Archive | Growth strategies

Dickens takes aim, but the residential land fix is elusive

Rodney Dickens.

Property-focused economist Rodney Dickens took aim at the Government’s housing initiatives at the weekend.

Despite the valid criticisms, though, his harshest presentation of failure is aimed not at a single year’s performance by the present government but at 2 decades of failure by successive governments.

In doing so, Mr Dickens didn’t present a forward path.

His solution to escalating house prices is to fix section prices.

That in itself is not an answer. How do you fix? Who fixes? Where do you start?

This article comes in 3 parts:

  1. Mr Dickens’s key points in his latest Rodney’s Ravings report – which will fill you with horror although you’ve known the truth of them for a long time
  2. I will take you to some questions which I think need to be assessed, and
  3. To close, I’ll look at potential ways forward.

Now to the Dickens report:

The Government should do the obvious to fix housing affordability, says Dickens

Economist Rodney Dickens, owner & chief researcher of Strategic Risk Analysis Ltd, produced graphs at the weekend which show how far out of kilter residential section prices have gone.

Mr Dickens wanted to throw the spotlight on the role rising section prices have played in driving up new & existing house prices in Auckland and the similar story in all major urban centres except Christchurch, where the 2010-11 earthquakes set it on a different path.

KiwiBuild, one of Housing & Urban Development Minister Phil Twyford’s solutions to the slow construction rate, has experienced some teething problems: “Some people aren’t happy that it isn’t delivering new housing affordable to low income earners, while the extension of the ballot for the first 10 of the 211 KiwiBuild dwellings planned for Wanaka over 2 years may be a sign it will face indigestion problems in towns.

“More teething problems will no doubt arise. But the real criticism should be aimed at the Government’s housing initiatives more generally because they aren’t aimed enough at fixing the largest obstacle to more affordable new housing: high section prices.”

Mr Dickens’s graphs illustrate, at least in part, the role rising section prices have played in driving up prices for new & existing houses in Auckland.

Ironically, he said, the housing accord & special housing areas the National-led Government put in place in Auckland “may be belatedly starting to drive a hint of downside in sections prices. But it is far too little. Much more needs to be done to get down the cost of developing sections; it would deliver a real solution to the housing affordability problem.”

True extent of escalation much higher

Even the research he has done doesn’t show the true extent of land price escalation, because Real Estate Institute figures on section prices don’t take into account the shrinking size of sections.

Over the last 25 years, the average construction cost/m² for a new home in Auckland, based on consent data, rose 212%. The median section price rose 903% over the same period, but Mr Dickens said that because sections had been shrinking in size, the price escalation/m² for sections could well exceed 1000%.

“Obviously the cost of sections feeds directly into the cost of new dwellings, but section prices are also an implicit part of existing dwelling prices.

“A link between Auckland section & existing dwelling prices is evident in the chart below that uses the Real Estate Institute median prices. The difference between the existing dwelling price & the section price is the effective market value of the improvements, that is linked to a moderate extent to building costs.

“Between January 1993 & October 2018, the median section price increased 903% while the median dwelling price increased 514%. In the 12 months ended January 1993, the median Auckland section price was 41% of the median dwelling price, while for the 12 months ended October 2018 the median section price was 67% of the median dwelling price.

“In a country with an extremely low population density, it is madness that it costs more on average for a section than for the house built on it, even in the largest region.

“These increases, and especially the increase in section prices, look horrific when compared to the 68% increase in prices in general over the same period based on the consumers price index, the 111% increase in hourly earnings over the average employees & the 89% increase in the national average rent based on the CPI rent component.

“The causes of sky-rocketing section prices have been discussed elsewhere, including by the Productivity Commission. Relevant factors include massive increases in development contributions, council policies that effectively gave oligopolistic pricing power to landowners, and a drawn-out & expensive process for getting new subdivisions approved.”

Next, Mr Dickens compared the median section price reported by the Real Estate Institute for Auckland with the average cost of building/m² based on the new dwelling consent data: “While the median section price increased 903% between January 1993 & October 2018, the average cost/m² for new dwellings in Auckland increased 212%. Building costs have increased much more than prices in general & average hourly earnings – this is in the context of average hourly earnings most likely understating overall income growth for a range of regions not discussed here. But the increase in building costs is dwarfed by the increase in section prices.

“The increase in section prices is even worse than it looks because, since 1993, the average section size has fallen significantly. The average price/m² for Auckland sections will have increased much more than suggested by the median prices reported by the Real Estate Institute. Unfortunately, data are not available on section prices/m², but the increase will be well over 1000%.

“If Auckland section prices had increased in line with building costs, the blue line in the chart below suggests what existing dwelling prices will have done relative to what they actually did.

“If Auckland section prices had increased since 1993 in line with the average cost/m² of building new dwellings in Auckland, the median section price would be around $180,000 now rather than $575,000.

“By implication, the median existing dwelling price would be around $460,000 rather than $854,000 (ie, $394,000 or 54% lower). So why isn’t the Government (and the Auckland Council & councils in all major urban areas) doing more to get down section prices? If the problem of high section prices was fixed, the market would fix the new housing affordability problem without the need for the contentious & bureaucratic KiwiBuild ‘solution’.

“Maybe the problem lies partly with the other parties that Labour relies on for support? But the problem runs deeper than this. National had every opportunity to fix this problem when it was in government, but didn’t.

“Ironically, the minor fall in the weighted average Auckland median section price since early-2017 may be a response to the boost in supply from the 154 special housing areas approved following National introducing special housing area legislation in 2013. The 154 special housing areas were expected to add over 60,000 new dwelling sites in Auckland. But if it is, it is far too little & way too late. The special housing areas didn’t stop a massive increase in section prices since the legislation was passed in 2013 (ie, 69% based on the weighted average median price for the Auckland region).”

Links (for all 3 pages of this report):
Rodney’s Ravings, 17 November 2018: The government should do the obvious to fix housing affordability
2017, National-led Government’s urban development authorities discussion document
Solly Angel + 5 other contributors, essay 5 July 2018: The new urban peripheries: Findings for a global sample of cities, 1990-2014
Solly Angel
NYU Stern urbanisation project
Stern urban expansion initiative

Earlier stories:
16 November 2018: 3-way partnership to fund infrastructure for next big subdivision at Wainui
13 September 2018: Transport agency sets out project list
20 April 2018: Council approves quest for $300 million of government housing infrastructure money
24 July 2017: Ministers explain infrastructure funding deal
24 July 2017: New Crown entity will advance housing infrastructure
12 July 2017: Council gets $300 million infrastructure package, balance sheet-beating deal to come next
28 April 2017: Joyce lifts infrastructure intentions and talks new operating mechanisms
6 March 2017: Property Council joins call for new infrastructure funding
8 January 2017: Housing infrastructure fund call for final proposals imminent, and panellists required
26 October 2016: Goff talks up growth along with cutting congestion and revising funding
5 October 2016: Infrastructure frailty puts US financial woes in perspective
3 July 2016: 
PM talks $1 billion infrastructure fund, English talks payback frame, Smith talks grabbing more power
6 September 2007: Curtis loses fight to remove “compact” from development framework
11 April 2007: Expect 4-5 centres to be earmarked in growth strategy review

Articles on Productivity Commission:
22 August 2016: Commission sees government change as essential for urban planning
22 August 2016: Commission says everything English wanted on planning
19 August 2016: Government says it’s already implementing land for housing recommendations
 5 October 2015: Commission sends land for housing report to Government
19 June 2015: Commission looks behind high land prices
19 June 2015: Key points from land for housing report
2 June 2015: Productivity Commission draft on land for housing out in fortnight
 7 November 2014: Productivity Commission launches land supply regulation inquiry
13 April 2012: Productivity Commission misses key affordability point – again
4 April 2011: First inquiry for Productivity Commission is housing affordability

Productivity Commission releases:
11 May 2018: New inquiry into local government funding announced
2 March 2018: Why can’t Auckland build enough homes?
29 March 2017: Urban planning – moving beyond the wheel spin

Pages in this report:
1: Dickens takes aim, but the residential land fix is elusive
2: Things to keep in minds while focusing on fringe land supply
3: Cutting the margin without breaking the market…

Attribution: Rodney Dickens, Solly Angel.

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Things to keep in mind while focusing on fringe land supply

This is page 2 of a 3-page article based on economist Rodney Dickens’s weekend report, The Government should do the obvious to fix housing affordability.

In this section, I’ve raised other factors that need to be considered.

Things in the wider picture to keep in mind:

  • Keep in mind that a syndrome featuring in the Auckland & New Zealand pictures also happens to have featured worldwide: Housing prices have been escalating in many countries, not just New Zealand, which ought to raise the suspicion that there’s at least one element of common cause.

The common features internationally:

  • Unheard-of low interest rates, which lift asset values
  • Rising US public debt, now truly out of control, an influence on values exported worldwide because of the reserve status of the $US
  • Sharp & prolonged increases in immigration.

Near-term international influences which will make it harder to bring specific economic policies of countries & for sectors such as housing under control:

  • The US desire for control, seen at the moment through President Donald Trump’s trade war with China, pressure on Iran & increase in military spending
  • Likely for/against positioning regarding the South China Sea, Pacific islands (including New Zealand) support, various treaties & international agreements (particularly those involving Asia), ad African development

Those might seem like far distant influences with little likelihood of interfering in domestic issues down here, but look at them this way: When, as a country, you’re forced to take sides (and this will happen all too soon), your trade routes & relations can be seriously upset.

There’s also one issue peculiar to Australia & New Zealand, and another which both countries can start to rectify:

  • The peculiar local issue concerns the flow of migrants across the Tasman Sea, thataway when times are tougher here & expanding there, the reverse when jobs are harder to find in Australia and Kiwis come home.

New Zealand came out of the global financial crisis of 2007-12 (the years of greatest impact here) very well, courtesy of a leap in immigration. Australia has encouraged even more immigration than our previous government did, though as a lower percentage of total population, but other factors have reduced the boost there. The most notable factor is the price of mined commodities, combined with some uncertainty in the biggest market, China.

Reduced immigration by both countries would at least stabilise the pressure on housing, but would also reduce economic growth.

Auckland’s 2 key issues: land availability & price

The 2 key issues for housing in Auckland are land availability & land price. Less of an issue (although they’re still big) are construction costs & regulation. Infrastructure funding is also less of an issue than the certainty of providing it quickly in the right place.

Housing & Urban Development Minister Phil Twyford addressed infrastructure funding this week in a way which looks positive, but in reality shifts the cost burden from today’s buyer down the track as a fixed-in-place (& spreading everywhere in short time if it’s accepted) cost for all homeowners.

Why do I regard it as a “targeted” cost for all homeowners? Targeted rates have spread from a city-centre rate to local rates for services such as sewerage to a fuel tax. Development contributions paid (and factored into land pricing) by developers to local councils were seen as a short-term solution to infrastructure expense and will remain in place, but are increasing in Auckland. The new targeted rate will be an extra.

The division of rates into general & specific is turning up more specifics. At the moment, buyers in new subdivisions pay development contributions, and you will see that kind of cost spread to specific charging for replacing infrastructure in older suburbs.

In the short term, the Government’s infrastructure funding support measure, via Government-sourced loans (as a long-term depository for Accident Compensation Corp income) plus targeted rates on specified homeowners, gives more certainty to the supply of utility networks & roading. It will spread infrastructure costs from immediate into years hence – an addition to the mortgage.

Is the rural:urban boundary the real bogey?

There has been a campaign for several years for Auckland Council (& the regional council & regional growth forum before it) to abandon set rural:urban boundaries (the RUB) to free more land for subdivision and, through competitive pricing, thereby reducing land costs.

Through all that campaign, nobody has ever said how that open-slather approach would be applied. In particular, how infrastructure would be provided.

One method could be to impose regulations on urban-fringe land sales to control prices of sale & onsale – authoritarian, roughly applying the model brought in by National Prime Minister Rob Muldoon in 1982 to freeze wages, prices, interest rates & dividends, which lasted until he lost office to Labour in 1984.

Lifting of that freeze had the most telling impact on interest rates – first mortgage rates flew quickly as high as 30% – but also loosened the reins on mortgage lending.

Unitary plan changed the equation

Auckland Council’s unitary plan, mostly operative since October 2016, has done 2 things to encourage new housing. One is to make zoning through much of suburbia less restrictive, opening the way to more brownfields development through many existing suburbs, resulting in a wider spread of intensification.

The other is to ensure a supply of potential greenfield residential land is made available through rezoning, starting as land zoned initially as future urban, mainly on the fringes, and progressing to long-term zonings.

Despite the aim of the National-led Government’s special housing areas legislation to free more land for housing – pretty much anywhere – somebody had to supply infrastructure, and that was in the hands of the council, which was approaching debt ratio limits.

Through last week’s 3-way government-council-developer infrastructure funding agreement for the Wainui area west of the Hibiscus Coast in Auckland’s north-east, Government loan support in September for Auckland Council via the Housing Infrastructure Fund to get further development underway at Redhills & Whenuapai in the north-west, and the legislation to establish a national urban development authority (that’s been sitting on the rack since National introduced it in early 2017), funding uncertainty appears resolved.

Pages in this report:
1: Dickens takes aim, but the residential land fix is elusive
2: Things to keep in minds while focusing on fringe land supply
3: Cutting the margin without breaking the market…

Attribution: Rodney Dickens.

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Cutting the margin without breaking the market…

This is page 3 of a 3-page article based on economist Rodney Dickens’s weekend report, The Government should do the obvious to fix housing affordability.

In this section, I look at market answers, and ways to achieve change without destruction.

The central housing issue in Auckland, as economist Rodney Dickens presented it in his weekend Rodney’s Ravings, is the leap in house prices resulting from excessive land prices.

The market answers have been:

  • Shrink section sizes
  • Build 2-storey houses to keep their size up to expectations of 200m²-plus homes
  • Supply some smaller homes, cheaper, but still more expensive than they would have been if section prices had been held down.

Mr Dickens wrote: “If Auckland section prices had increased since 1993 in line with the average cost/m² of building new dwellings in Auckland, the median section price would be around $180,000 now rather than $575,000.

“By implication, the median existing dwelling price would be around $460,000 rather than $854,000 (ie, $394,000 or 54% lower).”

Politicians keep looking for ways to get the prices of new houses down, and KiwiBuild is part of that hope.

But is it realistic?

And if new housing does take a price cut, how does that affect existing housing?

The first requirement is to increase supply so there is no longer an acute shortage.

Small builders’ assessment of prospects a critical aspect

The Government can force the issue by using Crown land for subdivisions but, long-term, the country’s thousands of small private sector builders need assurance that prices aren’t going to plummet. That, as we know from experience, destroys small businesses, the country loses experienced tradesmen to Australia and New Zealand goes through the painful task of rebuilding expertise again.

Buyers also need assurance. Like the builders, buyers will have negative equity if prices plummet after they’ve signed up for their purchase.

Alternatively, all other costs rise to meet the already-escalated land & house prices – inflation, but somehow excluding housing. That would include rises in fixed incomes, such as pensions & income derived from interest. Interest rates would have to rise.

Oh, and the banks. They’ve just reported massive profits, but that doesn’t mean they’re ready for a house price shakeout.

For all these entrenched & vested interests, a sharp drop in prices would be destructive. A general rise in non-housing costs & prices is possible, alongside a steady housing market. But who’s going to build if house prices don’t rise along with the rest of the economy?

Take a quantum leap

One answer to that question is to do something very different.

First, infill housing – intensification of existing suburbs as townhouses replace standalones – can reduce the heat in the greenfields market. It’s starting to happen, and an increase in available land supply should curb price expectations.

Second, brownfield development can go right to the heart. Those upstairs flats above shopping strips, in recent decades turned over to storage or the occasional office? Modern apartment blocks now have shops at ground level, and you will soon see apartments being developed above shopping centres.

They will need to offer a mix of the small & the family-sized. They will also need to be accompanied by far more town centre amenities. They can come without attached parking – given enough residential development in a centre, more travel can be by public transport and rental vehicles can replace the private car.

Generally, apartment developers wouldn’t expect to build to the same height in the suburbs as they would in the city centre – and generally, stipulated maximum heights would prevent it.

At the moment, only a handful of apartment blocks have been erected in old city centres or suburban centres. I see the increasing development of standalone apartment blocks, with retail at ground, becoming acceptable in suburban centres. And if shopping centres can have housing built on them elsewhere in the world, the same can happen here.

That would lead to 2 fundamental changes in New Zealand urban living:

  • Day & night populations in those centres, bringing a different vitality, and
  • A move to larger apartments to accommodate families (which is also achieved elsewhere in the world).

It could also lead to a further decline in home ownership, the arrival of largescale residential investors, and the growth of residential ownership by small investors. That, in turn, would create new requirements for investment education, and changed pension expectations as pensioners switch from mortgage-free owners to lifelong renters.

All of that is a long way round uncontrolled escalation of fringe land values. It needs to be accompanied by less inflationary population growth; continued advances in public transport systems; and more careful relation of dormitory suburbs to suburban centres, jobs & amenities.

Urbanism expert Solly Angel presents an action plan

New York professor Solly Angel.

For an outside view, New York urbanism specialist Shlomo (Solly) Angel + contributors wrote in the concluding section of a 29-page essay on the new urban peripheries, a shortlist of takes to prepare future urban peripheries: “Emphasis on complex master plans that rely on strong compliance must give way to simpler interventions that can utilise the limited available capacities for making significant changes on the ground.

“Finally, the quality of the urban fabric in new urban peripheries can be enhanced with a simple 4-point action programme:

  1. Estimating the amount of land needed for expansion in the next 30 years, identifying the area needed for expansion, and obtaining planning jurisdiction over the entire area
  2. Preparing an arterial road grid throughout the expansion area
  3. Identifying & securing a hierarchy of public open spaces that need to be protected from development, and
  4. Improving land subdivision practices on the urban periphery.”

Shlomo (Solly) Angel is an adjunct professor at New York University & senior research scholar at the New York University Stern urbanisation project, where he leads the urban expansion initiative. Professor Angel is an expert on urban development policy, having advised the United Nations, the World Bank & and the Inter-American Development Bank.

It sounds fine, except: We are not good at predicting (or acting promptly on our predictions), which is why we have bottlenecks, congestion, land & house price escalation well beyond reasonable.

Local body infrastructure providers in New Zealand have always been wary of developing too much infrastructure ahead of time, in case the economy slumps, needs change, somewhere else becomes more popular – in short, taking away the excitement of unpredictability.

Influences not covered

Others have noted that New Zealand has no capital gains tax or stamp duty, and Auckland uses capital value to set council rates rather than land value.

Seemingly irrational buying by a surge of foreign investors appeared to have the intention of shifting money out of their homeland, mainly China, as quickly as possible rather than being a carefully priced asset investment. That door has closed.

The above is a handful of ideas on how to gradually overcome an imbalance that’s been grown over a quarter century, without sudden destructive impacts.

You may think those ideas are impractical, or you may have better ideas to share. Comments are welcomed.

Pages in this report:
1: Dickens takes aim, but the residential land fix is elusive
2: Things to keep in minds while focusing on fringe land supply
3: Cutting the margin without breaking the market…

Attribution: Rodney Dickens, Solly Angel.

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Urban development authority on its way

Published 3 September 2018
This government & its predecessor have both seen a need for an urban development authority, and it’s about to happen.

Never mind that Housing & Urban Development Minister Phil Twyford’s new ministry, set up in June, still doesn’t have its own home in Auckland – the city of greatest crisis.

Never mind, either, that Auckland Council’s unitary plan largely became operative in November 2016, enabling far more intensification throughout the region’s suburbs, and that development based on that potential is starting to happen.

The authority would have the power to override the provisions of the unitary plan – chiefly, the rural:urban boundaries, created through Auckland’s urban growth forum in the 1990s to ensure infrastructure could be provided for a rising population and that development would be orderly, not willy-nilly sprawl.

Provision of infrastructure still needs to be orderly – that’s what underground pipe networks do – unless Auckland moves to smaller waste & water supply systems – water tanks as a standard feature of every home, systems to dispose of sewage inside the boundary (I wrote about such a project a quarter century ago).

Phil Twyford holds both the transport and the new housing & urban development portfolios. When the new Housing & Urban Development Ministry was announced in June, it was given a 1 August start date (but, in Auckland anyway, no independent accommodation) and an official start date for its operations of 1 October.

Mr Twyford said on its setting up: “Addressing the national housing crisis is one of the biggest challenges our government faces. The new ministry will provide the focus & capability in the public service to deliver our reform agenda.”

One of its objective is to launch an urban development authority to lead largescale urban development projects, confirmed by Mr Twyford last week, when he said he’d take a proposal to Cabinet soon.

“The Ministry of Housing & Urban Development will help us deliver our bold & ambitious plan to build much-needed affordable housing, and create modern & liveable cities ready for the future,” he said.

The 2017 version

In a 126-page discussion document the Ministry of Business, Innovation & Employment (MBIE) issued under the previous government in February 2017, the powers potentially available for an urban development project would relate to:

  • Land – powers to assemble parcels of land, including existing compulsory acquisition powers under the Public Works Act
  • Planning & resource consenting – powers to override existing & proposed district plans & regional plans, and streamlined consenting processes
  • Infrastructure – powers to plan & build infrastructure such as roads, water pipes & reserves
  • Funding – powers to buy, sell & lease land & buildings; powers to borrow to fund infrastructure; and powers to levy charges to cover infrastructure costs. An urban development authority would not have building consenting powers.

Support & opposition

Auckland Business Chamber head Michael Barnett supported the launch of this authority on Friday, as “a long overdue initiative”: “For the past 5 years Auckland has needed to build 14-15,000 new houses/year to keep pace with demand, but the most it has managed was around 13,000 consents in the year to July 2018.

“We are currently around 55,000 houses short. An authority that can speed up the delivery of the new houses Auckland desperately needs has been in the pipeline since the Government came to power last year.”

Mr Barnett said the Government should put the legislation to establish the authority through Parliament under urgency to ensure it’s operating by the end of the year.

Property Institute chief executive Ashley Church, on the other hand, said the institute had rejected the establishment of such an authority in 2016, and still rejected it: “Our position has not changed since that time and our fears, articulated back in 2016, that an urban development authority would ride roughshod over public consultation and the unitary plan are now being proved correct.”

If anything, he said (in 2016, and again), “the super-city provides a stark example of why a single authority isn’t the solution for Auckland. If the creation of a single authority was the answer to the housing problem, Auckland would now be well on the way to solving its housing issues. Instead, it hadn’t gone unnoticed that this property boom – the first since the creation of the super-city – was taking much longer to resolve than any previous boom since at least the early 70s.

“To be fair – that’s not all the fault of the Auckland Council. It’s also the result of strong migration & a strong economy. But I don’t think anyone gets the sense that Auckland Council ‘has matters under control’ – so the last thing the city needs is a new ’Soviet-style’ central planning agency.”

Links:
MBIE, February 2017: Discussion document on urban development authorities
MBIE, May 2017: Proposed legislation for urban development authorities
MBIE, September 2017: Summary of submissions on urban development authority discussion document

Attribution: Ministerial, Business Chamber & Property Institute releases.

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The wheels are turning down the southern rail corridor

Published 3 September 2018
The wheels are turning and transformation down the southern corridor to Hamilton is on the way. Alternatively, transformation is on the way up that corridor, from Hamilton to Auckland.

Presumptuous? For Auckland there’s a serious adjustment: Instead of looking at Hamilton as a place to extend to, Auckland needs to see the Waikato is an active & growing part of a larger matrix, where change will occur at many stops in multiple directions.

The NZ Transport Agency has a Hamilton-Auckland corridor plan – and it has another for Hamilton-New Plymouth. Auckland, if it sees a triangle at all, sees one encompassing Tauranga/Mt Maunganui.

Image above: The corridor, running 5km each side the rail line between Hamilton & Auckland.

It’s all very hard to keep with, but consider these points of discussion & action, in the last few days and into the next week.

Tomorrow, Auckland Council’s planning committee considers the Hamilton-Auckland corridor plan & its role in this. The recommendation is to endorse participation, and the new Auckland Plan 2050 development strategy as the basis for staff input.

The corridor plan stemmed from calls from Waikato councils for investment in a commuter rail service between Hamilton & Auckland.

Urban development authority ideas also enter picture

The committee will also need to start thinking hard, and quickly, about the Government’s plans for an urban development authority – not just as a twinkle in the eye but something likely to be in place this year.

Ideas for such an authority have been around for the last 3 years, promoted by former Housing Minister Nick Smith and sent through a consultation process in 2016-17 by the Minister of Business, Innovation & Employment (MBIE), and taken up by Phil Twyford, now Minister of Transport and also of Housing & Urban Development.

Natural development will cross the Auckland-Waikato border – Pokeno as an Auckland suburban outlier on top of being a growing Waikato business & dairy production centre is an example.

Report notes interdependencies

As Auckland Council senior transport advisor Szening Ooi says in her report to tomorrow’s committee meeting: “There are significant interdependencies between Auckland & the Waikato that cross local government boundaries. However, previous spatial planning along the Auckland-Hamilton corridor has largely been confined within these administrative boundaries.”

She said the plan was initiated by the Government, aiming to investigate opportunities to unlock & shape growth along the rail corridor, unlock the potential to connect communities and provide access to jobs in Auckland & Waikato towns along the corridor.

The corridor plan went to a ministerial briefing on 25 June, aimed at getting all partners in it to agree on the project scope, purpose, objectives, deliverables, timetable & ongoing partnership. That was followed by a 3-day enquiry-by-design workshop in Tuakau on 27-29 August, where the project partners developed a draft integrated spatial plan for the corridor.

The NZ Transport Agency board is due to consider the business case for the Hamilton-Auckland start-up passenger rail service in October. That ties in with electrification of the Auckland rail line to Pukekohe, building the third main rail track along the southern line and completing the city rail link.

Maori roles & gains

Ms Ooi said Waikato Maori – Tainui, Ngati Paoa & the Hauraki Collective – were partners in the project, and it presented investment opportunities for Tamaki Makaurau iwi as well: “Additionally, Maori will benefit if the project’s aims of improving housing affordability, providing employment opportunities & enhancing the quality of the natural environments along the corridor are achieved.”

Auckland Council staff have recommended the establishment of a mana whenua–iwi steering group to sit in parallel with the project’s steering group.

Pressure on urban boundary structure

A pressure point for the Auckland council is the Government desire to see more land released for housing both inside & outside the rural:urban boundaries agreed in the brand-new Auckland unitary plan, to improve housing affordability. This is expressed in the just-released Cabinet paper, Urban growth agenda: Proposed approach (see link below).

Ms Ooi said: “Through the project, central government has indicated that it aims to provide spatial plans that are more ‘minimalist’ and allow the market to ‘fill in’ & sequence development where possible, rather than through regulation.

“There is a risk that, through this project, central government could apply a top-down approach to addressing growth management in Auckland & the Waikato that could undermine Auckland Council’s approach to urban growth and be contrary to both the Auckland Plan development strategy & the unitary plan.

“The project’s focus is also to connect communities & provide greater access to jobs in Auckland & Waikato towns along the rail corridor. The project does not aim to displace growth from Auckland to Waikato but may have this effect as it provides growth opportunities along the corridor. This is not an issue in itself, but the potential impacts & subsequent responses need to be better understood.”

The timeline now:

September: Refine the plan and further test with key stakeholders, amend as required
Late October: Governance leaders consider proposed plan
Mid-December: Governance leaders consider the partnership design & refined list of projects; formal consultation & endorsements & implementation to follow.

The Waikato lead

Future Proof, created by Waikato public bodies, says on its website: “We estimate that there will be nearly half a million people living in Hamilton and the surrounding Waikato & Waipa districts by 2061. That means we will almost double our population in the next 50 years. We want to know our future by planning today.”

The Future Proof partners have produced ‘Future proof strategy, planning for growth, November 2017’. This updates the 2009 strategy & implementation plan. The partners are now working on the second phase of the update.

Links:
Auckland Council planning committee, agenda item 4 September 2018:
11, Hamilton-Auckland corridor plan
Recommendation
Attachments
Outcomes of the Wellington ministerial briefing on 25 June  
Cabinet paper, released in August 2018: Urban growth agenda, proposed approach
Future Proof, Hamilton to Auckland corridor study, December 2012
Future Proof
Future Proof strategy 2017 – summary
Future Proof strategy 2017 
Background reports

NZ Transport Agency, transport corridor plans:
NZTA, 31 August 2018: $16.9 billion investment in the future of NZ
NZTA, 31 August 2018: National land transport programme, 2018-21
NLTP regional summaries
Auckland land transport plan summary

Attribution: Council committee agenda, Cabinet paper, Future Proof.

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Twyford creates new housing & urban development ministry

Housing & Urban Development Minister Phil Twyford.

When the new Government allocated portfolios last October, Labour’s Phil Twyford won housing & urban development and the separate transport role.

On Friday, he announced that housing & urban development would get its own ministry, to be established on 1 August, operating from 1 October.

Initially, the Government will move functions from existing agencies, and will look at using funding from their existing operational budgets:

  • From the Ministry of Business, Innovation & Employment: the housing & urban policy functions, the KiwiBuild unit and the Community Housing Regulatory Authority
  • From the Ministry of Social Development: policy for emergency, transitional & public housing, and
  • From Treasury: monitoring of Housing NZ & the Tamaki Redevelopment Co Ltd.

The changes won’t affect where people go to for help with housing. The Ministry of Social Development will continue to assess people’s need for housing support and manage the public housing register.

The aim is for the new ministry to help deliver on the Government’s priorities of making housing more affordable & cities more liveable. Mr Twyford said: “Addressing the national housing crisis is one of the biggest challenges our government faces. The new ministry will provide the focus & capability in the public service to deliver our reform agenda.

“Too many New Zealanders are hurting because of their housing situation. Many are locked out of the Kiwi dream of home ownership. Others are homeless or suffering the health effects of poor quality housing.

“The new ministry will be the Government’s lead advisor on housing & urban development. It will provide across-the-board advice on housing issues, including responding to homelessness, ensuring affordable, warm, safe & dry rental housing in the private & public market, and the appropriate support for first-homebuyers.”

Mr Twyford said the new ministry would provide the Government with strong leadership & fresh thinking. It would also end the fragmented current approach caused by involving a number of agencies.

Then he rattled off 7 aims of the new government:

  • Ramping up efforts to house the homeless
  • Building affordable homes through KiwiBuild
  • Modernising & building more public housing
  • Reforming the tenancy laws to make life better for renters
  • Setting minimum standards to make rentals warm & dry
  • Adjusting the tax settings to discourage speculation, and
  • Setting up an urban development authority to lead largescale urban development projects.

In sum, he said: “The Ministry of Housing & Urban Development will help us deliver our bold & ambitious plan to build much-needed affordable housing, and create modern & liveable cities ready for the future.”

Earlier stories:
25 March 2018: Unitec land transfer kicks off KiwiBuild
23 May 2016: Is it really a faraway boundary that’s raising inner-city house prices?
8 November 2015: Twyford talks ideas which unitary plan & council funding review likely to resolve

Attribution: Ministerial release.

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Make them think, make them think

Donald Trump has succeeded where decades of politicians in the US have failed: By his full-on approach, he has forced people – especially opponents – to think about what future they want & how they want to get there, or how they might get there once the pathway has been redrawn.

An example was in a CityLab article a week ago, recognising a populist election victory and taking that forward to an examination of economic & urban issues.

“Will your city go into triage mode, double down on progressive policies, or flex its financial muscle in 2017?” the CityLab article, The 5 kinds of cities we’ll see in the populist era, asked. It went on to list 5 types of city:

Besieged: cuts in funding and shifts in national regulations
Opposition to anti-trade & anti-immigrant efforts, weakening healthcare security, safeguards for the climate and consumer protections
Progressive: acting independently of national government, across the US & Europe, cities are leading efforts to lower carbon emissions, boost energy efficiency and accelerate the transition to renewable energies and, in Europe, leading efforts to integrate Syrian & other refugees through imaginative housing, education & skills-building initiatives
Prosperous: “Economic restructuring and the demographic preferences of talented workers have revalued proximity, density, diversity & vitality – in a word, ‘cityness’ – over dispersion & decentralisation”
Networked: “The power of cities lies in the fact that they are not governments, but rather networks of public, private, civic, university & community institutions. Governments can be hijacked by partisanship; networks, by contrast, reward pragmatic action”.

The writers said cities would get smarter about how to use their market position for fiscal purposes: “Copenhagen and Lyon, France, are using the value of public assets including land & buildings – and new publicly owned, privately managed corporations – to invest at scale in infrastructure and spur the large regeneration of harbours & urban districts. Like other urban innovations, we should expect these new models of city governance & finance to spread fast.”

Institutions have unused role in raising cities’ economies

In another article in October 2015, The new grand bargain between cities & anchor institutions, CityLab cofounder & editor-at-large Richard Florida wrote that “anchor institutions spur economic growth & innovation, but are still lacking co-operation with cities themselves”.

We’ve seen that in Auckland, where a decade of institutional development has been mostly inward-focused. Auckland University tried, 10-15 years ago, to combine a “research innovation campus” beside its Tamaki sportsfields with public & private sector research & development facilities.

The obstacles were chiefly about planning. The notion that an education facility, other public institutions & private sector businesses should embark on joint ventures and leverage off one another’s efforts – exciting & highly innovative, I thought – was incidental.

The Tamaki campus has been sold, for housing, and students are heading back into town, where the university’s new Khyber Pass campus is again inward-looking. The relationship between gown & town will again be incidental.

In the US, Mr Florida wrote: “For most of the 20th century, large companies like General Motors and Ford, IBM and General Electric, US Steel and Procter & Gamble were the veritable suns that powered both the US economy & the scores of economies that comprised it. Cities, in turn, measured their strength by how many of these headquarters & manufacturing plants they held….

“The driving force in our economy has shifted from those behemoths to clusters of companies, talent & support industries. Those clusters do not just emerge out of thin air; more often than not they revolve around large anchor institutions – mainly research universities, colleges, medical centres & other creative or knowledge-based institutions – that help shape & structure urban economies.”

University examples

A report by the Urban Institute & New York University’s Wagner School, released through the National Resource Network, identifies ways to align cities & local anchors around shared interests and largescale economic & community development.

Examples of changing approaches are Tulane University in New Orleans, collaboration in Cleveland, the urban lab model in Chicago and Oregon University’s sustainable cities initiative.

In New Orleans, university president Scott Cowen changed his view that the university was in but not of the city after Hurricane Katrina in 2005, becoming a champion for the whole city. That included helping revive an historically black college, Dillard, that the report said would have closed, and creating a public service requirement for all undergraduates – a first for the US – “that led to after-school tutoring, house rebuilding and the creation of public gardens in some of the poorest neighbourhoods most severely damaged by the hurricane”.

The report writers saw even greater collaboration in Cleveland, where the heads of the Cleveland Clinic, Case Western Reserve University, University Hospitals and the Cleveland Foundation joined city hall leaders to broadly chart a redevelopment plan for the 7 low-income neighbourhoods surrounding the University Circle district.

The future incorporates major redevelopment mixed with a local home-buying programme, co-operative business ventures tied to the anchor institutions and a largescale workforce programme.

Last March, Chicago University expand its urban lab model that identifies promising city programmes and rigorously tests to see which are worth expanding.

In Eugene, Oregon University identifies a pressing challenge and, through its sustainable cities initiative, matches up to 30 courses in many disciplines over an academic year, resulting in faculty & students acting as consultants working against a semester-based clock to solve a public problem.

Links:
CityLab, 12 January 2017: The 5 kinds of cities we’ll see in the populist era
Travel & Leisure: Copenhagen’s waterfront development
CNN Style, 9 July 2015: France’s vision of a utopian future comes to life in Lyon
Richard Florida in CityLab, 5 October 2015: The new grand bargain between cities & anchor institutions
Urban Institute, 29 September 2015: Striking a local (grand) bargain
National Resource Network, 29 September 2015: Grand bargain report
Report pdf: Striking a (local) grand bargain

Earlier stories:
31 July 2005: Tamaki campus plan change approved
18 November 2002: Tamaki campus expansion to benefit Glen Innes & Panmure

Attribution: CityLab, Travel & Leisure, CNN, Urban Institute, National Resource Network.

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Institute suggests competing urban development authorities

Property Institute chief executive Ashley Church has asked the Government to consider setting up multiple urban development authorities in Auckland rather than the single authority which Prime Minister John Key floated last week.

The single agency would oversee major building projects, buy building sites, masterplan large residential developments and partner with private sector groups to deliver them. The Productivity Commission proposed the idea last year.

However, Mr Church said competition & private investment were the keys to fast-tracking the development of new housing projects in Auckland, and yesterday he encouraged the Government to consider a commercially focused multiple-agency approach along the lines of the energy company reforms of the 1990s.

“Most of the focus of those reforms was on price competition – but we forget that an equally important aspect of them was a need to rapidly find new ways to generate energy and avoid ‘brown-outs’. In that regard the creation of Mighty River Power, Genesis & Meridian was a huge success and solved a problem that was every bit as serious as the Auckland housing crisis, at the time.”

Mr Church said the Government should take the same approach to housing by establishing a series of competing urban development authorities – possibly domiciled in different parts of Auckland but with free rein to operate throughout the city. He said they could be Crown-owned entities, council controlled organisations or a combination of both.

Mr Church said the creation of the super-city provided a stark example of why a single authority wasn’t the solution for Auckland: “If the creation of a single authority was the answer to the housing problem, Auckland would now be well on the way to solving its housing issues.”

Instead, Mr Church said it hadn’t gone unnoticed that this property boom – the first since the creation of the super-city – was taking much longer to resolve than any previous boom since at least the early 1970s.

“To be fair – that’s not all the fault of the Auckland Council. It’s also the result of strong migration & a strong economy. But I don’t think anyone gets the sense that Auckland Council ‘has matters under control’ – so the last thing the city needs is a new ’Soviet-style’ central planning agency.”

Mr Church said it was ironic that the multi-city structure of Auckland before the super-city was created would have been much better equipped to handle the current housing problem: “Under the old structure, cities competed with each other for residential development & investment – so, by now, you would have expected to have seen areas throughout the isthmus opened up for commercial & residential development in a way which would also have encouraged private investment at a local level.”

Attribution: Institute release.

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Infrastructure council seeks rethink to improve transport & intensification

The NZ Council for Infrastructure Development issued a report yesterday calling for “a major rethink on transport & urban intensification”.

It outlined a dismal state of affairs, took no account of many imminent changes, spoke of gridlock as a future danger rather than an existing state of affairs, and made no mention of one of the biggest factors in that congestion, corporate parking.

In short, it wasn’t an advance.

One of the problems for anyone trying to promote ideas on land use or transport at the moment is that the independent panel that’s been hearing submissions on the proposed Auckland unitary plan is due to deliver its recommendations to Auckland Council on 22 July, and the council will then work through those recommendations before delivering its own decisions about 6 weeks later.

That unitary plan is intended to bring consistency out of the many regulations of the previous 7 territorial councils & one regional council which were replaced by the super-city Auckland Council in 2010.

In addition, it will contain new zoning rules & a recommendation on the urban boundary.

On top of changes coming through the unitary plan, Auckland Council & the Government have entered a one-year venture called Atap (Auckland transport alignment project) to identify a preferred approach for developing Auckland’s transport system over the next 30 years.

I was sceptical about its foundation report, issued in February, but since then I’ve heard positive vibes about the project. As I wrote in February, “The foundation report notes various problems around the region and notes that ‘something will have to be done’ to improve them. This report, not the next one, ought to have worked out very quickly what the problems are, and should have moved on to the next step: What alternatives for improvement should the focus be on?”

There are other public sector initiatives which will influence access, jobs & residential development, including council organisation Panuku Auckland Development’s focus on urban regeneration, for which it’s chose its first targets.

The Council for Infrastructure Development’s release & presentation yesterday came along as if it hadn’t made submissions to the unitary plan hearings and wasn’t aware of the many other strands of action occurring alongside the transport alignment project.

“Auckland must urgently revise transport priorities & the unitary plan to better align where people live, work and how they move around, otherwise gridlock will bring the city to a halt,” the infrastructure lobby group said.

“We launched the study of Auckland’s transport challenge last year to provide independent input into the transport alignment project. The analysis is also central to NZCID’s submission on the proposed Auckland unitary plan….

“A significant part of the [congestion] problem is that the proposed unitary plan & special housing areas allow urban infill & development which cannot be economically served by transport and don’t allow sufficient density adjacent to rail & busway stations.

“This forces car dependency and makes congestion much worse than it needs to be. To decongest Auckland and improve liveability the [NZCID] report recommends that we must:

  • Substantively revise land use provisions as set out in the Auckland and Unitary plans to target intensification around public transport and sequence growth to match transport availability
  • Loosen residential development and height restrictions in areas with quality public transport access and strengthen restrictions in areas without it
  • Enable satellite city development at scale beside rail with a focus on the Pukekohe to Manukau corridor
  • Develop mixed use “live, walk and work” communities
  • Improve the frequency and convenience of public transport services to major centres of employment, education and entertainment
  • Vastly increase park and ride facilities and provide express bus services across the public transport network
  • Deliver new capacity across the road network with a focus on fixing traffic pinch points and rigorously evaluate all options, including an eastern-aligned harbour crossing connecting to an eastern corridor
  • Implement road pricing to increase network capacity, fund ongoing improvement and accommodate electric vehicles
  • Promote teleworking and work from home initiatives leveraging digital connectivity
  • Invest in leading edge intelligent traffic management systems
  • Embrace and leverage new car technology wherever possible, but recognise that it does not yet provide a silver bullet solution to Auckland’s transport issues
  • Ensure land use and transport policy is adaptive to technological and other changes as and when they become clear.

The infrastructure council’s chief executive, Stephen Selwood, said: “Auckland can have a road system which moves and a reliable, high quality public transport network which gets people to work on time. But to achieve that outcome we need to sort out the unitary plan to target high amenity intensification around public transport, increase motorway & arterial network capacity, leverage new technology to the max and price the network to manage demand & fund new investment.”

Links to the infrastructure council’s report, Transport solutions for a growing city, and 10-minute gridlock video:

Report
Video

Earlier stories:
17 April 2016: Thomas unveils multipronged shakeup plan for Auckland transport policy
15 April 2016: On the road to better council thinking on housing, on transport
9 March 2016: Takapuna & Northcote first up for revitalisation
23 February 2016: Transport alignment starts off-track
6 December 2015: How Panuku proposes to lead transformation of Auckland

Attribution: NZCID presentation, release.

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Housing summit speaker says law reform vital

A lead speaker at the Property Council’s residential development summit in Auckland tomorrow says inconsistent & often impractical regulations are an unnecessary burden for the industry.

Lawyer Sue Simons, a partner at BerrySimons, says: “We need robust legislative reform of the Resource Management Act, the Local Government Act & the Land Transport Management Act to alleviate burdensome regulations and meet growth-fuelled future housing & infrastructure challenges.

“Auckland is currently experiencing unabated housing shortages & escalating house prices in a city where infrastructure development has been neglected for decades. We need a dynamic legislative & regulatory environment to meet these mounting challenges.

“The property development industry also needs greater certainty surrounding Auckland Council’s proposed unitary plan & land supply strategies, as well as the future of the special housing areas legislation. As an industry, we need the confidence & certainty from central & local government.”

Property Council chief executive Connal Townsend said yesterday so many critical questions arose in the process of resolving Auckland’s housing problem: “How do we fund infrastructure? How do we address zoning restrictions that deter development? How do we better align transport infrastructure planning with land planning? How do we ensure infrastructure complements residential development and not vice versa?

“We need integrated local & national policies that account for all of these issues, to really make a difference when addressing the shortage that has seen our house prices skyrocket year after year.”

Attribution: Property Council release.

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