Part 2: Preparing the housing accord and policy for special housing areas

Queenstown Lakes District Council: Managing a conflict of interest in a proposed special housing area.

2.1
In this Part, we discuss:

2.2
This Part covers the period from February 2014 – the start of the process for preparing a housing accord – to early November 2014, when the Council called for expressions of interest for special housing areas to assess against the policy approved at the end of October 2014.

2.3
We describe how the Council developed its housing accord and lead policy for special housing areas and who was most closely involved in some detail to explain and assess the nature and extent of the chief executive’s involvement.

What the housing accord is

2.4
The Queenstown Mayor and the Minister for Building and Housing signed a housing accord on 23 October 2014. The accord is intended to increase the supply of land for housing and to improve housing affordability in the Queenstown Lakes District.2 The agreement involves the Council and the Government working together, and with developers and landowners, to achieve this.

2.5
Under the accord, the Council can identify areas to recommend to the Government for approval as special housing areas. Qualifying developments in these areas benefit from shorter times for getting consents and plan changes, fewer grounds for appeals, and more permissive consenting rules.

2.6
A qualifying development in a special housing area is a mainly residential development in which the dwellings and other buildings will be no higher than six storeys.3

2.7
The accord, which has a particular focus on the Wakatipu Basin, lasts for three years and sets targets of 350 new sections and dwellings consented in the Wakatipu Basin for its first year, 450 in its second, and 500 in its third. Special housing areas are intended to contribute to the targets, but new consents from other developments also contribute.

2.8
Figure 1 shows the Housing Accord Areas in the Wakatipu Basin, as defined for the purposes of the accord.

Figure 1
Housing accord areas

Figure 1 - Housing accord areas.

Source: Adapted from Ministry of Business, Innovation and Employment.

The Housing Accords and Special Housing Areas Act 2013

2.9
The accord was made under the Act, which became law in September 2013. The Act was designed as a temporary measure to improve housing supply. The Government’s proposed changes to the Resource Management Act 1991 were intended to provide a more permanent solution.

2.10
The stated purpose of the Act is to enhance housing affordability by helping to increase land and housing supply in regions or districts that the Government identifies as having housing and affordability issues.4 These regions and districts are listed in Schedule 1 of the Act. Auckland was included in Schedule 1 when the Act was passed. Other districts have been added by Order in Council, including the Queenstown Lakes District in June 2014.

2.11
Under the Act, special housing areas last until September 2016. There is then a two-year period for consents to be issued. Therefore, there is pressure to set up housing accords and special housing areas under the Act.

Why Queenstown Lakes District Council and the Minister for Building and Housing entered into a housing accord

2.12
In early February 2014, officials from the Ministry approached the Council about adding the Queenstown Lakes District to Schedule 1 of the Act. One of the criteria for inclusion is whether land available for residential development is likely to meet housing demand, based on predicted population growth.5

2.13
The General Manager, Planning and Development told the Mayor and the chief executive about the Ministry’s approach. The General Manager, Planning and Development’s initial reaction was to decline, saying that Queenstown did not have a supply problem (a shortage of available land for housing) and that his staff had more pressing priorities.

2.14
The chief executive agreed about the supply matter, but said that Queenstown did have an affordability problem and that “I think we need to stay part of this”. He said that he would attend a meeting on housing affordability in Auckland a couple of weeks later and suggested sending the Ministry a holding reply saying that the Council was “interested but [had] limited resource availability”.

2.15
The meeting in Auckland that the chief executive referred to was a Local Government New Zealand seminar on housing accords and housing affordability on 25 February 2014. The seminar included a session where Auckland Council spoke about its experience of developing a housing accord with the Government.

2.16
The invitation listed the other local authorities that were considered to have housing affordability problems and were then listed in Schedule 1 of the Act. The chief executive asked Local Government New Zealand why Queenstown Lakes District – specifically, the Wakatipu Basin − was not considered to have housing affordability problems (see paragraphs 3.2-3.4).

Preparing the housing accord and the lead policy for special housing areas

Council officers begin discussions with Ministry officials

2.17
After the chief executive said that the Council should “stay part of this”, Council officers provided Ministry officials with some information about housing supply and affordability issues, the review of the District Plan that was under way, and development restrictions.

2.18
The main Council officers involved throughout the process were the District Plan Manager and the General Manager, Planning and Development.

Meeting the Minister for Building and Housing in Queenstown

2.19
On 9 May 2014, the Minister for Building and Housing met the Mayor and the chief executive in Queenstown to discuss adding the Queenstown Lakes District to Schedule 1 of the Act and the potential for a housing accord for Queenstown.

2.20
Before the meeting, the chief executive emailed the Mayor saying that he assumed that she had an open mind on the need for a housing accord. The chief executive commented that a housing accord would be unlikely to have any adverse effects and would streamline current processes.

2.21
The chief executive offered to attend the meeting with the Minister if the Mayor wished. The Mayor said she was not sure what a housing accord would offer Queenstown but was happy to hear from the Minister to find out. She was also happy for the chief executive to attend the meeting.

2.22
After they met, the Mayor issued a media statement welcoming the Minister’s approach, saying that the Council looked forward to working further with the Government on the proposal. The chief executive drafted the media statement for the Mayor. He suggested that the Mayor be the first contact and that he be the second contact for any technical questions about the housing accord process and how it might apply to Queenstown.

2.23
The Mayor sent the media statement to councillors, advising them that Queenstown Lakes District would be added to Schedule 1 of the Act and that a housing accord would be negotiated with the Government if the Council agreed. The Mayor told councillors that they would have the chance to give their views on the proposed housing accord and have input in developing it.

Council officers consider possible locations for special housing areas

2.24
The District Plan Manager briefed the chief executive on the possibility of a housing accord before the Mayor’s meeting with the Minister on 9 May 2014. The District Plan Manager said that, in his view, rural areas needed no special housing areas because plenty of land there was zoned for low-density housing. Instead, he suggested setting up special housing areas in some urban locations and attached information about a possible site (land zoned for high-density housing west of Gorge Road).

2.25
The District Plan Manager said that, despite being zoned for high-density housing, planning rules essentially limited the land west of Gorge Road to low-medium density and that the area was highlighted for possible “up-zoning” in the District Plan review. He said that designating the land as a special housing area would substantially speed up its rezoning.

2.26
The chief executive replied to the District Plan Manager by email on 9 May 2014, saying the proposal made sense. The chief executive then asked:

However, why are we limiting ourselves to [Queenstown]?

Acknowledging that I am slightly conflicted, Arrowtown is also in need of greater high density housing (hence the efforts of the [Community Housing Trust] at Suffolk St). It offers infrastructure (pre-schools, schools, retail and transport) that Lake Hayes etc lacks; has significant space for development, but has a group of generational NIMBY’s driving the house prices through the roof.

2.27
The District Plan Manager replied:

I see the greatest need in Queenstown, but you are dead right about Arrowtown.

Indeed it is highlighted as a key area in the RFP [Request for Proposals]. Again my thinking is the possibility of some upzoning there in the District Plan review, potentially in areas such as Adamson Drive. However, Arrowtown is likely to be more sensitive politically given its character.

I’m not suggesting that we should not think about Special Housing Areas there, just that we need to consider the possible “uproar”.

2.28
The Request for Proposals that the District Plan Manager referred to was for work analysing housing demand in Queenstown, Arrowtown, and Wanaka to help the Council with its review of the District Plan. The District Plan Manager attached the Request for Proposals to his 9 May 2014 email message to the chief executive, mentioning that it had been sent to three economic consultancies.

2.29
In Part 3, we comment on this email exchange.

Meeting with Ministry officials on 21-22 May 2014

2.30
After the meeting between the Mayor and the chief executive and the Minister for Building and Housing on 9 May 2014, Ministry officials and Council officers continued to discuss potential sites for special housing areas, including in Arthurs Point and Frankton. Ministry officials finalised a paper to Cabinet recommending that Queenstown Lakes District be added to Schedule 1 of the Act.

2.31
Ministry officials went to Queenstown on 21 May 2014 to meet the District Plan Manager and the General Manager, Planning and Development, and talk to developers. The General Manager, Planning and Development asked the chief executive if he wanted to attend the meeting. The chief executive said that he could attend for 15 to 30 minutes at the start to discuss time frames and other matters. The chief executive attended the first part of the meeting with the Ministry officials.

2.32
On 19 June 2014, Ministry officials told the Council that the Gazette notice adding Queenstown to Schedule 1 of the Act would be issued soon. The chief executive suggested to the Mayor that this could be seen as a positive step for affordable housing in the district. The chief executive drafted a statement for the Mayor as a proposed joint media statement with the Minister for Building and Housing. The chief executive suggested that he be the first point of contact for any media questions so he could explain any technical matters and that he would pass on anything political to the Mayor.

2.33
On 23 June 2014, the Minister and the Council issued their media statements.

Housing accord included on the Council’s business plan for 2014/15

2.34
In early June 2014, the Council considered a draft business plan for 2014/15 that the chief executive had prepared. The Mayor told councillors that the main projects in the business plan would form part of the chief executive’s key performance indicators for that year. A councillor suggested that achieving progress on affordable housing should be a focus. The chief executive told the Mayor that “surely the housing accord is the priority on this front”.

2.35
On 1 July 2014, the chief executive asked his general managers to list their significant projects for the 2014/15 business plan. He said that “the rule for 14/15 with Council will be not on the business plan [my performance agreement], then not a priority”. He suggested to the General Manager, Planning and Development that his list of projects include the housing accord.

2.36
The effect of this was that, from September 2014, the housing accord became one of the items in the chief executive’s monthly report to the Council on progress achieving the 2014/15 business plan.

2.37
The General Manager, Planning and Development, not the chief executive, wrote the updates on the housing accord for the chief executive’s monthly reports. Other general managers provided similar updates for their areas of responsibility. The updates on the housing accord focused on matters of process rather than substance. These reports continued after the chief executive told the Mayor that he intended to submit an expression of interest for a special housing area.

2.38
The General Manager, Planning and Development also reported to the chief executive on housing accord matters at their fortnightly catch-up meetings. From November 2014, the General Manager, Planning and Development sometimes used a reporting template that had been prepared for the purpose and that included special housing areas. The reports we saw were written after the chief executive had submitted his expression of interest. In Part 6, we comment on this reporting and the chief executive’s monthly reports continuing after his expression of interest.

Meeting with Ministry officials on 3 July 2014 to discuss the draft accord and targets

2.39
By late June, the District Plan Manager had identified five potential areas in the Wakatipu Basin to be considered for special housing areas:

  • medium density zone (parts of Marina Heights, Goldfield Heights, Sunshine Bay, and Fernhill);
  • high residential zone (Gorge Road);
  • Arthurs Point;
  • Henley Downs (next to Jacks Point); and
  • Arrowtown.

2.40
The District Plan Manager mentioned that there was potential support for allowing more diverse housing options in Arrowtown but that this might be controversial.

2.41
The Mayor and the chief executive were given the information about the five potential sites as part of background for a meeting with Ministry officials on 3 July 2014. The General Manager, Planning and Development said that he preferred to target the medium-density subzone for special housing areas.

2.42
In response, the Mayor said that she would prefer to use an open process for seeking expressions of interest for special housing areas rather than for the Council to select particular areas. This was because areas that the Council had not thought about might be put forward through an open process. The Council did use the expressions of interest approach later (see Part 6).

2.43
On 3 July 2014, officials from the Ministry met with Council officers and the Mayor in Queenstown. The meeting’s purpose was to discuss a draft housing accord that the Ministry had prepared, including possible sites for special housing areas and targets. The General Manager, Planning and Development and the District Plan Manager attended the meeting. The Mayor joined the meeting briefly to get an update but did not take part in the more detailed discussions.

2.44
The Mayor and the chief executive were given a copy of the draft accord that the Ministry had prepared before the 3 July meeting.

2.45
Ministry officials had been considering suitable targets for the accord. Using available district-wide data, the first draft of the accord proposed district-wide targets of approving consent applications for between 500 and 650 sections or dwellings each year for five years. At the 3 July meeting, they discussed removing the Wanaka information from the calculations because Wanaka had a lot of land available for development and because the accord targets would probably be focused on specific areas rather than covering the whole district.

2.46
In mid-July 2014, the District Plan Manager prepared some consent data for the Wakatipu Basin, rather than the whole district. The District Plan Manager suggested lower targets than those that the Ministry had proposed. The District Plan Manager said that he and the General Manager, Planning and Development would need to discuss his proposed targets with “the Mayor, and senior engineering and consents staff” before confirming them.

2.47
At this stage, the Ministry officials were keen for the accord to be finalised by the end of July. However, the General Manager, Planning and Development and the District Plan Manager told the Ministry that they thought that events were moving too quickly for the Council’s processes.

2.48
On 21 July 2014, the District Plan Manager told the Ministry that he needed to get “the Mayor’s thoughts” on the draft accord and her buy-in to the proposed targets. The District Plan Manager said that he would meet with the Mayor and the chief executive on 22 July 2014 to discuss this.

2.49
At this time, the Ministry official who had most contact with the Council said that she had not seen or spoken with the Council’s chief executive about the housing accord since the first meeting (on 21 May 2014).

Who proposed that the targets focus on the Wakatipu Basin?

2.50
On 22 July 2014, the District Plan Manager; the General Manager, Planning and Development; the Mayor; and the chief executive discussed the accord and the targets.6 The District Plan Manager had prepared a briefing paper that recommended focusing the housing accord targets on the Wakatipu Basin. The General Manager, Planning and Development gave the Mayor and the chief executive the briefing paper before their discussion on 22 July 2014.

2.51
The Mayor and the chief executive also received two reports by consultants that set out some modelling and projections of supply and demand.7 In the briefing paper, the District Plan Manager said:

Arguably the most important consideration for the Accord is the setting of housing supply targets over a 5 year period. Staff consider the housing issue to be most acute in the Wakatipu Basin (relative to Wanaka), where there is less potential housing supply, stronger constraints, stronger employment growth and strong demand.

Therefore it is recommended that the focus on targets should be on the Wakatipu Basin …

2.52
After the discussion with the Mayor and the chief executive on 22 July 2014, the District Plan Manager sent the Ministry the Council’s feedback on the draft accord. This feedback included proposed changes to the accord to focus the targets on the Wakatipu Basin.

2.53
The District Plan Manager also told the Ministry that the Council could not meet the end of July deadline for adopting the accord. He said that the Mayor or the chief executive would contact the Minister for Building and Housing to discuss time frames.

2.54
The District Plan Manager prepared a letter to the Minister explaining that the full Council needed to ratify the draft accord. He said that this could be done by the end of August 2014. The chief executive gave the letter to the Mayor to sign and send on 6 August 2014 after reviewing it.

2.55
On 4 August 2014, the District Plan Manager sent the chief executive and the General Manager, Planning and Development the latest version of the accord received from the Ministry. The District Plan Manager said to the General Manager, Planning and Development that “in the end it looks like they’ve maintained the Wakatipu focus, as per our suggestion, rather than broadening to District-wide as they were suggesting they might do”.

2.56
The District Plan Manager said that the time period for the targets had changed from five to three years. He also asked whether the Council had enough resources to deal with the likely “gold rush” of consent applications.

2.57
The District Plan Manager sought guidance from the Mayor and the chief executive about whether:

  • to give the draft housing accord to all councillors before a workshop for councillors on residential policy, saying that he and the Ministry preferred not to;
  • they had any thoughts on how to deal with any objections from councillors to the proposed focus on the Wakatipu Basin; and
  • to mention the likely make-up of the proposed joint steering group for monitoring the accord.

2.58
The Mayor commented on these matters.

2.59
The chief executive’s “to do” list prepared by his executive assistant on 5 August 2014 included the tasks of reviewing the latest draft of the housing accord and a draft economic development strategy. The chief executive commented on the economic development strategy but does not appear to have commented on the draft housing accord.

Council workshop on 7 August 2014

2.60
Council officers sought feedback from councillors on the accord at a workshop on residential policy on 7 August 2014.8 This was the first time the accord had been discussed with councillors in any detail.

2.61
Before the workshop, the District Plan Manager asked the General Manager, Planning and Development to discuss with the chief executive the possibility of giving councillors some information about possible financial incentives for special housing areas at the Council workshop. The possible financial incentives were deferred development contributions (to help developers by taking away some upfront financing costs) and rates holidays for qualifying developments.

2.62
The General Manager, Planning and Development forwarded the District Plan Manager’s suggestion about financial incentives to the chief executive as a “heads up”. The chief executive did not recall the email, and the General Manager, Planning and Development does not recall a response or a discussion about it. The District Plan Manager commissioned some advice from a consultant on these matters to help him prepare for the workshop.

2.63
To help councillors prepare for the workshop, the chief executive suggested that staff define the problem, then set out principles councillors could use to assess a range of solutions. He commented about housing affordability matters, including that councillors needed to consider the housing accord with other possible solutions to housing affordability problems.

2.64
The District Plan Manager updated the Ministry on 8 August 2014 on the outcome of the workshop. He said that there was unanimous support from councillors for the targets to be focused on the Wakatipu Basin, because of the pressing housing issues there. He gave the Ministry some final suggested amendments to the draft accord to reflect the focus on the Wakatipu Basin.

2.65
He also told the chief executive, who did not attend,9 that the workshop went well.

2.66
The targets eventually included in the accord are noted in paragraph 2.7 above. They are described as aspirational and are for 1300 consented sections and dwellings over three years. The targets focus on the Wakatipu Basin rather than the whole district. Council officers and councillors who we spoke with about this explained that Wanaka did not have the supply and affordability problems that the Wakatipu Basin had.

Council adopts the accord

2.67
After the workshop, Council officers drafted a report for a Council meeting on 28 August 2014. The report recommended that the Council approve the housing accord.

2.68
Council officers gave the draft report to the chief executive for comment. The chief executive made some changes. His most significant comment was to suggest that the part of the meeting to approve the accord should be open to the public. Council officers also sought the Mayor’s views, and the chief executive said he was happy for the Mayor to decide this. It was later agreed that the meeting would be open to the public.

2.69
The officers gave the housing accord and the draft report to Councillor Gilmour, portfolio leader for planning matters, and Councillor Lawton, deputy portfolio leader for planning, on 12 August 2014, with the draft paper for the 28 August 2014 Council meeting.

2.70
Councillors Gilmour and Lawton were concerned about the timing of adopting the housing accord and whether there would be enough local input into special housing areas. In their view, adopting the housing accord before notifying the Council’s proposed District Plan (then timed for May 2015) meant that the Council and community would not have enough say in the location of special housing areas.

2.71
Councillors Gilmour and Lawton thought that the housing accord should refer to the proposed District Plan to give that plan greater weight in decision-making about special housing areas. Council officers put this to Ministry officials, who did not agree that this was needed, because the Act already covered the point.10

2.72
The chief executive was not part of these discussions, but the Mayor told him of them. The Mayor asked for the report to the Council to be amended to reflect Councillor Gilmour’s concern.

2.73
On 27 August 2014, Councillor Gilmour told councillors that she intended to propose an alternative recommendation to the one in the officers’ report. Her alternative recommendation included:

  • that Council staff prepare a “lead policy” to be considered at the Council’s October 2014 meeting, setting out criteria for considering proposed special housing areas in the district;
  • that the Council call for expressions of interest for special housing areas after adopting the lead policy; and
  • that the Council consult the community about any proposed special housing areas.

2.74
At its meeting on 28 August 2014, the Council approved the housing accord for submission to the Minister for Building and Housing, subject to the alternative recommendation that Councillor Gilmour had proposed.

The lead policy

2.75
The District Plan Manager worked on the lead policy, consulting with the General Manager, Planning and Development and, to a lesser extent, with Councillors Gilmour and Lawton. The District Plan Manager also got comments from Ministry officials. The chief executive asked to see the officers’ report that contained the lead policy that was prepared for the Council’s 30 October 2014 meeting. However, the chief executive does not appear to have commented on the policy or been involved in preparing it.

2.76
On 23 October 2014, the Mayor and the Minister for Building and Housing signed the accord. The Council adopted the lead policy on 30 October 2014. The chief executive; the General Manager, Planning and Development; and the District Plan Manager also attended the signing. They were also present for the discussion about the lead policy at the Council meeting on 30 October 2014.

2.77
The lead policy stated that the Council would:

  • in November 2014, seek expressions of interest from landowners and property developers for land that might be suitable as a special housing area; and
  • seek views from the community on housing matters, focusing on the location and type of new housing that should be built in the district.

2.78
The lead policy set out criteria that the Council would use to assess expressions of interest, including matters such as proximity to existing urban areas and infrastructure, and demand for residential housing.

2.79
On 7 November 2014, the Council called for expressions of interest in special housing areas, with a closing date of 5 December 2014. The criteria in the lead policy would be used to assess the expressions of interest.11

2: In announcing the accord, the Minister for Building and Housing said that the Queenstown Lakes District is one of the five least affordable housing areas in New Zealand. A high number of homes are owned by non-residents for holiday purposes, and people who work in the tourism and hospitality industries on lower incomes can have trouble affording houses.

3: Section 14 of the Act.

4: Section 4 of the Act.

5: The Minister for Building and Housing had asked officials for advice on adding three districts, including the Queenstown Lakes District, to Schedule 1 of the Act.

6: The chief executive was at a conference but joined the discussion by phone.

7: Insight Economics (2014) Medium to High Density Housing Study: Stage 1a – Review of Background Data; and Stage 1b – Dwelling Capacity Model Review. These reports were prepared in response to the Request for Proposals mentioned in paragraph 2.28.

8: The workshop considered reports from a consultant on demographic trends and projections and dwelling capacity in the Queenstown Lakes District, as well as the housing accord and visitor accommodation issues.

9: The chief executive has a standing invitation to attend council workshops, but told us that he does not usually attend planning-related workshops.

10: Section 34 of the Act.

11: The lead policy was amended in April 2015 to include more content about affordable housing, and those who submitted expressions of interest were invited to amend their expressions of interest to reflect the changed policy.