Archive | Forward thinking

Council valuation shows outer suburbs hit harder this time

Outer suburbs have captured more of the rise in Auckland’s property values in the latest 3-yearly valuation, dated 1 July and released (in broad terms) yesterday.

As it’s the value movement compared to what’s happening in other suburbs that determines whether the share of rates rises or falls, that means it’s the outer suburbs that are more likely to face higher rates increases.

That’s in contrast to the 2014 valuation, when residents in central suburbs were up in arms at facing a bigger increase in rates bills because their property values had taken a hike.

Property owners will receive their valuation notices from Auckland Council in the mail or via email from next Monday, 20 November.

The average rise in Auckland property values across all market sectors since 2014 was 45%. For residential it was 46%, commercial 43%, industrial 47%, lifestyle properties 57%, rural 35%.

Auckland Council chief economist David Norman said the rise in residential values reflected at least 3 things: “First, Auckland’s strong population growth over the last 3years has not been matched by increases in the number of new houses being built, and this has pushed prices up. Second, record low interest rates have allowed people to bid up prices to secure somewhere to live because housing has been in short supply. And third, the unitary plan has added a lot of value to properties that can now carry higher intensity residential development than before.”

Mr Norman said the largest movements in the outer suburbs appeared to be a result of higher demand in areas where property was less expensive.

Local board areas with the largest movements – an average over 45% – are in Waiheke, Otara-Papatoetoe, Papakura, Mangere-Otahuhu, Manurewa, Henderson-Massey, Maungakiekie-Tamaki, Franklin, Howick, Rodney & Upper Harbour.

Movements within the remaining boards ranged between 11-44%.

The rates impact

Auckland Council head of rates Debbie Acott said a big increase in property value wouldn’t necessarily mean a corresponding increase in rates: “We expected to see an increase in valuations since the last revaluation in 2014, so movements in the 40-50% bracket really aren’t a surprise.

“Generally speaking, the values in Auckland’s outer suburbs appear to be catching up with the 2014 revaluation.

“Areas that increased the most in the last revaluation – by & large central Auckland – are now moving roughly along the average. Those that didn’t last time – mainly outer Auckland – are the ones with the highest increases this time.

“Property valuations are used to help us work out everyone’s share of rates – they don’t mean that we collect any more money. However, we won’t know the impact of this revaluation on rates until we agree our next budget in 2018.

“Because of Auckland’s dynamic property market, and valuations only capturing a moment in time, they should not to be viewed as current market value.”

The council revalued 549,000 properties, including every piece of land except roads & waterways.

Individual property data will be available from next Monday, 20 November, at the Auckland Council website.

Before valuations are finalised, they have to be approved by the Valuer-general, who’s responsible for authorising rating valuations for the Government.

Auckland Council uses capital value, or CV, as its rating valuation method, measuring the likely price the property would have sold for on 1 July 2017. The new values will be used to help set rates for the 3-year rating period beginning on 1 July 2018.

The council didn’t mention it, but many people refer to the council valuation as CV as if it’s a valuation that’s updated outside the rating valuation process.

Links:
Individual property data
Indicative residential average change in capital value since last revaluation
Notes to indicative residential average change

Earlier stories:
29 June 2015: 2% get big rates hike, 22% get cut
25 June 2015: Council approves rates, transport levy & long-term plan after 2 close shaves
23 June 2015: Flurry of targeted rates will distort rates bills
19 November 2014: Council will recommend end to rates caps, but the vote was close
8 November 2014: Brewer pushes for higher uniform charge in rates bill
6 November 2014: 3.5% average Auckland rates rise now proposed
20 August 2014: Auckland valuations used as rates basis rise average 33% in 3 years

Attribution: Council release.

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Council by-election dates set

Auckland Council will conduct 2 by-elections after Cllr Denise Lee & local board member Simeon Brown were elected to Parliament last month. Both have now resigned from their council roles.

Ms Lee has resigned as Maungakiekie-Tamaki ward councillor to become MP for Maungakiekie.

Mr Brown has resigned from the Manurewa Local Board to become MP for Pakuranga.

Both represent National. Their resignations are effective from 12 October and the by-elections will be held in early 2018. Nominations will open on Friday 24 November and close at noon on Friday 22 December. Voting packs will be delivered from Friday 26 January and voting will close at noon on Saturday 17 February.

Attribution: Council release.

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Goff off to Europe to look for urban answers

Auckland mayor Phil Goff left yesterday on an extensive 16-day working visit to Europe which includes talks & conferences on urban regeneration, affordable housing & homelessness.

The itinerary itself is mind-boggling in its extent.

Auckland mayor Phil Goff.

Mr Goff starts his visit today with a wreath-laying & presentation of a bronze statue of 1905 All Black captain Dave Gallaher to the people of Flanders on behalf of Auckland.

He’ll also attend a high level CityLab mayoral conference in Paris, invited by former New York mayor Michael Bloomberg, whose foundation & other sponsors are meeting the cost of travel & accommodation there.

The mayor’s visit to Belgium is with the official New Zealand delegation participating in the centenary commemorations of the World War I Battle of Passchendaele. Dave Gallaher was one of 492 Aucklanders who died in the Battle of Broodseinde in the lead-up to the Battle of Passchendaele. The statue, sculpted by Malcolm Evans, is a smaller replica of the statue of Dave Gallaher that stands outside Eden Park.

Mr Goff said: “Every New Zealand family is touched by World War I in some way and my family is no different, having lost a great uncle on the Western Front whose grave I will visit.”

From Belgium, he goes to London to meet the incoming lord mayor of the City of London, William Russell, senior leaders & Greater London Authority officials from investment, urban planning & transport organisations. The lord mayor is elected for a year, whereas the more widely known mayor of London is elected for a 4-year term. Current mayor is Sadiq Khan.

Mr Goff will also discuss affordable housing & urban regeneration at the Prince of Wales Foundation. Topics will include congestion charging & value uplift created by public transport infrastructure.

From London, Mr Goff will travel to Paris for the CityLab conference: Urban solutions to global challenges, hosted by the Bloomberg Foundation, The Atlantic & the Aspen Institute and bringing together mayors from around the world to discuss innovation & urban governance.

Mr Goff said on his departure: “London is an incredibly diverse city that faces similar challenges of housing unaffordability, congestion & environmental harm brought about by huge population growth. There is much Auckland can learn from how London has funded investment in infrastructure & public transport, and managed growth.

“Citylab brings together mayors from around the world to discuss innovative ways to tackle growth, environmental protection & urban planning.”

Link:
CityLab agenda

Attribution: Mayoral release.

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Council looks at way forward from 2010 transition setup

Sprinkled through a huge document on governance, to go to Auckland Council’s governing body on Thursday, are a few points which are highly pertinent to the way the council’s various arms will work with one another over the next few years.

The governance framework issue arose largely because the local boards, established under the 2010 reform of local government in the Auckland region, didn’t have a clear role.

They could propose budgets to the governing body, but the governing body determined the eventual sums doled out.

The working relationship between local boards & council-controlled organisations (CCOs) was also unclear. Could boards tell the CCOs what should happen in their domain? Or should Auckland Transport, for example – whose domain includes roads & footpaths throughout the region – treat such places as its domain, so it’s not subservient to any board?

Early last year, the council commissioned an independent consultant, Gareth Stiven, to carry out a review which looked at the policies, processes, protocols & organisational support structures that had been put in place since 2010.

Since 2003, Mr Stiven has been business advisory manager at Auckland City Council for 5 years, the old council’s economic development group manager for the next 2½ years, a director in PricewaterhouseCooper’s finance & economics team for over 5 years, self-employed from the start of 2016 (the period when he conducted Auckland Council’s research) and, since the start of this year, strategy general manager for Housing NZ Corp.

Ward & local rate changes

Outside his scope for the Auckland Council review were fundamental changes to the governance structure or the structure of council-controlled organisations. Nevertheless, some changes are mooted in the eventual report, such as reducing the number of wards & boards (the region has 13 wards, 20 ward councillors, 21 local boards), and the possibility of local (distinct from regional) rates.

Mr Stiven’s work was followed by months of workshopping for local board members & councillors. The boards received the report last month so they could provide comment for the governing body meeting this week.

The political working group for the framework project, set up after Mr Stiven presented his report last December, was unusual in itself – membership of 7 councillors & 7 local board members.

This week’s report contains 36 recommendations for change, under 4 themes:

Organisational structures & culture have not adapted to the complexity of the model: The review found that the organisation had struggled to adapt to the unique & complex governance arrangements in Auckland, and that this had impacted on the quality of advice & support for elected members
Complementary decision-making, but key aspects of overlap: The review touched on a number of decision-making functions where there is overlap between the governing body & local boards, or a lack of clarity about roles
Lack of alignment of accountabilities with responsibilities: The review found that the system of decision-making creates incentives for elected members to act locally despite regional benefits
Local boards are not sufficiently empowered: The review identified that there are some practices that are constraining local boards from carrying out their role, including the inflexibility of funding arrangements and the difficulties in feeding local input into regional decision-making. It also noted some local frustrations in relation to transport decision-making.

3 workstreams

The political working party has traversed a wide range of issues under 3 workstreams: policy, finance & funding and governance.

It’s also established a fourth workstream on organisational support, to respond to the changes coming out of the review, and will look at how the council organisation supports local boards as well as implementation of improvements required with current support provision. This workstream will be reported back internally to the project’s executive steering group in November.

The political working party noted that “there needs to be more recognition, support & empowerment of local boards as governors of a discrete set of local services & activities.

It also noted that the council’s focus “has tended to be on the regional ahead of the local for the first 6 years. While this is understandable for the purposes of developing & harmonising a wide range of policies, plans & bylaws, it is not sustainable in the long term and is not consistent with the policy intent of the governance reforms.

“For example, one of the key issues that the working party has been grappling with is the funding & financial model that is currently in place, and how that constrains local decision-making & local flexibility. In effect, the Auckland Transition Agency put in place a model that locked in legacy funding arrangements & service delivery models that are now 7 years out of date.”

Input from one governance tier to another

The initial 2016 review identified a number of issues about the way regional policy is developed, including low local board awareness of regional work programmes, the time & resource required to seek local board input and variable advice to local boards. The political working party has recommended that a framework for local input into regional policies should be developed, including prioritisation & agreed mechanisms for seeking local board input.

The review concluded that there are limited incentives for local boards to consider local assets in a regional context, and that this can lead to conflict between the governing body & local boards. It recommended a ‘call-in’ right was considered: “The working party doesn’t consider a call-in right is desirable, but instead has recommended that staff provide explicit regional impact advice where local decisions may have regional or sub-regional impacts. “

In response to frustration among some local board members about transport decision-making & their ability to carry out their place-shaping roles, the political working party considered local boards had a critical role in local place-shaping and has recommended that:

  • Auckland Transport should be more responsive to local boards in their place-shaping role
  • there should be increased use of the existing accountability mechanisms available to the council to ensure that Auckland Transport complies with expectations on local board engagement
  • there should be a significant increase to the local transport capital fund (currently set at $10.8 million) and the exact amount & allocation across local boards should be decided in the 2018-28 long-term plan, and
  • the review of accountability mechanisms for council-controlled organisations should consider the use of section 92(2) of the Local Government Auckland Council Act for local board plans, which allows the governing body to direct council-controlled organisations to act consistently with plans & strategies of the council.

The political working party has recommended that a 3-year pilot project with the Waiheke Local Board be established to enable more local leadership and the development of policy for specific local issues. The pilot would be actively monitored and the findings considered for wider application.

The 2016 governance framework review report identified some issues related to funding & financing, in particular:

  • local boards do not have to balance the trade-offs of financial decisions in the same way that the governing body needs to e.g. local boards can advocate for both additional investment in their own area and lower rates
  • inflexibility of the current funding policies to empower local board decision-making. In particular local boards feel they have little or no control over the 90 per cent of their budget that is for ‘Asset Based Services’, and
  • inflexibility of the current procurement processes and definition of when local boards or groups of local boards can undertake procurement of major contracts.

The report to the council this week says the working party members working on the funding & finance workstream went through a number of options to address these issues: “The majority of local boards & the political working party didn’t support or recommend a model of local rates for local activities, applied generally, but 4 local boards asked to participate in a pilot of the local rates model of decision-making.”

  • The report to the governing body was produced by Linda Taylor, programme manager for the governance framework review.

Links to items on Thursday’s governing body agenda:
10, Governance framework review: Recommendations of the political working party
7.1, Local board input: Waiheke Local Board
7.2, Local board input: Rodney Local Board
10, Recommendations of the political working party
Policy issues    
Funding & finance    
Governance & representation    
Delegations test for Reserves Act decisions    
Waiheke Local Board pilot project proposal    
Summary of local board feedback    
Complete feedback & resolutions of local boards    

Attribution: Council governing body agenda.

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National talks new urban planning laws, business & environmental alliance says “Go further”

The National Party has been working steadily towards its latest election policy for most of its 9 years in government: new urban planning laws that would make it easier to build, and faster than the Resource Management Act.

It would incorporate parts of the Local Government Act & the Land Transport Management Act. The Resource Management Act would stay in place for non-urban areas.

Steven Joyce lining up some mud at Manukau in 2009.

But Resource Reform NZ, an alliance of 3 normally National-leaning organisations – the Employers & Manufacturers Association, Infrastructure NZ & the Property Council – plus the Environmental Defence Society, said yesterday the National proposal didn’t go far enough.

They want “an integrated governance, planning, funding & delivery system to guide resource management & national economic development”.

The catchcry: fit for purpose

The ministers releasing the party policy and the Resource Reform alliance used the same term as their base: fit for purpose.

The ministers (now spokespersons for the duration of the election campaign), Steven Joyce on infrastructure & Nick Smith on environment (but apparently not on building & construction) said in their campaign proposal yesterday: “A re-elected National-led government will introduce new fit-for-purpose urban planning laws separate from the Resource Management Act to encourage more responsive planning, faster development & better protection for the environment in our growing cities.

“New Zealand is growing strongly and we want to make it easier to build the housing & infrastructure for that growth while still ensuring our urban environments are some of the most liveable in the world.

“To do that we need to give our cities the ability to adapt & develop faster, while respecting & improving the urban environment – and the current planning system is not allowing that.

“The RMA’s one-size-fits-all approach has restrained the development of our cities, dragged on their economic performance and restricted the supply of much-needed housing & infrastructure.

“So National will establish a fit-for-purpose planning system that allows our cities to evolve in a way that improves the quality of the local environment, and makes them great places to live & work.”

Idea is to separate planning & environmental regulation

Nick Smith, also lining up some mud, in 2015.

Dr Smith said the new planning legislation would have clear & separate objectives for regulating urban & natural environments: “Over the past 9 years we’ve simplified the RMA and made it easier to build, but the RMA is only one part of the planning system, and we have reached the end of what can be done by making incremental changes to the act.

“We agree with a number of stakeholders that it is time to develop fit-for-purpose planning legislation dedicated to urban environments that includes the relevant parts of the Local Government Act & the Land Transport Management Act in one piece of legislation.

“So we will set up separate planning & environmental regulations specifically designed to encourage growth, while tackling the environmental challenges found in cities, such as air pollution & stormwater surges.

“This new legislation will work in parallel with our plan to put in place urban development authorities to redevelop specific brownfields areas in our cities to allow for more housing – the work for which is already underway.”

Dr Smith said National would “keep a close eye” on changes applicable to non-urban & rural areas through the existing Resource Management Act.

“National will start its urban planning reform process by consulting with key stakeholders, local government, iwi, experts & the public to develop fit-for-purpose legislation that works for cities.

“The successful Auckland unitary plan & the independent hearings panel review process shows we can put sensible rules in place that work for everyone. We want to use the same collaborative formula to create an urban planning system that enables growth, gives businesses the confidence to invest and adapts to the changing needs of cities.”

Reformists seek consensus for change, don’t detail their reforms

Resource Reform NZ reform of the resource management system needed to go much further. It recommended that this would be best addressed through cross-party consensus on the issue by a politically independent process, such as a commission.

Infrastructure NZ chief executive Stephen Selwood said: “We know New Zealand’s prosperity is being held back by the current framework the wider planning system operates within. It is no longer fit for purpose, and is why we find ways to work around the current system when we want to deliver the infrastructure that the county so desperately needs.”

Property Council chief executive Connal Townsend said: “The current unco-ordinated planning system is driving increasing housing unaffordability, the high cost of commercial development and reliance on outdated funding mechanisms such as rates & council debt. That means we’re simply not building enough, quickly enough with the quality & innovation needed to develop the cities & standard of living we all expect in the future.”

Environmental Defence Society executive director Gary Taylor said: “The environment is suffering too. The Resource Management Act is our pre-eminent environmental law. Yet the cumulative effects of permitted land use activities over the lifetime of the act have led to a slow but significant deterioration of the quality of our streams, rivers & lakes.”

And the fourth advocate for greater change, Employers & Manufacturers Association chief executive Kim Campbell, said: “For business, these issues are also stifling the ability to grow & expand. Which, in turn, also impacts employees & the families. Looking into the future, we face even bigger challenges in how we manage & respond to demographic changes, advances in technology, rising consumer expectations & climate change.”

Attribution: National & Resource Reform releases.

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Ardern follows well researched overseas thinking on rentals, some responses over-edgy, and 5-year-old Ahuri research is helpful clarification

Jacinda Ardern in her policy broadcast yesterday.

Labour leader Jacinda Ardern announced a set of new terms for residential tenancies yesterday, and was immediately – and predictably – told this would badly affect landlords and would have the opposite effect on New Zealand’s housing crisis to that she intended.

The Labour policy is along the lines of what is the norm in Germany, where tenants enjoy long-term occupancy, and also follows the thinking of AHURI – the Australian Housing & Urban Research Institute – in a paper written 5 years ago, How can secure occupancy in rental housing be improved in Australia?

Below: First the Labour policy, then some adverse comments, followed by the AHURI view.

A quick note: I’d thought of paying more attention than I usually do to election policy announcements, then thought better of it. For starters, I have more than enough to write about already. Second, a high proportion of wishlist & splurge electioneering has been vote-buying which can mostly be dismissed – or, if it does eventuate, watched extra-critically. This one, though, is a policy which will affect a large investor sector. If it follows the AHURI line of thinking it ought to be beneficial all round.

A family constantly on the move

To deliver her policy, Ms Ardern said down with a family who’d moved 4 times in 3 years, whose children had to move schools, and whose attempts to save to buy their own home had been set back.

“About 50% of Kiwis now rent their home, but too often their living situation is precarious,” Ms Ardern said.

Her promise: “A Labour Government will strengthen renters’ rights so everyone can have more stability. Not only will Labour increase the notice period for ending a tenancy, we’ll also end letting fees, limit rent increases to one/year, make all homes warm, dry & safe to live in, and much more.

“And for landlords who need to move on tenants who are breaching their agreement, we’ll make sure the tenancy tribunal is properly resourced, and that issues like anti-social behaviour are much clearer in the law.

“It’s about making renting fairer & more stable for both tenants & landlords – and is part of our comprehensive plan to fix the housing crisis.”

Policy: Making life better for renters

“For most people, renting used to be a short stage of their life before they bought a house and started a family. Now, it is becoming the norm. 3 out of 4 people under 40 years old rent, compared to one in 2 in 1991. Among older New Zealanders, the home ownership rate has fallen from over 90% in 1991 to 75% today. All up, half of New Zealanders now live in rental properties.”

Ms Ardern said renters’ rights were still designed around the assumption renting is a short-term arrangement for people without children and that renters will move frequently, rather than set down roots in their community.

The policy:

  • Increase 42-day notice periods for landlords to 90 days to give tenants more time to find somewhere else to live
  • Abolish “no-cause” terminations of tenancies
  • Retain the ability of landlords to get rid of tenants who are in breach of the tenancy agreement with 90 days’ notice, or more quickly by order of the Tenancy Tribunal
  • Limit rent increases to once/year (the law currently limits it to once every 6 months) and require the formula for rental increases to be specified in the rental agreement
  • Give tenants & landlords the ability to agree tenants on a fixed-term lease of 12 months or more can make minor alterations, like putting up shelves, if they pay double bond and on the basis the property is returned to the state it was in at the start of the tenancy
  • Ban letting fees
  • Require all rentals to be warm, dry & healthy for families to live in by passing the Healthy Homes Bill, introduced as a members’ bill by Ms Ardern’s predecessor as Labour leader, Andrew Little, and in the committee stage when the parliamentary term ended in August, and
  • Give landlords access to grants of up to $2000 for upgrading insulation & heating.

Notice periods

Ms Ardern said notice periods would be used where a landlord required the home to live in or had sold the property, the tenant had breached the agreement such as anti-social behaviour, failure to pay rent or causing damage to the property; or the landlord didn’t want to continue a fixed-term tenancy past its expiry: “This will mean landlords are still able to give notice to evict bad tenants. Landlords will still be able to go to the Tenancy Tribunal to ask for evictions or other remedies in the event of breaches of tenancy agreements.

“Most landlords operate with integrity and seek to provide decent accommodation at a fair price. These reforms will not affect them. What they will do is stop exploitative behaviour by a minority that is blemishing the reputation of landlords as a whole.”

Property Institute: It will worsen housing crisis

Ashley Church.

Property Institute chief executive Ashley Church said: “Labour’s new housing rental policies will scare existing landlords out of the rental market and will make the current housing crisis even worse – particularly in Auckland.

“The timing of these proposals couldn’t be worse. Auckland is currently in the grip of a serious housing shortage which affects both buyers & renters – and anything which deters investors from providing housing can only succeed in compounding that problem.

“If you’re an existing landlord, the deck is already stacked against you. The market has flattened, loan:value ratio (LVR) restrictions mean your equity position is worse, and bank credit rationing means that it’s now much harder for you to borrow money to do renovations & improve your position.

“Now Labour is telling you that, if elected, they’ll take away your right to terminate a tenancy and they’ll regulate the circumstances under which you can increase rents to make them comply with some as-yet-undefined Big Brother formula.”

Mr Church said these moves would come on top of a capital gains tax, pending a report from a yet-to-be-formed tax working group: “It doesn’t take a rocket scientist to recognise that Labour are already committed to a capital gains tax and that their tax working party will be made up of others who share that worldview. So, if you’re a property investor, the very clear message is ‘We’re going to get you’.

“That might make for good politics – but it risks doing long-term damage to the property market by scaring off mum & dad investors who are currently putting a roof over people’s heads.”

Mr Church said private investment was the key to solving the housing crisis and providing incentives to get people building new homes was the way to overcome the supply issue: “But no one is going to do that if they’re worried that they’re going to be regulated & taxed to death. Existing landlords will abandon the market and people who might otherwise have invested will stay away. Which means the State – which is just you & I as taxpayers – will be left holding the bag.”

First National chief also makes lopsided call

Bob Brereton.

First National Real Estate chief executive Bob Brereton said Labour’s proposals to change tenants’ rights “will severely, and negatively, impact on a landlord’s ability to protect their investment and will result in increased rents for tenants.

“The pledge to outlaw letting fees is a good example of a poorly thought-out policy with an unintended consequence: Letting fees are charged by professional property management companies to cover the costs associated with securing the right tenant. They then act as advocates for both the landlord & tenant to ensure comfort, safety & protection of the investment. If you remove letting fees, many management companies will be forced to increase management fees to compensate. This will simply force up rents.”

He was also concerned about the proposal to remove the right to end a tenancy, with 90 days’ notice, without cause: “This is simply ludicrous. There are many reasons why landlords might want vacant possession of a property, and infringing on these is a direct challenge to private property rights.

“A similar proposal to increase the provision to end a tenancy after 42 days, in certain circumstances, to 90 days will have a significant impact on property values. The 42-day provision is used, particularly, when a landlord sells a property and the buyer requires vacant possession or where the landlord needs to move back into it urgently, so this provision could impact on a landlord’s ability to sell.”

Brereton says regulating rent rises a no-no

Mr Brereton said one of the biggest challenge of Labour’s policy was the proposal to regulate market rentals by passing legislation to cap the amount by which rent can be increased. His example:

“A landlord buys a house, putting up say $200,000 of their own cash or equity, to provide a home for someone without one. They borrow $450,000 for the purchase at 5% interest and, paying only interest, it costs them $22,500 in interest, another $2000 for rates and $1500 for insurance ($26,000/year). This means they have to rent the property for $500/week, just to cover costs. Add in a 5% return on their equity and its $692. Anything less than that and you are just providing social housing.”

Overall, he said: “This risks being ‘the straw that breaks the camel’s back’. Landlords are facing negative returns, flat prices & the threat of a capital gains tax. If interest rates go up, as predicted, it would only take a small move in a flat market to convince many landlords to get out of the market.”

Australian research indicates similar issues left to fester

AHURI – the Australian Housing & Urban Research Institute – introduced a paper published in May 2012 this way: “More Australians are renting for longer periods, yet do not enjoy the benefits of secure occupancy. Changes to improve the security of occupancy in the Australian private rental system can be informed by international experiences.”

The paper was based on research conducted by Professor Kath Hulse at the AHURI Swinburne-Monash Research Centre, and Associate Professor Vivienne Milligan & Dr Hazel Easthope at the AHURI UNSW-UWS Research Centre. They examined the provisions for secure occupancy across rental systems in Australia & other similarly developed countries, and considered the potential to adapt these provisions to Australia.

Key points:

  • Secure occupancy is important in creating a home, regardless of tenure, and is a foundation for many aspects of wellbeing
  • The Australian private rental sector is characterised by relatively insecure occupancy compared to either social rental or home ownership
  • International experience demonstrates that it is possible to have a large private rental sector with smallscale investors & higher levels of secure occupancy for tenants. Changes to the regulatory framework and policy settings are required to achieve this.

This study argued that secure occupancy is linked to whether households are able to:

  • participate effectively in rental markets
  • access & remain in adequate, affordable & appropriate housing with protection of their rights as consumers & citizens
  • receive support from governments or other social service agencies if & when necessary to obtain &/or sustain a tenancy
  • exercise a degree of control over their housing circumstances and make a home, to the extent that they wish to do so.

European examples

Provisions for secure occupancy are stronger where rental systems are large, such as in Germany, the Netherlands & Austria, where, respectively, 60%, 43% & 30% of households rent. All of these might be categorised as integrated systems, with more uniform policy & regulatory approaches to rental housing.

While the latter 2 prioritise the social rental sector, the German system relies mainly on a private rental system. In these countries, secure occupancy in rental housing has been supported by supply subsidies. By contrast, other jurisdictions (Scotland, Flanders, Ontario, New Jersey & Australia) tend to have highly differentiated systems with strong security in social housing and relatively insecure occupancy in the private rental sector.

Largescale investment & professional management

Countries with large social renting sectors (the Netherlands, Austria, Scotland & Ireland) or higher corporate/institutional investment (Austria, the Netherlands, New Jersey, Ontario & Germany) also have a stronger tradition of professionalised management than in Australia.

This enables investor risks to be pooled and decisions about occupancy for individual households to be made at arm’s-length from decisions about investment.

Germany provides an interesting example, where, although there is larger-scale investment, most landlords are smallscale but are investing for the longer term, enabling more secure occupancy for tenants.

Legal provisions for secure tenure

There is a range of lease types across the countries studied. The typical practice in Australia of offering short-term fixed leases followed by month-to-month arrangements was only found elsewhere in Scotland & Ontario. New Jersey also has month-to-month arrangements, though these renew automatically unless a notice to terminate is given by either party. Other countries have the practice of longer-term or unlimited lease terms.

Of the jurisdictions studied, only Scotland compares with Australia in terms of having short-term tenancies that can be terminated readily without grounds. Even jurisdictions like Ontario & New Jersey have specified grounds for ending a private sector tenancy.

Supporting lease terms that meet the long-term needs of householders

Some jurisdictions have also been better at assisting people to personalise their dwelling and use the property according to their wishes, and so improve their autonomy. In the German private rental market, the standard lease provides capacity to personalise or even renovate the house and facilitates access to people with disabilities. These are only found in other jurisdictions on a lease-by-lease basis.

Links: Labour policy: renters
Ahuri, 14 May 2012: How can secure occupancy in rental housing be improved in Australia?

Attribution: Labour policy & release, Property Institute & First National releases, AHURI research paper.

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Council accounts show revenue & assets up, net debt below forecast

Auckland Council released its unaudited financial results for the June year to the NZX yesterday (because the council has listed debt securities), with more detail to come in 4 weeks.

The deputy auditor-general will complete the audit and issue an audit opinion on 28 September.

Group highlights include:

  • Revenue up 11% ($424 million) to $4.129 billion, ($3.705 billion in 2016), including
    • Rates $1.641 billion ($1.564 billion)
    • Fees & user charges $1.193 billion ($1.083 billion)
  • Operating surplus $340 million before gains & losses ($250 million)
  • Net debt (after cash on hand) up $486 million to $7.969 billion, but $467 million lower than forecast
  • Surplus after tax $640 million ($231 million deficit)
  • Total assets up $2.7 billion to $47.36 billion ($44.68 billion)
  • Net assets $35.78 billion ($33.65 billion).

Auckland Council Group acting chief financial officer Matthew Walker said the group’s financial performance “shows it is balancing the need for prudent financial management with the investment required to address the growth challenges Auckland faces.

“As a successful & increasingly global city, Auckland’s population is growing rapidly. This continually adds to the demands on our transport, 3 waters & community infrastructure such as libraries & parks. Yet the group results show the council is on track to deliver its largest programme of investment ever over the next decade, based on the adopted 2015-25 long-term plan.

In the last year, the council group (including council-controlled organisations such as Auckland Transport & Watercare Services Ltd) delivered $1.66 billion of investment, including its share of the city rail link, now co-funded by Auckland Council & the Government.

Mr Walker said the council sold down part of its diversified financial assets portfolio in August 2016 and issued debt in $NZ, Euro, Norwegian kroner & $A. Meanwhile, it continued to raise debt through the Local Government Funding Agency. He said low interest rates had contributed to a lower cost of funds during the course of this financial year.

“The council maintained its credit ratings of AA (stable) from Standard & Poor’s, and Aa2 from Moody’s Investor Services, confirming our prudent fiscal management and strong debt-servicing capability. These continue to remain among the strongest credit ratings in New Zealand.

“The council has begun the development of its long-term plan 2018-28. While group debt is projected to reach $11.6 billion by 2025, it will remain at a prudent level relative to our income.
“The group’s asset base is expected to grow from $45 billion to $60 billion over that same period to 2025.”

Capex highlights:

  • $310 million on water & wastewater infrastructure
  • $200 million on parks, sports facilities, libraries, community centres & facilities
  • $430 million on roads & footpaths, and
  • $288 million on public transport.

Link: Auckland Council 30 June 2017 accounts (on NZX)

Attribution: Council accounts & release.

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Matching infrastructure to population explosion a key Goff plank

Auckland mayor Phil Goff laid out his vision yesterday to build infrastructure at a rate that would match the region’s unprecedented population growth.

Some funding mechanisms are in place, and the council & Government have agreed bigger funding streams for some areas such as transport, but their budgets still show a $5.9 billion shortfall over the next decade.

The mayor said he would seek staff advice on options for broadening the council’s revenue base, which currently relies on rates to generate almost 50% of its funding. Other options include:

  1. the further development of special purpose vehicles funded by growth infrastructure targeted rates
  2. the application of the targeted rate on accommodation to the informal sector (eg, Airbnb)
  3. the sale of non-strategic assets, and
  4. likely proceeds from various road pricing options & practicality of implementation.

The mayor wrote his 8-page report to set the process going for the council’s 10-year budget (otherwise known as its long-term plan) for 2018-28.

The process now is for the council to run political workshops through September-November, finishing with a more concrete mayoral proposal which will go to more workshops in December, then out to public consultation in March and adoption of the plan on 27 June next year.

Mr Goff wrote in his release presenting the report:

“Our vision for Auckland is a world-class city where talent wants to live. It must be the city which can keep the best & brightest of our young people in New Zealand while competing globally with other cities around the world for skills, entrepreneurship & investment.

“My key focus is to build infrastructure at a rate that matches unprecedented population growth to maintain our quality of life and make it easier to do business in our city.

“Auckland grows by 45,000 people/year and is clearly a desirable place to live. This growth creates opportunities, but it also presents challenges in housing shortages & affordability, growing traffic congestion & pressure on our environment.

“The key to tackling these issues is our ability to lift investment in our infrastructure.

“Investment in public transport, including light rail, in active transport modes like cycling & walking, and optimising our road network is critical.

“That’s why, under our latest Auckland transport alignment project, we have set aside $27 billion for capital investment in the next decade. Currently, $5.9 billion of that is unfunded and has to be found.

“I welcome the Government’s commitment to meet the larger share of that, but Auckland will also need to contribute more.

“The 10-year budget needs to consider where we source our share of the funds.

“The interim transport levy is not user-related and does not raise sufficient funds. We can’t simply impose huge general rate increases to pay for infrastructure, so some form of road pricing will be essential.

“We need to build more houses more quickly. The mayoral housing taskforce makes recommendations which we need to move to implement.

“The unitary plan enables land development, but we need to invest in infrastructure to allow houses to be built. This will involve intensification of houses, as well as new developments under the future urban land supply strategy.

“Use of targeted rates as well as special purpose vehicles through Crown Infrastructure Partners will be essential. That also applies to protecting & enhancing our environment.

“Water quality is a top priority. We need to reduce wastewater overflowing into our streams & harbours. Building new water infrastructure will be our focus, including new wastewater interceptors & green infrastructure.

“While the council is looking for new sources of infrastructure funding, we must also get better value for the ratepayers’ dollar.

“It is time to realise the benefits of amalgamation to deliver further efficiencies & economies of scale made possible by the super-city.

“Findings from our group-wide section 17A value-for-money reviews will be critical, and I want the council to develop group-wide shared services.

“APEC [Auckland will host the Asia-Pacific Economic Co-operation forum leaders’ week from 8–14 November 2021] and the America’s Cup defence add impetus to our planning and provide the opportunity to create a lasting legacy for Aucklanders.

“We have the opportunity to make Auckland more prosperous, smart, innovative, inclusive & culturally rich, with a beautiful environment and choice & opportunity for all.

“With this as our vision and the investment we need in infrastructure, we will make Auckland a world-class city.”

Image above: Auckland mayor Phil Goff, on site shortly after his election as mayor last October.

Links:
Mayoral intent for the 10-year budget (long-term plan) 2018–28
10-year budget 2018-28 road map

Attribution: Mayoral release & plan document.

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Governance framework review a leading topic for local boards

In this round of local board meetings, all boards will consider the governance framework review (links taken from the Orakei Local Board agenda for its meeting on Thursday):

12, Governance framework review recommendations  
Attachments
Summary table of report recommendations    
Regional decision-making and policy processes    
Allocations and delegations    
Reserve Act land exchanges    
Local boards and Auckland Transport    
Confirmation of draft transport recommendations    
Waiheke Local Board pilot project cover paper    
Waiheke pilot project outline    
Funding and finance workstream paper 1    
Funding and finance cover paper July    
Funding finance description of 2 models    
Number of local boards    
Representation options    
Naming conventions

Who gets the name Wesley?

The Puketapapa Local Board will return this week to the topic of where in Auckland the suburb name Wesley should be used:

12, Notice of motion, official naming of Wesley suburb
Recommendation
Attachments
Notice of motion, official naming of Wesley suburb    
Wesley boundary map 

Airport access

The Puketapapa board also has airport access – light or heavy rail, and the route – on its agenda this week:

17, Airport access
Recommendation 
Attachments
Benefits of LRT and heavy rail to Aucklanders    
Auckland Transport board resolution    
Progression pathway

Three Kings plan change

And the Puketapapa board has a request for its view on whether a plan change request from Fletcher Residential Ltd to amend the Three Kings precinct, and to rezone some land within the precinct, should be accepted as a private plan change or adopted as a council plan change.

The council’s planning committee will make the council decision on how the plan change request will be treated.

21, Plan change proposal for Three Kings precinct 

Sediment discharge

After a submission from the Friends of Okura Group, the Hibiscus & Bays Local Board has received a report on sediment discharges from the Envirofill cleanfill site at 1627 East Coast Rd at Redvale, and the Weiti village development nearby, which has concluded the developments meet their consent conditions.

12, Envirofill & Weiti developments, sediment discharge inquiry

Attribution: Local board agendas.

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Access matters most

On this website, access is the most important consideration. The real estate catchcry, “Location, location, location,” relies on your ability to get there.

In Auckland, a 30-minute car journey can take 90 minutes, but estimating timeframes is also hazardous at pretty much any time of day.

The Government resolutely opposed rail innovation until the super-city’s first mayor, Len Brown, won the support to proceed with the city rail link and forged ahead, notwithstanding the funding gap as the Government sat on the sidelines. Eventually, this year, the Government signed up.

Cars have quickly filled the extra lanes on a short patch of the Northern Motorway and will quickly fill the Waterview tunnel & North-western Motorway expansions.

As I wrote 6 years ago about travelling on the western, industrial side of the isthmus: “Occasionally I stray into Neilson St, Onehunga, and quickly realise it was a mistake. There’s no need to be quick about the realisation, of course, because it’s going to be a while before you can escape.”

Construction of the East-West Link, the State Highway 1-20 road route through that western area, is before a board of inquiry, Mill Rd between Papakura & the southern edge of Flat Bush at Redoubt Rd & into Murphys Rd is becoming a more significant arterial and is now the subject of upscale talk, but the arrival of still more congestion isn’t being beaten.

Now, it seems, the third track on rail’s main trunk line will be built, and perhaps the fourth track as well.

Labour’s new candidate for prime minister, Jacinda Ardern, upped the ante yesterday when she said Labour would build light rail between the city centre & airport within a decade, extending to West Auckland in the same timeframe and later to the North Shore.

She would introduce a regional fuel tax, infrastructure bonds & targeted rates.

National’s finance minister, Steven Joyce, again ruled out a regional tax, which he’s previously argued is inefficient. So, too, is doing nothing while Auckland’s population grows by about 50,000/year, with 10-year projections from Statistics NZ of 29,000/year (medium) to 35,000/year (high).

A party in power for 9 years has no room for innovative policy without the audience asking why these policies weren’t already in place and, while both National & Labour issued transport policies yesterday, Miss Ardern had to have the front running.

We are set up, then, for a serious battle of wits over primary infrastructure & housing in Auckland – and the skilful politicians will at least appease the rest of the country, if not produce some sound economic offerings, so the election doesn’t just become about Auckland.

For the voter who thinks more about policy than party allegiance – and these voters, I think, are likely to decide who comes to govern – there are questions not just about policies but about strategies, and particularly funding methods.

Among those questions today:

  • Why has it taken so long to introduce new central government funding for extra housing infrastructure support?
  • Why has the Government steadfastly opposed new forms of tax, or a greater sharing of tax to support regional initiatives & infrastructure?
  • Why have key Auckland transport decisions been delayed so long in the face of record immigration?
  • Why is a board of inquiry examining one proposed section of transport infrastructure – the East-West Link – in isolation from other components such as the third & fourth sections of main trunk rail track and the future port location & consequent transport links?

Those are questions which are obviously aimed at the incumbent government. Other parties have released policies on some of these issues.

Labour has a policy to build, or finance the building of, an extra 10,000 houses/year and Miss Ardern talked yesterday of using a regional fuel tax.

The key transport – access – decisions need further input from all claimants for the government benches. The central issue is integrated decision-making, and the absence of such integration has long been a feature of central government (including bureaucrats) versus Auckland.

Attribution: Party speeches & release.

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