The Queenstown Lakes District Council has the power to control the effects, or potential effects, of any development which could push up land prices in the district, a High Court decision has found.
Plan Change 24: Affordable and Community Housing was originally notified in 2007 and would enable the council to evaluate new development to see if it had any effect on housing affordability.
The council wants to use PC24 to impose a levy, under the resource consent process, when land is rezoned from rural to urban classification.
In July, the Environment Court ruled the council could address housing affordability under the Resource Management Act (RMA), despite opposition from property developers Remarkables Park Ltd, Five Mile Holdings Ltd (subsequently placed in receivership) and a group comprising Infinity Investment Group Holdings, Willowridge Developments Ltd and Orchard Road Holdings Ltd.
Infinity general manager Marc Bretherton and Willowridge director Allan Dippie have both described PC24 as an unfair tax on district property developers who are already providing affordable housing schemes.
However, the High Court has found in favour of the council.
Justice Chisholm's decision stated if the use or development of land within the district had the effect, or potential effect of pushing up land prices and thereby impacting on affordable housing, the council had the power to control those effects through its district plan "subject, of course, to the plan ultimately withstanding scrutiny on its merits".
"It goes without saying that there must be a link between the effects of the use or development of the land and the objectives, policies and methods that are established to achieve integrated management.
"On its face, without going into the merits, PC24 appears to fit within the framework of the function [of the council] ... It concerns a perceived effect of the future development of land within the district.
"However, the requirement to provide affordable housing will only arise if the development is construed as having an impact on the issue of affordable housing ... Thus, the requisite link between the effects and the instrument used to achieve integrated management exist."
Mr Bretherton told the Otago Daily Times the company was "naturally disappointed" the High Court didn't rule in its favour, but he was pleased it had made a "very clear statement" there needed to be a link between new development and affordable housing.
"That link must be established before any financial contributions [can] be imposed by the council. We don't believe that the QLDC has ever established a [strong] link between those two things.
"The High Court has reaffirmed that link needs to be clearly demonstrated before [financial contributions are imposed]."
Council senior policy analyst Scott Figenshow said the decision was an "important milestone", but it was not the final hurdle for the plan change, which would now return to the Environment Court for "the more substantive hearing".
"For the council and the community it's a way to ensure that a portion of the new housing supply meets the needs of the local workforce.
"The decision by [Justice] Chisholm confirms that council has the authority to address the issue of housing affordability."
Over the last eight years, nine affordable housing stakeholder agreements had been volunteered by developments in Queenstown, Wanaka, Albert Town, Kingston and Cardrona.
Mr Figenshow said the substantive hearing would involve debate and decisions on some of the detail of the methods, for example, which developments would be captured by PC24, how much housing developers would be required to provide and the method of that delivery.
It was hoped the hearing would be held in the next six months.
