Community Housing Policy Document A Applicant Eligibility Criteria for Community Housing

Community Housing Policy Document A Applicant Eligibility Criteria for Community Housing This document summarises the key points of Community Housing Policy Document A Applicant Eligibility Criteria for Community Housing, which outlines the requirements that must be met by applicants before they are eligible to participate in any Community Housing programme governed by the Council and operated by the Queenstown Lakes Community Housing Trust. General Requirements for applicants include: At least one member of a household must be a NZ citizen or resident and hold full time employment (at least 30 hrs/week) for 6 months or more in the Queenstown Lakes District. The housing must be used exclusively as the household s primary residence. Household income and assets test Income Testing You are eligible for the programme if your household income does not exceed the 120% of the Area Median Income band for the Queenstown Lakes District. For 2006-2007, this amount is $80,960 gross per year, and is adjusted annually. Asset Testing For home ownership programmes, you must be able to demonstrate that you have adequate assets to make the required deposit contribution. The expected contribution will vary based on your situation but will be at least 2% to 5% of the property price. You will not be eligible for the programme if you have assets that would enable to you purchase or rent a home in the district without the assistance of the Community Housing Trust. Gap Analysis The level of assistance provided by the Community Housing Trust will be based on the minimum amount required to eliminate the gap between what a household can afford and the cost of an appropriate residential property. Please see the full document for more details. Specific Community Housing programmes operated by the Community Housing Trust may employ further requirements. Application Review and Approval The Community Housing Trust will handle all applications, and will produce further communication on their process in September, 2007. Further information For more detailed information, please view the full Community Housing Policy Document A Applicant Eligibility Criteria for Community Housing on the council website www.qldc.govt.nz

Proposed Plan Change 24: Community Housing Working Paper One This document establishes the preferred direction for the Council s proposed Plan Change 24: Community Housing. Council set forth for public consultation in December, 2006 an Issues and Options report as prepared by Hill, Young, Cooper. Feedback was received through 16 March 2007. The purpose of the plan change is:.to implement a policy framework, new definitions, rules and other methods that establish the affordability of housing as an RMA issue for this District, and to create an incentive for the development of affordable Community Housing appropriate by zone, throughout the district The report Working Paper One dated April 2007 provides an update based on further research, and the feedback received to date. The working paper outlines the intended scope of analysis to be undertaken in the Section 32 report, and is proposed to be limited to issues, objectives and policies. Further, the report proposes implementation of a linkage zoning scheme, likely to be calculated for catchments in the district, and signals that: It should be noted that in the course of Stakeholder Agreement negotiations with several of the developments progressing plan changes for new residential zoning, Council has performed linkage zoning calculations. The result of these linkage zoning calculations suggests that those developments would need to provide between 10% and 30% of the total development s residential units as Community Housing. The analysis of the costs and tradeoffs of such a scheme are being analysed through a Section 32 Cost Benefit report, which is currently underway and scheduled for release in August/September 2007 concurrently with a Proposed Plan Change 24 for public consultation. The plan change will reference both Document A: Eligibility Criteria and Document B: Guidance for Developers. The Council welcomes comments on the appropriateness and feasibility of the Council s preferred direction as set out in Proposed Plan Change 24: Community Housing Working Paper One as part of the public consultation process ending July 13 th 2007.

Proposed Plan Change 24: Community Housing - Policy Plan Change Working Paper One Prepared by Hill Young Cooper Ltd with Tricia Austin April 2007 PURPOSE The purpose of this Working Paper is to outline a number of policy issues that will need to be addressed in developing the preferred direction for a plan change that will introduce community (affordable) housing into the District Plan. This preferred direction was set out in an Issues and Options paper circulated from 15 December 2006 to 16 March 2007. Feedback on this preferred direction has helped to highlight the issues that need to be addressed. Based on the this report, more detailed work will commence on the Proposed Plan Change, including the required Section 32 report, and this material is likely to be reported to the Council in August 2007. It is possible that, through the analysis required by Section 32, the preferred direction will be amended. BACKGROUND The Council s Housing Our People in our Environment (HOPE) Strategy identified the need to consider regulatory methods to help provide a flow of affordable housing units. The HOPE strategy identified that regulatory tools will need to work alongside other financial and facilitative tools to address growing affordability problems for local households. It is not uncommon for resort towns to experience a severe miss-match between the incomes of local households and property prices. Local factors that exacerbate housing affordability problems include a service-based economy which is dependent upon many low to moderate income jobs, a small housing market that is bid up by investors, the commercial accommodation sector and the second and holiday home markets, and constraints on land supply (due to the landscape values of the district). The inter play of these factors can be evidenced in the QLDC area, where housing affordability is now worse than places like the Auckland Region. These local conditions mean that there is a case for local action, as national housing programmes (such as the provision of State Housing and financial assistance in the form of the Housing Supplement) are never likely to mitigate all of the effects of the heated local property market. Also, the costs of local programmes that have the long term aim of assisting the growth of the district s economy should, in at least some part, be met locally. The Council considers that, in mind of the nature of the District s rapidly growing resort economy, there is a need to deliver two types of community housing: 1

1. Resident/Family housing This is housing dedicated to households that intend to live and work in the community over the medium-to-long term but may need assistance in acquiring suitable housing that is affordable to purchase or rent long-term. The built form of this housing is most likely to be homes, apartments, duplexes, townhouses and other residential typologies of a size from one to four bedrooms. 2. Worker/employee accommodation This is housing appropriate for people working in the area who may be intending to only stay on a short-term basis, such as seasonal or contract workers or, if units are available, people participating or working with events. The built form of this housing is more likely to be shared living accommodation or smaller, studio- type units. Regulatory tools need to consider the supply of market rate housing, as well as provide guidance on both types of affordable housing: Resident/Family housing as well as Worker/employee accommodation. Affordable housing refers to housing where a regulatory tool is used to ensure that the household spends no more than 30% of gross income on rent or mortgage (principal and interest) repayments. Regulatory tools therefore need to consider: A. An adequate supply of market rate housing. This can help to restrain house price inflation, with supply influenced by the amount of land that is zoned for residential purposes (density of development as well as land area), as well as the range of housing that can be provided within a district (such as stand alone housing, terrace housing and apartments, residential flats and shared accommodation for workers). B. The supply of affordable housing can be influenced by planning controls, in particular controls than impose a contribution from development to the provision of affordable housing. In addition, planning controls can ensure that a portion of new residential development be dedicated long term to the affordable market through the use of appropriate retention mechanisms (such as ownership by the Community Housing Trust, or by covenants, conditions of consent, or other regulatory agreements) The Council is currently considering land supply issues through a number of investigations, including but not limited to: The Visitor Accommodation and Residential Amenity work is looking at the High Density Residential Zone, and whether there would be benefits from limiting visitor accommodation developments in part of this zone so as to offer a permanent residential area (and therefore opportunity for high quality, high density residential developments that will be more affordable compared to stand alone dwellings). The Frankton Flats development in Queenstown and the Wanaka Structure Plan will also address land supply issues. 2

The HOPE Strategy also noted the need to consider alternative forms of housing for short-term workers, as well as the role that residential flats play in providing a pool of affordable rental units. However maintaining a supply of land and a range of housing types will not, in itself, lead to a supply of housing that is affordable to low to moderate income houses, as there is no mechanism to retain a portion of the land and housing that is made available for these groups. This report therefore considers the point B above, and what types of District Plan requirements should be prepared in relation to the provision of affordable housing. Currently the Council has either completed or is involved in negotiations with developers on a case-by-case basis in relation to affordable housing contributions that are part of developments which are subject to plan change processes. These include Jacks Point (Queenstown), Riverside Stage 6 (Albert Town), Peninsula Bay (Wanaka), Kirimoko (Wanaka), Cardrona, Five Mile (Queenstown), 3 Parks (Wanaka), and others are in progress. PREFERRED DIRECTION, DECEMBER 2006 In December 2006, an Issues and Options report was prepared, following a number of Advisory Group meetings, which set out a range of options to promote affordable housing. The Issues and Options report identified the following preferred direction: 1. The supply of affordable housing is a relevant Resource Management Issue, and should be addressed in the District Plan 2. The increased supply of affordable housing should be included as an objective and policy in the District Plan 3. The extent to which developments can increase the supply of affordable housing should be included as assessment criterion that would apply to particular activities, such as comprehensive residential developments 4. A Financial Contribution under the Resource Management Act that would be levied on all development should be investigated and applied through a plan change process in 2 to 3 years time. Such levy would be able to be met by committing affordable units, or land, over a period of time in lieu of making a cash contribution 5. To assist the Housing Trust in its work, and to share the costs involved, District Plan methods need to be complemented by other sources of funding (e.g. rates, loans), and further policy development. For example, community housing should be recognised as social infrastructure within the Council s Long Term Council Community Plan (LTCCP). Other sources of funding will need to be explored through the update process for the LTCCP, over the next 2 to 3 years. It is possible that the LTCCP process could result in a development contribution for community housing, although this is likely to require a change to the Local Government Act. If this was the case, then the financial contribution in the bullet point above would not need to be used. 3

Thirteen submissions were made on the Issues and Options report. Opinions varied between support for the preferred direction, to opposition. Concerns raised include: Affordable housing is a central government issue Fewer constraints on land supply would address the issue (e.g. more land zoned for housing, both in urban and rural areas, and/or more high quality, high density development) Council-initiated schemes, such as development of public land holdings, rather than regulatory controls A contribution system is likely to raise the costs of market rate housing, undermining the purpose of the plan change There should be a focus on encouragement / incentives, such as density bonuses or rates relief for developers who offer affordable housing as part of their development. In responding to these points, it is noted that: Central government (via Housing New Zealand's submission) supports Council s proposals in so far as they will help to complement and extend their own efforts. In other words, central government is unlikely to solve all local problems Land supply is being considered (in relation to the Wanaka Structure Plan as well as in relation to the Queenstown high density zone). However, given the growth pressures facing the QLDC district, there is no guarantee that an increased supply of land will drive down house prices to a point where they become more affordable. Council-initiated schemes are part of the HOPE strategy, and need to be progressed. The question of the costs of any regulatory approach is a valid concern and needs to be addressed. The preferred direction notes the potential need for some sort of rates funded investment in affordable housing. The first stage of developing the preferred direction will help to address the issues outlined, particularly in relation to costs. POLICY DEVELOPMENT-PREFERRED DIRECTION APRIL 2006 The following section takes forward the first three points from the December 2006 preferred direction. In doing so, the plan change needs to set in place the framework to support the action under the fourth bullet point. To help develop this framework, a number of regulatory-based affordable housing schemes have been considered, including: 4

Town of Vail (Colorado, USA), Ordinance 7,8 and 9, 2007 New South Wales State Environmental Planning Policy No 70 Affordable Housing (Revised Scheme), 2002 South Shropshire District Council, Interim Planning Guidance Affordable Housing, 2006. While these schemes are not directly transferable to New Zealand (because of different legislative contexts), they nevertheless provide a useful checklist of issues that need to be considered. In reviewing the above schemes, it is apparent that in developing the preferred direction, a number of options will need to be considered. Particular aspects that need to be considered relate to: 1. The extent to which any affordable housing requirements should be shared between the residential and the non-residential sector; 2. Whether costs should fall to new development or existing development; how to balance the need for new development to meet the needs of the workforce it will require, while also balancing the need for the existing community to house its workforce. This will need to involve a study of costs to future developments as well as how costs might fall on other home owners, developers or landowners, and the extent of these costs; and 3. How affordable housing should be defined so that it is of a high quality, is located in the right place and meets the needs of the community. Residential / Non residential In reviewing how other (overseas) local authorities develop policy, there are two distinct approaches: Inclusionary zoning Linkage zoning. These approaches are discussed in turn. Inclusionary zoning Inclusionary zoning is widely used in America, and refers to the practice of requiring private housing developments to provide some affordable houses. These houses may be sold by the developer at or below market rates to qualifying individuals, or perhaps purchased by a Housing or Land Trust, for rental or on-sale. In some cases, affordable housing has to be transferred to the Council or relevant Trust at no cost. While the provision of affordable housing is an important goal of inclusionary zoning provisions, an equally important driver is social cohesion and ensuring that new 5

housing developments offer a mix of housing types including differently priced housing products. With inclusionary zoning, whilst it can be argued that limited land availability for residential development will increase demand for new market-rate housing developments, having a negative effect on the provision of affordable housing. It is difficult to argue for a specific quantum of affordable housing to be contributed to reduce or mitigate any adverse environmental effects as required by the Resource Management Act. It is therefore recommended that an inclusionary zoning approach not be pursued, due to the incompatibility with current Resource Management Act provisions in terms of the difficulty of drawing a link between effects and necessary mitigation. However the principle of ensuring a mix of housing types within a development is applicable. Linkage zoning Linkage zoning refers to a requirement that development provide affordable housing in proportion to the employment that it generates, the income profile of that employment, and associated housing needs. In contrast to inclusionary zoning, there is a strong connection between development that increases employment in the community and the demand for housing that is affordable to those employee households. Hence it is possible to establish a quantitative relationship linking the development to the marginal increase in the level of demand for affordable housing. Typically, linkage zoning is applied to commercial developments like new shopping centres and visitor accommodation developments, but the same process can be applied to residential developments by including a factor relating to the overall demand for local services generated by the residents of the development (such as retail growth). The basic principles involved cover: Calculating the permanent jobs generated by the development. This does not cover construction-related jobs, or economic multiplier effects. Allowances need to be made for part time jobs and multiple jobs Understanding the income profile of the jobs created, particularly the number of low to moderate income jobs Determining what an appropriate contribution towards affordable housing for the low to moderate income workers should be, taking into account factors such as what proportion of low to moderate income working households should live in an area, and the range of mechanisms available to meet these needs. Linkage zoning can be applied to residential developments by considering how much employment is involved in servicing and maintaining residential dwellings and 6

sections. This covers services like repairs and maintenance, security, as well as house cleaning, lawn mowing, and services like accommodation and rental management. In a resort town, where there is a large number of second and holiday homes, the approach provides for a reasonable linkage to be developed between urban residential growth and demands for affordable housing. The down side of a linkage type approach is the need to restrict use of the affordable home provided to people working in the district. This is in contrast to the more broadly-based inlcusionary zoning type requirements, where access to the affordable homes provided may be controlled via a Registered Social Landlord, or some other system of qualification which would provide for working and non-working households. Further work is underway by the QLDC to establish the appropriate retention mechanisms, including the role of the Queenstown Lakes Community Housing Trust, in preserving affordability over time. It is recommended that a linkage type contribution system be used as a model for the approach to be developed for the QLDC District Plan, as the links between the natural environment and economic development are very strong in the QLDC area, and most households in the area are working households. Households who secure affordable housing while working would not be at risk of loosing it when they retire. Work is needed on developing the actual methodology that will be used to quantify how much affordable housing is needed to meet the needs of low to moderate income working households for different development types (e.g. residential, office, retail, visitor-related). Costs Any local affordable housing scheme will involve some costs. There will be additional transaction costs and administration costs for landowners and developers preparing development proposals, while there may also be reduced returns for investors, developers and land owners, and/or higher costs for other homeowners, ratepayers and/or consumers as a result of the regulatory requirement. A public fund whereby affordable housing is purchased from developers at market rates is currently not an option in New Zealand (apart from Housing NZ development programmes, where Housing NZ negotiates with developers).the Government is looking into a split equity scheme, whereby the Government (or perhaps another party like a trust) retains part ownership of a property. Council does have some landholdings, and developing them so as to provide affordable housing is identified in the HOPE Strategy as an action, while the preferred direction also identifies the need to consider some rates-based funding of affordable housing schemes. What public funding will be available will need to be directed at meeting historical demands. A regulatory approach therefore needs to concentrate on managing future adverse effects, rather than addressing historical problems. Submitters on the Issues and Options report are concerned that a regulatory approach which controls the price of some units in a development (or requires that some affordable units be provided as part of a commercial development) may result in the developer selling other houses in the development at above market rates, meaning that other home owners pay for the 7

subsidy involved in the provision of sub market housing, other things being equal. Equally, requiring a contribution from non-residential development may push up the costs of goods and services in the district, relative to other areas. This may harm low income households. However the size and importance of the tourism sector (and its large contribution to business viability in the district) should help to reduce this effect. One way to reduce the extent of any cross-transfer of costs is to provide a density bonus, whereby the provision of affordable housing units at or below market rates can be off-set against the returns from additional units / or commercial floor area. The value of land is, of course, highly dependent on the applicable planning policies, and the market value reflects the quality of the land, including the planning provisions that apply. District Plan changes and resource consents that upzone land enables a planning gain to arise. Under linkage zoning, a portion of that gain (relative to the increase in local employment created) can be used to meet the consequential need for affordable housing. Clearly the rezoning / upzoning process needs to be related to a wider growth management strategy, and managed so that development cannot use the provision of affordable housing as the sole reason to convert rural land to urban land, for example. Uncertainty over how much affordable housing should be provided is likely to result in additional costs that fall on a developer / business owner, as the resource consent process will be used to negotiate through the requirement. A transparent, upfront requirement is likely to get factored into equations associated with how much a land development parcel is worth, meaning that costs are more likely to be felt by landowners. Under the affordable housing schemes reviewed, usually the amount of affordable housing that has to be offered reflects the demand for affordable housing in the district, the funding options available and contribution rates that are tempered to make them reasonable. The amount of housing to be provided therefore varies a lot between different schemes, for example: In Sydney, State Environment Policy requires that between 0.8 % and 5% of new housing floor area in some growth areas has to be transferred, at no cost, to the relevant local authority for use as affordable housing. Small developments provide money rather than space. For non-residential floorspace, the contribution rates are around 1% of the floor area. In South Shropshire, the aim is for 50% of new homes to be affordable, and there is funding (via central government) for Registered Social Landlords to acquire some of this housing at below cost for subsequent rental, while other housing must be offered at an affordable rate (i.e. 10 to 20% below normal market rates) on the open market. To this end, an affordable sale value is stipulated by planning guidance. Subsequent resale is also controlled. In the Town of Vail which uses a linkage-based approach - the intention is that 30% of low to moderate income working households can live within the town. To this end, new commercial and business development must mitigate its impact on employee housing by providing household units that are restricted to sale or rent 8

to people working within the district, at a rate of 20% of the employees generated by commercial development. For residential development, the requirement is that 10% of residential floor area be devoted to household units that are restricted to sale or rent to local workers. There are no controls on sale or rental value, although obviously the restriction to sale or rent to local workers limits the market price. Similar approaches are used in a number of other mountain resort communities in Colorado, California and Wyoming. The proposed scheme for QLDC will rely on stipulating that a proportion of houses in a housing development be made available at an affordable rate for qualifying households, while commercial development will need to provide housing, or pay an equivalent contribution, in-line with employment generation demands. Setting the affordable housing contribution rate must therefore take into account the impact on the developer / business, and the cross subsidy that will be acceptable to the wider community. In other words, any contribution needs to be set at a reasonable rate. Important principles in setting the contribution rate are likely to cover: A broadly-based, linkage type requirement related to future employment generation would spread costs over the widest base, while limiting the contribution to a clearly defined effect. Tying the linkage requirement, in the first instance, to the time of rezoning / change of use would focus the contribution to a point where density bonuses could be addressed. In this way part of the value uplift associated with the development process can be retained for the public good and cross-subsidy effects reduced. The contribution rate will need to recognize that the total affordable housing demand will be met by a number of initiatives, and so only part of the demand will be met through the district plan requirement. Other methods like expanding supply and Housing Trust-initiated developments will also meet demands. To further help to minimize the costs of any new provisions, it will be important that objectives and policies and supporting information is clear about the number of units to be provided and the extent of discounting expected on the affordable units offered for sale. One way to peg prices to an affordable rate would be to relate required sale / rental values to median household incomes, with the intention that the scheme be focused on moderate income households. Council has begun to establish these parameters through its Document A: - Applicant Eligibility Criteria. It should be noted that in the course of Stakeholder Agreement negotiations with several of the developments progressing plan changes for new residential zoning, Council has performed linkage zoning calculations. The result of these linkage zoning calculations suggests that those developments would need to provide between 10% and 30% of the total development s residential units as community housing. The Section 32 report will need to expand upon and develop these criteria. 9

Quality, location and mix Affordable housing will need to be carefully defined in the District Plan so as to ensure that developments that propose affordable housing does so in a way that supports wider urban design and community cohesion goals. Important dimensions are likely to include: The location of affordable houses The mix of units (size) The design Energy efficiency Retention. Council staff have started to develop guidelines covering these aspects, and one option would be for the District Plan to refer to these guidelines. However, it will be important that the District Plan (at a policy level) incorporate the main principles of these guidelines. These guidelines are set forth in the draft Document B: Builder Developer Guidelines and are released in draft form for comment at this time. OUTLINE OF PLAN CHANGE The following section sets out a possible plan change. This is provided to help shape discussion on the preferred direction, and the required analysis under Section 32. The actual content of the Plan Change will evolve as investigations continue. 10

Resource Management Issues Add under 4.9 Urban Growth A particular long term constraint on growth is a lack of affordable housing. A limited supply of housing that is affordable to low to moderate income households is likely to constrain the growth of the economy, create pressure to expand the urban footprint of the settlements in the district, and will restrict people s social wellbeing. Add the following to 4.9.2 Issues The principal issues identified are:.. Ensuring that present and future generations have access to a range of housing choices, particularly housing (both rental and owner occupied) that is affordable to low to moderate income households that support the economic base of the district. 4.9.3 Objectives and Policies Add new objective: Objective 2 (a) Affordable Housing Urban growth that contributes to, and helps sustain opportunities for low to moderate income working households to live in the district in proximity to their place of work and community services and activities. Add new Policies along the lines of the following: 2(a).1 New developments in urban areas (both residential and non-residential) should contribute to the provision of housing for working households on low to moderate incomes. Developments that provide for affordable housing shall not be expected to contribute further on that portion of the development that meets affordability criteria. 2(a).2 Particular consideration of the positive social and economic benefits of the provision of affordable housing should be given at the time of: rezoning of land from rural to urban as part of Structure Plan processes (e.g. Wanaka / Frankton Flats), when up zoning of existing urban land is proposed (such as when new provisions provide for additional residential density, housing or visitor accommodation units, or commercial floorspace) When considering discretionary and non-complying resource consents that seek to exceed normal density, floorspace or unit standards. 11

2(a).3 Contributions should be determined at a rate that takes into account: the direct, permanent employment demands that the development generates, the income profile of the employment generated, and the proportion of low to moderate income jobs, and the number and type of affordable housing units required to meet the housing needs of these workers, taking into account the supply of, and demand for, housing units that will be able to accessed by low to moderate income working households within the area of the development. the range of methods that will be used to support the supply of affordable housing, including actions to increase land supply, support a range of housing choices and direct financial investments by public agencies like Central Government and the Housing Trust. Note: to assist in the interpretation of these policies, the Council will produce, on a five yearly basis, a housing needs assessment that considers demand and supply factors, and the different methods to be used to address supply issues. 2(a). 4 The value of the contribution, that is the rate at which the affordable housing units are to be offered for sale (affordable sale value) should reflect the income of working households in the district, with the sale value no more than 3 to 4 times the annual median income of the district. 2(a).5 Contributions may be in the form of money, land, units, or a mix of these. There is a preference for units within a development site, or in close proximity to it to be provided, with a monetary contribution only where the development is small in scale, or there would be an over concentration of affordable housing units within a particular area. 2(a).6 Affordable housing should be located within the confines of the urban settlements in the district, within walking distance of shops, community services and transport routes, be of a range of sizes (number of bedrooms) to match predicted housing needs, be constructed so that they are energy efficient and be well designed so that they integrate with surrounding development. 2(a).7 A concentration of affordable housing in neighbourhoods shall be avoided, with no more than 30% of households being identified as affordable housing units within any one neighbourhood. 2(a).8 Appropriate, long term (no less than 30 years) retention mechanisms shall be provided with any affordable housing, such that the housing remains affordable for subsequent, qualifying working households, and mechanisms should be put in place to ensure appropriate management, monitoring and maintenance of units. 2(a).9 Housing types that provide more affordable accommodation, such as residential flats, worker accommodation and intensive housing formats that reduce land costs should be encouraged, provided they are well designed and appropriately located. 12

Implementation Methods Objective 2(a) and associated polices will be implemented through a number of methods including: District Plan a) Assessment criteria that apply to particular types of development requiring discretionary or non-complying resource consents b) Incorporation of appropriate provisions in relevant plan changes and variations c) Assessment criteria in relation to Comprehensive Residential Developments in the Low Density Residential Zone d) Provisions enabling shared living arrangements, residential flats and similar forms of accommodation. The Council is to consider the subsequent development of a financial contribution which will apply to all forms of urban development. Non District Plan The Council will continue to negotiate on a case-by-case basis with developers. Explanation and Reasons The district s economic, social and environmental well-being is dependent upon a range of people and households being able to live within the district. The district s economy is dependent upon a skilled labour force offering a high quality visitor experience. Rapid turnover of staff and inability to attract low to moderate income workers due to high housing costs undermines this aim. The district also recognises that a diverse, permanent resident population plays an important role in sustaining a healthy, vibrant community. The growing lack of affordable housing in the district is the result of a number of pressures on the housing market in the district, which means that there is a reducing incentive for the market place to offer affordable housing. These pressures include strong economic growth driven by the tourism sector which is seeing the expansion of the visitor accommodation market, a large second and holiday home market, and a significant investment orientated development sector. Options to provide more affordable housing (through an expansion of land supply) are also restricted by an inability to expand the urban settlements of the district into surrounding rural areas that are highly valued for their landscape qualities, and which help to underpin the economic base of the district. 13

To help develop a stock of affordable housing that will be available to qualifying low to moderate income working households, the Council has developed an affordable housing strategy and put in place a Community Housing Trust. It has also negotiated agreements with individual developments. To complement these actions, and to recognise and mitigate the effects of urban development on the sustainable management of the district's resources (including its social and economic resources), the District Plan recognises that the provision of affordable housing is an important resource management issue for the district, and that where appropriate, urban development should contribute towards the provision of affordable housing for working households. Contributions are expected at the time of rezoning, upzoning and when redevelopment to a higher intensity is provided for through discretionary or non-complying resource consents. The extent of contribution will be assessed on a case-by-case basis, and will be linked to the number of direct, permanent jobs created by the proposed development. Construction-related jobs, and direct and indirect job multiplier effects associated with the increased economic activity arising from the development will not be counted. The contribution will also take into account the income profile of the jobs created, and the number of affordable housing units that are needed to help meet future demands. In regards to the last factor, the Council will produce, on a 5 yearly basis, an assessment of affordable housing needs, taking into account the extent of supply of affordable housing, as well as demands from working households. Affordable housing is housing that will be within the means of households on low to moderate incomes to rent or buy. In the case of QLDC, low to moderate income households are households with an income up to 120 % of median household income, with the majority of that income sourced from salary and wages, and who have few assets. Affordable housing needs to be well designed so that it integrates with existing communities, is not concentrated in one area (leading to social stigma), located close to shops and transport and be energy efficient to help reduce household running costs. To remain affordable into the long term, appropriate retention mechanisms need to put in place. This refers to mechanisms that in some way restrict the price at which units may be rented, and / or restrict resale values, such as sale only to qualifying individuals, or at a pre-determined rate of capital growth which is below normal market rates. Definitions Definitions will need to be developed to support the above provisions, covering (but not limited to): Affordable / Community Housing Affordable Sale Value Affordable Rental Charge 14

Eligible household Appropriate Retention Mechanism Area Medium Income 15

COMMUNITY HOUSING POLICY VERSION 1.1 DRAFT AS Approved by Strategy Committee for Consultation 9 May 2007 (Reflects amendments to VERSION 1.0 ADOPTED 5 May 2006) Document A Applicant Eligibility Criteria for Community Housing TABLE OF CONTENTS 1) General Requirements... 2 2) Income Test:... 3 3) Asset Test:... 4 4) Gap Analysis:... 4 5) Retention: Repayment and Resale Control... 4 6) Application Ranking... 5 7) Application Review and Approval... 5 8) Definitions... 5 Document A: Applicant Eligibility Criteria Page 1 of 6 Version 1.1

Document A Applicant Eligibility Criteria for Community Housing (Note: the following criteria have been drafted to apply to all affordable/community housing programs to be governed by the Council, including those operated through the Queenstown Lakes Community Housing Trust (Trust). To be eligible to participate in community housing programs (hereafter referred to as the Programme ), applicants must meet the following set of requirements. These are designed to ensure fairness and equity among applicants, and to ensure that the wider goals of the Housing Our People in our Environment (HOPE) Strategy are achieved. 1) General Requirements a) Participation in the Program is limited to a Household with at least one member, who is and will remain a New Zealand Resident or Citizen. b) At least one member of the applicant household must be employed on a full-time basis with an employer in the District (see Full Time Employment), c) The property must be used exclusively as the household s Primary Residence. d) Applicants shall agree that all information provided on the application is true, correct, and should any information provided be found to be of a false or fraudulent nature, the Council/Trust reserves the right to reject the application, terminate the applicant s participation in the program or take any other action that is legally available. e) If a specific program states, then the following requirements shall also apply: i) Applicants have been employed for 6 months or more and remains employed on a Full-time basis in the District with an employer. ii) Applicants will be required to certify their agreement to abide by the program requirements for the duration of their participation in the program iii) Applicants consent to an annual re-certification of the information provided in the application, which includes but is not limited to verification of household income iv) If the applicant wishes to include a person in their Household whose primary relationship is that of a flatmate, the applicant must state Document A: Applicant Eligibility Criteria Page 2 of 6 Version 1.1

this relationship in their application form. In this case, Household eligibility will still be based on the AMI target for the primary household size. The primary lender s underwriting criteria can take the flatmate rent into consideration when determining the income necessary for repayments. This situation would only be considered desirable if it allows an applicant to qualify, and if the flatmate situation is temporary (i.e. will only apply during the first 1-2 yrs of eligibility). v) First Time Homebuyer in the District: Applicants cannot own any other residential property in NZ at time of settlement, and cannot own or be in the process of borrowing funds to purchase a rental property. Households may be deemed to be ineligible if a household member, via a trust or other mechanism, has an ownership share in other residential or commercial property, or other significant assets (i.e. share portfolios), subject to the assessment of the asset as part of test ii above. Applicants will be encouraged to discuss their situation with staff, which may need further consultation with the review committee prior to making a decision. f) Household Income and Household Assets form two of the central eligibility factors for the Programme. The Income Test and Asset Test are utilized in the Gap Analysis, and are defined as follows. 2) Income Test: a) Applicants are eligible for the Programme if their Household Income does not exceed the 120% of the Area Median Income (AMI) band for the Queenstown-Lakes District, and as adjusted annually by the average wage inflation rate, or as published by Statistics New Zealand. See: Attachment A: Targeted Area Median Income Levels by Household Size b) Housing is deemed affordable if the Household spends no more than the higher of either the Gross Income or Net Income calculations set forth below: i) Gross Income: approximately 30% of the household gross income on rent or mortgage (principal and interest) repayments. In some cases, primarily where household income is above the median, and where the household can support conventional lending, a maximum expenditure of 35% of gross income may be acceptable. ii) Net Income: approximately 55% of the household net income (after tax) on all accommodation costs, as further described below: (1) Rent or lease payments (to rent a house); Document A: Applicant Eligibility Criteria Page 3 of 6 Version 1.1

3) Asset Test: (2) mortgage repayments (interest and principal repayments on mortgages to purchase a house); (3) the cost of providing space heating, hot water, power and cooking fuel, such that all habitable rooms can be heated to 18C, 16 hrs per day (4) body corporate fees (if applicable); (5) rates (including local authority rates and water rates); (6) house insurance premiums (excluding contents insurance); (7) mortgage protection insurance or life insurance (only if this is compulsory for the mortgage); (8) essential repairs and maintenance costs to the home; (9) payment towards a deposit (limited circumstances apply). a) Applicants who currently own their primary residence are viewed as suitably placed in the housing market, and therefore not in need of the assistance provided through the programme. b) Households who have assets that would enable them to purchase or rent a home in the District without the use of Trust assistance will not be eligible. Applicants consent and agree to provide details of all assets at time of application in order to determine whether programme assistance is necessary to achieve the Household s housing goals. i) For Homeownership programs, Applicants must demonstrate adequate assets to make the required deposit contribution. At time of application, these may come in the form of a property or other investment owned outside of the district for which the household would be required to commit to sell and apply the proceeds toward their primary residence in the district. The expected deposit contribution will vary based on the household situation, but would be expected to be at least 2% to 5% of the property price. 4) Gap Analysis: Levels of assistance will be based on the minimum amount needed to secure adequate housing by eliminating the gap between what the household can afford, and a residential unit appropriate for the household size. 5) Retention: Repayment and Resale Control All housing meeting the definition of affordability set forth under Council policy will be required to comply with some form of long term retention. At this time, the Trust is the primary entity charged with the responsibility for ensuring the retention of long term affordability. Document C: Retention Mechanisms will Document A: Applicant Eligibility Criteria Page 4 of 6 Version 1.1

specify the form and nature of all Repayment and Resale Controls. The specifics of such controls are under development. 6) Application Ranking At this time, applications will be reviewed and processed on a first-come, firstserved basis. A balloting or ranking score system may be implemented by the Trust if needed. Should demand exceed supply, such a ranking system may be necessary and would be proposed for adoption at a future time. 7) Application Review and Approval Applications will be reviewed by the Trust for completeness and eligibility, and for confirmation of Residency and Registered Employer. 8) Definitions a) Assets: All bank, investment, real property, or other assets owned by any member of the Household. b) Full-Time Employment: Defined as 30 hrs per week or more. c) Household: may include a single individual or a family, which may comprise a legally married or de-facto partnered couple, and their children (aged 18 or under) who are under legal guardianship of the individual or couple and other dependents who normally occupy the same primary residence. It is acknowledged that households may also include elderly parent(s) or adult children, and the inclusion or exclusion of these members income when calculating Household Income as defined below will be reviewed on a case-by-case basis. d) Household Income: all income earned from gainful employment, or received from investment, public benefit, superannuation or other source, of any Household member. e) Primary Residence: defined as the place of daily residence for all household members. A Household may have only one Primary Residence. Document A: Applicant Eligibility Criteria Page 5 of 6 Version 1.1

f) Targeted Area Median Income Levels (2007) Homeownership Rental Area: Queenstown-Lakes District 2007 Area HOUSEHOLD Median Income GROSS Income (Before Tax) NET Income (after Tax) $ $ 64,142 $ $ 59,667 129% AMI 88,107 120%AMI 81,960 Median 100% AMI $ 68,300 $ 49,722 80% AMI $ 54,640 $ 39,778 70% AMI $ 47,810 $ 34,806 60% AMI $ 40,980 $ 29,833 50% AMI $ 34,150 $ 24,861 40% AMI $ 27,320 $ 19,889 Upper Median Lower Median g) Income Bands Bands are defined as follows: Targeting Bands Upper 129% Band Level 120% Lower 110% Upper 109% Band Level 100% Lower 90% Upper 89% Band Level 80% Lower 70% Upper 69% Band Level 60% Lower 50% Document A: Applicant Eligibility Criteria Page 6 of 6 Version 1.1