Agenda of Climate and Environment Committee Meeting

Climate and Environment Committee Meeting Agenda

22 May 2025

8 He Kōrero Hou | Updates

8.1 Preliminary Investigation into Inclusionary Zoning

Kaituhi | Author: Aastha Shrestha, Intermediate Policy Planner

Kaiwhakamana | Authoriser: Kris Pervan, Group Manager Strategy & Growth

Te pūtake | Purpose

1 In follow-up to Council’s resolution to make Plan Change 2 – Intensification (PC2) operative, this paper provides a report-back on inclusionary zoning and seeks discussion on the value of and support for Council officers taking a lead in the development of a regional approach given:

a) findings from preliminary investigation initiated in 2023 into the potential for inclusionary zoning to help deliver affordable and inclusive housing outcomes in Kāpiti; and

b) national and international examples, key implementation considerations, and the rationale for supporting a regionally coordinated approach to inclusionary zoning.

Taunakitanga | RECOMMENDATIONS

A. That the Climate and Environment Committee:

A.1 Note the findings of the preliminary investigation into inclusionary zoning (attached in Appendix 1) and its relevance to Kāpiti’s affordable housing objectives / outcomes.

A.2 Discuss and provide direction and/or support for Council taking a lead role in the development of a regional approach to inclusionary zoning, through collaboration with the Wellington Regional Leadership Committee (WRLC), while remaining open to alternative options if regional efforts stall.

Tūāpapa | Background

2 Housing affordability remains a critical issue in Kāpiti and across New Zealand. Of note:

2.1 The Council’s Housing Needs Assessment and the subsequent Housing Strategy 2022 identified that while population growth and housing pressures continue to rise, access to affordable, secure, and diverse housing has not kept up, particularly for low- to moderate income-households^{^[1]}.

2.2 The Strategy identified seven focus areas for addressing housing challenges, including housing affordability. One of the actions under this focus area was to explore Inclusionary Zoning to support tenure diversity and increase housing supply. It also encouraged partnerships with iwi, Community Housing Providers (CHPs), and other local partners to enable collaborative housing delivery.

2.3 Further to this, the 2023 Housing and Business Development Capacity Assessment (HBA)^{^[2]} confirmed that while there is sufficient zoned capacity to meet projected housing demand, significant challenges remain around development feasibility and the delivery of affordable homes. This underscores the need for planning tools that not only enable growth but also secure affordable outcomes.

3 In August 2023, when the Council resolved to make Plan Change 2 – Intensification (PC2) operative, its limited scope meant that broader urban development matters (like exploring tools for diverse housing) were deferred. As a result, staff committed to investigating inclusionary zoning as a complementary planning response to support the provisions enabled by PC2^{^[3]} and contribute to more affordable and inclusive housing outcomes aligned with the district’s strategic housing objectives. With PC2 now operative, and as part of the Council’s Future Urban Development Plan Change pathway, there is now an opportunity to consider and investigate additional planning tools such as inclusionary zoning, that could complement intensification and contribute to more affordable and inclusive housing outcomes in Kāpiti.

4 Within the national and regional context, our Council has taken proactive steps to strengthen its local housing system and improve affordability outcomes. In particular:

4.1 In 2023, the Council formalised Kāpiti Housing Solutions Trust (the Trust) as a local vehicle for delivering social and affordable housing. Its establishment followed the Council resolutions endorsing a partnership-based approach to housing delivery.

4.2 The Trust now provides an institutional home for progressing community-led housing projects and is expected to serve as a key delivery partner in any future Inclusionary Zoning or Inclusionary Housing framework. By aligning with the Trust, the Council can leverage trusted delivery expertise while ensuring that affordability outcomes are secured and maintained over time.

4.3 In 2024, the Council launched a Community and Affordable Housing Seed Fund, offering up to $200,000 to support iwi, social enterprises, and CHPs wanting to develop housing initiatives.

4.4 Alongside its Housing Strategy and other targeted initiatives, these investments reflect an evolving approach to housing delivery, which recognises the need for both regulatory tools and resourced delivery mechanisms to respond to local housing needs.

5 However, due to the complexity of factors contributing to the housing crisis, increasing housing supply alone will not be enough to ensure that homes become more affordable (especially for low- to moderate-income households), without additional targeted mechanisms to direct delivery towards genuinely affordable options. Inclusionary zoning is one of several additional levers that will need to be considered to more fulsomely address the housing crisis, and to deliver both supply and affordability.

He take | issues

Scope for Inclusionary Zoning / Housing

6 Inclusionary zoning (IZ), also known as inclusionary housing, is a planning tool that enables councils to require or incentivise private developers to include affordable homes in residential or mixed-use developments. It is designed to integrate affordability into the development process and can be implemented through mechanisms such as district plan rules, resource consent conditions, or negotiated agreements.

7 IZ typically applies above a development threshold (commonly 10 or more dwellings) and allows flexibility in how affordable housing contributions are delivered. This may include on-site provision (generally preferred), off-site delivery, or financial contributions to a dedicated affordable housing fund (via Financial Contributions or Development Contributions).

8 Homes delivered through IZ are usually targeted towards households earning below the median income and secured as permanently affordable using legal mechanisms such as covenants, ground leases, resale caps, or shared ownership models to preserve affordability over time.

9 By capturing some of the land value uplift associated with zoning changes or intensification, IZ can ensure that new development contributes directly to affordable housing outcomes.

10 Effective IZ frameworks depend on clearly defined planning provisions, robust legal instruments, and partnerships with trusted delivery agencies such as Community Housing Providers (CHPs) or housing trusts. Councils typically determine when and where IZ applies (often triggered by the scale of development) and how contributions are calculated and secured.

11 It is important to note that IZ is not seen as the same as social housing, nor is it a ratepayer-funded subsidy. It is a supply-side tool that leverages the private development process to secure a portion of affordable homes. The ongoing management and stewardship of these homes are typically undertaken by CHPs, iwi organisations, or housing trusts to ensure affordability is retained and appropriately allocated over time.

Preliminary findings from investigation

12 Several issues have been identified through the preliminary investigation that is outlined in paragraph 13 (below):

12.1 The current resource management framework does not explicitly support mandatory IZ, creating legal uncertainty around its enforceability under the RMA. This has been a key factor in several councils withdrawing or softening IZ proposals during plan-making processes^{^[4]}.

12.2 Pursuing IZ at a local level (district-only approach) risks creating fragmented policy approaches, which can lead to market confusion, policy inefficiency, and conflict in managing regional housing pressures.

12.3 Due to its technical nature, Inclusionary Zoning requires expert legal, planning and economic expertise to develop and implement it, including economic modelling, legal drafting, and ongoing compliance monitoring, which can place significant pressure on existing in-house staff resources.

13 Key areas of focus and points of note from the review are as follows:

13.1 Inclusionary zoning is used widely, and effectively, by international jurisdictions as a planning tool:

13.1.1 IZ is used internationally to address housing affordability pressures and promote diverse communities, particularly in growing urban areas. Some examples include:

· Toronto, Canada: IZ was introduced in 2021 and applies to Protected Major Transit Station Areas (PMTSAs). The policy requires between 5% and 22% of residential gross floor area in new developments to be affordable housing, depending on location and phasing^{^[5]}. Affordability is secured for 99 years through legal agreements.

· London, UK: Affordable housing is delivered through “Section 106” agreements, where developers negotiate with planning authorities to provide 35%–50% of homes as affordable in qualifying developments. Nationally, Section 106 has been the dominant delivery mechanism, accounting for 47% of affordable homes in 2022–23 and 44% in 2023–24^{^[6]}. Developers build these homes and transfer them to housing associations (Registered Providers) for long-term management.

· Boston, USA: The city’s Inclusionary Development Policy applies to developments of seven or more units. It mandates 13%–20% affordability^{^[7]}, with options for off-site delivery or in-lieu payments. Developers often partner with CHPs for implementation.

· Johannesburg, South Africa: A mandatory IZ policy introduced in 2019 requires at least 30% affordable units in residential developments of 20 or more. The policy is embedded in the city's spatial planning framework and applies to rezoning and development approvals. By late 2023, nearly 8,000 units had been approved under this policy^{^[8]}.

13.1.2 These international examples demonstrate the core components of effective IZ frameworks. Successful implementation depends on integrating IZ requirements within statutory planning instruments, tailoring affordability thresholds to reflect local housing market conditions, enabling a range of delivery options including on-site or financial contributions, and establishing clear mechanisms for ongoing monitoring, enforcement, and long-term affordability retention.

13.2 In New Zealand, inclusionary zoning is not yet widely used but interest is increasing in it use as a planning tool:

13.2.1 IZ is still emerging as a policy option in New Zealand. While it is not yet widely implemented, housing affordability pressures have prompted many councils to explore IZ as a tool to better align private development with public housing outcomes through the planning system.

· Queenstown Lakes District Council (QLDC): Since 2003, QLDC has implemented a form of Inclusionary Housing, requiring developer contributions (such as land, dwellings, or cash payments) for affordable housing^{^[9]}. These contributions are directed to the Queenstown Lakes Community Housing Trust (QLCHT), which provides affordable homes through long-term ground leases, capped resale pricing, and assisted ownership models like the Secure Home programme^{^[10]}.

In 2024, QLDC withdrew Plan Change 24, which proposed a mandatory IZ variation to the District Plan, following the Independent Hearings Panel's recommendation against it. The panel cited insufficient evidence and analysis of alternative options to address housing affordability^{^[11]}.

· Auckland Council considered mandatory IZ during the development of its Unitary Plan in 2016 but ultimately withdrew the proposal due to legal uncertainty under the Resource Management Act 1991 (RMA). It now supports affordable housing through partnerships, voluntary negotiated agreements, and targeted infrastructure investment.

· Tauranga City Council employs site-specific negotiated agreements and planning incentives under the City Plan and Housing Accord. Although it has not introduced a formal IZ provision, it continues to secure developer contributions toward affordable housing delivery.

· Waipā District, Waikato District, and Hamilton City Councils are investigating IZ through plan change processes, supported by shared research and collaboration under the Future Proof Partnership. These councils are working toward a regionally aligned and legally defensible IZ framework, drawing from local conditions and shared policy goals.

· Wellington City Council (WCC): In 2021, WCC explored implementing mandatory IZ through the Assisted Housing chapter of its Draft District Plan, however, the Council removed these provisions before public notification. The Council cited legal and procedural limitations under the RMA^{^[12]}, indicating it did not provide a clear legal framework for enforcing mandatory IZ, leading to concerns about the feasibility and legality of such provisions.

Despite this, WCC plays an active role in the Wellington Regional Leadership Committee’s (WRLC) Inclusionary Housing workstream. The WRLC, a partnership of councils, iwi, and central government in the Wellington-Wairarapa-Horowhenua region, aims to develop a consistent, coordinated IZ approach across the Wellington region^{^[13]}. This regional initiative builds on lessons learned from district-level experiences, including WCC's, to address housing affordability challenges collectively.

13.2.2 Community Housing Aotearoa (CHA) in its 2024 report, Inclusionary Zoning – A Path Forward in Aotearoa New Zealand^{^[14]}, highlights growing national interest in Inclusionary Zoning as a planning tool to address housing affordability. The report also identifies significant regulatory constraints, particularly the lack of explicit enabling provisions within the RMA, which creates legal uncertainty / ambiguity and limits councils' confidence to integrate IZ in their district plans.

13.2.3 CHA advocates for a national IZ framework to provide standardised eligibility criteria, enduring affordability mechanisms, and legal clarity to support defensible local implementation. Without such direction, councils face legal risk, inconsistent practice, and limited ability to translate planning-enabled growth into affordable housing outcomes.

13.3 New Zealand’s existing legislative framework is complex and provides a degree of uncertainty for planning tools like inclusionary zoning at a district level:

13.3.1 Previous legislative frameworks have sought to enable councils to play a more active role in the delivery of affordable housing. The Affordable Housing: Enabling Territorial Authorities Act 2008 provided a statutory mechanism for councils to require developer contributions, contingent on the preparation of a Housing Needs Assessment – a process already completed by the Council^{^[15]}. However, this Act was repealed in 2010 before it was fully operationalised^{^[16]}.

13.3.2 The subsequent Housing Accords and Special Housing Areas Act (2013) provided time-limited fast-tracking mechanisms with some affordability provisions but was repealed in 2022 without establishing a durable framework. These past efforts underscore the ongoing need for a lasting national mechanism to support affordable housing delivery.

13.3.3 More recently, national planning instruments such as the National Policy Statement on Urban Development (NPS-UD) and Medium Density Residential Standards (MDRS) have supported housing growth and intensification. However, they do not provide mechanisms to secure affordability through zoning.

13.3.4 The limited scope and duration of these measures demonstrate a continuing gap in robust, enabling legislation to support the large-scale implementation of Inclusionary Zoning. This further emphasises the need for regional coordination and strong advocacy for national reform, alongside alignment with higher-order policy instruments such as the Regional Policy Statement (RPS).

13.4 Coordination of a strategic response across the region, if not NZ Inc as a whole, is needed to effect real change:

13.4.1 The scale and complexity of housing affordability challenges across the Wellington region, as a microcosm of NZ Inc, highlight the need for a coordinated and strategic response. While Kāpiti’s local initiatives lay important groundwork, the complexity and legal uncertainty surrounding IZ highlight the limitations of acting independently.

13.4.2 There is opportunity to work with other districts through the WRLC to progress a regionally aligned IZ framework to develop a shared legal and technical expertise, strengthen collective advocacy for legislative reform, and ensure consistency in planning approaches. This unified approach may also reduce litigation risk, which is more likely if councils act independently in the absence of a clear regional or national mandate.

13.4.3 Pooling legal, economic, and planning resources across the region would enable a more robust and defensible implementation. On the other hand, a fragmented approach risks undermining policy effectiveness, as developers may avoid affordability requirements by relocating to areas / jurisdictions without IZ provisions.

13.4.4 Establishing a regional direction would also align with the CHA’s report, which highlights the value of regional collaboration in delivering more effective and enduring affordable housing outcomes. There is growing consensus that a shared approach reduces duplication, improves delivery, and provides developers with greater certainty.

13.4.5 For Kāpiti, IZ presents an opportunity to complement existing planning tools and contribute to more predictable delivery of affordable housing. Ongoing participation could ensure Kāpiti has a voice in shaping the policy direction and implementation model, and any future implementation may require alignment with, or amendments to, the Regional Policy Statement (RPS).

13.4.6 This preliminary investigation identifies that the district could both contribute to, and benefit from, a regional IZ framework, particularly through access to shared legal, technical, and delivery resources that align with local housing priorities.

13.4.7 However, regional collaboration may also bring risks, including reduced flexibility to tailor solutions to local conditions, possible delays due to misalignment with the district-specific needs, and dependence on shared resources. These may limit Kāpiti’s ability to progress independently.

13.4.8 These risks reinforce the need for Kāpiti to maintain an active and visible role in shaping the regional framework while ensuing its ability to act locally if required. As such, the Council should remain open to exploring other mechanisms or fallback options if regional efforts do not progress as expected (if regional efforts stall or diverge from local needs).

13.4.9 Kāpiti has the opportunity to take a leadership role in progressing Inclusionary Zoning across the region. By contributing proactively to WRLC discussions and aligning regional framework with existing local mechanisms (such as the Kāpiti Housing Solutions Trust), the Council can help shape solutions that are both consistent and locally responsive. This approach enables Kāpiti to leverage regional capacity while maintaining ability to address its own priorities.

Ngā kōwhiringa | Options

14 The following table provides a summary of the benefits and risks related to Inclusionary Zoning to support the Committee’s discussion today:

Kōwhiringa \| Options	Hua \| Benefits	Tūraru \| Risks
Option A: Collaborating regionally via WRLC’s Inclusionary Zoning workstream (Assessed as optimal)	· Shares legal and technical resources · Supports regional consistency for developers · Reduces litigation risk through collective approach · Enhances collective advocacy for national reform · Retains ability to tailor or progress with local provisions if regional efforts stall · Positions the Council to take an active leadership role in shaping the regional framework	· Dependent on WRLC prioritisation and pace · Potential misalignment with local priorities · Local momentum may be slowed by regional governance/committee process · Risk of reduced flexibility if a strong local leadership role is not maintained
Option B: Progress Inclusionary Zoning independently via a District Plan Change	· Allows direct control over policy design · Tailors provisions to Kāpiti-specific needs · Signals local leadership on housing affordability	· High legal and resource burden · Greater litigation risk without national or regional mandates · May prompt developer pushback or relocation to other areas · Duplication of effort with other councils in the region
Option C: Maintaining status-quo (relying on existing tools and funding initiatives)	· No additional resourcing required · Utilises current partnerships (e.g. Housing Solutions Trust) · Avoids complexity of policy development	· No guarantee of affordable housing delivery · Missed opportunity for strategic influence · Limited ability to secure affordability through planning · Greater long-term reliance on external funding

Kōwhiringa | Options

Hua | Benefits

Tūraru | Risks

Option A: Collaborating regionally via WRLC’s Inclusionary Zoning workstream

(Assessed as optimal)

· Shares legal and technical resources

· Supports regional consistency for developers

· Reduces litigation risk through collective approach

· Enhances collective advocacy for national reform

· Retains ability to tailor or progress with local provisions if regional efforts stall

· Positions the Council to take an active leadership role in shaping the regional framework

· Dependent on WRLC prioritisation and pace

· Potential misalignment with local priorities

· Local momentum may be slowed by regional governance/committee process

· Risk of reduced flexibility if a strong local leadership role is not maintained

Option B: Progress Inclusionary Zoning independently via a District Plan Change

· Allows direct control over policy design

· Tailors provisions to Kāpiti-specific needs

· Signals local leadership on housing affordability

· High legal and resource burden

· Greater litigation risk without national or regional mandates

· May prompt developer pushback or relocation to other areas

· Duplication of effort with other councils in the region

Option C: Maintaining status-quo (relying on existing tools and funding initiatives)

· No additional resourcing required

· Utilises current partnerships (e.g. Housing Solutions Trust)

· Avoids complexity of policy development

· No guarantee of affordable housing delivery

· Missed opportunity for strategic influence

· Limited ability to secure affordability through planning

· Greater long-term reliance on external funding

ngā Mahi panuku | next steps

15 The Social Sustainability Committee (SSC) will consider a similar paper as discussed today, on the 19 June 2025, including a summary of feedback from this Committee on this matter.

16 Following this, on 24 July 2025, the Strategy, Operations and Finance Committee (SO&F) will be briefed on preliminary investigation findings as part of the “Report back on future District Plan changes and other potential actions arising from Council decisions on Plan Change 2”.

17 If SO&F resolves to proceed with the option currently assessed as ‘optimal’ (refer to Option A in paragraph 14), then following next steps will occur:

17.1 Staff will engage with the WRLC to further explore regional inclusionary zoning opportunities that align with local housing delivery tools and emerging regional policy recommendations.

17.2 Report future updates as required to this Committee, the SSC, and SO&F, as regional work progresses and a potential framework is developed.

17.3 If regional alignment does not progress or fails to produce an implementable framework, Council officers would draft further advice regarding opportunity to progress district-level inclusionary zoning options or alternative planning interventions.

Ngā āpitihanga | Attachments

1. Presentation: Council briefing on Inclusionary Zoning ⇩

[4] The Community Housing Aotearoa (2024) report also corroborates this uncertainty, noting that while affordable housing is not excluded from the RMA, the specific mechanisms of Inclusionary Housing have not yet been tested in court, creating ambiguity for councils. See: https://communityhousing.org.nz/wp-content/uploads/2022/10/FINAL-IH-PAPER-3.pdf

[12] The section 32 report notes “the legal constraints in the RMA and its national direction on how ‘inclusionary housing’ methods can be applied in district plans” as a key reason for not proceeding with IZ at the time. p.32: https://wellington.govt.nz/-/media/your-council/plans-policies-and-bylaws/district-plan/proposed-district-plan/reports/section-32-part-2-assisted-housing.pdf

[14]Community Housing Aotearoa, Inclusionary Housing: A Path Forward in Aotearoa New Zealand (2024). Retrieved from: https://wrlc.org.nz/wp-content/uploads/2024/02/FINAL-IH-PAPER-3-1.pdf.

[15] Kāpiti Coast Housing Needs Assessment 2022 was received by the Strategy and Operations Committee on 12 May 2022. The Council report is available at: https://kapiticoast.infocouncil.biz/Open/2022/05/SAOCC_20220512_AGN_2414_AT.htm#PDF2_ReportName_10273

[16] Had the Act remained in effect, it would have provided a clear statutory foundation for councils to implement affordable housing policies, including mechanisms to secure Inclusionary Zoning-type contributions through the planning system.

[17] 8 April 2025, Climate and Environment Committee. Item 8.3. Environment Strategy Approach. https://kapiticoast.infocouncil.biz/Open/2025/04/CEC_20250408_AGN_2731_AT_WEB.htm


RĀRANGI TAKE AGENDA Te Komiti Āhuarangi me te Taiao \| Climate and Environment Committee Meeting
I hereby give notice that a Meeting of the Te Komiti Āhuarangi me te Taiao \| Climate and Environment Committee will be held on:
Te Rā \| Date:	Thursday, 22 May 2025
Te Wā \| Time:	9.30am
Te Wāhi \| Location:	Council Chamber Ground Floor, 175 Rimu Road Paraparaumu
Rach Wells Group Manager People and Capability

Cr Jocelyn Prvanov	Chair
Cr Sophie Handford	Deputy
Mayor Janet Holborow	Member
Cr Glen Cooper	Member
Cr Liz Koh	Member
Cr Shelly Warwick	Member
Mr Christian Judge	Member
Mr Michael Moore	Member
Mr Glen Olsen	Member
Mr Tim Sutton	Member
Mr Simon Black	Member
Mr Huriwai Paki	Member
Ms Kim Tahiwi	Member
Ātiawa ki Whakarongotai Representative	Member