, and $120,000 for three or more borrowers.311 No deposit is required on loans up to $200,000, while a 15 per cent deposit is required on the amount borrowed over $200,000, up to the maximum loan of $280,000.312 The Welcome Home Loan scheme was piloted in 2003 through Kiwibank, and was launched nationwide in 2005.313 As of March 2008, 3341 people had taken out such a loan, with 24 per cent of loans granted nationwide having been paid back in full.314
Kiwisaver contains two features to help members purchase a home. The first home deposit subsidy provides a subsidy of $1,000 for each year contributions are made to Kiwisaver, up to a maximum of $5,000 for five years of contri- bution.315 Members must contribute to Kiwisaver for three years before the subsidy can be obtained, with the first subsidies becoming available from 1 July 2010.316
To be eligible, applicants must have a household income of less than
$100,000 (for one to two people), or less than $140,000 for more than two people.317 A lower-priced home must be purchased, though the price caps will be reviewed in 2009, before the first subsidies are paid out.318
The contributions a member makes to Kiwisaver can also be used to purchase a first home. After three years of membership, all or part of both a member’s contributions and the member’s employer’s contributions can be withdrawn to buy a first home.319 However, the government’s $1,000 kickstart and the member tax credit cannot be withdrawn.320
PA0805/S00162.htm> (accessed 18 August 2008).
319 Kiwisaver, “Benefits and incentives”, at <http://www.kiwisaver.govt.nz/benefits/ benefits/#06> (accessed 21 October 2008).
288 New Zealand Journal of Environmental Law
Papaka¯inga has been defined as “habitation”, “local environment” and “settle- ment”.321 Papaka¯inga lending “is available for building or buying housing on Ma¯ori land held in multiple ownership”.322 The loan is only secured over the house, which must be “easily relocatable with easy road access, and meet applicable local authority requirements”.323 The agreement of all landowners, or trustees of land held in trust, must be obtained to be eligible for a Papaka¯inga loan for a home on land held by multiple owners.324
Central government, local government, and the private sector are working to develop an integrated urban community at the former Hobsonville airbase.325 Three thousand new homes are planned, with 500 (or up to 15 per cent of the total development) available for first home buyers.326 Five hundred state rentals will be provided, with the remainder available on the open market.327 The focus is on sustainability, and development is expected to take at least ten years.328
A redevelopment at Tamaki was also announced earlier this year, in which central and local government are similarly partnering with the private sector, to deliver 3,000 homes. A significant portion of this number will be affordable housing.329
Land Information New Zealand is planning to carry out a review of public land holdings, to determine “what available and appropriate Crown land could be opened up for housing development”.330
Affordable Housing 289
The evaluation of some regulatory costs is also planned to occur, including consideration of “how to simplify the design and building consent costs for starter homes”.331
The Housing Innovation Fund was established in 2003, “to encourage the inno- vative development of a non-government social housing sector able to provide affordable and secure rental housing and home ownership opportunities to low- income New Zealanders”.332 Although the Housing Innovation Fund is aimed primarily at the social housing sector, it has also played a role in the provision of affordable housing, particularly through its provision of “seed funding” to support the Queenstown Lakes Community Housing Trust, as discussed earlier in this paper.
7.2 Future Initiatives
The Commerce Committee resolved on 1 March 2007 to conduct an inquiry into housing affordability.333 The inquiry sought to “[i]dentify and quantify all components of the cost of housing for first home buyers in New Zealand and examine significant shifts over time”.334 The Commerce Committee made ten recommendations in its 15 August 2008 report to the government.335 These
October 2008).
9621DBD5C7A7/92196/DBSCH_SCR_4170_61892.pdf > (accessed 17 August 2008) 5.
<http://national.org.nz/Article.aspx?ArticleId=28498> (accessed 21 November 2008)). The National Party’s policy is to free up the supply of land by allowing “councils to incentivise the release of residentially zoned land by landholders for subdivision and housing in a
New Zealand Journal of Environmental Law
recommendations related to land use and supply, financial services, local authority processes, central government actions, building costs, third sector housing initiatives, demographic factors, and interventions in the Auckland region.336 Some of the selected future initiatives discussed below fall within the broad areas the Commerce Committee recommended for consideration.
The government plans “to develop large scale housing developments involving partnerships between central, regional, and local government, and the private sector”, and has been considering the appropriateness of introducing “Urban Development Agencies”.337 These agencies are able to carry out “specific development projects that are of a scale and complexity that would not generally occur in the private sector”, and have the ability to facilitate urban renewal projects that previously received little market interest.338 Their role in Australia was noted as follows:339
Regional UDAs in Australia have been used to coordinate faster urban development of large, strategic sites with roles including: land acquisition and amalgamation; fast-tracking regulatory approvals; specification of design, quality standards and affordable housing requirements.
The government also intends to support the development of the third sector, to “provide more affordable rental and owner-occupied houses for lower-middle income families or individuals in high cost areas”.340 However, this is viewed as a medium- to long-term initiative.341 The possible establishment of dedicated housing entities, similar to the United Kingdom’s housing associations, has been raised.342
reasonable timeframe” and by issuing “a National Policy Statement that ensures local councils plan for a forward supply of suitable land zoned for housing”. The policy also states that the shared equity scheme will continue, and public land will be developed for first home buyers under a “Gateway Housing” initiative.
336 “Inquiry into housing affordability in New Zealand”, supra note 333, at 4. 337 “Action plan to increase affordable housing”, supra note 331.
338 “Home ownership — protecting the Kiwi dream”, supra note 325. 339 “Action plan to increase affordable housing”, supra note 331.
Affordable Housing 291
The Department of Building and Housing is to collect further information on land availability, because:343
While there is significant land zoned for housing in our major urban centres, there is little accurate information regarding timeframes in which it is likely to be available for development ...
This indicates the government may consider policy approaches to address “land banking”, which operates to prevent a steady release of new land for housing.344 Offering incentives, like development contribution waivers, is a possible mechanism for encouraging development timeframes to be brought forward.345 Similarly, “penalties for withholding residential land once rezoning or permission for development is granted” is another possibility.346
Although this paper focuses on efforts to increase the supply of affordable housing, it may also be important to protect such existing housing. Controls on demolition and change of use may restrict or limit redevelopment of affordable housing within a particular area.347 If redevelopment is approved, a portion of affordable housing could be required in the new development, resulting in no net loss of such housing.348
Another possible initiative, which was considered but recently rejected in the United Kingdom, is the introduction of a levy to capture a portion of the increase in land value caused by the granting of planning permission.349 The reasoning for such a levy is that the “windfall gain” or betterment “should be shared as public benefit”.350
Since the Act already requires developer contributions in the form of
343 “Home ownership — protecting the Kiwi dream”, supra note 325. 344 Gurran et al, supra note 150, at 29.
New Zealand Journal of Environmental Law
affordable housing, land and/or money, it is considered that such a levy would have to operate as an alternative basis on which to seek contributions to prevent contributions being sought twice for the same development.
7.3 Conclusion on the Role of the Act in Addressing Housing Affordability
The Act seeks to increase the supply of affordable housing, by providing powers to territorial authorities to require contributions from developers. The Act’s focus on increasing housing supply contrasts with the government’s demand- side strategies, such as the Welcome Home Loans, the Shared Equity pilot scheme and the Kiwisaver first home deposit subsidy, which aim to assist people into homes. However, the government has initiated other schemes to add to the supply of affordable housing, including the large-scale housing developments at Hobsonville and Tamaki that will include a proportion of affordable housing. The government’s support of the third sector through Housing Innovation Fund grants and loans indicates that this sector will likely play a bigger role in supplying affordable housing in the future. Other possible initiatives include the use of Urban Development Agencies, which when combined with the planned review of public land holdings indicate that more large-scale mixed housing
developments will occur.
8. CONCLUSION
It is concluded that the Affordable Housing: Enabling Territorial Authorities Act 2008 will assist the supply of affordable housing in New Zealand. The regulation of land use through the application of planning tools, such as inclusionary zoning and linkage zoning, enables the social outcome of providing an increased supply of affordable housing to be obtained. In particular, territorial authorities have been given a broad power to require actions from developers, including the provision of affordable housing, land and/or money. They also have a wide discretion to offer developers incentives, such as density bonuses and development contribution discounts. The legal sanctioning of these powers recognises the role that local government can play in using the planning system to address the housing affordability issue.
However, it is considered that the Act’s effectiveness in increasing the supply of affordable housing will partly depend on territorial authorities’ uptake of the tools provided. The cost of developing an affordable housing policy, and the potential costs of appeals, may discourage some territorial authorities. Other factors which may affect the supply of affordable housing through the use of the Act are the housing market conditions, and the ability of the third sector to assist in housing development and management.
Affordable Housing 293
It is considered that the United Kingdom’s experience in using planning obligations to provide affordable housing can help to inform the future use of the powers sanctioned in New Zealand. In particular, guidance on how to negotiate the amount of an affordable housing contribution in the United Kingdom may assist territorial authorities in New Zealand that choose to negotiate with developers over incentives.Finally, the Act is only one of the responses needed to address the issue of housing affordability. Future initiatives, particularly the greater support that the third sector is expected to receive, will be important in ensuring that the issue of housing affordability is adequately addressed.
[Postscript: Following the change of government in New Zealand in late 2008, the Infrastructure Bill 2009, clause 49 is scheduled to repeal the Affordable Housing: Enabling Territorial Authorities Act 2008. The provision in the latter Act stating that certain covenants are void if the purpose is to stop land being used for housing for persons on low incomes or with special housing needs or disabilities is to be retained and inserted as s 227A of the Property Law Act 2007. The Infrastructure Bill is likely to be passed in 2010.]
NZLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.nzlii.org/nz/journals/NZJlEnvLaw/2009/8.html
