Special Housing Area: Submission to Councillors on Item 4
Prepared for QLDC Council Meeting, held 18th March 2021
17 March 2020
Hāwea Community Association (HCA) contends that the justifications provided in the report to accept the proposal from Universal Developments are weak or irrelevant. We critique them below.
1. Reasons for the proposed change
Universal Developments (UD) provided the following reasons for the proposed change:
1.1 A higher contribution to the Queenstown Lakes Community Housing Trust:
The report (clause 24) says this was unanticipated by UD. This may well have been the case BUT UD agreed to the government requirement that the contribution be increased from 10% to 12.5%. They would have been well aware of the financial implications when they signed the Deed. UD appears to be using the contribution to QLCH as a lever to obtain favourable consideration for changes to the Deed.
1.2. Consumer preferences
UD argues that a portion of the expected purchasers in the development may be tradespeople, for whom a house and land package would not be as attractive as a self-build option. The report notes that UD produce no evidence for this claim. The report then appears to be an advocate for UD by producing information it considers relevant to this matter. That information does not provide any evidence that the market has significantly changed in this respect. That is, no justification is given for the increase from 30-40%
HCA has concerns about the appropriateness of Council staff searching for and providing evidence to support UD’s unsupported claim.
1.3. Lending conditions
The report notes (clause 31) “No firm information on the development lending environment was provided...” In fact, NO evidence was provided. The report then appears to be an advocate for UD by producing information it considers relevant to this matter.
HCA has concerns about the appropriateness of this. It is up to UD to make their case -not Council staff.
Irrespective of the foregoing lending conditions will undoubtedly change again in the near future. There is nothing new in this and UD should have planned accordingly.
2. Comparison to affordability outcomes against other SHA Deeds
The report states (clause 33) that Deed “...goes further than any other SHA Deed in the district in terms of the specificity of the affordability outcomes alongside the provision of additional housing supply”
The discussion in the report illustrates how poor previous Deeds were in terms of delivering affordability. When one starts from low base it is easy to look good. In absolute terms HCA considers the Deed has significant shortcomings, especially in terms of protecting affordability.
3. Affordability & Covid
It is HCA’s position that the Deed did not lock in affordability in a meaningful way. The (QLDC) Mayoral Housing Affordability Task Force stated that the Council adopted the internationally recognised bench mark where housing is deemed affordable if a household spends less than 35% of their gross income on rent or mortgage payments. The vast majority of discussion by Councillors and staff in relation to UD SHA is about cost relative to rest of the current market. This completely misses the point. The report to Council is silent on the affordability metric it has adopted.
At the core of SHA’s is making housing affordable. Council’s recent agreement to increases to land and house package prices seemed to be out of sympathy to increased costs UD was facing and thus reduced margins. There was no discussion about potential buyers and how these increased costs relate to their ability to purchase.
Many residents in the district are facing severe financial hardship as a result of Covid. The situation is going to get worse as an increasing number of businesses find they are unable ride out the Covid storm. Increasing numbers of employees will have reduced hours or lose their jobs altogether. This is not the time to agree to any provisions which will put housing further away from wage and salary earners.
If Council approves the current proposal it will further erode affordability
4. Report to Council
As will be evident from the foregoing HCA has concerns about the report from Council staff to Council in two regards
4.1 Advocacy
UD does not produce evidence to support its claims. Council staff have attempted to do this for them. Implicit in the document is an acceptance that UD may be facing financial challenges and Council should thus assist by making the Deed more favourable.
To make matters worse no consideration, this advocacy is not offset by any consideration of the plight of potential purchasers and in particular a consideration of the measure of affordability Council has adopted.
The reference to the Deed being significantly better than previous Deeds further seems to be implying that because of this Council should look favourably on the UD.
4.2 Quality of evidence
The evidence that Council staff produce in considering UD’s claims is of low quality. This well illustrated by that dealing with consumer preferences. A change from 30-40% is being sort. It thus needs to be supported by evidence of a change in consumer preferences- no such evidence is produced.
5. Recommendation
HCA recommend Council reject the proposal in the interests of affordability.
John Langley
On behalf of the HCA
