Late 2019 saw the Government up its pace in addressing the country's housing and infrastructure issues through the introduction of a number of proposed legislative reforms.
The long-awaited amendments to the Resource Management Act 1991(RMA), Kāinga Ora's new urban development powers and the proposed Infrastructure Funding and Financing Bill were all flagged as part of the Government's new tool kit to transform our urban environments and facilitate urban growth. How effective will these tools really be in addressing Auckland's burgeoning population and historic underinvestment in infrastructure?
Striking the right balance between environmental protection and fast-paced housing development will not be easy.
A "comprehensive" review of the RMA is under way but is still in its early stages. The expert panel tasked with developing the proposals for reform is due to report back to Government in May.The panel's terms of reference and the initial issues and options paper it produced signal the likelihood of at least some new provisions that may assist in facilitating housing and infrastructure development.
However, the RMA has also been criticised for failing to protect environmental bottom lines. There is a long way to go before we see a bill introduced to Parliament which is now looking unlikely before the September election. Kāinga Ora was created last year by amalgamating Housing New Zealand, HLC and parts of the KiwiBuild unit. This new Crown agency is tasked with initiating, facilitating and
undertaking urban development, but its enabling legislation does not give it the functions and powers necessary to carry out comprehensive urban development at scale.
The Urban Development Bill before Parliament will provide Kāinga Ora with the power to undertake complex urban development projects by itself, or in partnership with iwi, local government or the private sector.
The process will involve the establishment of a specified development project (SDP) and then a development plan outlining the development powers and funding arrangements that will be used for the SDP. The development plan process will involve a public consultation and submission process but submitters will have very limited appeal rights. Importantly, the Urban Development Bill will provide Kāinga Ora with a comprehensive suite of powers that would allow it to act as a consenting authority in relation to the specified development project area, compulsorily acquire land, build infrastructure or require network utility operators to install assets, set targeted rates and levy development contributions.
If effectively used, the new powers will enable Kāinga Ora to partner with councils, communities, mana whenua and private developers to build much-needed homes and infrastructure at pace and scale.
However, early indications are that specified development projects will only be used in a dozen or so areas. So what is there for everyone else wanting to get on with housing development outside SDP areas?
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Years of underinvestment means that Auckland is faced with the challenge of servicing new areas with infrastructure but also rectifying years of underinvestment in existing areas. Local government has the tools to finance and provide new infrastructure but is struggling with debt levels and the pressures of population growth, climate change, tourism and other responsibilities passed down from central government. The Infrastructure Funding and Financing Bill, at select committee stage, provides some new tools for developers desperate for new infrastructure to service their developments.
Developers who need new infrastructure for housing development currently need to shoulder the costs up-front through development contributions, construct the infrastructure themselves and/or convince council to take on debt to build it. The Infrastructure Funding and Financing Bill proposes a new way of financing infrastructure that spreads the burden of paying for it over time among those who benefit from that new infrastructure. The bill will enable Special Purpose Vehicles (SPVs) that will be responsible for financing and the construction of the infrastructure assets and will service the financing via a levy on future owners. Once constructed, the infrastructure will vest in the relevant local authority.
The Infrastructure Funding and Financing Bill drew heavily on the model successfully used for the Milldale development, north of Auckland. Crown Infrastructure Partners, in partnership with Auckland Council, established an alternative financing model for the Milldale development to enable the delivery of infrastructure to support the construction of 9000 new homes. The infrastructure levy that is required to be paid by the new home owners each year for the next 30 years is secured by an encumbrance on the title of each section. As a result, Auckland Council was able to bring forward its investment in the infrastructure required to support the project.
Of all the Government's recent announcements it is the Infrastructure Funding and Financing Bill that offers the most promise to solve Auckland's problems in the short term. The devil will be in the detail as the bill progresses through to law and this will influence the level of uptake from developers. The new funding model, combined with Kāinga Ora's new powers and the RMA overhaul, provide a promising new toolkit to enable the delivery of new housing. Whether the scale and pace of delivery of housing and infrastructure has a real impact on the delivery of new housing and the infrastructure required to support it will depend on the extent to which the market capitalises on the new tools available to it. Watch this space.
• Christina Sheard and Marija Batistich are partners in Dentons Kensington Swan's environment and planning team.