First Experiences under the Tauranga Housing Accord

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1 First Experiences under the Tauranga Housing Accord Richard Coles Boffa Miskell, Tauranga - Richardc@boffamiskell.co.nz Paul Taylor Classic Builders/PMP Developments, Bay of Plenty/Waikato - Paul.taylor@classicbuilders.co.nz Wednesday 15th April pm Keywords: Special Housing Area, design, affordability Abstract Housing affordability in New Zealand has been an issue for over a decade. Recent moves by central government include streamlining the consenting process and ensuring land supply issues are addressed. The vehicle for making this happen is the Housing Accords and Special Housing Areas Act This paper will discuss our experiences of the housing accord from a Tauranga perspective having established and consented the first housing accord site within the Tauranga District. It will also address the difficulties in achieving target housing values and how different city design options and housing typologies assist in achieving this outcome. Affordable Housing Proposal PMP Developments Paul Taylor came to Boffa Miskell in the middle of 2014 to discuss a potential medium density development at 162 Waihi Road. This is a brownfield site formerly being used as a camping ground. The site had been cleared ready for redevelopment in the mid 2000 s but the onset of the GFC resulted in the land remaining

2 vacant for several years and becoming overgrown. Surrounding the site is a mixture of residential and commercial activities including offices, motels, child care centres and residential homes. Boffa Miskell completed some preliminary yield assessments based on some parameters provided by PMP. It was considered possible to establish over 30 residential units on site providing servicing and geotechnical issues could be overcome. Given the site area was 7000m 2 and only 5000m 2 was confirmed suitable for development a medium density affordable housing proposal was considered appropriate. This was timely as the Tauranga City Council was considering sites for inclusion in the Tauranga Housing Accord. Initially I thought there was little benefit having the site included as a Special Housing Area, but after reviewing the HASHA Act I could see there being potential benefits in terms of reducing third party risk and also narrowing the assessment criteria for making a decision on a resource consent. Process for inclusion of Land as Special Housing Area Tauranga City Council as an accord territorial authority under the HASHA made an application pursuant to Section 17 of the Act to include the land as a Special Housing Area. This application by Council included several other sites and was approved by the Governor- General on 2 February 2015 by way of an Order in Council including criteria for qualifying developments. A 28 day objection period applies before applications under the HASHA can be made. From our first discussions with Council in August 2014 the site was approved as a Special Housing Area within a 6 month timeframe. I consider this to be quite fast given the 2 Stage approval process; firstly Tauranga City Council agreeing to make the application as the land was suitable as a special housing area, and secondly Council s application to the Governor- General. Criteria for qualifying development The criteria for qualifying developments for the Waihi Road site included only: 1. A building height limitation of 9m; and 2. The minimum number of dwellings that must be built is 30. The building height aligned with the Suburban Residential Zone maximum height. However the density is significantly more than the District Plan zone allows. This creates an opportunity to establish a range of smaller housing types and meet a market need for this type of housing. Paul will discuss the 3 housing types later. Making Applications Section 20 of the HASHA provides the opportunity to make an application under Section 88 of the RMA or under Section 25 of the HASHA. Section 25 enables applications to be made for prohibited activities if a proposed plan has a less stringent activity classification (e.g.

3 discretionary or controlled). Section 25 also enables applications that are not classified as prohibited to be made. For Waihi Road the use of these provisions was not necessary as the activity classification is discretionary under the Operative Plan. Section 27 of the Act states that Sections 88(2) to (5) and 88A apply for resource consents made under the HASHA. Notification Section 29 Section 29 provides the approval agency a greatly reduced discretion on who to notify. This includes Owners of adjacent land Local authorities whose district or region the land falls within Any infrastructure providers who have assets on, under or over the land. The requiring authority if the site is located over a designation or one is on adjacent land. I see this as the biggest benefit for the Waihi Road application to be under Section 25 HASHA. The wider public and occupiers are excluded from the notification process. If the application was notified under S29, the number of submitters is greatly reduced, which should result in a quicker hearing. For Waihi Road having the density confirmed as a minimum requirement meant that this issue was in less contention than it otherwise would be under the RMA. Decision Making Criteria Section 34 (1) identifies the matters that the authorised agency must have regard to when considering an application. These include the following in order of priority and weighting to be applied: 1. The purpose of the HASHA 2. Part 2 matters of the RMA 3. Any relevant proposed plan 4. Other matters that would arise from consideration under 104 to 104F RMA 5. Key Urban design qualities expressed in MFE New Zealand Urban Design Protocol (2005) At the time of writing the application has not been officially lodged but a draft application has been submitted to Council for comment. Council has assessed the proposed infrastructure pursuant to the stringent requirements of Section 34(2), which states an authorised agency must not grant a resource consent that relates to a qualifying development unless it is satisfied that sufficient and appropriate infrastructure will be provided to support the qualifying development. This is a more

4 stringent test than what could otherwise be addressed by preliminary engineering reports conditions under an RMA process. Responding to Council required more detailed information to be submitted. This included additional geotechnical investigations, soil testing and reporting to confirm a subsurface retaining wall could be established without adversely affecting adjacent land or destabilising the escarpment and endangering properties below. It also required additional detail on how storm water would be managed on site to ensure neighbouring properties were not affected. Conditions of Consent Conditions of consent are covered by Section 37 of the HASHA. Sub-clause 2 provides Council with the discretion to impose any conditions necessary to achieve the purpose of the HASHA e.g. target housing values. Paul will discuss the difficulties for developers in achieving target housing values and some parameters around how a condition may be drafted to provide for some flexibility. Time Limit for Notifying a Decision Section 41 states that the authorising agency shall provide a decision on the application within 20 working days. This aligns with the RMA consenting process. Observations Richard Coles The most significant difference Paul and I have noticed is Council s willingness to work collaboratively. This is partly generated by the need to be certain about the infrastructure requirements but also because there is recognition the housing shortage is a national issue and Tauranga is not exempt from this problem. My second observation is that the HASHA has carefully considered how the RMA process restricts affordable housing and provides a decision making assessment criteria that focuses on providing affordable housing, i.e. the purpose of the HASHA Act. Thirdly the speed for consenting the application from first speaking to Council was similar to that under the RMA. I see this being difficult to improve on unless the Special Housing Area approval process was shortened. In any event there remains site investigations and engineering design that takes time. Paul Taylor - Classic Builders and PMP Developments Classic Builders Residential building company, Classic Builders, was founded in Tauranga, Bay of Plenty in Directors Peter Cooney and Matthew Lagerberg have since built over 3000 homes in Northland, Auckland, Bay of Plenty, Waikato and Otago, making it the fifth largest building company in New Zealand. In 2013, independent, building and construction science and engineering research organisation, BRANZ, awarded Classic Builders as having New

5 Zealand s most satisfied customers. This is due to their excellent customer care programme, which proves that trust, transparency and strong customer relationships are key. Classic Builders offers a range of design and build and house and land packages. PMP Developments PMP is a development company focused on building affordable houses. PMP directors include the founding Directors of Classic Builders and Paul Taylor. We have built over 100 homes and Waihi Road will be one of our largest projects. Decision to Proceed under the HASHA For the Waihi Road development there seemed to be some potential gains in the consenting process to proceed under the HASHA as opposed to making an application under the RMA. Any savings in process and time assist in reducing development costs. We decided to take the risk of the uncertain process under the HASHA given the positive move of the government to establish the legislation and given current housing crisis. Housing affordability The AMP 360 Home Loan Affordability Index for First Home Buyers (January 2015) identifies Tauranga as an area that requires 57.4% of a single median income of first home buyers for a home loan deposit. The move of most banks to require a 20% deposit increases the time it takes to save a deposit to 7.5 years. These factors are well documented, regularly in the press, and continue to demonstrate that housing affordability remains a concern. During early discussions with Council with the Waihi Road site, it was considered an affordable target price would be $350,000. This was established taking into consideration land costs, building costs, Council fees and charges, and land development costs. It also took into account that the median house price in Tauranga has risen to $403,000 1 Difficulties in setting rigid affordability targets There are difficulties in setting rigid targets for housing affordability. The reason for this is there are so many parameters of impact on affordability, including inflation. We have found that land supply and district plan rules do restrict the ability to provide alternative housing designs. Consenting processes with high levels of uncertainty do not assist. The HASHA provides a more certain consenting framework establishing minimum rather than maximum housing density. We considered this was one of the main benefits to apply under S25 of the HASHA rather than under the RMA, which would likely have had notification and consenting issues for a development of this density in this location. Arguments of precedent effects are largely avoided. 1 Bay of Plenty Times 22 January 2014.

6 How is affordability achieved? There is no silver bullet in achieving affordable housing products. There is a need to carefully design a home so that building products are used efficiently. Having a well-managed construction programme helps compress the construction time and this also reduces costs. There is still a need to keep all costs as low as possible. Building design and innovative solutions is one way to achieve affordability. In the case of Waihi Road, enabling higher density and having standard building designs assists in reducing processing costs for Building Consents. It also assists in knowing what the ultimate construction costs are for each unit in advance. For the Waihi Road site 4 housing types were developed including: 1. Detached 3 bedroom residential unit 2. Semi-detached duplex units 3. 6 Unit two storey terraced block 4. 8 unit two storey terraced block The elements of development risk associated with the Waihi Road site reside around the engineering design solutions for a large subsurface retaining wall and also the proposed stormwater management system. The HASHA requires a higher level of engineering design to be undertaken up front so that the authorising agency is certain there are no infrastructure constraints to developing the land. This in turn assists in understanding the specifications of the design and quantifying the construction costs. Observations - Paul Taylor My observations are the HASHA does provide a consenting framework more conducive to delivering affordable housing products to New Zealanders. Tauranga City Council have worked collaboratively to work out any infrastructure constraints. The level of collaboration is one step beyond what we would normally expect. Such cooperation provides a more solution focused process. The Special Housing Area approval process was relatively straight forward and central government were timely in issuing the HASHA (Tauranga City) Order, which details the qualifying development conditions. Having a minimum density is supported and also useful in providing some flexibility in relation to the final dwelling yield. Bios Richard Coles is a Senior Principal at Boffa Miskell. He was the planner responsible for the first Special Housing Area application under the Tauranga Housing Accord made on behalf of PDP Developments Ltd. Richard is an urban planner with considerable experience in urban planning, project feasibility and consenting.

7 Paul Taylor is the Regional Manager for Classic Builders Bay of Plenty/Waikato. Classic Builders is a national housing construction company building over 350 houses each year. He is also a Director of a small development company associated with Classic Builders. He specialised in medium sized housing developments but has also overseen retirement village development. His work is primarily focused within the Bay of Plenty and Central North Island.