Appendix 4: Retailing Report

REPORT FOR

PALMERSTON NORTH CITY COUNCIL

REVIEW OF INDUSTRIAL, INSTITUIONAL & AIRPORT ZONES

STAGE 1 : SUGGESTED HIGHER LEVEL AMENDMENTS TO THE DISTRICT PLAN

CONCERNING DISTRIBUTIONAL EFFECTS

MARCH 2012

TABLE OF CONTENTS

Reference Topic Page 1.0.0 Introduction & Approach 1 2.0.0 Cumulative Effects 1 3.0.0 Industrial Zone : Preliminary Comments 3 4.0. The Institutional Zone 5 5.0.0 The Airport Zone 6 6.0.0 Conclusions 7

1.0.0 INTRODUCTION & APPROACH 1.1.0 The Project Brief 1.1.1 The Project Brief was circulated on 21 December 2011, seeking assistance with the

review of the Industrial, Institutional and Airport Zone sections of the District Plan, at this time limited to Stage 1, described as follows in paragraph 2.3 of the Brief:

"The assessment and recommendations for each zone need to be separate outputs but

delivered at the same time. The scope of the project can best be described as being broken down into four stages as follows:

1. Retail assessment and recommendations relating to the development or recasting of

issues, objectives, policies, performance standards and assessment criteria for the Industrial, Institutional and Airport Zones (indicative timeline: January 2012 to March 2012);"

1.1.2 The author's requested involvement was to align the policy approach for managing

retail and office activity in the foregoing sections of the Plan, as an extension to the work developed for Plan Change 1. As a consequence, the ensuing Report focuses on prospective amendments to the incumbent Issues, Objectives and Policies for the three zones, on reasons for such amendments and on other work that will need (in the author's view) to be done, to meet the requirements of s32, fine-tune the recommended amendments and inform the evidence that will be required to support changes to the relevant parts of the Plan.

1.1.3 As noted above, at various junctures and in the Conclusions, this is a "first cut"

rationale, based on the author's particular discipline / experience, intended to focus and facilitate the ongoing work, whilst avoiding the need for all to do a "first cut".

1.2.0 Approach 1.2.1 The next section of the Report looks at the potential for recognition of cumulative

effects to feature in the Zone-by-Zone amendments, to save repetition of that theme and the reasons for it on a Zone-by-Zone basis. The three target Zones are then independently discussed as to prospective higher-order changes, with a brief Conclusion to finish. Hopefully, the contents will be of benefit in terms of the ongoing work and wider participation contemplated.

2.0.0 CUMULATIVE EFFECTS 2.0.1 There will be some reference to the prospect of cumulative effects in the ensuing

analysis, so clarification of the reasons for that is set out in advance of the substantive evaluation.

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2.0.2 There are business zones in many areas, where the strategic thrust is to preclude

unfettered retailing activity, but where some types of retailing may be (or are) appropriate, while non-specific retail is provided for by way of discretionary consent procedures. Such provisions generally have the effect of avoiding the establishment of significant de facto centres (ie aggregations of activity as found in suburban, district or larger zoned centres) but they do not guard against the gradual commercialisation of the zones concerned, with such consequences as:

• elevated servicing and customer traffic flows; • property valuation anomalies which, with enhanced owner expectations, can

deter the kinds of activities for which the zone primarily exists; • undesirable and unanticipated reverse sensitivity issues; and • an undermining of some commercial centre functions. 2.0.3 Opening the gate to such prospects is or can be a foreseeable outcome even though the

activity classification, rules and associated criteria are reasonable in relation to a given application, because they do not adequately anticipate a succession of applications, each – on balance – meeting the criteria.

2.0.4 While it is well established that cumulative effects are relevant considerations when

applications are considered, this recognition does little other than favour those "first off the block". Also, the scope to decline on cumulative effect grounds is rarely adequately provided (in the Plan) for decision makers, in a manner that would strongly support refusal. The focus of this review provides an opportunity to introduce and reinforce the topic of cumulative effects, within the Palmerston North District Plan.

2.1.0 Evidence concerning Cumulative Effects 2.1.1 If the foregoing proposition is accepted, at least as a pro forma matter, evidence will

be needed, partly for inclusion in the relevant "Explanations" in the Plan and partly for statements in support of the entire suite of changes, before the City and – if necessary – the Court. Evidence in support would hopefully be available from at least some proveable trends in the City, as well as from experiences in wider jurisdictions. The former trends can be informed by activity surveys conducted in 2006, if repeated this year. In any event, such information would lend itself to inclusion in the District Plan's "Explanations" and go a long way toward enabling the requirements of s32 to be met, at the Plan's top hierarchical levels.

2.1.2 The high level focus of the present brief makes further investigation along these lines

inappropriate at this stage. However, once the desired strategic direction has been agreed, it is envisaged that a primary task will be to explore the extent to which there is s32 justification for an enhanced focus on cumulative effects. Outside the City, it is considered that there would be little difficulty in finding such support, from Court decisions, down to individual circumstances. Within Palmerston North, …/

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the answers – such as they are – probably lie in a combination of activity surveys in

parts of the Industrial Zone that have accommodated material commercial activities, and a combing of the records in relation to the latter, to see how the business activities were established.

2.1.3 One evidential matter no longer requiring research is the rezoning, through Plan

Change Nº 1, of pockets of former Industrial zoning to an appropriate Business Zone, including the FBZ, but not confined to that particular outcome. Some tightening of the actual or perceived retailing opportunities in the residual Industrial zoning would be no more than a reciprocal / complementary provision, having regard to these PC1 outcomes. This may be a useful springboard from which to launch and explain the prospective Plan Change and reinforce the integrated nature of this initiative.

3.0.0 INDUSTRIAL ZONE : PRELIMINARY COMMENTS 3.1.0 Issues 3.1.1 Operative Issues 3 and 4 are the most relevant to the proposed Review, in the

distributional effect context. They are complementary, 3 referring to adverse effects outside the Industrial Zone; 4 to implications within the Zone.

3.1.2 These and the other Issues are couched in general terms, but by that virtue, they

provide provenance for a wide range of Objectives and Policies, becoming increasingly specific as the provisions cascade down. The two lines of approach are to:

(a) leave the two Issues untouched, in part to maintain the generality of all Issue

statements; in part because they will arguably justify any more specific Objective that needs to be enunciated; or

(b) amend the Issues, more specifically recognising concerns about cumulative

effects (and/or to enunciate any other actual or potential adverse outcome) to provide provenance for more explicit Objectives and more specific Policies.

3.1.3 If course (b) were to be followed, it is suggested that the amendments disturb the

generality of the Issue statements as little as possible, consistent with the intended outcomes for O's and P's.

3.1.4 Looking at Issues 3 and 4, the latter adopts the longer term and wider concerns

associated with the brief for this work. It is considered to flow on from and reinforce the content of Issue 3, so the emphasis of this Report's preliminary recommendations is that amendments would most appropriately be made to that passage, if it is considered that the wording could be improved. A simple possibility would be to add:

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"3. The effects, including cumulative effects, of industrial …" This may be seen as a tautology, but it would underline the greater concern about

gradual / insidious changes where industrially-based retailing and office development has been or is provided for. In any event, if the principle of amendment Issue 3 is accepted, alternative rewording can be further explored.

3.2.0 Explanation 3.2.1 The fifth and sixth paragraphs at pp12-4 and 12-5 provide sound grounds for Issues 3

and 4. It would not be difficult to introduce further comments to reinforce those statements – especially in relation to an amended Issue 3 – but inappropriate to spend time on that now. The wording could be expected to reflect, in specific or general terms, whatever emerges from an assessment of trends and/or a current land-use study (cf paragraph 2.1.1).

3.3.0 Objectives and Policies 3.3.1 Objective 1 is the first of two which are considered to be reviewable, in the context of

the brief for this Report. It is essentially a response to Issue 4, focusing on the primary purpose of the Zone. Its Policies are consistent with its purpose. Policy 1.2 would be the only contender for amendment.

3.3.2 The preliminary view reached in this evaluation is that Objective 1 and its Policies are

fundamental and should remain unchanged. Any rewording that would appropriately respond to an amended Issue 3 should be applied to Objective 2 and related Policies.

3.3.3 The wording of Objective 2 is so appropriate that it is difficult to see how it could be

amended with advantage. However, the benefit of its simplicity – especially in the context of Issue 3 – is that its Policies can be suitably enhanced without any difficulty as to upstream continuity and provenance.

3.3.4 Policies 2.2 and 2.3 are on point with the focus of this Report. It is considered

appropriate to introduce more specific provisions by way of the enhancement of these Policies, as outlined below.

3.3.5 A policy which may be implicit from the interpretation of Policies 2.2 and 2.3 but is

not explicitly stated is suggested. Its draft wording would suggest that it becomes Policy 2.2, while its thrust is completely consistent with, and a specific extension of, Objective 2.

"2.2 To avoid the undue use of industrial land for other than core industrial purposes

or activities."

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Such a Policy statement would provide a clearer basis for the ensuing Policies and for

more explicit rules in regard to the cumulative effects of retail and/or office developments in the Zone.

3.3.6 If the additional Policy is adopted, renumbered existing Policies would need little or

no amendment, to complete the Policy suite under Objective 2. Consideration has been given to a wording change to the first of these incumbents, but at the end of the day, its first clause, the purpose of which would be clarified by a new Policy 2.2, need not be amended in order to justify a tightening of subsequent rules and criteria.

3.4.0 The Explanation to Objective 2 3.4.1 There is clear scope to amend the operative text after the fourth paragraph on p12-7.

Such amendments could well incorporate references to (among others): (a) the matter raised in paragraph 2.1.3; (b) ditto in relation to paragraphs 2.1.1 and 2.1.2; and (c) replacement of the word "Unrestricted" in the fifth paragraph, with a suitably

less absolute term, plus consequential changes. 3.4.2 It is neither appropriate nor possible to be more specific, for the purpose of this

Report. 4.0.0 THE INSTITUTIONAL ZONE 4.1.0 Issues 4.1.1 The existing Issue statements lie outside the author's expertise and in any event do not,

explicitly at least, touch upon distributional matters. The author is unsure whether a suggested change below requires some specific reference in the Issue statements.

4.2.0 Objectives and Policies 4.2.1 Objective 1 and Policy 1.3 are the only higher order provisions conceivably under the

spotlight in the context of the current exercise. The latter could be strengthened by the addition of a clause such as :

"… ancillary to an institutional activity and also complementary to business activities

established in other zones."

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4.3.0 Explanation 4.3.1 Such an addendum would desirably be given context in the p19-4 passage after the

Policies, along these lines: "… However, the Council will not allow within the Zone, a duplication of activities (for

example, of retailing and related commercial activities legitimately established nearby) to an extent that would threaten the sustainable management of the Zone or Zones concerned."

4.3.2 The kind of survey work referred to in paragraphs 2.1.1 and 2.1.2 would usefully

extend – but probably more by way of enquiry than a physical visit – to the Institutions concerned. One subsequent way of giving effect to the Policy change would be to reduce the rule thresholds, so it would be appropriate to ascertain the extent, if any, to which the incumbent levels have been achieved.

5.0.0 THE AIRPORT ZONE 5.1.0 Transportation Issues 5.1.1 The Issues stated at topic 20.2 of the Plan do not in any way indicate concern about

distributional effects, with the reciprocal provision that retailing, restaurants, takeaway bars and licensed premises are permitted Airport Zone activities. Prospectively changing that status calls for additional higher level provisions which in turn reflect a perceived issue. It is therefore suggested that a new Issue be introduced. Issue 5 concerns the airport, but at a macro level, possibly unsuited to expansion for the purpose of the prospective plan change. However, it may be considered appropriate to simply add a few words to the current Issue 5 text, so that it concludes as follows:

"… on adjoining residential areas and business zones." 5.1.2 The alternative approach would be to introduce a new Issue 6 (with consequential re-

numbering). Such an approach would enable the Issues and the Plan to recognise that ancillary business activities at the airport are indeed part and parcel of its "efficient operation" and "the reasonably foreseeable needs of future generations", as incorporated in Issue 5. Wording along the following lines is indicative only:

"6. The prospect that business activities, in particular retailing activities (beyond those

reasonably complementary to the efficient operation of the airport) could establish, to the possible detriment of longer term airport needs and the sustainable management of existing business zones."

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5.2.0 Explanation 5.2.1 The last paragraph of the p20-4 Explanation provides an opportunity to clarify such

additional passage or passages in the Transportation provisions as are deemed most appropriate.

5.3.0 Objectives and Policies 5.3.1 Objective 1 is devoted to promoting the airport operation, while Objective 2 focuses

on avoiding potentially adverse effects. It is considered appropriately worded as it stands.

5.3.2 The existing Policies are not suited to amendment in the context of the contemplated

plan change, so it is recommended that a new Policy, 2.3, is introduced, along these lines:

"2.3 To avoid the undue use of airport land for other than core airport purposes or

activities." It is noted that this is a parallel wording to that proposed at paragraph 3.3.5. In

conjunction with the expanded Transportation Issues (topic 5.1.0) it is considered that such a Policy would provide provenance for whatever amendments to the Zone rules are subsequently considered appropriate.

5.4.0 Explanation 5.4.1 It will be appropriate to add a further paragraph at p20-30, to further contextualise the

new Policy. 6.0.0 CONCLUSIONS 6.0.1 The foregoing proposals are advanced as a draft framework, to focus attention on the

available options and enable a more efficient evaluation by other parties to the exercise, having regard to the dictates of s32.

6.0.2 They also reflect the nub of the author's opinions (albeit without participation in wider

discussions) and therefore provide an assurance that final provisions which broadly incorporate the above proposals can be fulsomely supported in evidence, if that is called for.

MARK TANSLEY 22 March 2012

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TABLE OF CONTENTS

Reference Topic Page

1.0.0 CONTEXT 1

2.0.0 ISSUE 3 1

3.0.0 OBJECTIVES & POLICIES 2

3.1.0 Objective 1 2

3.2.0 Objective 2 3

4.0.0 ENVIRONMENTAL RESULTS ANTICIPATED 4

5.0.0 THE RULES 4

5.1.0 Permitted Ancillary Activities : Meaning of Ancillary 4

5.2.0 Permitted Ancillary Activities : Extent 6

5.3.0 Suggested Amendments for Permitted Ancillary Activities 7

5.4.0 Suggested Amendments / Additions to Rule 12.6.1 9

5.5.0 Non-Ancillary Permitted Activities 10

6.0.0 DISCRETIONARY ACTIVITIES 10

6.1.0 Restricted Discretionary Activities 10

6.2.0 Full Discretionary Activities 12

1.0.0 CONTEXT

1.0.1 Stage 1 reporting on the changes, including those within Plan Change 9, involved the

review and discussion of operative Objectives and Policies for the Industrial, Airport

and Institutional Zones in the City Plan, concerning their strategy and provision for

commercial activities (the March Report). This subsequent report extends the

discussion about provisions in the Industrial Zone.

1.0.2 The suggested earlier approach for the Industrial Zone was reviewed and generally

commended by Opus Consultants, primarily responsible for managing Plan Change 9

through its drafting, s32 evaluation and evidential processing.

1.0.3 This second report builds upon the earlier work, developing the implementation

possibilities that could give effect to amended Issues, Objectives and Policies for the

Industrial Zone. The report was earlier circulated in draft form, on which feedback

was received. This has been accommodated in this 12 July final version.

2.0.0 ISSUE 3

2.0.1 It was considered appropriate to add the following words, or words to the same effect,

to this Issue:

"The effects, including cumulative effects of industrial …"

2.0.2 Such an amendment requires an explanation. It is suggested that a passage be added

within the current sixth Explanation paragraph, to the effect that two paragraphs are

created:

"This would raise two concerns. Firstly, it would quickly lead to the inefficient use and

further development of the physical resources, particularly buildings and infrastructure

which have already been developed within the business areas to meet the needs of

business activities. Secondly, it would displace industrial activities which would then

have to try to establish in areas, such as the rural area, where their potential adverse

environmental effects would be much harder to control. Both these concerns are a

reflection of the propensity for cumulative effects to arise, where repetitive consents are applied for and granted, to enable retailing and/or office activities.

Additionally, Equally retail and office dispersal into the industrial area is likely to bring

with it demands for higher amenity standards, particularly with regard to provision for

pedestrians and parking. This would lead to an inefficient allocation of resources into

these areas, as these facilities already exist within the business areas and would once

again assist in displacing industries where their activities created adverse effects on the

new 'higher quality' amenities."

2.0.3 The last sentence above is perhaps unclear and capable of better redrafting, quite apart

from the implications of Plan Change 9's proposed introduction.

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3.0.0 OBJECTIVES & POLICIES

3.1.0 Objective 1

3.1.1 This is a matter which escaped attention in the March Report, essentially because there

was nothing at the Objective and Policy level seen as inappropriate or inconsistent

with the thrust of proposed Plan Change 9. It has been brought to the fore during this

report's evaluation of the Permitted Activity Rule (topic 5.1.0).

3.1.2 Policy 1.2 provides as follows:

"To enable activities which are compatible with, and complementary and ancillary to,

industrial activities to establish within the Industrial Zone." (underlining added)

At face value, this appears to be an appropriate Policy. The underlined words are

however cumulative, meaning that the non-industrial activities covered by the Policy

must be:

• compatible with industrial activities; AND

• complementary to industrial activities; AND

• ancillary to industrial activities.

3.1.3 However, when one looks at Rule 12.6.1(vi), performance conditions (a)-(c) give

effect only to the ancillary aspect of the Policy, whilst the activity list in (vi) (d) is not

reliant on ancillary status, effectively giving effect to the Policy provisions requiring

compatibility and complementarity. There is therefore, a disconnection between the

Policy and Rules. Performance conditions (vi) (a)-(c) are the subject of further

comment in this report, but only minor change is proposed to provision (vi) (d). It is

therefore considered that the Policy's cumulative provisions (ie those underlined

above) are unintended, as well as unnecessary.

3.1.4 It is therefore suggested that the Policy be re-written and split, along the following

lines:

"To enable retailing and office activities which are compatible with, and complementary

and ancillary to industrial activities on the same site to establish in a limited manner

within the Industrial Zone.

To enable limited commercial activities of a kind compatible with industrial activities

and not fundamental to either the functional amenity or urban form of Business Zones to establish within the Industrial Zone."

3.1.5 The proposed distinct Policy provision concerning ancillary retailing and office

activities may be more clearly given effect by the introduction of new definitions.

Section 4 of the Plan already contains a definition of "Ancillary Institutional Activity".

This possibility is taken further in sub-topic 5.0.0.

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3.2.0 Objective 2

3.2.1 It is not considered necessary to amend the Objective,. However, discussion at and

from paragraph 6.1.6 raises the question as to whether retail and office activity

"policies" in Rule 12.9 would be better expressed under Rule 12.3, by either tweaking

or expanding the Zone Policies. Some policy aspects at R.12.9 are not expressed, or

fully expressed in the Policies to give effect to Objective 2, or to a lesser extent, in

Policies under Objectives 1 and 3. Should any such changes be made, the Zone

Policies would be strengthened, while anomalous provisions in R.12.9 could be

removed, without losing their force.

3.2.2 Howsoever the Policy suite may emerge, the Explanation should be expanded as

follows (with some rearrangement of operative passages) to incorporate the matters

considered to be necessary in the amended Policies and subsequent Rules:

"Residential and retail and office activities have a role to play within the industrial area,

however it must be appreciated that:

The City's industrial areas do not provide or maintain the level of residential amenity

found within the city's residential areas;

The City's industrial areas have been specifically provided for and developed to

accommodate industry, and represent a significant community investment in land and

infrastructure for industrial purposes;

Inner Industrial areas close to the Central Area's Outer Business Zone were rezoned to

Fringe Business Zone in 2008, to recognise their existing commercial activities and

their potential to provide an additional, differentiated precinct for certain types of

retailing. To the extent that this has provided greater commercial opportunities in

former Industrial areas, it has reduced the justification for so providing in the

Industrial Zone;

A review of Industrial Zone resource consents for the 11 years to 2011 revealed that

two-thirds concerned parking (56%) and landscaping (10%) matters, while nearly a

quarter involved building height, set back, signage and outdoor storage. Around 10% related to the provision of non-industrial activities, including retail (6%) office (2%)

and retail & office (1%). Given the extent to which retailing and office developments

call for higher parking standards, it is important to avoid or minimise their cumulative

take-up of Industrial Zoning;

Existing industrial areas do not provide the level of pedestrian, retail and office amenity

(i.e. covered walkways) commensurate with established business areas. Given the city's

focus on reinforcing the vitality of its existing business areas through streetscape

improvement projects, and the cost attached to such projects, it is unlikely undesirable

that similar works would be considered within industrial areas in other than a limited

manner;

The City has established business areas where substantial investment has occurred to

accommodate office and retail activities and generally satisfy the amenity and functional

requirements of these activities (i.e. pedestrian access and covered walkways,

…/

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streetscaping, large public and private car parks etc.). Unrestricted Cumulative retail

and office development within industrial areas would undermine established business

areas, and community investment within these areas;

Retail and office development within industrial areas could also have a detrimental effect

…." (amendments in bold or strike-thru)

4.0.0 ENVIRONMENTAL RESULTS ANTICIPATED

4.0.1 Clause 2 at 12.5 of the Plan relates to the emphasis of proposed Plan Change 9, but

could usefully be expanded without simply repeating the suggested precedent

amendments. Something along the following lines is indicated:

"2. The efficient use of physical resources within the Industrial Zone through their use

providing for industrial purposes activities, whilst minimising overlap with

business activities."

5.0.0 THE RULES

5.0.1 Proposed / suggested amendments in 2.0.0 – 4.0.0 above are essentially (apart from

topic 3.1.0) little more than a carry-over of the March Report's considerations, so

suggestions have been set out quite specifically, with minimal discussion. However,

the Rules have not previously been considered, so there is more ensuing discussion

and less specificity about the suggested outcomes.

5.1.0 Permitted Ancillary Activities : Meaning of Ancillary

5.1.1 As noted at topic 3.1.0, provisions at Rule 12.6.1(vi) (a)-(c) give effect only to the

ancillary aspects of operative Policy 1.2. They have no other high-order provenance.

Despite this clear Policy thrust, the wording used in the Rule is far from a guarantee of

ancillary status. Indeed, the term "ancillary" is only used in the wording of

R.12.6.1(vi) (b) (ii), and then in a manner capable of implying that the other provisions

do not concern true ancillary activities. It will be necessary to overcome this

constraint to ensure that the Rule appropriately gives vent to the Policy.

5.1.2 The relevant wording in other respects uses the following qualifier:

"… a building or part of a building used by any activity …"

…/

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Setting aside the Policy constraints, this wording could well be interpreted as

permitting a retail activity to operate within a larger building in the Industrial Zone,

provided the building has an appropriately scaled larger activity in it. There is no

explicit requirement for the activity to be part of and ancillary to its neighbouring

activity.

5.1.3 The purpose of the "ancillary" rule is to formalise the ability of any industrial activity

to sell the products it creates, assembles or otherwise enhances "ex factory". It is

arguably not a rule to enable traders solely concerned with distributing goods at

wholesale to set up retail premises, but this is not a practical option for trucking,

courier and similar firms not undertaking a true wholesale function. It is – in any

event – impossible to stop large wholesalers from selling to staff, families and by any

other limited form of customer "qualification", so it is not practical to try to prevent

such ancillary activities. However, in the absence of the creation of recognisable

retail premises, such propensities pale into insignificance compared with other

legitimate ways to bypass bricks and mortar shops, notably through direct selling

based on the internet and television marketing.

5.1.4 It is therefore considered that the "ancillary" retail connection needs to be more

explicitly made in the wording of Rule 12.6.1(vi) (a)-(c). This is one aspect of the

amendments considered necessary, to give effect to the relevant suitably worded

Policy.

5.1.5 The author has no knowledge of the extent to which the ancillary office development

Rule has been tested or found wanting, so the ongoing focus of this report is mainly on

retail activities. However, it would appear inevitable, both that industrial businesses

need offices and that office space would not normally require more than a relatively

small part of their gfa. 35% seems a generous "default position" for the Plan's

Permitted Activity Rule. It is subsequently postulated (paragraph 5.4.1) that for

normal self-sufficiency, 20% would be an appropriate proportion. However, that

percentage is open to challenge.

5.1.6 The current exception under R.12.6.1(vi) concerns activities that use industrial

properties as yards, for storage and/or sales purposes. Such activities do not need or

use any or any significant enclosed premises for an industrial process, but still need an

office. Examples are businesses that deal in house removals, where their stock-in-

trade is stored on site, and automotive and marine suppliers where their stock is

mainly displayed in an open yard.

5.1.7 Another matter considered worthy of comment is the dual approach to office activities

touched briefly upon in the previous paragraph. There is no retail equivalent in Rule

12.6.1(vi), meaning that sole use of a discrete building for retail purposes is not

Permitted. From a dispassionate viewpoint, a primary purpose of the Rule, in giving

effect to the Objectives and Policies, is to avoid or mitigate the effects of uncontrolled

retailing outside, but in competition with, the Business Zones. Whether such activity

as is considered unable to have these effects (and therefore be Permitted) arises in an

ancillary building or within the main building is irrelevant.

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5.1.8 In the ensuing discussion about the retail rules, the foregoing comments are not

repeated, but the distinction is seen as a live one, to be addressed in whatever final

amendments are adopted (and therefore in the applicable part of the s32 evaluation).

The points are again touched upon in topic 5.3.0, concerning Permitted office

activities.

5.2.0 Permitted Ancillary Activities : Extent

5.2.1 Rule 12.6.1(vi) (a) determines the extent of permitted retailing by reference to a cap of

500m² or 35% of the gfa of a building, whichever is less. The common point of these

provisions is a building gfa of 1,428m², of which 500m² is 35%. However, Rule

12.6.1(vi) (c) provides that for combined office and retailing activities, up to 50% of

the gfa of a building can be so used, so long as neither retailing nor office components

exceed their individual thresholds of 35%. These provisions are confusing and have

the potential to be more permissive (for retailing) than is intended.

5.2.2 All retail businesses need an office function, albeit this can be off-premises for some

or the most part. Office space tends to relate – within particular retail categories – to

the turnover of the retail operation, rather than the size of the premises. To the extent

that office space is also more loosely taken as including space for cleaning equipment

and for staff facilities – lockers, toilets and rest areas – as well as eating / tea-making

and bench space, it is also linked to the payroll count at peak times. Whereas some

back-of-house office functions can be off-premises (eg non-day-to-day accounting

functions, the compulsorily kept seven or more years of records of all transactions for

IRD purposes, reserve supplies of packaging, stationery and office perquisites and

seasonal decorations) most or all of such space is usually on-premises, other than for

very small retail operations.

5.2.3 In addition to the "office" functions discussed above, all retailers need back-up space

in which to receive, record and unpack inwards goods, prepare them and/or store them

for subsequent display, repack for despatch when not being physically carried out by

customers and for holding the likes of lay-bys and faulty / unsatisfactory merchandise

for return to suppliers. Bulky and perishable goods require substantial back-up areas

for such aspects of the business.

5.2.4 In the case of retailing ancillary to a predominant use, it is therefore unavoidable that

the so-called retail activity will comprise a retail showroom, which is unequivocally

retail, plus the back-of-house functions discussed above, which will physically merge

with the main industrial activity (assuming there is one). A manufacturer or

wholesaler of goods wishing to open an ancillary "factory" outlet is not going to

provide separate identifiable office and staff areas for the retail operation, whilst much

of the shop's other back-of-house activity will likewise be merged with the

predominant activity within the premises.

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5.2.5 All the foregoing begs the question as to how it is possible to ascertain whether an

ancillary retail activity is within Rule 12.6.1(vi) (a) or (c).

5.2.6 A provision for up to 500m² / 35% is a very generous one, bearing in mind the

impracticality of ensuring that the standard is objectively adopted. A stand-alone

retail outlet of 500m² gfa could yield 300-400m² of trading space / merchandising

area, depending on the use to which it was put. 500m² gfa is a size of retail unit

equating or exceeding the lower end of defined "large format stores" in those district

plans that have adopted such a definition for widespread use. It is considered

unnecessarily generous in Palmerston North's case, for ancillary activities; a large

format store can hardly be described as ancillary; it may technically be a minor part of

the building, but 500m² is a significant shop, when compared with all other shops in

the City. Furthermore, a shop purporting to occupy 500m² could in reality be more

like 600m² or more, if shared back-of-house space was objectively brought into

account.

5.2.7 It is therefore suggested that two significant changes to the Rules concerned be

introduced:

1. Replace the reliance on retail gfa with reliance on merchandising area, to avoid

the assessment of associated back-of-house activities.

2. Reduce the literal extent to which an ancillary retail activity is permitted.

5.3.0 Suggested Amendments for Permitted Ancillary Activities

5.3.1 Having regard to both of the above topics, as summarised in paragraphs 5.1.4 and

5.2.7, three generic amendments would be appropriate, concerning ancillary retailing.

These involve ensuring that Rules 12.6.1(vi) (a)-(c) relate only to truly ancillary

stores, limiting the extent of those stores in a more relevant and measurable manner,

and reducing that extent to better reflect the intent of the Objectives and Policies.

5.3.2 Insofar as the quantitative changes are concerned, it is considered that as-of-right

status to establish ancillary retail shops in the Industrial Zone should be framed

conservatively, with a fall-back Discretionary threshold. The suggested Permitted

threshold is 200m² of merchandising area, equivalent to a retail gfa of 270-300m².

5.3.3 As a proportion of gfa, it is considered that the operative threshold provision of 35% is

too high, especially given the potential for this to be mainly or totally devoted to

showroom space, implying a possible actual provision of 45-50%. It is considered

that using a Permitted merchandising area of no more than 15% of gfa would be more

appropriate, implying a true gfa of 20-25% of the total relevant gfa. This is a similar

reduction to that of the recommended absolute merchandising area cap, from an

implied 350-400m² to 200m². The proportionate and absolute Permitted thresholds

would merge at 1,332m². A 100m² showroom would be possible within a gfa of

666m², which would appear to be a very generous standard. Page | 7

5.3.4 Matters raised concerning R.12.6.1(vi) (b) in paragraphs 5.1.1 and 5.1.5 have been

taken into account in subsequent recommendations concerning specific amendments to

this provision. However, as a matter of principle, the sub-rule at (vi) (b)(i) is as vague

as the retail rule that precedes it, insofar as its true ancillary status is concerned. The

exception in sub-rule (b)(ii) applies to the possibility that an industrial activity might

prefer to have its office in a discrete building, rather than as an integrated component

of a structure mainly devoted to its primary function. The less than clear but possibly

implicit need for ancillary status in sub-rule (b)(i) is not present in sub-rule (b)(ii).

However, sub-rule (b)(ii) places little effective control on the proportionate Permitted

extent of ancillary offices, where they are provided in a separate building.

5.3.5 Scale is obviously a factor in situations where sub-rule (b)(ii) would come into force.

Setting aside the opportunistic possibility of so using an existing separate structure, it

would generally be more economic to avoid the cost of purpose-building separate

accommodation for newly housing any ancillary activities. However, the prospect

becomes more realistic for large industrial complexes, though these might generally be

expected to locate outside the general Industrial Zone (eg in the NEIZ).

5.3.6 The purpose of the constraints is two-fold; to not unduly use the Industrial Zone for

non-industrial occupations, and to not unduly disperse office floorspace which has

greater potential to contribute to the urban form and vitality of business areas, mainly

the IBZ. For some organisations however, the conjunction on one site of their

primary industrial activity and of their regional or national administrative centre (ie

HQ) may have significant advantages. There is no retail equivalent to this situation.

5.3.7 Because office activities can reflect high levels of employment, these days seen as

generally around 1 full-time employee for each 15m² of office space, a Permitted

provision for up to 35% of gfa to be devoted to offices would, for many industrial

activities, allow more office than industrial workers. Whilst that might well be

appropriate for activities of the kind mentioned at the foot of paragraph 5.3.5, it may

have already enabled an unnecessary level of office occupations to be housed in the

Industrial Zone. This is the underlying concern behind the comment made in

paragraph 5.1.5.

5.3.8 For the kinds of activity discussed in paragraph 5.1.6, the proportion of site coverage

currently permitted (10%) is high relative to the suggested reduction to R.12.6.1(vi) as

indicated below. The proposed reduction from 35% to 20% means that – for example

– a 2,000m² site, with a 40% building coverage of 800m², could incorporate 160m² of

ancillary office space. The same 2,000m² site, used for a non-manufacturing, non-

creative activity, would need fewer staff and less office space. The current provision

would enable 200m², higher than the recommended much more intensive use example

outlined above (160m²). A lower ancillary office area would therefore be appropriate.

It is suggested that the current 10% be halved,

…/

Page | 8

which would enable a permitted office on a 2,000m² site of 100m². This would be

additional to any non-office enclosed premises used, but would overlap sub-rule b(i)

as soon as use of other than yard space reached premises covering 25% of the site.

Survey work may confirm or otherwise the appropriateness of "5%".

5.4.0 Suggested Amendments / Additions to Rule 12.6.1

5.4.1 The foregoing recommendations and comments have been incorporated in suggested

amendments to R12.6.1(vi).

(vi) Ancillary Retail and Office Activity

(a) Retail Activity

No more than 500 200m² or 35 15% of the gross floor area of a building or part of a

building the premises used by any activity shall be used as merchandising area for

ancillary retailing purposes.

(b) Office Activity

(i) No more than 35 20% of the gross floor area (including any retail

merchandising area) of the premises a building or part of a building used by

any activity shall be used for ancillary office purposes activity.

Except where –

(ii) The activity predominantly utilises open yard space rather than enclosed

premises, in which case the gross floor area of ancillary office activity shall

not exceed 5% site coverage.

(c) Combined Retail and Office Activity

No more than 50% of the gross floor area of a building or part of a building used by any

activity shall be used for retailing and office purposes, provided any individual retail and

office components shall not exceed the standards in (a) and (b) above.

(c) Interpretation

For the purpose of this sub-rule:

(i) "Ancillary retailing" means the retailing only of goods manufactured or

assembled within the premises.

(ii) "Ancillary office activity" means office activity directly related to the

operation of the predominant activity in the premises and includes the gfa of

office work space, office equipment and storage space, dining space and staff

locker, toilet and rest room areas.

(iii) "The premises" means the enclosed gross gfa (excluding yard and parking

space) occupied by the predominant activity, including any space devoted to

ancillary office or ancillary retailing activities, whether in one building, part

of a building, or in more than one building in a contiguous or integrated

formation.

Page | 9

5.4.2 The foregoing proposal incorporates definitions that are specific to the Rule. This is a

precautionary approach to ensure that any amendments do not have wider Plan

implications.

5.5.0 Non-Ancillary Permitted Activities

5.5.1 The list of unconstrained Permitted commercial activities at R.12.6.1(vi) (d) remains

appropriate in principle, although it would be worthwhile to re-visit the provision for

"Licensed Premises".

5.5.2 Under the foregoing provision, a liquor store of unlimited size is permitted. It is

difficult to justify the listing of such outlets when other food specialists, like butchers

and produce outlets are excluded, at any size. It is therefore suggested that off-license

premises be excluded within the provisions of Change 9.

5.5.3 Licensed premises also include licensed restaurants and taverns, the distinction in

current terms often being one of emphasis, rather than scale. There are no serious

distributional grounds to exclude such activities from the Industrial Zone if demand

exists. However, such premises are less likely to establish within an industrial area

than on its edge, in locations offering good exposure to passing trade.

5.5.4 It is therefore put forward, as a matter for discussion, that a three-fold approach be

considered:

1. Provide for licensed bars and restaurants under the same constraints that apply to

unlicensed food and beverage outlets; ie Permitted, if less than 100m² gfa.

2. Provide for licensed taverns of less than 200m² gfa as Permitted activities.

3. Remove the general provision for licensed premises, from the (vi) (d) list.

6.0.0 DISCRETIONARY ACTIVITIES

6.1.0 Restricted Discretionary Activities

6.1.1 As matters stand, provisions affecting non-Permitted ancillary retail and office

activities are only provided for under this activity category. An increase in

proportionate share from 35% to 50% of the gfa of the occupied building or part-

buildings can be sought, by reference to five broadly stated criteria.

Page | 10

6.1.2 According to the Shorter Oxford English Dictionary, "ancillary" means "subordinate".

Various meanings given the latter word include "not predominant", "secondary" and

"minor". Earlier comments concerning the clarification of Permitted ancillary

activities apply equally here and would suggest that at 50%, or even close below that

proportion of gfa, an activity would not be ancillary.

6.1.3 Setting aside the technicalities, it is suggested that Restricted Discretionary status

would be appropriate for only minor breaches of the Permitted Activity standards,

providing flexibility, but not significantly. As a guide for the retail provisions, it is

suggested that the best approach might be to enable both Permitted thresholds to be

breached by up to 15% of the Permitted setting. That is to say, the maximum

merchandising area cap by 30m², to 230m² and the proportionate cap by 2.25%, to

17.25%. Such limited flexibility would enable the use of discretion without greatly

intruding into the role of full Discretionary. It becomes increasingly difficult to

justify ancillary retailing beyond what are considered already generous caps, unless in

the context of very strong criteria.

6.1.4 It is ultimately the regard that must be had to the highest thresholds that has

contributed to the foregoing suggestions.

6.1.5 Isofar as the office component is concerned, some consistency of relationship needs to

be established, as between the Permitted and Restricted Discretionary thresholds. An

equivalent to the retail approach would see the 20% threshold lifted to 23%.

6.1.6 The approach taken in Rule 12.9, concerning Restricted Discretionary is unusual, in

that after listing the aspects of activities which can be considered, there is no reference

to criteria. Instead, the ensuing topics are introduced as "policies". Insofar as the

three concerned with "Retail and Office Activities" are concerned:

• Policy (a) is consistent with Objectives 1-3, plus Policies 1.1 and 1.2; 2.1; and

3.1.

• Policy (b) is consistent with Objective 2, plus Policies 2.2 and 2.3.

• Policy (c) is consistent with Policies 2.2 and 2.3.

6.1.7 There are some aspects of the specific policies for Retail and Office Activities at p12-

22 that are not covered or directly covered in Section 12.3 of the Plan, though there is

no conflict. If the former were to be either partly re-cast as, or replaced by criteria, it

may be thought more desirable to adopt the second approach, and tweak the Zone

Objectives and Policies to explicitly encompass the policy concepts. The policies are

not worded as criteria and the extent to which they imply discretion can not be

devined.

Page | 11

6.1.8 Having regard to the suggestions and comments in paragraphs 6.1.3, 6.1.5 and 6.1.7,

the relevant operative policies on p12-22 are not directly related to the exercising of

discretion. It is considered that criteria appropriately provided in the Plan as guidance

concerning the use of discretion can and should be relatively focused, if the "overage"

between Permitted and Restricted Discretionary is only 15% of the former's standards.

Examples of possible criteria are:

"The extent to which the breach of permitted thresholds is occasioned by, or reflective of:

1) the physical characteristics or constraints of the premises and/or those parts of the

premises for which consent is sought;

2) the nature of the products to be displayed in a retail merchandising area and related

factors concerning their spatial requirements;

3) office staffing requirements and other statutory obligations concerning the provision

of dining, rest room, toilet, bathroom, locker and other related spaces, including

corridors and lobbies, for all employed or contracted office personnel normally

present in the premises."

6.1.9 It is beyond the scope of this report to consider other provisions that might be affected,

if the above proposals are considered, in principle, to be the most appropriate approach

under s32. However, it is noted that the other topics in Rule 12.9 are all dealt with by

way of policies, without criteria, so may be caught by any change in approach

concerning "Retail and Office Activities". It is also noted that the Explanation to the

latter "policies" would need to relate to the criteria adopted. This passage is also

inappropriate, to the extent that its context is the absence of an unrestricted

discretionary Rule governing these activities. In view of the uncertain extent of

amendments that may be needed, no attempt has been made to provide a draft

alternative text.

6.2.0 Full Discretionary Activities

6.2.1 It is considered logical to provide for Discretionary thresholds to define the outer

extent of what is appropriate for ancillary retail and office activity in the Industrial

Zone, so long as the thresholds remain clearly ancillary. It needs to be borne in mind,

in the latter regard, that a retail merchandising area cap implies a larger store area,

when allowance is made for back-of-house functions that are merged within the

predominant activity.

6.2.2 It is strongly considered that Plan Change 9 should effectively limit Discretionary

thresholds to no more than half again those adopted as the Permitted limits. That

would mean a 22.5% ratio, up to 300m² of merchandising area. In turn, 300m² of

merchandising area implies a stand-alone store of some 400m² gfa, near the low end of

the usually defined lfr threshold for Plans providing specifically for suburban lfr. In

Palmerston North's case, only the FBZ has rules on shop size, but the IBZ and OBZ

provide ample opportunity to establish shops both smaller than and above a 400m² gfa

module. Page | 12

6.2.3 As earlier noted, it would be appropriate, in terms of the Objectives and Policies as

amended, to require a rigorous assessment of Discretionary ancillary retail

development. Insofar as both retailing and offices are concerned, full Discretionary

criteria should include the Restricted Discretionary criteria, but also extend to the

wider Issues flagged and Objectives generated by those Issues. For example:

In relation to ancillary retailing:

(a) Whether or not there are particular reasons which mitigate against the

establishment of the sought merchandising area in a Business Zone, within

which the retailing activity is permitted.

(b) Whether or not there is Business-zoned property in close proximity to the

proposed retail merchandising area and if so, the nature of its activities and the

extent to which the consent, if granted, would be likely to become a de facto

extension of the Business Zone concerned.

(c) The extent to which the sought consent, if granted, would augment any existing

or approved retail merchandising area(s) within the Industrial Zone, and be

likely to create a potential de facto retail destination, by virtue of that cumulative

offer.

(d) The extent to which the sought consent, if granted, could have reverse sensitivity

implications for the Industrial Zone.

In relation to ancillary offices:

(e) Whether, and if so the extent to which the sought consent seeks to accommodate

administrative and related staff with responsibilities that extend beyond the

operation and function of the predominant activity.

In relation to both ancillary retailing and offices:

(f) The extent to which the sought consent, if granted, would contradict or

undermine the potential achievement of the Objectives and Policies for the

Industrial Zone, having regard to cumulative and precedent effects.

6.2.4 The above examples are illustrative only and therefore not set in the italic template

form used earlier. There may be other matters again, such as traffic generation, that

are well beyond the bounds of the author's discipline. Also, the operative

discretionary provisions appear to relate solely to the Napier Road Industrial Precinct.

Current criterion (g) concerns retail and office activities, while others may have

broader application, with the wider advent of unrestricted discretionary provisions.

The author is unable to usefully comment on that prospect.

Page | 13

6.2.5 Looking solely at the kind of provisions advanced in above paragraph 6.2.3, new text

would be needed to clarify the intention of the criteria, probably best inserted ahead of

the more specific explanatory passage on page 12-27. This should clarify that a

consent not complying with the restricted discretionary criteria will require rigorous

assessment and quite possibly public notification, given the extent to which the sought

proposals would, in principle, be inconsistent with the Objectives and Policies for the

Zone. The Explanation provides an opportunity to more specifically refer to those

aspects of the Issues, Objectives and Policies that determine the Plan's strategy, which

the Rules are framed to implement.

6.2.6 The final comment at paragraph 6.1.9 is even more applicable to the wording to be

considered for the Explanation concerning this new activity category. Its form will to

some extent be dependent on decisions to be made concerning Rule 12.9, so no

attempt has been made to suggest the content of the future passage(s) concerned.

MARK TANSLEY

12 July 2012

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