Insights
FEB 24 2017
All Insights

The Future of Large-Scale Urban Development

Jeff Walters – 24 February 2017

The government is introducing new legislation governing urban development authorities (UDAs) in a bid to ensure there is always plenty of land for new developments.

These locally controlled authorities will have compulsory land acquisition powers and fast-tracked resource consent processes to help enable the National Policy Statement on Urban Development goals of ensuring enough land is available for housing and infrastructure, such as roads, parks, schools, water and sewerage.

The proposal contemplates a sword to the Gordian knot. In essence, UDA is a public entity that will have special powers to push a particular project along and bring it to fruition several years earlier than otherwise might occur.

The Tamaki Regeneration Company is an example of what this type of entity might look like.

Will it work? The public sector in Auckland has struggled to deliver results, with Waterfront Auckland and the Hobsonville Land Company being obvious exceptions.

The UDA proposal is ambitious and risks being swamped by its own complexity. In particular, the mere suggestion of extending compulsory acquisition powers or fast-tracking planning consents may prove politically unpalatable.

The biggest risk is that bringing yet another public body into the local and central government housing mix will make the process more complicated and expensive than it is.

The proposed UDAs will co1ne under the Ministry of Business (MBIE) whose track-record to date in facilitating housing growth is poor.

What is clear is that it is nearly always the private sector which actually builds homes.

Developers and builders are doing excellent work at Hobsonville and Tamaki. The government would do well to bring those developers into the discussion.

In Auckland, private entities tend to avoid engaging in the pre-legislative process. However, developers and builders are facing the issues daily and should bring that insight to the proposal.

The UDA proposal is a good start in the redevelopment issues the country is facing. There is much in the proposal that still needs to be developed:

- using targeted infrastructure charges to pay for infrastructure is a good idea provided the costs are fairly distributed;

- brownfields sites present a need to amalgamate land parcels, but care needs to be taken to ensure unwilling sellers are appropriately compensated;

- preventing land banking is essential but balancing property rights and the public good is tough;

- co-ordinating local authorities and their council-controlled entities is a must;

- holding UDAs accountable is a great idea but how will it be done? Ensuring local authorities are held accountable in a clear and transparent way is also vital;

- partnering with the private sector to balance social goals (for example, social housing, affordable housing, amenities) with private incentives is great in theory but much harder in practice;

- overriding district plans to fast-track planning stages will take some selling;

- developing at scale is an issue. Looking at how SME developers and builders can participate will be key;

- iwi participation with their treaty rights, resource and the ability to partner with developers and builders will continue to be a crucial ingredient;

- funding, the white elephant in the room, needs to be addressed. With land prices high and project finance limited, the cost of land is key to development feasibility; and

- overseas entities and their ability to bring new capital and scale will need to be balanced against the risk of the project being abandoned in tough times.

Like every new law, the model is not yet perfect and needs more discussion, particularly with iwi, developers and builders.

The government is consulting on its UDA proposal until mid-May.

Jeff Walters is a commercial property partner at Anderson Creagh Lai and has been closely involved with the Tamaki regeneration.

Contact:

Jeff Walters
Director
Anderson Creagh Lai Limited

Level 1, 110 Customs Street West, Auckland 1010, PO Box 106-740, Auckland 1143
Direct line: +64 9 306 5896