Councils abandon townhouse plan
A proposal for an urban development entity that would help get high-quality townhouses built across Nelson Tasman has been abandoned.
The entity would have bought and amalgamated adjoining properties across the region before demolishing their dwellings and subdividing the land to sell as a package to developers, but would not build any homes itself.
This approach was intended to de-risk medium-density housing projects for developers to make it easier to build high-quality townhouse complexes, diversifying and increasing the local housing supply.
The Nelson City and Tasman District councils would have jointly owned and overseen the entity.
However, elected members of both councils were told on Tuesday that such an urban development entity would be financially unfeasible.
The determination came from an independent strategic assessment that highlighted that the entity would be unlikely to recover its cost directly, with modelling revealing that between $175,000 to $358,000 could be lost for each development site. The development sites could each have had between 10 and 30 individual lots, depending on the site.
Council officers added that the entity might have needed “at least $20 million in seed capital” to establish.
However, the assessment also highlighted that “there may be a viable case for
intervention” once the wider economic and social benefits of a co-ordinated approach to housing intensification were quantified.
Those benefits were meant to be quantified during a business case following the strategic assessment, however the business case was not conducted because the entity’s financial unfeasibility had already been determined.
Nelson mayor Nick Smith supported not pursuing the idea further and said Nelson Tasman doesn’t have the scale for an urban development agency.
“Setting up an urban development authority would add very significant compliance costs to the development and are beyond the challenges that we quite appropriately have in the areas of housing.”
However, Nelson councillor Aaron
Stallard drew attention to the fact that the wider benefits of the agency, and the detrimental impacts of continuing to approach housing in the same way, hadn’t been quantified.
While he agreed that the councils would not want to make “a large loss”, he pointed out that delivering space for 20 homes at a loss of $175,000 would equate to losing less than $10,000 per lot. “That doesn’t seem like a huge amount.” Nelson-based architect William Samuels was disappointed by the councils’ decision.
Samuels chairs the Nelson and Marlborough branch of Te Kāhui Whaihanga New Zealand Institute of Architects and co-founded the NelsonTasman2050 independent think tank, which advocates for sustainable urban environments.
He has advocated for establishing an urban development entity in the past.
“Our current status quo approach to housing is desperately broken and is not delivering us the outcomes that we need,” Samuels said. “If we’re serious about addressing the housing challenges in our region we need to take bold steps, and direct intervention is clearly needed to make it more viable for the private sector to deliver desirable housing and community outcomes.”
He added that the economic and social costs of continued urban sprawl “are potentially far greater” than the operational costs of the entity, which would increase the region’s liveability and supply of good-quality housing.
“The direct costs associated with building poor-quality housing located in the wrong areas is significant and needs to be factored within the cost-benefit analysis of an urban development entity.”
While the two councils aren’t pursuing the entity any further, officers added that Kāinga Ora already possesses many of the powers that the entity would have.
Julia Campbell, Kāinga Ora’s regional director for Nelson, Marlborough, and the West Coast said that Nelson Tasman is one of the most expensive places in the country to buy a home.
She confirmed that Kāinga Ora is in the early stages of exploring opportunities with the two councils to ease housing pressures, including by using its powers under the Urban Development Act to enable more market and affordable housing.
“Easing these pressures and delivering more housing will require a level of density that has not typically been delivered there previously.”
The agency is also delivering its public housing programme, which aims to deliver over 300 homes across Nelson Tasman in the coming years.
The councils’ strategic assessment on the urban development entity cost $74,000 and was funded by the Government’s Better Off funding. Another $76,000 had been earmarked for the business case.
However, because the business case was not advanced, the remaining funds were split between Nelson and Tasman to use on other projects.