Auckland signs up to long-running construction bonanza

The Unitary Plan, signed off by Auckland City Council recently, will ignite a long-running construction boom which could transform Auckland from a shambling collection of suburbs to a modern metropolis.

The Unitary Plan, signed off by Auckland City Council recently, will ignite a long-running construction boom which could transform Auckland from a shambling collection of suburbs to a modern metropolis.

The Plan will bring 30 percent more land into the Rural Urban Boundary but will rely mostly on intensification of brownfield sites to accommodate an additional 422,000 new houses in the next 30 years.
The scope of the potential construction spend is huge, especially when the cost of the attendant infrastructure provision is taken into account. The New Zealand building industry is already stretched to capacity and facing skills shortages and competition for materials, meaning that there will be opportunities for overseas companies, suppliers and contractors.
Four main residential zones will be created:
  • Zone One (“single house”) – one house per section, two storey limit
  • Zone Two (“mixed housing suburban”) – two houses per section (more with resource consent), two storey limit
  • Zone Three (“mixed housing urban”) – two houses per section (more with consent), three storey limit
  • Zone Four (“terraced housing and apartment buildings”) – five to seven storeys.
Nearly half of the space devoted to the traditional ‘single house plus section’ in the high value central isthmus area will be Zone Four.

The adoption of the Unitary Plan is an important step in a journey which began in 2009 with the forced amalgamation of Auckland’s seven territorial authorities and the Auckland Regional Council into a ‘Super City’. None of the steps in that journey has been easy.

Central government, aware of how the dynamics in local government politics favour entrenched interests, kept the Council’s feet to the fire – threatening at different times to legislate over the Plan if it failed to deliver change of the order required, or to sack the Council and appoint commissioners.

This was echoed at the grass roots level with the formation of the Coalition for More Homes – an unlikely alliance of Generation Zero, property developers and the Salvation Army, set up to counter the well-resourced anti-intensification lobby.
The policy process was exhaustive. Consultations on the Council’s proposed Plan were referred to an Independent Hearings Panel which sat through 249 days of hearings, received over 13,000 submissions and considered over 10,000 items of evidence.

The Panel commissioned two expert reports on whether the notified Plan provided sufficiently for population and economic growth. The results identified “a severe shortfall” in residential development capacity and less acute shortfalls in commercial and industrial capacity.

Based on that information, the Panel concluded that the Plan should “err toward over-enabling” because the risks and outcomes of under-provision were much more severe. The Plan up-zones land regardless of infrastructure provision, putting pressure on infrastructure providers to be more flexible in reacting to building demand, rather than setting the growth direction.

The Panel’s recommendations were bold. The Council has accepted most of the more substantial ones – stunning the cynics both with the level of resolve shown and by wrapping up its decision-making four days ahead of deadline.

There is the potential for some delay in implementation as people have until 18 September to lodge an appeal. Appeals to the High Court are restricted to points of law and appeals to the Environment Court are available only where the Council has rejected a Panel recommendation or accepted an out-of-scope recommendation that would unduly prejudice the submitter.

Regardless of how many appeals are lodged, we expect the Courts will want to resolve them quickly to allow the building boom to get underway.

There are also other policy and legislative developments beyond the Plan which should ease the compliance processes around construction activity.
The Resource Legislation Amendment Bill, to be reported back from select committee in November, provides for a myriad of changes to standardise planning documents and reduce consenting requirements. We expect many will be passed although some of the Bill’s more radical provisions have run into political trouble.

A proposed National Policy Statement on Urban Development Capacity will require councils in high growth areas to provide for a 15 percent to 20 percent buffer in their land release plans so that they can be confident they can meet demand without putting pressure on land prices. Arguably, Auckland has already met its targets through the Unitary Plan, so this initiative will have limited impact in Auckland in the short term.

And – further out – the Productivity Commission has embarked on a ‘blue skies’ review of the whole resource management and planning framework. This review has proposed distinguishing between the built and the natural environment – either as distinct sections in a single law or as two laws. The legislation governing urban planning would contain a presumption in favour of development and would specify that the primary purposes of the urban planning system are to:
  • enable changes in land use
  • ensure sufficient capacity to meet demand, and
  • promote the mobility of people and goods through the city space.
The Commission is now consulting on its draft report and hopes to have its final recommendations with the government by 30 November this year.
However Finance Minister Bill English indicated when he first announced the inquiry in 2015 that he would be looking for something to take to the electorate in the 2017 elections rather than to enact this term.
Given that the Unitary Plan has released some of the urgency around the Auckland housing issue, this timetable seems likely to be followed.

Luke Hinchey and Brian Clayton are partners at Chapman Tripp. Luke specialises in environment planning, resource management and public works law. Brian specialises in  construction projects.

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