Why (Greenfield) Special Housing Areas Won’t Work #AKLPols

Comment of the Weekend on the SHA’s

In the Land Banking Special Housing Areas? #AKLPols post regular commenter Dale left the following comment below as food for thought on the Special Housing Areas. Now reading I am taking it refers to the Greenfield Special Housing areas rather than the Brownfield ones announced on Thursday last week. However, if Dale is referring to the Brownfield I’ll know soon enough.

This from Dale as Comment of the Weekend and thoughts on why the Greenfield Special Housing Areas will not work:

I have said from day one that the SHA cannot work as they defy development logic.
For starters
  1. The land prior to the creation of the SHA’s was bought at land banked prices in anticipation of re zoning, or as happened the creation of SHA’s. Therefore going forward, it does not matter who owns the land, the input price has already been determined at a land banked price that will make it nigh on impossible for housing to be truly affordable.
  2. Also irrespective of which land is included in the SHA’s, because infrastructure is provided by council, then there is a specific order of development from those properties that are closest to the last connection out. Therefore, if you are the developer at the end of the line, council will not allow you to develop if it is out-of-order with their grand plan.
  3. Land bankers are not necessary developers, so it is only natural they will on sell to an end developer.
  4. What the SHA conditions are trying to do is make land be developed which has a high input cost and then make a large number of sections come to the market in a short time frame. Many developers see this as too risky.
  5. Lastly, some of the land within the SHA’s is owned by owners who could not care less about developing now ie farmers, or is owned by long-term land bankers ie the land has no debt, and they are happy enough to see the land developed around them, knowing that its value is increasing anyway and will wait on the inevitable future rezoning.The only reason the SHA’s came into existence was to get around the limitations of the LGA and RMA. But as much land that the SHA’s are supposedly releasing, it is still less than the previous MUL or RUB (Metropolitan Urban Limits, Rural Urban Boundary) and combined with the reason in #2 above means no more land outside what had already been identified in years past by land bankers had been released.SHA’s were never going to work, and never will.

……..

Thank you Dale for the thought-provoking comment.

As I was discussing with a fellow blogger yesterday the Manukau SHA (New Special Housing Areas Announced Including One in Manukau #AKLPols) should have been always the first Special Housing Area off the rank with other largish Brownfield SHA’s to follow-up afterwards. Your Greenfield SHA’s should have been last off the rank given the lack of infrastructure to service them, something which Minister of Housing Nick Smith admitted last week.

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4 thoughts on “Why (Greenfield) Special Housing Areas Won’t Work #AKLPols

  1. Hi Ben

    Yes I was referring to Greenfields SHA’s for most part, but the principles are the same for Brownfields especially if future development will be on land that was up zoned.

    However you last comment:

    ‘Your Greenfield SHA’s should have been last off the rank given the lack of infrastructure to service them, something which Minister of Housing Nick Smith admitted last week,’

    further highlights that the penny has not dropped yet for yourself, or the Minister, on how supply and demand works.

    For this reason; if you say (to the market) you will release only Brownfields first, then you are restricting supply. So we have gone from an open zoning (which in effect rural zoning is before it is changed, to a RUB (a restriction) to a MUL(a further restriction), to a SHA (a further restriction) to Brownfields first (a further restriction). Following your logic/trend, about the only step left after this would be to say no development at all.

    The more you restrict supply relative to demand the more pressure you put on the remaining supply. Prices go up. The paradox being that you think you are increasing supply by making these designations like SHA’s etc, but relative to the big picture of how the market views supply relative to demand, to are restricting it.

    There is research that shows that at least 30 years of land supply must be seen to be available to give the market the comfort that there is enough supply ahead to met demand. However, this is different from the ability of that supply being allowed to be developed. Aussie research shows that the big development companies like Lendlease etc. between have approx. 30 years of supply of land banked land. I wouldn’t be surprised if the same was true for NZ.

    There is no reason to limit the development of Greenfields land. My point in my previous reply was that one of the limiting factor to Greenfields development was the council monopoly on providing infrastructure, which the main limiting factor is waste water. If other providers/developers were allowed to compete, they would soon identify which areas (Greenfields or not) could be developed, competitively, and that the market would purchase.

    Increased supply and competition would help in making housing more affordable. We need more affordable housing, not just more housing that is not affordable because of the high non value added input costs.

    1. Good points Dale.

      But the reason why I said go for the Brownfield SHA’s first when the Accord was first brought into existence was simply because we have no idea where or what the RUB will do until Kirkpatrick has given his final recommendations.

      Given the Interim Guidance on the RUB and the lag from consent to build I was wondering if the Greenfield should have held off until the UP goes live next year – THEN we go for it.

  2. The other major flaw in the HASHAA legislation is that even though your can utilise PAUP zone rules to deliver a greater yield on a site in an SHA area, you are still subjected to the rigorous limited notification tests under s.95 of the RMA. You are also exposed to a Council Planner’s interpretation of new rules that have not yet been properly tested, most of which have changed during mediation sessions since the PAUP was notified. Even if you push the density up you’ll still likely need sign-off from the neighbours which often results in major delays to the consent process.

    1. Indeed and the Manukau SHA is going to be a live example of this.

      The zone it sits on is the Mixed Use Zone which I believe right now has a 4-5 storey limit sitting over. You can go for an addition height overlay of 6 storeys but it has not being applied here.

      So we have two situations:
      1) The Centres and Business Zones head to Hearings in September of which there was in the mediation a push to bring the Mixed Use Zone to a full 8 storeys. I was one such submitter who pushed for it. Whether Kirkpatrick agrees with the new limit of 8 storeys is yet not seen.

      2) I have asked the Housing Project Office for a sit down and hopefully look at the Master Plans for the Manukau SHA. I would like to see what the developer has in mind as it is believed he is going for 6 storeys plus here – thus contravening the Mixed Use Zone rules as they currently stand.

      This is all fascinating and to be honest a pain in the backside too.

      All things considered I hold hopes for that Manukau SHA as an example of a large scale Brownfield Development outside of a centre. Just hope they are not false hopes.

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