Part 2: Background to commercial arrangements with the New Zealand Retail Property Group

Inquiry into aspects of Auckland Council’s Westgate/Massey North town centre project.

2.1
In this Part, we describe:

What is the Massey North project and how did it come about?

2.2
The Massey North project involves developing a new town centre in the north-west of Auckland. The project came about in the context of the Auckland Regional Growth Strategy. The purpose of this Strategy was to ensure that Auckland's growth (estimated at that time to be a population of two million by 2051) is accommodated in a way that meets the best interest of all the region's inhabitants. The Regional Growth Strategy was developed in 1999 under section 37SE of the Local Government Act 1974.

2.3
The working mechanism of the Regional Growth Strategy were "Sector Agreements" between the various Auckland Councils. Waitakere City Council was party to the Northern and Western Sectors Agreement, along with Rodney District Council and North Shore City Council. The first iteration of the Northern and Western Sectors Agreement in 2001 anticipated a new sub-regional centre in north-west Waitakere and urban development at Hobsonville. This area became known as the Northern Strategic Growth Area (NorSGA), and a series of projects was developed with the aim of implementing the regional growth strategy in the area.

2.4
The purpose of the NorSGA programme was:

… to promote the sustainable development of Waitakere City and the surrounding region in a way which:

  • accommodated a portion of the region's residential and employment needs, as agreed in the Auckland Regional Growth Strategy;
  • created a regionally significant business address which made efficient use of the investment that was taking place at the time in the area's state highway network;
  • enabled the development of further services, jobs and amenities in the north west of Waitakere City to serve the existing population and projected population growth;reduced the amount of travel undertaken by residents of the area to find services, jobs and amenities and strengthened public transport investment;
  • reduced the pressure for growth in rural areas and the Waitakere Ranges.

2.5
The plan was to progress the Northern Strategic Growth Area in three stages. The first stage involved developing Hobsonville Airbase, Hobsonville Village, and Westgate/Massey North. The focus of our report is the development at Westgate/Massey North.

2.6
At the time, there was already a shopping centre at Westgate (developed on land purchased in the 1990s by NZRPG), but the area to the north of the shopping centre was largely undeveloped. The Massey North area was a "dormitory suburb" where people lived but had to travel some distance to get to work in the cities of Auckland.

2.7
Under the Northern and Western Sectors Agreement, Waitakere City Council was required to determine the best location for the proposed new town centre, and prepare appropriate changes to the District and Regional Policy Statement documents. Various sites were rejected on the grounds of topography and transport. The preferred site was land controlled by NZRPG, which was next to the Northwestern Motorway. This land was considered to have good transport ac
cess and easy contour, and was in control of a single entity. In discussions with the Council, NZRPG had indicated its willingness to proceed on the basis that the town centre would be designed in accordance with "new urbanism" principles.

2.8
In 2004, the Local Government (Auckland) Amendment Act was passed. Under that Act, councils in the Auckland region were required to align their District Plans with the Auckland Regional Growth Strategy published in 1999. A particular requirement of the Act was to align land use and transport planning. The Act also supported the "new urbanism" approach. We have been told that that approach is characterised by street-based developments incorporating sustainable employment, civic functions, cultural facilities, recreational facilities, open space, and high specification environmental performance.

2.9
The Council also considered it important that the town centre met certain urban planning and design criteria to ensure that it would attract higher levels of investment in the surrounding retail, commercial, and residential sectors. A particular concern for the Council was to avoid the possibility of mall developments covering the proposed site.

2.10
Figure 1 shows the location of the new Massey North town centre and nearby other Northern Strategic Growth Area projects.

Figure 1
Map showing the location of the new Massey North town centre and nearby other Northern Strategic Growth Area projects

Figure 1 Map showing the location of the new Massey North town centre and nearby other Northern Strategic Growth Area projects.

How Waitakere City Council's relationship with the New Zealand Retail Property Group began

2.11
Once the Council had decided the preferred location for the town and implemented the necessary Plan Changes, a complex set of issues needed to be resolved before the development could proceed. The establishment of a town involved both public and private developments. The Council needed to acquire control of the land it needed for the public parts of the town, such as the road network and town square. The Council had to assess what infrastructure would be needed and which party – the Council or private developers – should be responsible for building and paying for it. It is evident from the papers available to us that resolving these issues was challenging, given the scale of the development and the number of private landowners affected, and that the Council carefully considered how best to proceed.

2.12
The Council had three basic options for developing the town:

  • It could do nothing and leave it to private developers to develop the town.
  • It could seek to acquire the land needed for public roads and infrastructure, either by agreement or compulsorily under the Public Works Act 1981, and appoint a contractor or contractors to carry out the necessary works on the Council's behalf.
  • Alternatively, it could work co-operatively with landowners and private developers in the area, to acquire land and provide infrastructure for both the public and private parts of the development in a co-ordinated manner.

2.13
The land on which the new town was to be built was mostly privately owned. Therefore, to ensure that the new town centre was built to its requirements, the Council needed to work closely with several private landowners and property developers in the area.

2.14
At the time, the land identified for the town centre was almost all controlled by NZRPG companies. For the purposes of this part of our report, we do not distinguish the individual companies within the group but refer to them simply as NZRPG.

2.15
NZRPG owned the existing Westgate shopping centre, which is next to the land on which the new town centre was to be constructed. NZRPG also owned or leased the major portion of the land on which the new town centre was to be built. Therefore, NZRPG was the most significant of the landowners and property developers the Council needed to talk to.

Memorandum of Understanding

2.16
Discussions between Waitakere City Council and NZRPG date back to around 2002. NZRPG told us that, at that time, it already had its own plans to redevelop the existing Westgate Shopping Centre and to develop the land it had acquired to the north of that site. However, it understood the Council's rationale for wanting to establish a new regional town centre that would incorporate the existing Shopping Centre, and it was sympathetic to the Council's view.

2.17
In June 2004, NZRPG and the Council entered into a Memorandum of Understanding. The Memorandum of Understanding recorded the parties' "shared goals of providing a city centre at Westgate that is socially vital, economically viable, environmentally responsive and aesthetically pleasing".

2.18
It also signalled the parties' intention to have an ongoing working relationship and set out the following specific goals:

  • to establish a formal working relationship to determine and agree on a vision for the Westgate city centre, and agree on and prepare a concept plan for the development;
  • to establish processes for collaborating on the design of the new Massey North town centre;
  • to work together to prepare the detail needed to expedite changes to the District Plan;
  • to work together in a mutually supportive manner in advocating and negotiating for agreed outcomes with Auckland Regional Council and other stakeholders; and
  • to provide a framework for possible cost-sharing of building, public infrastructure, and other facility development.

2.19
Figure 2 shows the Massey North Concept Plan. This includes the proposed road network within the town centre and the roads that would link the town centre to the public network – State Highway 16 and Fred Taylor Drive to the south and a new road, Northside Drive, to be constructed to the north. State Highway 16 and Fred Taylor Drive may have historically been referred to as Hobsonville Road, although that road extends beyond the Westgate Town Centre.

Figure 2
Massey North Concept Plan

Figure 2 Massey North Concept Plan.

Changing the District Plan (March 2005 to June 2007)

2.20
Before any development work could begin on the new town centre, or on the broader NorSGA project, changes needed to be made to Waitakere City Council‘s District Plan. The Plan Changes include changes relating to public transport and urban design requirements.

2.21
Under the Local Government (Auckland) Amendment Act 2004, all of the NorSGA Plan Changes were required to be publicly notified. This meant that the public was entitled to make submissions on the proposed changes. The main Plan Change that is relevant for the purposes of this report is referred to as Plan Change 15. Plan Change 15 was notified on 31 March 2005, and a Hearings Panel was appointed to hear submissions.

2.22
The Hearings Panel issued its recommendations on Plan Change 15 in May 2007. Waitakere City Council adopted these recommendations in June 2007. Changes made to Waitakere City Council's District Plan as a result of Plan Change 15 included:

  • establishing two "special areas" – the Massey North Employment Special Area, which provided for the establishment of industrial activities, and the Massey North Town Centre Special Area, which provided for a mix of commercial and residential activities;
  • re-zoning land from rural to urban use;
  • establishing several "precincts", each with specific rules to control the location and mix of activities, design quality of development, and so on;
  • introducing a "Massey North Concept Plan" to guide the development; and
  • introducing a rule requiring any development carried out in the Massey North Town Centre Special Area to have a "Comprehensive Development Plan" addressing matters such as roads, community facilities, stormwater, wastewater, housing densities, site layouts, the position of the main buildings, and open space areas. The Comprehensive Development Plan required the Council's approval.

2.23
The Hearings Panel's recommendations resulted in a large number of appeals to the Environment Court. These appeals were all resolved before the transition to Auckland Council.

Assessing infrastructure requirements

2.24
After the adoption of Plan Change 15, the Council implemented several projects designed to bring the Plan Changes into effect. These included:

  • an infrastructure project to determine what infrastructure, such as transport, the three waters, parks, property, community facilities, and broadband, was needed, and to facilitate landowner understanding of the infrastructure requirements;
  • an urban design project to up-skill relevant Council staff on the new urban design requirements introduced as a result of the Plan Changes and to prepare guidance material for developers;
  • a social infrastructure project to ensure that the future social infrastructure needs of the communities covered by the NorSGA Plan Changes were identified, planned for, and met over time; and
  • a Development Contributions Action Plan to determine the development contributions for the NorSGA area. Development contributions are contributions developers are required to make to cover the costs of providing new infrastructure.

2.25
A specific project was also established for the Plan Change 15 area. The purpose of this project was to co-ordinate interactions with developers and landowners, co-ordinate communications, manage the Comprehensive Development Plan processes, and resolve issues about integrating the existing Westgate shopping centre with the new town centre.

2.26
At the beginning of June 2008, Council staff reported to the Council's Finance and Operational Performance Committee that planning for infrastructure in the NorSGA area had progressed to the point where preliminary needs could be assessed and that a view had been formed of the likely cost of providing new infrastructure for the development. This information was used as a basis for discussions with developers about how the infrastructure would be provided and paid for.

2.27
Officials explained that, from the Council's perspective, the starting point for discussions with developers was to seek to ensure that portions of major infrastructure required for the development were paid for directly by developers and vested in the Council on completion. The developer would then be credited for that work in accordance with the Council's development contributions policy. The advantage of this approach for the Council was that the Council did not need to fund the cost of the infrastructure up front.

2.28
If the infrastructure work completed by a developer provided additional capacity to enable neighbouring land to be developed, the Council would reimburse the developer for that additional cost by collecting development contributions or financial contributions from neighbouring landowners who benefited from the infrastructure. These agreements would be covered in a "developer agreement" between the Council and the developer.

2.29
Officials explained that this approach to negotiating developer agreements was likely to be reasonably successful with some, but not necessarily all, of the landowners in the Plan Change 15 area. This was because several developers in the Plan Change 15 area had not yet formed any clear plan for development. This made it difficult for the Council to determine the extent of works needed or the form developer agreements should take.

2.30
The extent of infrastructure that the Council would need to provide was also unclear because this depended on the way in which the land was developed – for example, whether developers chose to aggregate several parcels of land and develop them as one or to develop them separately. This meant that it was not necessarily obvious whether the responsibility to provide new infrastructure lay most appropriately with the Council or developers.

2.31
Officials advised that, until the picture became clearer, the Council was planning for the minimum level of infrastructure based on known developments, plus some major networks to service later developments within Plan Change 15 and other Plan Change areas.

2.32
As part of the planning for Plan Change 15, officials had already identified various parcels of land it wanted to buy immediately under the Public Works Act 1981 for water and road alignment purposes.

2.33
Officials proposed that, once the infrastructure had been built on the land, the Council would dispose of the balance of the land to offset part of the purchase cost. The cost of the land retained for the works would be recovered by means of development contributions and/or financial contributions from developers benefiting from the infrastructure.

2.34
Officials recommended buying the land to provide infrastructure, rather than waiting till the landowners concerned chose to develop their land. This was because, although it meant that the Council would have to provide the funding in advance, it would ensure the timely development of wastewater and stormwater infrastructure assets for the new development. It would also enable the landowners who wanted to get started to do so.

2.35
The Council approved the proposed buying of land under the Public Works Act 1981.

The transition to the new Auckland Council

2.36
In May 2009, the Local Government (Tamaki Makaurau Reorganisation Act) 2009 was passed. That Act provided for the existing local authorities in the Auckland region to be dissolved with effect from 1 November 2010 and for a new Auckland Council to be established from that date.

2.37
The Act also established the Auckland Transition Agency. The Auckland Transition Agency was responsible for making arrangements to enable Auckland Council to operate on and from 1 November 2010, and to manage and oversee the transition process.

2.38
There was a transition period, from 25 May 2009 to 31 October 2010, during which the Auckland Transition Agency was required to review and confirm any spending decisions of local authorities in the Auckland region that could have a significant effect on the new Council.

2.39
In June 2009, the Auckland Transition Agency told the Council that all decisions about the wider NorSGA project (including the Massey North project) must be confirmed by the Auckland Transition Agency before being implemented.