The shortage of affordable housing is a hotly debated topic and is the subject of the Housing Accords and Special Housing Areas Bill introduced on 13 May 2013. Given the urgency with which the Government wishes to address the issue, the legislation has followed a rapid timetable through the legislative process, with submissions due two weeks after the Bill was introduced. The Select Committee's report on the Bill was issued on 31 July 2013.

At the time the Bill was introduced, it was intended that it would be enacted in August. The pace at which the Bill is presently progressing through the legislative process means that this timeframe is achievable. That being said, there are a number of matters within the Bill that (in our view) require further consideration and amendment before enactment.

This FYI briefly outlines the purpose and framework of the Bill, before touching on some of the key issues raised in submissions and the Select Committee's response to the concerns raised.

The Bill

The Bill is intended to provide a short term measure to enable a rapid increase in land and housing supply to help address current housing affordability issues. This is reflected in the Bill's purpose:

The purpose of this Act is to enhance housing affordability by facilitating an increase in land and housing supply in certain regions or districts, listed in Schedule 1, identified as having housing supply and affordability issues.

The Bill is intended to only be an interim measure, with a maximum of 5 years duration.[1] It is proposed that longer-term measures will be incorporated within further reforms to the Resource Management Act 1991 (RMA).

The Bill provides for the establishment of special housing areas within regions or districts that are included in Schedule 1 as having housing affordability issues. At present, only Auckland (ie the entire Auckland region) is included in the Schedule 1, although further areas may be included following the process provided for in the Bill.

Within the districts or regions listed in Schedule 1, special housing areas can be established by Order in Council by the Governor General, on the recommendation of the Minister of Housing. Before making such a recommendation, the Minister must 'have regard to' a number of matters, including whether there is demand to create qualifying developments[2] in the area, and whether there is, or is likely to be, adequate infrastructure to service qualifying developments.

Qualifying developments can follow, as an alternative to obtaining resource consents under the RMA, the new streamlined consenting approach set out in the Bill. The decision on an application for resource consent for a qualifying development must be made within 60 working days from the date that the application for resource consent was lodged, or if the application is for a combined resource consent and plan change (or variation), within 130 working days.

The Bill also provides for housing accords to be entered into between the Government and territorial authorities.

The Government and Auckland Council have already agreed a housing accord, which is pending ratification by the Council once the Bill passes into legislation. The accord outlines a slightly different process, and different criteria for qualifying developments to those included in the Bill. While the criteria in the accord can be incorporated as parameters for qualifying developments for particular special housing areas within Auckland, those matters related to process will be governed by the Bill. There is presently no provision for regard to be had to a housing accord as part of the decision making process for applications for qualifying developments.

Concerns raised in submissions and the Select Committee response

While the intent of the Bill as part of the package of measures to address the housing affordability and shortage problem has been supported by most, a number of concerns with the Bill were raised in submissions.

Some key concerns included the:

  • provision for the Government to override territorial authorities;
  • emphasis on the purpose of Bill - without appropriate environmental checks and balances;
  • implications of the Bill on the provision and capacity of associated infrastructure to support qualifying developments; and
  • limited appeal rights.

Government Override

The Bill as introduced, and as reported back from the Select Committee, allows the Government to override local authorities' consenting functions in some circumstances.

The provisions provide for housing accords to be entered into between the Minister and territorial authorities within a scheduled area. Where such an accord exists, a collaborative approach between the accord territorial authority and Minister is provided in regard to recommending special housing areas and the parameters for qualifying developments in those special housing areas. Further, the accord territorial authority is the body that decides applications for qualifying developments. The Bill however provides that the Minister has no obligation to enter into a housing accord.

The implications where agreement on a housing accord has not been reached with a territorial authority (or the agreement on an accord has been terminated) are significant. In such circumstances, the Chief Executive of the Ministry of Business, Innovation and Employment (MBIE) (or delegate) has the power of an authorised agency[3] with respect to applications for qualifying developments. Further if there is no housing accord, the Minister can make recommendations on special housing areas and the criteria for qualifying developments within those areas without reference to the relevant territorial authority.This clearly has implications for Councils and may have unintended effects on existing council plans, assumptions and forecasts - including in relation to asset planning.

Despite concerns with respect to these provisions being raised by a number of submitters, the same framework has been retained by the Select Committee.

Purpose of Bill

As outlined above, the purpose of proposed legislation is focussed on enhancing housing affordability. There is no reference in the purpose provision to sustainable management (which is the key tenet of the RMA), nor does the proposed framework in the Bill for decision-making provide that much weight be given to environmental considerations.

In response to concerns raised in submissions on this point, some amendments have been proposed by the Select Committee. While an improvement on the first version of the Bill, the amended provisions still place sustainable management, and environmental considerations, as a lesser consideration after the purpose set out in the Bill. For example, clause 32 of the Bill, which sets out the process and requirements for decisions on qualifying developments, lists the matters which an authorised agency must have regard to in considering an application for a qualifying development. Clause 32 sets out that the list is to be given weight (from greater to lesser) in the order provided. The purpose of the Bill is the first matter on the list, followed by Part 2 of the Resource Management Act. The Select Committee has also recommended that proposed plan provisions be given greater weight than operative plan provisions when considering resource consent applications.

How environmental considerations will be balanced against the drive to provide increased residential development through the process provided in the Bill will be a matter demonstrated as applications for qualifying developments are processed.It is possible that the possible environmental effects of development will be addressed as part of the criteria established for qualifying developments in specific special housing areas.

Infrastructure

Related to the concerns of the 'Government override' were the practical implications of the proposed significant increase in the level of residential development and whether there will be sufficient infrastructure to service that development. Concerns were also raised about the lack of ability to charge development contributions in cases where the Chief Executive of MBIE (or delegate) is the authorising authority. Changes have been proposed to the Bill that go some way toward addressing these concerns.

For example, before recommending that an area be declared a special housing area, the Minister must be satisfied that adequate infrastructure exists, or is likely to exist, to service qualifying developments. The provision for applications for resource consent for qualifying developments, have now also been amended to clarify they may include the infrastructure related to the development. Section 108 of the RMA also applies to any consent granted to a qualifying development, allowing conditions to be imposed requiring services or works to be undertaken.

Further, while the ability to notify certain parties is retained as a discretionary power that may be exercised by the authorising authority, local authorities within whose district or region the application falls and any infrastructure providers who have assets on, under or over the land subject to the application or adjacent to that land, are now also included as parties that may be notified. In addition, where the relevant land is adjacent to land subject to a designation, the requiring authority may also be notified.

The Select Committee report has retained the provision preventing an authorised agency from granting an application for resource consent for a qualifying development unless it is satisfied that sufficient and appropriate infrastructure will be provided to support the qualifying development. This includes being satisfied of the compatibility of the proposed infrastructure for the qualifying development with existing infrastructure, and with relevant standards for infrastructure published by relevant local authorities and infrastructure providers; and the capacity of both the proposed and existing infrastructure to support the development.

Finally a new clause 48A has also been inserted clarifying that subpart 5 of Part 8 of the Local Government Act 2002 (relating to development contributions) applies to resource consents granted under the Housing Accords and Special Housing Areas Act (once enacted).

Together these provisions should ensure that the infrastructure required to service qualifying developments will be taken into account and provided for before special housing areas are provided for, and qualifying developments are granted consent.

Appeals

The rights of appeal to the Environment Court are limited to appeals by the applicant or any person who made a submission, and then, only on decisions for resource consent applications for qualifying developments that are four or more storeys high. No appeal rights are provided for decisions on applications for plan changes or variations to proposed plans, although provision is made for objections in relation to such applications.

Some submitters sought amendments to make provision for the possible review of decisions or, at a minimum, more robust assessment of applications. Some sought to provide for cross examination of all evidence particularly for those applications which are presently ineligible for merit appeals to the Environment Court; others sought to provide a review process with the establishment of a review panel for all applications determined under the proposed legislation; or for appeals to the High Court on points of law for those applications that do not meet the criteria for merit based appeals to the Environment Court.

No amendments have been made to the provision for appeals through the Select Committee process.

Concluding comments

The Housing Accords and Special Areas Bill goes some way to addressing issues of shortage of supply of land and buildings to address the housing affordability issue. However the Bill provides a significantly different regime to that under the RMA, and while a number of provisions are cherry-picked from the RMA, further work is required in order to ensure the legislation will work efficiently in practice, without resulting in unintended adverse consequences. The ability for the Government to "override" local authority resource consenting in certain circumstances also remains a concern.

For residential developers, however, the Bill provides a potentially attractive fast track consenting process, in which the "deck is stacked" in favour of consent being granted. While we have only touched on some of the issues that arise from the Select Committee report on the Bill, we would be happy to discuss how the Bill may affect you and your particular circumstances.