The Urban Development Bill (the Bill) was introduced in late 2019 to provide for further functions, powers, rights and duties of Kāinga Ora – Homes and Communities (Kāinga Ora) after the entity was established on 1 October 2019. The Bill received Royal Assent on 7 August 2020 and aims to “improve coordination of the use of land, infrastructure, and public assets to maximise public benefit from complex urban development projects” (Urban Development Bill as reported from the Environment Committee).

It aims to address issues including unaffordable housing, rising urban land prices and pressure on the public housing register by developing urban areas at “scale and pace” with “transformational urban development projects” (Urban Development Bill General policy statement).

The objective is for Kāinga Ora to act as a ‘one-stop-shop’, to avoid a siloed approach between local and central government that can unnecessarily delay development.

In this article, we examine and comment on some of the key features of the Bill.

Key features

Specified Development Project process

A key mechanism introduced by the Bill is the ‘specified development project’ (SDP) process. The SDP provisions in the Bill provide a streamlined and consolidated process for urban development projects.

The process for establishing an SDP will include either Kāinga Ora or the Minister of Finance and Minister for Urban Development (Joint Ministers) selecting a project for assessment, and Kāinga Ora engaging with Māori and key stakeholders and publicly notifying an assessment of the project and making a recommendation to the Joint Ministers.

Once the Governor-General has declared an urban development project to be an SDP (on the recommendation of the Joint Ministers) Kāinga Ora must prepare a development plan for the SDP.

The development plan must include, among other things, the indicative development densities for the SDP, the location of existing or needed infrastructure, community facilities and reserves, the likely staging of the SDP, any modifications to existing planning instruments that would apply to the SDP, whether Kāinga Ora would have roading powers in relation to the SDP, and the sources of funding for the SDP including any development contributions policy, targeted rates policy or charges that would apply.

Each draft development plan must be publicly notified, with the draft and submissions on the draft considered by an independent hearings panel.  Following receipt of the independent hearings panel’s recommendations and advice from Kāinga Ora, the Minister for Urban Development may approve or decline the development plan.  Rights to appeal the Minister’s decision are limited to appeals on questions of law (there is no right to appeal the merits of the Minister’s decision).

Once a development plan for an SDP becomes operative:

• Kāinga Ora is the consent authority under the Resource Management Act 1991 for all resource consent applications to a territorial authority in the SDP area and the territorial authority for the purpose of determining any notices of requirement lodged by other requiring authorities in relation to the SDP area (regional councils retain their powers as consent authorities in relation to the SDP); existing designations within an SDP area no longer apply, and only designations included in the development plan have effect in the SDP area;
• Kāinga Ora may exercise certain infrastructure powers;
• Kāinga Ora can use funding mechanisms (including targeted rates) in accordance with the development plan; and
• the planning instruments that would normally apply to the SDP area only continue to apply to the extent that they are not overridden by, added to, or suspended by the development plan.

These provisions aim to simplify the consenting process by allocating decision-making powers to Kāinga Ora. The development plan creation process is intended to shift consultation and consenting risk to the beginning of a project to improve efficiency and reduce costs.

The safeguards included in the Bill include the requirements for Kāinga Ora to engage with Māori entities and key stakeholders on whether an urban development project should become an SDP, and publicly notifying its assessment of the SDP, the draft development plan and supporting documents.

Certain land is carved out of the SDP provisions, including protected land (including certain reserves and national parks), Maori customary land and Maori reservations, parts of the common marine and coastal area in which customary marine title or protected customary rights have been recognised, and other specific categories of land and maunga of significance to iwi.

Land acquisition

Another mechanism introduced by the Bill is a framework for Kāinga Ora to transfer and acquire land not only for SDPs, but also for other ‘specified works’ (i.e. works for the purposes of urban development).

Subject to some exceptions relating to land potentially required for future Treaty Settlements, former Māori land, and land subject to conditions included in the relevant development plan, the Minister for Land Information can:

• transfer an existing public work to Kāinga Ora,
• set apart Crown land or a part of the common marine and coastal area,
• transfer former reserve land to Kāinga Ora, and
• acquire or take other land for Kāinga Ora using a process similar to that under the Public Works Act 1981 (PWA).

Once Kāinga Ora has acquired land, there is also a process for that land to be transferred to one or more developers who are completing specified works, without any obligation to offer that land back to the person from whom it was originally acquired, but subject to the right for the Crown to resume the land if necessary to enable specified works to be completed. The compensation provisions in the PWA will apply to an acquisition.

Once housing, urban renewal works, or works with a commercial or industrial purpose are completed on land acquired by Kāinga Ora, either Kāinga Ora or any developer that land has been transferred to may dispose of that land without offer-back obligations applying.

This is a real strength of the Bill, as it removes any uncertainty about the applicability of the PWA (and offer back obligations under the PWA) to urban development regeneration projects involving public land and private developers. It also aligns with the Bill’s objectives by enabling Kāinga Ora to acquire land needed for large scale urban development projects.

Rating powers

Another notable feature of the Bill is the local authority powers that are given Kāinga Ora. As mentioned above, Kāinga Ora can become the consenting authority, and may also use funding mechanisms to facilitate urban development.

If authorised by the Governor-General, Kāinga Ora can set targeted rates for an SDP area if this is included in the SDP development plan. The Bill includes examples of targeted rates – for roading within the project area, or to fund an upgrade of an existing waste-water system. Any targeted rates levied in relation to an SDP would be collected by the territorial authority on behalf of Kāinga Ora. These targeted rates will be in addition to any territorial and regional authority rates already charged in the area.

Initial comments

The Bill is intended to improve the coordination of the use of land for large urban developments by giving all of the key powers required to enable such development to occur to one entity and to reduce the need to deal with multiple arms of local and central government.

However, the processes within the Bill do not all lend themselves to short timeframes. The (albeit necessary and important) engagement and notice requirements to establish an SDP and determine the content of the development plan may take as long as current planning processes to establish an equivalent precinct. It could be some time before we see finalised and approved SDP development plans under these powers.

While having Kāinga Ora as the responsible authority may remove complexities for particular SDPs, the interplay between Kāinga Ora and other authorities could, if not well managed by the stakeholders, simply add another authority that developers and owners need to consider when dealing with land.

Information sharing between entities will be crucial to ensure both rates and consenting databases are up to date. If you are applying for a LIM for a property in the project area, Kāinga Ora may hold applicable rating and resource consenting information that the territorial authority needs to include in the property file. Under the Bill, more prescriptive information-related provisions have been removed, so it is unclear how records will be shared with the territorial and regional authorities in practice.

If you would like to understand how the Bill might affect any upcoming projects, including the consenting process and the powers under the Bill, get in touch with one of our experts.

Co-authored by Hannah McCay (Solicitor) in our Real Estate team.