On the ground: hoping for a bargain but worried about pitfalls? Never skip an initial feasibility assessment

As a development engineer at Auckland Council, Ethan Fu’s day-to-day work mainly involves reviewing and approving resource consent and EPA applications for land development projects under the Auckland Unitary Plan. As a result, Ethan encounters a wide range of land development cases and often helps friends resolve related issues. At the invitation of YIJU New Zealand, Ethan is sharing his experience in land planning and development with the magazine’s readers for the first time.

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Case one

A friend had his eye on a site in central Auckland. It was well located, reasonably priced and in the Mixed Housing Urban Zone. With future sale prices in mind, he hoped to connect the proposed high-density homes directly to the public wastewater system at a street corner 60 metres downstream using gravity drainage, rather than pumping wastewater to the public system on an upstream neighbour’s property, as the existing standalone house did.

Case analysis

To assess whether the proposal was feasible, Ethan recommended first checking whether the downstream public wastewater system could accept the discharge. A CCTV pipe inspection revealed a blockage in the system. Subsequent contact with Watercare. Service Limited established that the public wastewater system along that stretch had suffered blockages for years and was already overloaded, so no new connections would be permitted. Meanwhile, the feasibility of extending a pipe to the public wastewater system 60 metres downstream was also investigated. An on-site underground utility. service survey revealed numerous underground services along the route, including water supply pipes, telecommunications and electricity cables. An assessment found that extending the pipe would be difficult and expensive, with a preliminary cost estimate of NZ$300,000.

Outcome

Laying the pipe would be expensive, and obtaining approval from Watercare Service Limited would very likely require an upgrade to the public wastewater system, at a cost that could not be estimated. Installing a wastewater pump would fail to meet the friend’s aim of avoiding one, as its use would affect future sale prices. Ultimately, he decided against buying the site. Although the investigation took nearly 4 weeks and cost three to four thousand New Zealand dollars, he considered it money well spent because it prevented further losses.

Case two

This site was in the Mixed Housing Suburban Zone, where medium- to high-density residential development should, in principle, be possible. The owner simply wanted to subdivide the section occupied by the existing standalone house into two lots and build a new house on the newly created lot. On the surface, this seemed entirely straightforward.

Case analysis

Ethan encountered this case while reviewing applications. He found that the site was at a busy T-junction in west Auckland, directly opposite a school. The council would therefore have reservations about approving any development that might increase traffic at the junction and potentially affect children’s safety.

Outcome

After several rounds of discussions with the council, the owner eventually decided to proceed with limited. notification of the development application. This meant inviting everyone in the community whom the council considered potentially affected by the project to attend a hearing. If the proposal passed the hearing, the land development project could be approved. Almost everyone who attended opposed the owner’s development plans, so the council ultimately declined the application.

Case three

This site was in south Auckland, with 3/4 of the land in a flood-affected area. However, it was a flood prone area rather than the more familiar flood plain or overland flow path. Land within a flood plain or overland flow path can be developed simply by raising the house and setting aside some

land to channel overland floodwater. By contrast, when a flood prone area floods, the water cannot drain away. It accumulates on the site until it reaches the spill level, when it can flow out naturally.

Although the Auckland Unitary Plan does not explicitly state whether a flood hazard assessment is required for a flood prone area, the council still has the power to restrict development applications by considering the flood risks that future owners would face after development. When the owner bought this site two years earlier, they had no idea there was a difference between these types of flood-affected land and assumed that raising the buildings would allow development. Because it was a flood prone area, however, 3/4 of the land could not be developed at all.

Case analysis

A church upstream of the site had addressed the problem of accumulating floodwater by filling its land. As the volume of fill required for this site’s flood prone area was relatively small compared with the church’s, Ethan believed that if the council could approve the church building, it should also agree to the same approach for this site.

Outcome

The owner engaged a specialist flood engineer to prepare a detailed flood analysis report, including a land-filling proposal and its effects on other properties downstream. After a year of work, approval was finally granted, and the entire site was filled to the spill level. Development remained restricted, as the filled ground could not support buildings that were too tall, but at least the site could now be developed.

That was not the full cost of the earthworks, however. Accumulated water had left very poor ground conditions, with the subsurface soil consisting largely of silt with no bearing capacity. It all had to be replaced with graded engineered fill of suitable bearing capacity before construction could proceed, at considerable expense.

Professional advice

1. If you are buying land, engage an experienced development engineer to assess whether the site can ultimately deliver your intended development outcomes. If there is any uncertainty, be prepared to spend money on feasibility assessments covering both planning and engineering. Be particularly cautious if a site appears to have everything going for it and is suitable for high-density development, yet is inexpensive. Do not focus solely on securing a bargain: establish why the price is so low.

2. When buying land, make sure you understand the surrounding built environment and traffic conditions. Is it at a particularly busy crossroads or T-junction? Are there public buildings, such as libraries, schools or hospitals, as well as homes nearby? If so, development of the site could be significantly restricted. Engage a planner, architect and development engineer to carry out a joint feasibility analysis beforehand.

3. Inexpensive land in a flood-affected area may offer an excellent investment opportunity, but it could also become a financial hole that is difficult to fill. In particular, many people overlook the distinction involving a flood. prone. area. If this area (a flood. prone. area) occupies only a small part of the site and is intended for outdoor activities, the impact is limited, but building houses in a flood. prone. area would be very expensive and carries the risk that resource consent may not be granted, so buying it is not recommended. If you are determined to buy, commission a feasibility assessment beforehand and estimate the volume and cost of fill required. This calls for early involvement from a planner, development engineer and geotechnical engineer.

4. Although specialist problems can be left to specialists, developers and investors benefit from understanding basic development principles and government policies. This helps them make preliminary judgements when needed and avoid unnecessary detours. We recommend reading the following sections of the Auckland Unitary Plan (. Unitary. Plan):

• Land zoning provisions: H3, H4, H5, H6;

• Transport provisions: E27.