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Planning and Regulatory
Committee
12 July 2016
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Part
A Reports
Submission on the National Policy Statement on
Urban Development Capacity (NPS-UDC)
Department: Community and Planning
EXECUTIVE SUMMARY
1 The
Minister for the Environment has released a proposed National Policy Statement
on Urban Development Capacity (NPS-UDC) for public consultation.
2 Once
operative, the DCC will have to give effect to the NPS through its District
Plan.
3 The
purpose of this report is to provide an overview of, and to allow Council to
consider a submission on, the Ministry for the Environment's proposed National
Policy Statement on Urban Development Capacity (Attachment A).
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RECOMMENDATIONS
That the Committee:
a) Considers
and approves the attached draft submission on the proposed National
Policy Statement on Urban Development Capacity.
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BACKGROUND
4 The
Ministry for the Environment is consulting on a proposed National Policy
Statement on Urban Development Capacity (NPS-UDC). Submissions close on 15 July
2016.
5 The
proposed NPS-UDC is a priority for the Government. The scope relates to the
provision of development capacity in local authority plans to address both
housing and business needs.
6 National
Policy Statements are prepared under section 45 of the Resource Management Act
(the Act) with the purpose of stating objectives and policies for matters of
national significance that are relevant to achieving the purpose of the Act.
7 The
timetable set out by the Government is to have the NPS-UDC operative by 1
November 2016.
8 If
Government finalises the NPS within the timeframes it has currently predicted,
then the NPS will be in force before final decisions on the 2GP are made. This
means that the 2GP decision makers will have to ensure that the 2GP "gives
effect" to the NPS (s75).
9 The final
version of the NPS could be quite different from the proposed version so it is
difficult to predict what the exact implications will be on the 2GP. As
currently drafted 20% over projected short and medium-term residential and
business demand would need to be provided (PA2 and definition of
"sufficient").
10 A final NPS in a
similar form to the proposed version will create an additional factor for the
2GP to be assessed against and therefore increases the toolbox for submitters
who seek to challenge constraints in the 2GP.
11 According to the
consultation material, the purpose of the NPS-UDC is to ensure regional and
district plans provide adequately for the development of business and housing.
12 Based on our growth
rates, the Dunedin City Council (DCC) is identified as a local authority that
only needs to comply with objectives and policies in the OS/PA group.
DISCUSSION
13 Staff have prepared
a draft submission (attached) for consideration that discusses some of the
implications of the proposal. It addresses its alignment with the current
policy position of the DCC as stated in the Spatial Plan and Proposed District
Plan (2GP), and its alignment with planning best practice from a staff
perspective. The submission includes suggestions for amendments to improve the
NPS.
14 A summary of the
main points follows below:
a) DCC
conditionally supports the NPS on urban development capacity.
b) The NPS should
provide broader recognition on promoting good urban design and the principle of
long term intergenerational environment and economic sustainability in the
document.
c) Potential
development constraint from protecting resources can be overcome through a
range of mechanisms.
d) Urban
development needs to be clearly defined and to not include un-serviced large
lot residential on the fringe of a city or town.
e) Seek stronger
support for spatial plans as the mechanism for projecting out 15 to 30 years.
Projecting out as far as 30 years is considered too far for district plan use.
f) The concept of
development capacity and associated methodology can be made clearer, in
particular how this is calculated in terms of reasonably available capacity
verse theoretical capacity.
g) Seek changes
to the objectives section to:
· Include
an objective promoting the efficient use of land and infrastructure, and
minimisation of the long term costs to ratepayers of development and ensuring
that development is economically, socially and environmentally sustainable in
the short to long term.
· Recognise
issues around demographic change in New Zealand and economic shifts that affect
the need for different types of commercial and industrial land, both of which
will affect our long term housing and commercial land needs.
· As
a small low-growth city, the risks for Dunedin are more likely to be around the
long term economic sustainability of development and this is something that
should be reflected in the NPS.
h) Seek changes
to the policies section, including:
· Add
a new policy; Developing rules, agreements, or other mechanisms to ensure land
release and infrastructure can be provided to enable the actualisation of
development capacity.
· Encourage
further data collection and analysis to better understand the nature of the
problem of housing affordability and its causes, as well as to better
understand the housing market more broadly.
i) Identify
methods to ensure land is put on the market in a timely way and prevent land
banking.
j) Support the
use of incentive funding for re-development that enables protection and long
term use of heritage buildings or other strategic assets where development
would provide high benefits to the city.
OPTIONS
Option
One
15 That the Council
approves the draft submission.
Advantages
· Submitting allows Council the opportunity to provide input into the
development of the proposed NPS-UDC.
Disadvantages
· There are no known disadvantages of submitting on the proposed
NPS-UDC.
Option
Two
16 That the Council
does not submit on the proposed content of the NPS-UDC.
Advantages
· There are no known advantages for not
submitting.
Disadvantages
· Council’s opinion on the proposed NPS-UDC and its provisions
will not be heard.
NEXT STEPS
17 If approved by the
Council the submission will be forwarded to MfE.
Signatories
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Author:
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Jessie Wu - Policy Advisor
Anna Johnson - City Development Manager
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Authoriser:
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Nicola Pinfold - Group Manager Community and Planning
Simon Pickford - General Manager Services and
Development
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Attachments
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Title
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Page
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a
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NPS-UDC 2 page summary
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3
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DCC submission on the
NPS-UDC
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3
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SUMMARY OF CONSIDERATIONS
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Fit with purpose
of Local Government
This proposal enables democratic local decision making and
action by, and on behalf of communities.
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Fit with strategic
framework
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Contributes
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Detracts
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Not applicable
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Social Wellbeing Strategy
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☒
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☐
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☐
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Economic Development Strategy
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☒
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☐
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☐
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Environment Strategy
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☒
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☐
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☐
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Arts and Culture Strategy
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☐
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☐
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☒
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3 Waters Strategy
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☒
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☐
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☐
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Spatial Plan
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☒
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☐
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☐
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Integrated Transport Strategy
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☒
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☐
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☐
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Parks and Recreation Strategy
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☒
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☐
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☐
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Other strategic projects/policies/plans
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☒
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☐
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☐
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The submission is of most direct
relevance to the Council’s Spatial Plan and Second Generation District
Plan (2GP), and ensuring that the NPS does not force changes to these
policies which have been developed in consultation with the community.
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Māori Impact
Statement
There are no known impacts for tangata whenua.
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Sustainability
Part of the submission is to encourage greater recognition
of sustainability in the NPS.
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LTP/Annual Plan /
Financial Strategy /Infrastructure Strategy
There are no direct implications from this submission.
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Financial
considerations
There are no financial implications at this stage.
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Significance
The decision whether or not to make a submission on the
NPS-UDC is assessed as being of low significance in terms of the
Council’s Significance and Engagement policy.
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Engagement –
external
There has been no external engagement on the proposed
submission.
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Engagement -
internal
Due to the short timescale, the proposed submission was
prepared by City Development and circulated to the Transport, Parks and
Recreation, Resource Consents and Corporate Policy teams for feedback.
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Risks: Legal /
Health and Safety etc.
There are no known risks associated with the decision to
submit.
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Conflict of
Interest
There are no known conflicts of interest.
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Community Boards
There are no known implications for Community Boards.
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Planning and Regulatory
Committee
12 July 2016
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6 July 2016
NPS Urban Development Capacity
Ministry for the Environment
PO Box 106483
Auckland City 1143
SUBMISSION ON THE PROPOSED NATIONAL POLICY STATEMENT ON
URBAN DEVELOPMENT CAPACITY
The Dunedin City Council (DCC) welcomes the opportunity to
submit on the Proposed National Policy Statement on Urban Development Capacity
(NPS-UDC). The DCC conditionally supports having an NPS on urban development
capacity if the relief sought in this submission is provided.
This submission provides comments on the following elements:
· Problem Definition and Objectives as outlined in the consultation
document
· The content of the draft National Policy Statement
· Other related matters.
Background
The DCC is responsible for meeting the current and future
needs of communities for good quality local infrastructure, local public
service and performance of regulatory functions in a way that is most cost
effective for households and businesses, under the Local Government Act 2002.
The DCC has been identified as a local authority that only
needs to comply with objectives and policies in the "OS/PA" group.
The DCC supports this assessment and notes that this submission primarily
relates to the objectives and policies which apply to this group.
The DCC conditionally supports having an NPS on urban
development capacity if the relief sought in this submission is provided. The
DCC regularly undertakes development capacity assessment and has mechanisms in
place through its Spatial Plan and proposed district plan to meet the
objectives and most of the policies of the proposed NPS. The DCC's plans and
strategies, however, place more emphasis on considering how to provide
development capacity in a way which promotes environmental, economic, social
and cultural well-being and sustainability. Many of the DCC's comments reflect
the view that urban development should not be promoted as an
'end-in-itself.’ The DCC suggests that broader recognition should be
given in the NPS to promoting good urban development and the principle of long
term inter-generational environmental and economic sustainability in the
document.
The DC suggests that the NPS needs to place equal emphasis
on encouraging support for urban development and on avoiding urban development
that may have irreversible and significant adverse effects on communities and
lead to development that is economically or environmentally unsustainable. This
outcome is particularly important for lower growth areas, where the key issue
related to urban development is more likely to be ensuring the long-term
affordability of the pattern of urban development rather than the relatively
small impact that urban land supply has on housing affordability in a low
growth city.
The DCC requests consideration of several amendments
detailed below in relation to each of the Proposal's objectives. Requested
additions are indicated via underline, deletions via strikethrough.
A. Problem
definition as outlined in consultation document
Dunedin City Council Supports
The DCC supports the recognition of the importance of the
quality of urban environments in terms of attracting people (p.20) and the
recognition that without good planning “cities can become victims of
their own success, burdened by rising traffic congestion and house prices and
poor quality environments” (p.21). The DCC also supports acknowledgement
of the important role that local authorities play in the success of urban
areas. There is strong support for the statement that local authorities
must consider the needs of the whole community and the impact that
planning decisions will have on future generations and for the acknowledgement
of the risk of decisions that protect current, local interests, at the expense
of broader community outcomes and future generations.
The DCC also supports the discussion around providing for
business needs that recognises that there can be an oversupply of business land
that can lead to unfunded infrastructure and struggling town centres. The
recognition of the need to protect industrial land from incompatible land uses
and land uses that may drive up the cost of land is also welcomed. Shifts to
“higher value” commercial activities can in fact reduce employment
opportunities and economic opportunities for the city, as retail activities offer
fewer jobs at good salary levels and economic returns for cities, compared with
many industrial activities. The DCC submits that in some cases,
resisting, rather than facilitating, spatial change is necessary to achieve
productivity growth.
The experience with recent proposed plan changes that sought
to shift industrial uses away from industrial land on the waterfront to enable
‘higher value’ uses by providing greenfield land for industrial
activities, resulted in a number of the issues identified in the NPS:
· The
industrial activities did not want to shift as their operations (due to
locational relationships with other suppliers and better access to markets, as
well as the capital investment in their assets);
· The
re-zoned land was not taken up by any industrial activities over a long period
and therefore there was no development to fund the infrastructure expansion
necessary, and the lack of infrastructure also made the area difficult to
market;
· In the
waterfront area, due to the plan change enabling more sensitive activities,
existing industrial activities submitted that their continued operation would
be threatened by reverse sensitivity effects, which resulted in a large
activity leaving the city.
Dunedin City Council Does Not Support
In terms of the discussion on constraints, the document
correctly recognises that planning decisions often respond to groups in the
community that are the most vocal and well-resourced in consultation processes.
However it fails to identify that often these are developers or development
advocacy interests. Often, the most poorly represented are future rate-payers
who don’t understand the relative costs and benefits of different types
of development.
The assumption that current planning decisions
“emphasise the status quo” also does not accord with the consents
granting statistics and outcomes in Dunedin. The DCC questions whether this
assumption is based on a thorough analysis of consents data.
The DCC disagrees that a key example of decisions responding
to outspoken groups, at least in the Dunedin context, is plans not providing
enough development opportunities to meet demand for housing and therefore
contributing to increased housing prices. The DCC also disagrees with the
statement that decision-makers need to “better understand that
constraints on development to protect and manage precious natural and physical
resources, such as heritage, landscapes and amenity values, comes at a cost”.
The DCC is well aware of the constraints on development and
the cost of protecting resources, but also of the benefits of adaptive reuse of
heritage buildings. The experience in Dunedin is that protection and reuse of
heritage buildings are not achieved at the expense of community access to
housing and employment.
The DCC’s experience with developing and implementing
a regeneration plan for the Warehouse Precinct heritage area near the CBD was
positive. This project was equally successful in creating new spaces for
housing and employment as it was in protecting and using heritage buildings.
Heritage buildings are very attractive to the Dunedin market for both office
and residential spaces. The result was new high quality and high return
commercial spaces from what were essentially derelict heritage buildings, with
a relatively low level of investment from the DCC supporting some of the
additional costs associated with working with heritage buildings. This project
has increased tourism opportunities, uplifted the amenity of this part of the
city significantly, and has provided a high-profile opportunity to market the
city.
A recent analysis of the return on investment showed that
for a $1.1m council investment in grants and amenity upgrades, the city has
leveraged $52m in private investment.
Finally, the DCC notes that the consultation document lacks
discussion around changing demographics. The DCC suggests that commentary on
how changing demographics may affect urban development demand long term and how
the conflict between short terms demand versus long term demand should best be
managed, would be useful.
B. Content
of Proposed NPS
Definition of urban development
The DCC submits there is a need to define “urban
development” including:
· at
what density land use becomes urban, especially with regard to residential and
industrial areas, which can vary significantly in the density of their
development and what type of public infrastructure (vs private infrastructure)
is provided. The DCC recommends that rural residential and large-lot
residential that is not serviced by reticulated public infrastructure be
excluded from the definition. The DCC also suggests that industrial areas
(rural industry) not connected to public reticulated infrastructure networks
also be excluded;
· that
urban development is clearly defined to include infill/intensification of
existing urban areas, brownfield redevelopment, as well as greenfield
development.
Note: References
to public reticulated infrastructure are intended to include public water,
storm water and waste water networks.
Short, medium and long term
The DCC questions the need to identify long term (15-30
years) development areas in district plans as the Council's experience is that
this will create pressure for these to be developed out of sequence and too
early. It is suggested that medium term should be extended to 15 years. This is
the basis for areas identified in district plan and has been the approach in
the proposed Dunedin City District Plan (2GP). This reflects the time-horizon
of a district plan accounting for a plan change period for a full review of a
plan.
The DCC also suggests that stronger support should be
given to the use of Spatial Plans developed under the Local Government Act to
identify longer term urban development needs (15-30 years), with district plans
focusing on short to medium term needs (up to 15 years). The LGA is the only
legislation that enables integrated planning to connect how infrastructure will
be provided and funded (including all council provided facilities) with
strategies for providing urban development capacity. The NPS cannot be truly
implemented through District Plans alone given its requirements to clarify
“the provision of adequate infrastructure, existing or likely to
exist” in terms of the definition of development capacity. This is not
something that can be achieved other than in an LGA strategy/plan.
Development capacity
The concept of development capacity as defined and used in
the proposed NPS is not clear about the application of a methodology that
includes a discounting approach to be applied to ‘theoretical’
capacity vs. ‘real’ (achievable ) capacity. The approach
taken in Dunedin’s 2GP has been to calculate theoretical capacity and
then apply a discounting factor.
In the 2GP the theoretical capacity is made up of:
1. the
number of vacant sites
2. the
infill capacity of the vacant sites (calculated by dividing the land area by
the minimum site size plus a factor to provide for roading and other
infrastructure)
3. the
infill capacity of sites that already have a dwelling on them.
In general, only a portion of any theoretical capacity will
be available on the market for development. The DCC therefore, translates that
theoretical capacity into a more realistic estimate of real capacity by
applying a discounting formula:
· Vacant
sites created through greenfield development/subdivision less than 10 years old
= 100% counted
· Vacant
site older than 10 years = 80% counted
· Vacant
infill = 10% counted
· Infill
= 2% counted
This formula, while not entirely ‘scientific’ or
modelled overtime, was based on detailed local knowledge, consents information,
and observations of the market. However, local authorities could be encouraged
to come up with local models that were evidence-based by tracking the market
for sites against similar factors.
The proposed NPS seems to provide for this type of
refinement approach through the use and definition of the word
“sufficient”. However, this is not clear as it does not
reflect a Plain English interpretation of the word sufficient and could cause
confusion. The DCC submits that instead, the NPS should clarify within the term
development capacity itself, at least at a high level, how this should be
calculated to be reasonably available capacity vs theoretical capacity. If
capacity is calculated appropriately there is no need to create a 20 or 15%
‘margin for error’, which will likely only discourage a thorough
analysis of capacity as the margin for error would be seen to allow for poor
analysis. The DCC's experience in the 2GP has been that developers are reliant
on councils identifying land appropriately. Time and money can be wasted by
developers exploring sites only to find that they cannot be developed
economically due to the presence of hazards, due to slope or lack of
availability to the market.
The DCC submits that the wording “provision of
adequate infrastructure, existing or likely to exist, to support
development…” is unclear as to who is responsible for providing
and/or funding that infrastructure. The DCC submits that development capacity
should be defined as:
"Development capacity means in relation
to residential and business land, the capacity of land for urban development,
taking into account the following factors:
· The
zoning, objectives, policies, rules and overlays that apply to the land; and
· The
provision of adequate infrastructure, existing or likely to exist, to support
the development of the land, having regard to –
o The relevant proposed
and operative regional policy statements, regional plans and district plans;
and
o Any relevant management
plans and strategies prepared under other Acts.
· clear
rules, agreements, and/or mechanisms being in place to ensure that adequate
infrastructure can be provided within the period the capacity is calculated
for, to support the development
· the
likely availability of land to the market
· any
constraints that may make the development of the land impractical or
unachievable such as the presence of hazards, poor access to sunlight, poor
climatic conditions, slope, lack of amenity."
The third and fourth original bullet points should either be
deleted or be expanded to include the full range of mechanisms that might
ensure this (which can include private development agreements as well as other
mechanisms).
Objectives
Overall, the DCC supports the intent of OA1 and OA2,
although some changes are suggested. The DCC submits however, that OA3 is not
necessary nor does it add value. Development and change are not inherently
‘good things’ that needs to be promoted. Change invariably creates
stresses on communities as it often disrupts social networks, and
people’s relationship to place. While change may be necessary to
enable broader positive effects to be realised, these adverse effects should
always be considered and mitigated as far as practicable. The DCC suggests that
clarification is required around a more meaningful outcome that change is
designed to enable.
The DCC submits that the NPS should include an objective
promoting the efficient use of land and infrastructure, and minimisation of the
long term costs to ratepayers of development and ensuring that development is
economically, socially and environmentally sustainable in the short to long
term. The DCC also notes that the discussion document does not address issues
around demographic change in New Zealand nor economic shifts that affect the
need for different types of commercial and industrial land, both of which will
affect our long term housing and commercial land needs. As experience in other
countries has shown, over expansion of urban development, and consequential
increased costs per ratepayer associated with maintaining new infrastructure
and facilities created as a result of growth, can quickly become unaffordable where
a population declines or shifts to a lower income profile.
As a small low-growth city, the risks for Dunedin are more
likely to be around the long term economic sustainability of development and
this is something that should be reflected in the NPS.
The DCC submits that OA2 should be combined with OA1 to
recognise that while capacity needs to be met, there are many ways to meet that
capacity. Some of the solutions may contribute to the long term economic and
social sustainability of communities and some may offer short term gains but
significant long term costs, especially for future generations. Furthermore,
while New Zealand is currently facing issues related to too little capacity in
many cities, in other parts of the western world over-supply or poorly planned
supply has created equivalently significant problems. This has been
particularly evident in the housing crashes, and local government bankruptcies
that have occurred in the US.
The DCC proposes new wording which reads:
“Adequate residential and business development
capacity is provided for through;
(i)
district plans and other plans and strategies which enable the demand to
be met in a way that supports the purpose of the Act and;
(ii)
effective and efficient urban areas that enable people and communities to
provide for their social, economic and cultural well-being.”
The DCC broadly supports objectives OB1 and OC1. However,
OD1 as currently worded is opposed. The Council suggests that OD1,
similar to OA3, reads as if urban development is an end in itself and always a
positive thing. Urban development, if not well planned, can have
significant adverse on social, economic and cultural wellbeing (OA1), as
well as not supporting the purpose of Part 2 of the Act with regard to
sustainable management of natural and physical resources. The DCC is neutral on
OD2, although has some concerns if this is interpreted to mean (as indicated by
current definition of sufficient) that capacity must cater to housing wants
(market wants) rather than housing needs. This is likely to result in an
economically and environmentally unsustainable form of development. Demand is
always high for low density residential development in greenfield locations,
which can create unaffordable long term costs to ratepayers, if the primary
pattern of development where more efficient use of land is an option.
The DCC also notes there are no objectives that discuss the
need for urban development to achieve environmental sustainability. It could
therefore be argued that the NPS does not reflect the most critical component
of the Purpose of the Resource Management Act.
Policies
The DCC supports PA1 and PA2 in principle, but submits that
there is a need to change the wording of PA2 to read:
“Local authorities must identify existing or new land
areas that will provide sufficient development capacity to meet the short,
medium and long term needs of the community in plans and strategies prepared
under the Resource Management Act and Local Government Act".
The DCC proposes that the following text be added to PA3:
"When considering the effects of urban development,
decision-makers must:
· Recognise
and provide for the contribution that urban development will make to the
ability for people and communities and future generations to provide for their
social, economic and cultural wellbeing.
· Provide
sufficient development capacity, whilst maximising the positive effects of
development, and minimising the adverse effects of development.
· Have
particular regard to the positive effects of urban development at a national,
regional and district scale, as well as its local effects.
· Consider
the long term costs and affordability to ratepayers of urban development and
ensure that development is designed to be economically sustainable.”
The DCC also submits the addition of a new policy:
"PA4: Local authorities must support, as far as
practicable, the realisation of development by developing rules, agreements, or
other mechanisms to ensure land release and infrastructure can be provided to enable
the actualisation of development capacity".
C. Is
there anything else that would contribute to better understanding the supply
and demand of development capacity?
The DCC strongly encourages further data collection and
analysis to better understand the nature of the problem of housing
affordability and its causes, as well as to better understand the housing
market more broadly. Additional data collection which would be useful includes:
· the
sizes of houses and sites created through greenfield development and their
sales data for the first 10 years of ‘life’- to track what part of
the housing market (based on affordability) most new greenfield houses are
being created for and how house prices rise;
· the
value of development (building consents data) and land value vs sales to see
how profitable house development of different types is and how affordable
houses are based on type and location;
· national
data collection on owner-occupied vs rental occupied and location of owners to
see where property investment is coming from;
· national
data collection of vacancy rates of buildings in residential and business
areas.
Other related matters:
Dunedin City Council strongly encourages the NPS to identify
methods that would ensure land is put to the market in a timely way and prevent
land banking. This is essential not only to creating development capacity, but
also for effective infrastructure planning. The Council uses and supports the
use of transitional zoning, rather than direct zoning of land. This enables
more land than is required to be identified and provides for a ‘use it or
lose it’ type approach. Land that is not used within the period
identified is removed and land where there is market commitment can be
developed instead.
Dunedin City Council also supports the use of incentive
funding for re-development that enables protection and long term use of
heritage buildings or other existing strategic assets of the city where
development would provide high benefits to the city in terms of social or
economic wellbeing.
For further information please contact Anna Johnson, City
Development Manager at anna.johnson@dcc.govt.nz or by phone on 03 477
4000.
Yours sincerely
Dave Cull
Mayor of Dunedin
