The Kāinga Ora legislation is itself part of a wider package of legislative change, which will provide more flexibility, co-ordination and support for New Zealand’s urban development. This article also considers the Infrastructure Funding and Financing Bill, which is hot-on-the-heels of increased government funding for infrastructure, the recent establishment of the Infrastructure Commission, and release of the Proposed National Policy Statement on Urban Development. No longer will local government have a virtual monopoly over the planning and funding of urban development. New Zealand will soon have the tools to radically transform our urban environments, at pace. The new tools, if effectively implemented, could mean that in ten years’ time our cities could look quite different.
Kāinga Ora and the Urban Development Bill
Kāinga Ora was created earlier this year, by amalgamating Housing New Zealand, its subsidiary HLC, and parts of the KiwiBuild unit. It is tasked with initiating, facilitating or undertaking any urban development, whether by itself, in partnership, or on behalf others. See our comments on the Kāinga Ora – Homes and Communities Bill here.
However, the legislation which created Kāinga Ora did not give it the functions and powers necessary to carry out comprehensive urban development at scale. Those powers will be bestowed by the new Urban Development Act, which basically centralises and expands upon powers currently available to councils. The powers include:
Perhaps most controversially, Kāinga Ora will also be able to:
The specified development project process effectively allows Kāinga Ora to act as a consenting authority, and bypass the land use provisions of the RMA. The process will include public consultation and submissions on the project objectives, location and its effects, but very limited appeal rights. Projects will be tested against the purpose and principles of the urban development legislation, as well as provisions of the RMA. The principles in the Bill emphasise integrated and effective use of land and buildings, quality infrastructure, efficient, effective and safe infrastructure, access to public open space, and low-emission urban environments.
Once a specified development project is confirmed, finalising the details necessary to enable development will be much quicker than the standard RMA process. In this way it is similar to existing structure plans within district plans. Kāinga Ora will also become the consent authority for activities carried out by others within the development plan area, respond to any plan change requests, and be responsible for compliance, monitoring and enforcement. Regional council functions will be unaffected, and regional consents for specified development projects will still be required.
Kāinga Ora will have extensive land acquisition powers, even if Minister Twyford has promised these will be used sparingly:
a. It will be able to apply to the Minister for Land Information to have land or an interest in land (except for sensitive Māori land) taken by compulsory acquisition under the PWA for one or more ‘specified works’, without demonstrating that the work also meets the definition of ‘public work’ in the PWA. The definition of ‘specified work’ is broad, and includes urban development, urban renewal, housing and related infrastructure purposes;
b. It will be able to do this at any time, whether or not a development project has been established and whether or not the relevant land is within a project area;
c. It will be able to do this with the intention of transferring that land or interest in land to another person or entity for a specified work;
d. The land will vest in Kāinga Ora instead of the Crown. Kāinga Ora will be able to hold land or an interest in land in its own name without having to hold it for a particular public work;
e. Existing Crown-owned land can be transferred by agreement of the relevant Ministers, and may involve the payment of a price for the land;
f. Any land held by a ‘Crown agent’ rather than the Crown must be compulsorily acquired in the absence of an agreement, and (unusually) the Crown agent is prohibited from objecting to the Environment Court against the proposed compulsory acquisition if the acquisition relates to a project area or specific development project;
g. Compensation for any private acquisition or taking can either follow the PWA processes or, by agreement, take an unspecified different form and amount. This provision will be an interesting one to see in practice, as it is a departure from the universal approach of the well-established PWA compensation framework;
h. Kāinga Ora can transfer land to developers without the usual offer-back restrictions, but with the right for the Crown to ‘resume’ such land if the land is no longer required for a specified work or is required for another specified work;
i. Land held by Kāinga Ora for housing, urban renewal, reinstatement or commercial/industrial purposes which have been completed can be disposed of without going through the s 40 PWA offer-back regime, subject to specific processes for former Māori land; and
j. Otherwise, PWA offer-back obligations apply where land held by Kāinga Ora is being disposed of for something other than a specified work.
Minister Twyford has suggested that the powers in the Bill could be used to implement the light rail component of the Let’s Get Welly Moving project. Certainly, the Bill would enable the amalgamation and development of land (for commercial and residential purposes) in order to fund and support public transport infrastructure. Transport hubs are valuable locations to live and work, but people living and working nearby will also support better public transport use. Building transport infrastructure in conjunction with land development has long been recognized as a win-win in other countries. Careful use of the Urban Development Bill powers will allow New Zealand’s urban environments to be transformed.
The Urban Development Bill has been referred to the Environment Select Committee. The closing date for submissions is 14 February 2020.
Infrastructure Funding and Financing Bill
The Infrastructure Funding and Financing Bill was introduced by Minister Phil Twyford on 12 December 2019, with bi-partisan support. Its first reading was on 17 December 2019. The Bill’s purpose is to provide a funding and financing model for the provision of infrastructure for housing and urban development.
Difficulty funding infrastructure is widely recognised as one of the main constraints on urban development in New Zealand. Local government currently provides most of the roading, water, wastewater and other services which urban communities rely upon, but local government funding of new infrastructure requires a long lead-in time. There are difficulties co-ordinating urban development with the infrastructure necessary to support it. This can mean development is stalled until the infrastructure is ready, or existing infrastructure is put under increasing pressure to service unanticipated development. And this is on top of the existing need to maintain and repair infrastructure which may have been historically underfunded, or which needs to be upgraded in response to climate change effects.
The New Zealand Productivity Commission has recently released a report on local government funding and financing. This report concluded that councils currently have access to a range of funding and financing tools, and a great deal of autonomy in how they use them. This is a strength. However, some councils are struggling to deal with the pressures of population growth, climate change, tourism, and responsibilities passed down from central government. The report notes that special purpose vehicles are an effective infrastructure investment tool, and that the Government is working on ways to expand their use. It recommends expanding the use of special purpose vehicles to finance investment in growth infrastructure.
The Infrastructure and Financing Bill is the output from that government work. When enacted, it will provide an alternative way to fund infrastructure. But it also has the potential to empower special purpose vehicles established under the Act to construct infrastructure on private land, roads or public land, and councils will be able to acquire land under the Public Works Act for eligible infrastructure.
How we can help
If you’d like to better understand how these development tools might be available for your project, how you could be affected by a specified development project, or the protections afforded to your interests in Māori land, heritage, or resulting from a Treaty settlement, please get in touch. We can also assist you with the preparation of select committee submissions.
 New Zealand Productivity Commission, Local government funding and financing, November 2019.
 New Zealand Productivity Commission, Local government funding and financing, November 2019, findings F7.8 and F7.9 on page 309.
 New Zealand Productivity Commission, Local government funding and financing, November 2019, recommendation R7.5 on page 310.