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GREEN LIGHT FOR THE NATIONAL POLICY STATEMENT ON URBAN DEVELOPMENT CAPACITY
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On 31 October, the Environment Minister Dr Nick Smith confirmed Government approval of the National Policy Statement on Urban Development Capacity 2016 (NPS-UDC).

Councils will see new directions and obligations placed upon them which must be “given effect to” (effectively, “implemented”) in RMA plans, and it is likely that the administrative burden associated with the various assessments, consultation, and monitoring requirements in the NPS-UDC will be substantial.
 
However, this guidance will be useful in light of the proposed new function for councils in the Resource Legislation Amendment Bill, which is “the establishment, implementation, and review of objectives, policies and methods to ensure there is sufficient development capacity in relation to residential and business land to meet the expected long-term demands of the district or region.”
 
In that respect, and while the RMA tools are likely to be only a partial solution to development capacity and housing affordability issues, the NPS-UDC is a positive step forward.

The NPS-UDC will come into effect on 1 December 2016, but councils have until the end of 2017 or 2018 to have completed many of the assessments or strategies required.

The NPS-UDC aims to facilitate:

  • Effective and efficient urban environments which provide opportunities for housing and business land development;
  • Urban environments which provide choices to people and communities as to where and how they develop housing and business land, and which can accommodate change;
  • Robust evidence underpinning planning decisions in urban environments;
  • Responsive planning approaches for the short, medium and long-term; and
  • Integration of land use development and infrastructure.

How does this apply?

The first four policies apply to all councils and provide that:

  • Councils must ensure there is sufficient and feasible development capacity for the short, medium and long term.
  • Councils must satisfy themselves that other infrastructure necessary to support urban development is likely to be available.
  • Councils must provide for people, communities and future generations, while having particular regard to the need for choice, promotion of effective use of land and infrastructure, and not undermining the competitive operation of land and development markets.
  • Councils must take into account the benefits of urban development for the wellbeing of people, communities and future generations, and the benefits and costs of urban development at a national, inter-regional, regional, district and local scale.

Additional policies apply to councils with a Medium or High-Growth Urban Area within their district or region:

  • Councils must carry out a housing and business development capacity assessment at least three-yearly.
  • To be well-informed about demand, development capacity, urban development activity and outcomes and how planning decisions may affect this, councils must monitor quarterly:
    - the prices and rents for housing, residential and business land by location and type, and changes in these over time;
    - resource and building consents relative to population growth; and
    - indicators of housing affordability.
  • Councils must use information provided by indicators of price efficiency in their land and development market to understand how well the market is functioning, how planning may affect this, and when additional development capacity might be needed.
  • Councils must provide an additional margin of feasible development capacity over and above projected demand.
    When housing and business development capacity assessment or monitoring indicates insufficient development capacity in the short, medium or long term, councils must respond by “providing further development capacity” and “enabling development”.
  • Councils shall consider all practicable options for providing sufficient, feasible development capacity and enabling development to meet demand.
  • Councils that share jurisdiction over an Urban Area are strongly encouraged to work together to implement the NPS.
  • Councils shall work with providers of development and other infrastructure to achieve integrated land use and infrastructure planning.

Councils with a High-Growth Urban Area within their district or region have additional policies which apply to them, regulating matters such as:

  • Minimum targets for sufficient, feasible development capacity for housing.
  • Production of a future development strategy that demonstrates there will be sufficient, feasible development capacity in the medium and long terms and that minimum targets will be met. Councils must work with providers of development and other infrastructure when preparing this strategy.
  • Co-operation between councils that share jurisdiction over an Urban Area.

A helpful summary document of the objectives and policies of the NPS-UDC has been provided by the Ministry for the Environment, and is available here

Background

What is the NPS-UDC?

National policy statements are issued by the Government to provide direction to local government about matters of national significance that are relevant to achieving the purpose of the Resource Management Act 1991 (‘RMA’). The NPS-UDC is particularly focused on recognising the national significance of:

  • urban environments and the need to enable those environments to develop and change; and
  • providing sufficient development capacity to meet the needs of people and communities and future generations in urban environments.

The full NPS-UDC can be accessed here.
 
Why is it needed?

The NPS-UDC was developed by the Ministry for the Environment and the Ministry of Business, Innovation and Employment, as part of the Government’s response to the recommendations of the Productivity Commission. In 2015, the Productivity Commission inquiry into ‘Using land for housing’ identified the need for a national policy statement to help address constraints on development capacity (Using land for housing, New Zealand Productivity Commission, September 2015).

How will it work?

The NPS-UDC will address housing affordability challenges by requiring councils to provide an appropriate supply of residential and business land, slowing down the price hike and making residential and business land generally more affordable. The NPS-UDC will apply nationwide, but has particular policies which target councils with medium or high growth areas within their district.
 
Councils will be required to provide sufficient development capacity in their resource management plans for housing and business growth in order to meet demand. Councils will also need to consider the NPS-UDC when determining resource consent applications for urban development.
 
Timeframes

The NPS-UDC has been developed through a fast-track process – it has been delivered in less than nine months, in comparison to the standard three year period. This speed of production has come at the cost of community participation (while the draft NPS was publicly notified for submissions, there was no hearing process or receipt of evidence, as occurred for some previous NPS).  However, this reflects the Government’s focus on taking action on housing issues, and the increased emphasis on the use of national RMA tools. The NPS-UDC will come into effect on 1 December 2016, but councils have until the end of 2017 or 2018 to have completed many of the assessments or strategies required.

Further information

If you would like to discuss the implications of the NPS-UDC for your current and future operations, please contact Nicky McIndoe.  You can read the Minister’s media release here.

Our thanks to Ezekiel Hudspith and Jenny Chung for preparing this newsflash.

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Ezekiel Hudspith3
Ezekiel Hudspith

Senior Associate

Wellington

+64 4 498 0849

Nicky McIndoe
Nicky McIndoe

Partner

Wellington and Auckland

+64 4 915 0818

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