Lawrence Yule
HASTINGS District Council is working hard to match supply with demand, says its mayor.
Mayor Lawrence Yule said the district council did not want housing to be a pinch point on the current high-growth environment.
To plan and manage urban growth, council used the Heretaunga Urban Plains Development Strategy (HPUDS).
This aims to provide direction for the growth of commercial, industrial and residential sectors, and is an agreed planned release of land between Hastings District Council, Napier City Council and Hawke's Bay Regional Council.
Mr Yule said the critical parts of the 35-year strategy worked to manage where growth occurred, where infrastructure was provided and how councils could look after the environment.
In the most recent HPUDS market demand report, prepared by TelferYoung Hawke's Bay Ltd, it was found there would be enough "stock residential sites" expected to cover demand for both Hastings, and Napier past 2045.
This took into account a declining population, the projected household growth rate for the twin cities - at 480 new households per annum until 2025 - and the amount of potential residential, or subdivision sites identified.
In Hastings, there were 2717 of these across all price brackets, from Havelock North to Flaxmere, with indicative timing for subdivision from 2018.
Currently, however, there are 273 sections across three areas in Hastings and Havelock North which are either vacant, or seen as a "potential yield" - as reported in a forum held at council last week.
About 75 of these had been sold but had either no houses on them, or no building consents lodged.
"These could be built on tomorrow," Mr Yule said.
Another 13 hectares of land, spread across three areas, is ready for subdivision - it is thought about 188 sections could be built on this land, based on the district's average new section size.
Mr Yule said council had already provided the infrastructure for these, but their release was outside the control of council.
Hastings District Council economic development group manager Craig Cameron said there appeared to be confusion around what council could, and could not do about the supply of residential sections.
"Council's role is to zone land in a way that allows the best residential development for the district, and install infrastructure for the development," he said. "It has to do that in a way that is not going to be costly for ratepayers."
As it was still a costly process, council had an obligation not to spend money on infrastructure which might be un-needed in the "reasonably near future".
As there was a strong demand for vacant sections, Mr Cameron said council were working to identify potential areas of residential growth, while ensuring any expansion into high-value growing land was carefully managed.
They were also encouraging higher levels of building within urban areas.
Currently, Mr Yule said there were a number of areas which had been zoned but had not been transferred into sections.
"Effectively that's not our mandate to do; that's the developers," he said.
"If you want to go and buy a section, that's quite hard at the moment in certain parts, but actually not all of that is the council's responsibility."
He pointed to the "pinch point" in Havelock North, where only a small number of sections still had not been developed into subdivisions. Other sections had been subdivided, but no building consents had been lodged.
"We as a local authority, we've done our bit, we've rezoned the land and put all the infrastructure [in] and for whatever reason the developer hasn't brought those to market yet," he said, "that in itself makes it harder for people to buy sections so we're talking with them to see if they can bring those to market as quickly as possible."
Mr Cameron said while council could re-zone land, it could not tell a landowner to divide their land into, or tell them how, when and for what price to sell a section.
"Having said that, central government has recently raised the possibility of using the Public Works Act to compulsorily buy land from owners who are 'land banking'," Mr Cameron said.
At this stage however such powers did not exist. Citing the 75 empty sections, Mr Cameron said while they were available for building, the council could not control whether they were available to be on-sold.
Mr Yule said he did not think land banking was occurring, but acknowledged a lot of developers were securing land as it was rezoned and releasing it to the market when they felt it was commercially viable to do so.
"What we've got at the moment is an upsurge in demand coming off a period when there has been very little growth or development," he said.
There had also been "shakeouts", he said, citing a property developer who had purchased a number of properties in Lyndhurst, and was then liquidated, tying the properties up for a period before they could be released.
While some could suggest council re-zone land, and then let the market determine where people developed, and built, Mr Yule said this would mean creating new infrastructure for these areas.
Mr Cameron said the council arranged for a loan to pay for infrastructure from the nearest developed area to, and through, a new subdivision.
"As the area is developed Council is repaid the cost of the infrastructure. If the land is not developed or the uptake is slow, then Council - the ratepayer - carries the cost of the loan," he said.
This meant subdivisions were planned where people were most likely to want to live, and where putting in the infrastructure required would be the most cost-effective.
Mr Yule said as council managed their risk, so did developers.
"A developer typically spends three times the original land value to get a section to market," he said. "It is a risky business and they also manage the risk.
"The ratepayer also bears a much great financial risk if the release of land is not staged and planned."
Developments which were "uncontrolled" were unlikely to be profitable for developers, he said.
By releasing properties to the market in a staged, organised way, developers and the council were able to manage their respective risks. For council this ensured infrastructure, which could cost millions for each development, was provided at a stage when they knew it would be used.
Council had more areas on the drawing board for the future.
At last week's forum it was reported approximately 270 sections were expected to be available to the market over the next few years.
Mr Cameron said council was also working to ensure it would be able to react quickly to market changes.
However he said this had to be balanced with the need to not compromise the fertile land "at the heart of our economy", and the need to ensure ratepayers were not saddled with unnecessary loans.
An issue being raised in this debate was that the district's economic development was being constrained by a lack of sections, Mr Yule said.
"I certainly for one would never want that to be a reality, and we're working really hard to make sure that doesn't occur."
"In the short term there is some pressure but in the medium term there is some relief," he said.
"There is lots of land available and we're looking at how we can service that, and in what time frames, to make sure people have options for choice for building."