A fight is brewing over housing densification in New Zealand's biggest city with the Government viewing Auckland Council's moves to protect character villas as unlawful, the Herald understands.
Ministers in Wellington think Auckland Council has been overzealous in the way it has applied character protections to villa-heavy central suburbs and potentially in breach of new planning laws designed to free up urban land for more apartments and townhouses.
This could be a problem for the council as it is a central government minister who is the ultimate arbiter of whether it has interpreted the planning laws correctly or not.
If the Government is right, it would mean - eventually - more land in city-adjacent suburbs like Grey Lynn and Ponsonby being zoned to allow for apartments and townhouses.
On August 18, Auckland Council officially notified the way it would incorporate two of the Government's most significant housing changes into its plans - both of these changes were designed to force councils to open up more inner-city land for housing development, allowing more high-rise apartment blocks, and more homes per section.
It is understood the Government thinks what Auckland Council notified in August is unlawful, breaching the spirit and the letter of both laws, mainly because of the way the council has applied "special character area" protections liberally in Auckland's villa belt.
The first of the two planning laws, the National Policy Statement on Urban Development (NPS-UD) was published by then-Housing minister Phil Twyford in 2020.
This policy statement was designed to force councils in New Zealand's biggest cities to update their zoning to allow for six-storey apartment blocks in central areas, defined as being within walking distance of the town centre, or rapid transit.
The second piece of legislation, the Resource Management (Enabling Housing Supply and Other Matters) Amendment Act, was the result of a bipartisan deal between Labour and National. It brought forward parts of the NPS-UD and opened up even more land for development by allowing people to build three townhouses on most residential sections.
The changes do not force people to sell or develop sections, but they do encourage the development of more dense housing in urban centres.
Since the NPS-UD, Auckland Council and the Government have been arguing over how it was to be applied. The battle boiled down to the council's interpretation of special character areas, which protect individual parts of a city from the full application of the NPS-UD.
The Government drafted the statement with the intention of stopping councils from using blanket applications of character protection to stop development.
Instead, character protection would need to be applied on a site-by-site basis.
But Auckland Council's notified plan changes have applied special character protection to vast swathes of central suburbs anyway, carving them out from intensification rules.
Some ministers believe this to be against both the spirit and the letter of the NPS-UD.
Auckland Council thinks the protections are both justified and lawful. A council spokesperson said the "NPS-UD and Amendment Act specifically provide for councils to consider circumstances where the blanket provisions should be amended.
"These are called qualifying matters. It is therefore not illegal for Auckland Council to protect values that are important to Auckland or communities, for example Special Character Areas, through this mechanism," they said.
"The extent and location of the qualifying matters will be considered by the Independent Hearings Panel through the submission and hearing process.
"The Panel will determine whether the use of qualifying matters is justified in each circumstance and they can recommend retention or changes to the notified version," the spokesperson said.
People can provide feedback on the councils' changes until September 29. They will then be assessed by an independent panel, in a process similar to the drawing up of the Unitary Plan.
The council has the opportunity to accept or dispute the findings of that review panel by March 2024. If the council disputes the findings, the ultimate arbiter is the Environment Minister, currently David Parker.
This makes his view on the council's interpretations of the rules very important.
Speaking to the Herald earlier this week, Parker pulled his punches when asked about the plans that had been notified by councils.
"I've got a role in the end here so I have to be a bit careful about what I say - there's quite a bit of process to run yet," Parker said.
"I won't speak about any specific council, but in general there's been a high level of compliance with what we've requested. A lot of councils relish the idea the Government has helped them intensify because it's what they want for their cities and sometimes it's politically difficult," Parker said.
Parker was significantly more candid before Auckland had notified its plan. Speaking to Metro magazine earlier this year, he said the Government believed the council took liberties with special character.
"We believe the special character exception they assert is too broadly cast both in terms of quantity and location," Parker told Metro.
"When you exempt that much in a quantity sense from the requirements, in terms of city centres and transport corridors, you're going too far and you're undermining the intent of the density requirements of the NPS-UD," Parker said.
Another Government source confirmed last week that this view was still held by the Government, which considered the notified plan changes to be in breach of both planning laws.
The protection of inner city suburbs is not the only problem the Government has with Auckland's plan. The laws mean the council must be more permissive of intensification along both existing and planned rapid transit corridors.
The Government is unimpressed the council has not incorporated Auckland's future light rail corridor into its notified plan for densification.
Auckland Council's contentious interpretation of the changes is big news for the opposition too. There is an election between now and 2024, after which the Environment Minister might get dragged in to rule on any contentious dispute of the interpretation of the rules.
This means it might not be a Labour minister in the driver's seat, but a minister from National or Act.
National backed both planning changes - and deputy leader and former housing spokeswoman Nicola Willis was the driving force behind the 2021 rule change.
Its current housing spokesman Chris Bishop said it was impossible to comment before seeing legal advice on the planning changes.
Act leader David Seymour said his party "predicted" the kerfuffle over the implementation of the new rules.
"If councils do not find it profitable to allow development, they will find ways to fight back against it and that's what's playing out now," Seymour said. He said the Government should share the GST take with councils to give them an incentive to grow.
He said the rule changes raised some important questions.
"There's the question of should the person have the right to develop the property as they see fit - I think they probably should," Seymour said.
"On the other hand people have bought into these neighbourhoods precisely because the heritage of Auckland's kauri villas is one of the things along with the harbours and the volcanoes that people value about the city," he said.
Matt Lowrie of Greater Auckland, a transport and urban issues blog, said the changes the council had notified would have the effect of pushing development out of the central city to places like West Auckland.
"One of the things we've seen from the Unitary Plan that has already happened is the area that has the most development permissible, which is West Auckland, has seen the most building consents and most development going on.
"It shows that people will build where it is possible to build," Lowrie said.
He said places further out of the city were "very car-dependent" and did not have "the social infrastructure to support density".
Auckland is not the only council to provoke the Government's ire with its planning changes.
Wellington City Council has frustrated ministers with its decision not to classify the Johnsonville rail line as rapid transit, exempting that corridor from some densification changes.
Under the NPS-UD territorial authorities located in Auckland, Tauranga, Hamilton, Wellington and Christchurch as well as Rotorua Lakes Council were required to notify housing planning changes by August 20 of this year.
All councils hit this deadline with the exception of two: Waikato District Council and Christchurch City Council who missed the deadline because of resourcing pressures and staff illness.
Waikato District Council will notify its changes by September 19 this year, and Christchurch City Council will notify its changes by September 24 this year.
The delay will not affect the rollout of the housing intensification changes.
The new Ombudsman has been in his role for just 12 weeks.