UDAs useful – but not the legendary speeding bullet


The government clearly believes that Urban Development Authorities (UDAs) can make a positive contribution to the New Zealand landscape, according to Chapman Tripp partners Ross Pennington, Brian Clayton and Luke Hincheywellington-houses

This, they say, is evident in the political risks it has taken in the policy design.

First, there is the obvious challenge to property rights through the proposed application of the compulsory purchase provisions in the Public Works Act (PWA), although it is important to note that these can be exercised only by the minister, not by the UDA directly.

Then there are the suggestions that:

  • land acquisition within a UDA project might be exempt from the Overseas Investment Act on the basis that overseas developers would hold the land only briefly
  • central government should be able to override local government opposition to projects which are in the national interest.

Neither of these proposals features in the body of the consultation document.  On the contrary, it proposes that, to ensure a collaborative approach between local and central government, all territorial authorities (TAs) within an affected area should have a right of veto over whether a project proceeds.

Instead they are raised as questions for public feedback in the document’s concluding pages.  But the government will know that they each have the potential to be highly controversial.

So, is the political risk worth taking, particularly in an election year? This will depend entirely upon the workability of the scheme, and the evidence points both ways.

Doubtless it will create new opportunities. But whether they will favour the over-stretched local construction industry or overseas players, and the extent to which UDAs will be able to accelerate development and unblock financial bottlenecks, remains to be seen.

UDA design basics

  • UDAs can only be used for regionally or nationally significant developments. These can be commercial only, although the government can require “public good” outcomes as a condition for approval and these might include affordable housing.
  • UDAs must be publicly controlled – e.g. central government and crown entities, publicly owned limited liability companies, councils and council controlled organisations (CCOs). They may act as regulator only, working in partnership with private developers or landowners.
  • The UDA will be the resource consenting authority. In making decisions, it will prioritise the strategic objectives of the project above the principles in Part 2 of the Resource Management Act (RMA).
  • Where the UDA is both the consent applicant and the consent authority, compliance and enforcement powers will rest with the relevant TA and the UDA will be required to delegate its decision-making function to independent commissioners. UDAs will not have building consent powers.
  • Special powers will be conferred as required to:
    • assemble coherent parcels of land, generally through standard market transactions, although with the PWA as back-up should the Minister agree to use it on the UDA’s behalf. The UDA will have the ability to offset the price by offering the landowner an equity stake.  Where the land is being compulsorily acquired, we expect this option will be popular as the land value will be calculated on an “as is” basis
    • override existing planning documents – although this power can be exercised only with the minister’s consent and only if the minister judges the public benefit is sufficient to justify it
    • powers to stop, move, build or alter infrastructure and to require network utility providers to do the same. Should they refuse or fail to comply within a reasonable time, the UDA can intervene and do the work itself
    • funding powers, including to levy development contributions and to impose targeted infrastructure charges, although these would have to be collected by the relevant TA and funnelled to the UDA, if it is servicing the debt, or to a privately-owned vehicle established to own the asset.

Anchors which may slow the UDA boat

The purpose of the UDAs is to speed progress and a number of “sails” have been attached to the boat to achieve this.

Chief among these are the streamlined consents processes, all of which must be completed within specific timeframes.

On the other hand, heavy consultation requirements have been built into the structure.  This is not a criticism.  New Zealand is a property-owning democracy and this must be reflected in all instruments of government.

But there are several steps which must be cleared before a project can proceed, each of which could be time-consuming and problematic:

  • central and local government work together to identify a development opportunity
  • officials engage with affected or interested parties
  • central and local government decide whether to establish the project
  • a formal public consultation is held on the proposed strategic objectives for the project, the location, the development powers to be conferred and the proposed UDA. This will be led by the mayor, if initiated at local government level, or by independent commissioners if central government is the initiator
  • a recommendation is made to the minister that the plan be approved, approved with amendments or rejected. The minister’s decision is final and is not subject to merits appeals in the Environment Court.

Existing zoning restrictions and “Nimbyist” obstructionism are born of some sort of constituency – incumbent owners with vested interests who are also taxpayers, ratepayers and voters.

It is difficult to see how this influence can be circumvented.  In fact, by creating new layers of interface, the UDAs could make things worse, embroiling ministers and mayors in intractable local disputes.

Another possible anchor is funding.  The funding arrangements are the least developed aspect of the package, coming across almost as an “add-on”.

It is clear that one of the government’s aims was to find a way to let TAs escape their statutory debt limitations but the proposal as it stands cannot solve the TA’s accounting problem.

Some of these issues are unavoidable.  Others might be a matter for submission.  Submissions close on 19 May.

The 19 May deadline will push any new legislation beyond the 2017 election, and beyond the final report from the Productivity Commission on a fundamental rewrite of planning law.  There is a possibility that the UDA initiative will be rolled up into this wider reform.