Election 2020
THE HOUSING INNOVATION SOCIETY - POLICY STATEMENT ELECTION 2020
THIS is an advocacy and research group dedicated to supporting innovation in housing development that delivers thriving communities and social, environmental and financial wellbeing.
We are calling on all Parliamentary parties to back a number of targeted reforms to support Kiwis to build their own homes and enable high-quality, fit-for-purpose and diverse housing options. This Policy Statement introduces difficulties that have arisen from the direct experience of projects (including Cohaus and Urban Habitat Collective), and proposes targeted reform to enable citizens to have more involvement in the development of their homes and communities.
Community-Focused Housing (CFH) is a form of development in its own right, proven to contribute to thriving communities and environmental, social and economic wellbeing. It is defined by the process that is used to develop a project (resident-led and co-designed), it's not-for-profit nature (there is no third party developer), its distinctive architectural design and programming (more shared amenity and smaller private spaces), and its governance, management and financing structures. Such models include elements of shared amenity and are more affordable than market housing. These housing models, not products, are defined by the set of legal, financial, governance, management, and design parameters that shape them.
A limited number of projects succeed at present because current regulation and legislation does not adequately address this type of housing development. Without adequate (and expensive) bespoke legal advice on each project, they encounter barriers related to regulation, financing and lending, land and underwriting, and political support that undermines project viability. Our primary ask is that Community-Focused Housing (CFH) is defined as a form of development in it’s own right, setting a benchmark for projects to meet that sets them up for success, enabling third-party institutions (lenders, underwriters, etc) to engage more productively with projects and allowing a range of flow-through benefits. This would include formalising the definition as part of the Urban Development Bill and in company regulation to maximise opportunities for community partnership with Kāinga Ora in urban development projects.
Company and Tax Regulation: Defining “Community-Focused Housing (CFH) Entities” as a new category of development entity (with a separate and linked definition for "Māori Community-Focused Housing Entity" linked to papakāinga, to be refined and developed with mana whenua) would enable common understanding across banks, regulators, professional services, and citizens, and allow these developments to be treated more akin to a residential home build. This would remove current pitfalls of existing legislation and regulation intended for developments with for-profit motives, eliminate unnecessary complexity and cost that compromises the feasibility of Community-Focused Housing (CFH) development projects, and provide a set of requirements to establish new projects and build the foundations for successful delivery. As an example of this complexity, current legislation for ‘associated party transactions’ leaves projects that fail to develop a uniquely suited legal structure - increasing complexity and adding significant legal fees - liable for unexpected costs that were not intended for developments with not-for-profit motives. This can include the requirement to pay GST at market valuation, despite no sale having taken place.These requirements do not apply to a standard residential home build.
Example: Amend the Companies Act 1993 to specifically define a new category - Community-Focused Housing (CFH) Entities - with requirements to ensure social value generation (as defined by the local community), and a mechanism to exempt them from “related party transaction” requirements at market value.
Finance: Bank and commercial lending is based on a risk assessment of projects that generally proceed without sales secured. By contrast, Community-Focused Housing (CFH) Developments are conducted with sales secured in advance, and future residents involved in the process, reducing project risk. However, because these projects have no standard regulatory pathway to navigate, they are often unable to access financing to support early-stage development and site feasibility studies.
Example: By defining CFH as noted above, a defined tax-pathway specifically designed for not-for-profit developments (treating CFH projects in a similar way as a traditional residential home-owner build) will allow more people to undertake projects without needing to navigate complex legal structures. Project financing can be improved by allowing the Progressive Home Ownership Fund to apply to CFH development, and by enabling KiwiSaver first-home withdrawal eligibility for members of CFH projects.
Building Regulation: The residential Building Code is due to be updated in October 2021 as part of the Ministry for Business, Innovation and Employment’s (MBIE) Building for Climate Change Program. The plan outlined in the Building for Climate Change report (July 2020) requires an informed public sector and residents, and landmark projects that exceed code benchmarks to provide a path for others to follow as the building code ratchets up. Part of the challenge of delivering high-quality housing in Aotearoa is the ability of designers to steward fit-for-purpose housing of sufficient quality. Community-Focused Housing (CFH) has been demonstrated to meet these goals by delivering fit-for-purpose and high quality housing, but the sector needs support. Designers need to know how to design to meet resident needs.
Example: As part of MBIE’s Building for Climate Change program, develop a “Community-Focused Housing Design Guide” that supports architects and consultants to design high-quality buildings in partnership with communities, and provide a streamlined Acceptable Solution and Verification Method for building approval for those under this stream that exceed building code performance under the October 2021 revision.
Land and underwriting: Acquisition of land in suitable areas is often challenging for projects when competing on the open-market against third-party, for-profit developers with much larger financial resources at their disposal. Underwriting of projects is also difficult, as underwriters have no standard approach they can use to assess CFH projects. As a result, the benefits to communities associated with these projects (higher degrees of generational affordability, decreases in gentrification, higher levels of community diversity, wellbeing and greater social cohesion, to name a few) is lost.
Example: Enable Local Governments to underwrite Community-Focused Housing (CFH) developments once they meet the set of strict criteria set out in the definition of a Community-Focused Housing (CFH) Development Entity, and mandate inclusionary zoning within Government projects to make land available for not-for-profit CFH developments that demonstrate social benefit. Additionally, develop a dedicated development plan approach for CFH developments to be written into district plan provisions.
Political Support: Understanding of Community-Focused Housing (CFH) Developments and their benefits is nascent, but growing. A recent workshop held by Local Government NZ (LGNZ) on these approaches builds on on-going work by Kāinga Ora, Panuku Development Auckland, Ministry for Housing and Urban Development (MHUD), along with the Ministry for Social Development (MSD) specifically focused on CFH projects. These projects consistently deliver sustainability outcomes vastly exceeding building code, and thus provide a necessary benchmark to improve quality within the sector as a whole, a critical process to ensure success of the Ministry for Building, Innovation and Employment’s (MBIE) Building for Climate Change program. Targeted work is required to build capacity, awareness and understanding, and to align the work taking places across various levels of Government.
Example: Provide funding to support capacity building, awareness and engagement across levels of Government, and public and private sectors.
During the campaign for the upcoming 2020 General Election we ask all political parties to consider adopting the above as part of their policy platform.
