RM Journal

Urban Development, the NPS on Urban Development and Urban Growth

 

Authors: Thomas Gibbons, Thomas Gibbons Law & Charlotte Muggeridge, Associate, Harkness Henry 

Introduction 

The problem of growth is multi-faceted. It has been nearly 50 years since the Club of Rome identified the environmental challenge of “The Limits to Growth” (Donella H Meadows and others The Limits to Growth (Universe Books, New York, 1972)), but the challenge is not simply about population growth, resource use or environmental impact.

Away from Rome and closer to home, growth remains a significant – and perhaps critical – economic goal but it has particular difficulties within the frameworks of the Resource Management Act 1991 (RMA) and Local Government Act 2002 (LGA). Put simply, growth creates infrastructural needs: in a modern society, we expect sanitation, stormwater, roading systems and housing to all be available and effective.

We expect transport networks to operate well, and many of us expect readily available public transport or readily available car parking – or both. These elements – roads, water and suitable land for housing – all depend heavily on local government. But councils themselves have their own challenges of the limits to growth, which are not just environmental or infrastructural, but also political: a local authority cannot stop people moving into its district, for example, but has limited avenues to manage the spend such internal migration may require.

Rates, user charges, borrowing and development contributions are all available, but all have their political (and in some cases, legal) constraints and in their own ways contribute to a local, and ultimately national, problem of the limits to growth.

The National Policy Statement on Urban Development 2020 (NPS-UD) is firmly charged with addressing these limits. It by no means resolves them, but it does look to manage and shape how growth is recognised and given effect.

This article considers some selected aspects of the NPS-UD, which took effect on 20 August 2020, replacing the National Policy Statement on Urban Development Capacity 2016 (2016 NPS). The NPS-UD can be seen as making a fundamental contribution to how local authorities are to make decisions relating to well-functioning urban environments. As will be shown below, the NPS-UD aims to achieve a mindset change and a greater emphasis on managing growth. It does these things admirably but also with limits.

Objectives 

The eight objectives of the NPS-UD are to apply immediately. In summary, these are:

  1. well-functioning urban environments that consider the social, economic, cultural wellbeing, and health and safety of people and communities; 
  2. planning decisions to improve housing affordability through competition; 
  3. regional and district planning frameworks that enable living, and business and community services in urban areas in appropriate proximity to each other; 
  4. urban environments with amenity values that are adaptive to change; 
  5. planning decisions on urban environments that take into account the principles of Te Tiriti o Waitangi;
  6. decisions by local authorities on urban development that integrate with infrastructure planning and funding, and are strategic and responsive.  
  7. local authorities having uptodate information on urban environments; and  
  8. having regard to climate change.  

Hon Simon Upton, Minister for the Environment when the RMA was introduced, has recently cautioned against further reform, noting that policymaking based on desired outcomes can be fraught with difficulty.

To put this in a blunter way than Mr Upton, we all want happy and vibrant communities where people can be prosperous, well-housed, healthy and live their best lives. But we cannot legislate utopia and nor does everyone agree on what this utopia looks like.

Incremental change is much easier. In terms of approach, the NPS-UD is something of an irony. It is intended to help local authorities provide for urban development through requiring them to have less restrictive plan provisions (that is, the NPS-UD makes less restriction mandatory); it also aims to clear out some restrictions and processes but has the effect of placing more obligations and process on local authorities. This centralised irony should not be forgotten, highlighting that local government remains subservient to central government.

Tiers, Assessment and Process 

The NPS-UD provides for urban areas to be categorised in tiers based on population size and growth rates. Tier 1 includes New Zealand’s main cities: Auckland, Hamilton, Tauranga, Wellington and Christchurch. Though television weather reports may suggest otherwise, Dunedin is not included.

Tier 2 contains a larger group that includes many mid-size cities, such as Rotorua, New Plymouth and Queenstown. Different policies and timeframes relate to different tiers: most of the policies relate to Tier 1 and 2, but Tier 3 local authorities are encouraged to do things that Tiers 1 and 2 are obliged to do. That said, quite how a Tier 3 would give effect to Tiers 1 and 2 obligations is not entirely clear, as among other things funding is likely to be an issue when growth projections are not the same.

Every local authority in Tiers 1 and 2 must prepare a Housing and Business Development Capacity Assessment (HBA); this is arguably the first substantial action required by the NPS-UD and should then be updated every three years (to match up with the timing for long-term plans).

The purpose of this HBA assessment is to provide information on the demand and supply of housing and business land. The required information for an HBA is outlined in cls 3.20 to 3.30(3) of the NPS-UD. These information requirements are extensive and will be expensive to produce, but in theory, should assist council planners in identifying areas of growth and (where necessary) in relaxing consent requirements.

The HBA is, in respect of housing, to be available no later than 31 July 2021. This reflects concerns that housing supply is an area of immediate need, though the NPS-UD remains a less blunt tool than the Housing Accords and Special Housing Areas Act 2013.

Once the HBA is available, housing bottom lines are required to be inserted into regional and district plans without the sch 1 process (in accordance with s 55 of the RMA). The regional policy statement is to record the housing bottom lines; the district plan is also to insert a provision relating to the housing bottom lines that are referred to in the relevant regional policy statement (cl 3.6).

Any changes to RMA planning documents required to give effect to the bottom lines must use the sch 1 process. Put another way, the housing bottom lines are added without following the sch 1 process, but the mechanisms to achieve them must follow sch 1. It is plausible to feel that even if the bottom lines are uncontentious – and they may not be – the mechanisms to achieve them may be contested and implementation more difficult than the NPS-UD contemplates.

Enabling Development 

The NPS-UD calls on local authorities to be sufficient on housing demand by ensuring that development is plan-enabled, infrastructure-ready, feasible and meets the appropriate competitive margin (cl 3.2(2)). These can be broken down further:

  • Plan-enabled: The land has to be already appropriately zoned in an operative district plan or proposed district plan for a short- to medium-term land availability. If it is in relation to long-term development, land needs to be identified in a Future Development Strategy (FDS), the purpose of which is to show long term planning towards a well-functioning urban environment, failing inclusion in the FDS, in any other plan or strategy.
  • Infrastructure-ready: There is enough infrastructure in the short-term or (in the medium-term), funding is available for development in the long-term plan and (in the long-term), the necessary development infrastructure has been identified in the infrastructure strategy required under the long-term plan.
  • Feasible: To work out the development capacity in a local authority’s region, the local authority may use any method, as long as that method is justified and there are inputs and assumptions that are used to arrive at the estimates. Examples are given in the NPS-UD, but there seems a risk that some local authorities may assess they have higher/lower development capacity compared to other areas nearby – a particular problem in those areas such as the Waikato, which is home to a plethora of local authorities. If a local authority may obtain greater levels of central government funding based on development capacity, there is a risk that this will lead to unfair outcomes between districts and regions, particularly if different methodologies and different data sources are used.
  • Competitive margin (cl 3.27): This is calculated through an analysis of the housing demand assessment, which is an estimate of the demand for additional housing over the short, medium and long term, and working out the different locations and the dwelling types needed. Local authorities have a discretion to identify locations as they wish, and the only essential difference between housing types that must be recorded is whether they are a standalone or attached. This analysis must be compared to the development capacity in the HBA. The competitiveness margin for short and medium term is 20 per cent and for long term is 15 per cent.  

Out-of-Sequence Plan Changes 

In locations that are not identified by the local authority, the likely option will be a plan change in accordance with cl 3.8 of the NPS-UD. Clause 3.8 provides a breath of fresh air, though not quite a set of bellows on the flame, as it specifically allows for plan changes that will enable urban development.

The area subject to the plan change will need to be a well-functioning urban environment and connected to transport corridors. In addition, further criteria will be set in the relevant regional policy statement, as the plan change will need to meet the threshold of being ‘significant’.

Here, we are likely to see an interesting interaction between regional and territorial authorities: the regional policy statement and the district council(s) within it will need to decide how to work out what areas in the district are viable (or perhaps preferred) for future growth, and given the different drivers that sometimes exist, reaching an agreement between different organs of local government may at times be difficult.

Car parks  

In addition, every district plan in the country must remove any clause that mandates having a minimum number of car parks. The only car parks to have any rules relating to them are accessible car parks. These changes can be done without the RMA sch 1 process.

Car parking often has its controversial side: for some, fewer car parks provide a pathway to an easier consent or assist in reducing car dependency and increasing the viability of public transport options. For others, reducing car parking requirements increases the inaccessibility of urban areas, as public transport options are often limited, and reflects a form of social engineering against car parks.

Anecdotally, weekend brunch choices are often based on car parking availability, and a policy change like this can affect local authorities, developers, planners, the public, and the retail and hospitality industries in different ways. Consenting is likely to be quicker, but other aspects of urban convenience may be lost in pursuit of a greater good. Amenity, like growth, can be multi-faceted.

Conclusion 

The NPS-UD places emphasis on both quality and growth; the emphasis it places is arguably on adaptation and change more than growth, but the theme of growth comes through clearly. The kind of growth the RMA envisages and allows for has its limits: these are not just environmental, but are also based on social, cultural and ultimately process-based limits.

The NPS-UD does two key things. First, it seeks to achieve (or, with an eye to the 2016 NPS, at least expand upon) a mindset change: local authorities need to be enabling and concerned with how growth is managed and achieved as well as restricted. It drives against process-based limits in places while retaining them in others. Second, it continues a theme in the 2016 NPS of placing emphasis on feasibility.

‘Feasibility’ remains an interesting concept: the NPS-UD strives to define it, but emphasises feasibility for development. What the NPS-UD apparently fails to do is identify the feasibility of its mechanisms for local authorities.

Like growth, and amenity, local government is multi-faceted, and councils have roles and responsibilities which stretch far beyond district plans, regional policy statements, the NPS-UD and even the RMA. While the NPS-UD removes some process requirements for the development sector, it also places additional responsibilities and process-based requirements on local authorities.

Further, the NPS-UD does so in a way that does not recognise that re-zoning and delivery of infrastructure must be capably and properly funded. In this sense, the NPS-UD recognises the importance of growth but fails to recognise the political and structural limits of local authorities. For this reason, it must be regarded as effecting only limited change.