Compulsory land purchase to entice overseas housing developers

The Government yesterday paved the way for big international property development companies to come to New Zealand to build large-scale housing developments.

And it is prepared to use its powers of compulsory land acquisition to assist the developments.

Companies like Australia’s Lend Lease or several Chinese companies are thought to be interested ed in coming if developments are big enough.

The Auckland Council has already made moves to attract some Spanish companies to New Zealand through their involvement in bidding for the Puhoi to Warkworth motorway.

But the Government’s announcement yesterday that it will set up Urban Development Authorities opens up the possibility of large-scale housing developments across Auckland – and other cities also.

The Authorities will have the power to compulsorily acquire land to make up large sites, attractive to developers.

Possibly not coincidentally, the world’s second-biggest bank, the China Construction Bank (CCB), told The Herald yesterday that it wants to become more involved in funding New Zealand building and infrastructure projects.

The CCB’s ‘s New Zealand Deputy Chief Executive, Lloyd Cartwright, said he expected other Chinese banks in New Zealand to follow suit.

The idea of Urban Development Authorities was originally proposed in 2014 in the Productivity Commission’s Report on Land for Housing where it said that for our larger cities more housing would typically involve growing through more intensive development, rather than building outward.  

“To achieve this goal, councils need to tackle the tensions between the interests of existing residents and the more flexible rules that will be required to accommodate new residents,” it said.

“Some cities are responding to this challenge by establishing urban development authorities that can redevelop inner city sites to deliver large numbers of new dwellings.”

Former Prime Minister John Key confirmed the Government was looking at UDAs after he met with Chinese property investors last June.

“I’ve had quite a number now of development companies suggesting to me, and I suspect other Ministers that they would be prepared, they would like to play a role where they did the complete development of an area and include all of the horizontal infrastructure and the above ground dwellings that are built there,” said the Prime Minister.

It has taken two and a half years for that idea to become a reality.

Ironically it is doing so on the eve of another Productivity Commission report which will look at all our planning legislation.

The Development Authorities would be able to assemble parcels of land, including existing compulsory acquisition powers under the Public Works Act, override existing and proposed district plans and regional plans, and plan and build infrastructures such as roads, water pipes and parks.

They would also have the authority to buy, sell and lease land and buildings, borrow to fund infrastructure and levy charges to cover infrastructure costs.

Building and Construction Minister, Nick Smith, offered up existing developments at Hobsonville and Glen Innes as examples of where UDA’s could operate.

Those developments would see the UDA initially own the land and finance the development till the homes were sold.

He also said that the Fletchers development at the Three Kings’ quarry in Auckland could be another possibility.

“That’s been languishing through the resource management process now for five years, and it’s a one billion dollar development involving over 1500 new homes, you could see the Government appointing a UDA  in that area,” he said.

“It would be responsible for all the regulatory issues around reserves, roads, planning rules but all of the development and the land would remain in the ownership of Fletchers.”

But ultimately the Government sees the UDAs as a one-stop-shop to develop large tracts of housing, particularly intensified housing on existing brownfields sites.

The CEO of the New Zealand Council for Infrastructure Development, Stephen Sellwood, sees the announcement as a major step forward.

“The way we do developments now is one man and a dog builder, building house by house, section by section, really really slow,” he told POLITIK.

“What we really need to do is urban development at scale which will interest not only domestic investors and constructors but also international companies.

“To do that you need to be able to aggregate land, master-plan it and then provide development opportunities to the market to respond.

“And that’s exactly what an urban development agency will be able to bring to the table.”

Smith says the Tamaki Development Company which is redeveloping Glen Innes currently has a Request for Proposals for the development of 5000 homes which has already attracted international interest.

“The Government is looking for scale, whether that scale is best delivered by New Zealand companies or international companies, we are open minded.

“We want whoever will give us the best deal.”

Smith says that generally the UDAs will be appointed by Government or Councils. He said who did what would largely be determined by whether the UDA was based on Government or Council owned land.

There are some sensitive issues that he has had to step around.

There is a political sensitivity over the use of the Public Works Act which the Minister acknowledges which suggest that the UDAs will be encouraged only to use its powers when necessary.

The UDAs will not be able to compulsorily acquire any iwi-owned or Maori owned land  without the agreement of the iwi. Land that may be required for future Treaty settlements can not be included in a UDA.

The Minister sees the UDAs being particularly relevant to the redevelopment of old run down housing areas.

“If you’ve got an old suburb, and you’ve got 100 titles, you are not going to spend a couple of million bucks on developing your title if you are surrounded by an area of urban decay and so to get everybody on board so that you can transform an area is what the UDA is about.”

Sellwood says that if there has been one failing in New Zealand’s development of housing and infrastructure it has been our inability to offer up objects of scale and sufficient pipeline of them to attract an international capability.

“Having a UDA that can get all the ducks in a row is fundamental to success.”

The only disappointment for the Government with its proposal will be that it is unlikely to see any new houses on new UDAs before the election.