Archive | Intensification v sprawl

Churton warns Orakei board of declining standards from relentless intensification

Orakei Local Board member Troy Churton has questioned residential intensification at several spots around the ward in his report to the board’s meeting on Thursday, chiefly for height infringements, being out of character & resultant commuter congestion.

He’s also raised a question over the impact of cycleways on St Stephens Avenue & Gladstone Rd, which Auckland Transport is pursuing.

In his report as the board’s lead member on planning & regulatory matters, Mr Churton said that at a training day & workshop he discussed “‘triggers’ requiring planners to forward files to me for comment as to whether they should be notified or not”.

He went on to list projects where he understood the developer intended to breach the 16m height limit, notably at 29-35 & 37 Coates Avenue, Orakei, and, in one case, the quality of design on a landmark site “where the very best of design standards should be implemented”.

In his report on 29-35 Coates Avenue, Mr Churton said: “I do not accept the assessment of environment effects report at page 10 suggesting it is appropriate to disregard effects below 16m simply because a previous consent may have found there to be no more than minor effects for a 4-storey building previously applied for and of lower height.

“The receiving environment of this development is the area of Coates Avenue that currently has some multi-storeyed development. Overall the proposal is to likely to contribute to an obvious dominant high, built environment. This is said to be consistent with the future character of the area.

“It is, however, currently not the character of the area and there can be no expectation that just because a one’s set of standards enables certain types of development, that the community & landowners suddenly forego concern for the existing state of character or will seek to exploit those activities.

“The future character of the area relies on developments that are designed to meet standards and not infringe them. This proposal may, for want of being designed to meet height & height:boundary standards, therefore disrupts amenity value in the existing neighbourhood of mostly lower level surrounding residential built form & character.

“It will plainly meet many other unitary plan purposes and would not attract a notification trigger if designed to standard as to height & height:boundary.

“If the advice that I received in my training recently was that standards are to be upheld, then this matter presents an adverse effect as to height that is more than minor and should be notified.

“If, however, council planners intend on facilitating an ongoing culture of enabling developers to treat standards they are all very aware of in due diligence for a site and as measures to be willingly infringed, then there is a case to say the positive effects of the proposal in this zone & area may mitigate the potential adverse effects.”

Meadowbank Station & commuter parking

On the development proposal for 4 Koa St, Meadowbank – 14 units on 3 levels plus 10 basement parking spaces – Mr Churton said Housing NZ owned houses in the street and supported the application and the applicant wanted limited notification.

However, he questioned the adequacy of parking provision in a cul de sac which was some distance (450m) from the Meadowbank station but wasn’t exempt from commuter parking because commuters’ cars already saturated the area.

“While I have reservations about the bulk & scale, by itself in this zone it is not such an infringement as to be a special circumstance that would likely meet the requirements for discretionary public notification. However, there is a very high degree of public interest in ensuring quality built environs in this area as a number of other intensification projects are pursued, some from Housing NZ.”

Mr Churton suggested this development go to the council’s urban design panel for approval before a final decision was made on notification.

On a development proposal for 234, 236 & 236A Kepa Rd, on a prominent arterial ridgeline at the top of Mission Bay, Mr Churton said the proposed height infringement of up to 1m might seem small but, in an area where other intensification was also planned, the precaution of notification should be taken: “The cumulative effects of such a mass of multi-storey development where height infringements might be allowed for some is, in my view, a more than minor effect.”

At 9-11 Purewa Rd, Meadowbank, Mr Churton raised the quality objection: “Whilst not adverse [averse, I think] to intensification per se, the board views are to believe this proposed development will have a seriously detrimental effect on what is at present a desirable & sought-after residential area of our ward.”

He said a number of residents in the vicinity objected to “the poor design features”, drastically changed from the initial proposal “to a series of tenement-like structures with outdated features which have long been discarded in modern building practice- ie, external stairways.

“The size, and more importantly the density, of the planned construction has potential for adverse social impacts on an otherwise safe & pleasant community. This area of Meadowbank St Johns is already facing saturation problems with the increased traffic flow & parking overload on local streets from intensification, growing commuter use of the Meadowbank train station and the expansion from the nearby retirement village expansion.”

Mr Churton said the Purewa Rd site next to Hobson Bay & the railway line was a gateway to the Orakei ward via rail: “This is an example of a site where the very best of design standards should be implemented.”

Cycleways

Mr Churton said these cycleways on St Stephens Avenue & Gladstone Rd would eradicate onstreet parking for fringe cbd residents & workers as well as destination parking for tourism to places like the Rose Gardens on Gladstone Rd.

He said they also had “no apparent connection” to changes that might happen along Tamaki Drive or in stage 4 of the shared path crossing.

He wants the board to meet Auckland Transport to discuss the cycleways & stage 4 shared path across Hobson Bay.

Links:
Orakei Local Board agenda
12, Notice of motion, Member Troy Churton – Tamaki Drive & wider cycle route integration
Recommendation
25, Board member report, Troy Churton 
Addendum – examples of notification comments made as portfolio leader
NZ Transport Agency: Auckland urban cycleways programme
Auckland Transport: Cycling & walking programme

Attribution: Board agenda.

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Tracking ideas Sun27Sep16 – sprawl v compact, inclusionary housing, infrastructure funding, related pieces, Making NZ

Sprawl v compact research stops short
Inclusionary housing another debate that’s international
Infrastructure funding options
Related pieces
Making NZ a home for planning thinkpieces

Tracking ideas is a Bob Dey Property Report section devoted to ideas on property questions such as urban strategies & design, many from overseas but with relevance to Auckland.

This page today flits between foreign, mostly American, information and Auckland. I’ve listed a large number of links to work through – it’s a library piece, not a quick read. And I’ve mentioned a couple of points which may be true in the US but don’t apply in Auckland because circumstances here have changed.

Sprawl v compact research stops short

In another round of the sprawl v compact argument, US analyst Issi Romem produced an article a fortnight ago that’s already been taken by some notable news outlets as something approaching gospel.

Some of what I’ve read among the many links below leaves me mystified about the writer’s point, some of the complicated analysis requires more digestion, here & there I’ve spotted contributions worth taking further.

The first mystery, for me, is how Dr Romem’s figures (down to 2 percentage points) on housing development over the last 3 decades can point to a sensible way forward in times which have started to change very quickly.

An inappropriate template

The US – and New Zealand followed, though to a less extravagant extent – launched into suburban development in the 1950s, pushed along by the availability of cars for general consumption. That doesn’t mean the development of those suburbs was a perfect mechanism for housing fast-growing populations, or that in an isthmus-centred place like Auckland the carpetlaying grid template would be appropriate.

One side of the argument now is that central intensification should be used to provide a larger proportion of housing, that this will be cheaper than sprawl on the fringes of the region. On the other side, proponents of extending the urban footprint say this will provide cheaper land and thereby cheaper housing.

How you count the numbers, and which numbers, makes a big difference. Do you include a travel component, or not? Does it measure cbd to wherever, or some to more local workplaces? How many cars does a household have?

Housing comparisons undefined

All the research, and all the comments, refers to housing, houses, apartments…. You, the reader, can only guess at what kind of economic units are being referred to. At the start of the 1980s, the standard New Zealand house (used in Master Builders statistics) was 93m² (1000ft²). Standard houses now are more likely to be over 200m², perhaps over 300m² including garage, with indoor-outdoor flow to make it hard to assess actual, practical size.

Old sausage-block flats were small, commonly under 80m², and a high proportion of apartments built in the last 20 years will also measure less than that. But, in recent times, terraces, townhouses, cross-leases, standalones on small sections and a smattering of apartments will exceed 200m².

Section sizes have been shrinking for 20 years. From 809m² (one-5th of an acre, far more common than the ‘quarter-acre paradise’, 1012m²), sections now can be down at 200m².

In Auckland, now, the Government is a key participant in redeveloping at Hobsonville Point, in the Glen Innes-Tamaki area and at Northcote. The Government-owned Housing NZ is still contesting unitary plan decisions limiting what it can do on many other sites where it’s aggregated land, wants to reposition old housing or wants to do a mix of upgrade & new.

In most of the American research, apartments or other intensified housing in the city centre are compared to development on the distant suburban fringe, with no indication of how close they are to being alternative options, and no calculation of commute costs.

Commuting from Faraway

In Auckland, we have a 20km stretch through Dairy Flat, between the ridge above the Albany basin & Silverdale, and very large areas between Karaka, Pukekohe and west to the coast likely to be developed for housing. You can bet it won’t be turned over to housing at the US standard of 4 houses/acre gross (10/ha) – more likely a mix of standalones on sub-400m² sections, terraces and, a novelty, suburban apartment blocks.

Where will these residents work? Shop? How will they get there? Do we create new communities – or faraway dormitory suburbs? Will the commute be made easy first, or wait for an economic number of travellers to buy at Faraway?

What kind of local jobs will be there? Rodney District Council, in its last years before the super-city was created in 2010, envisaged an innovation zone of business & education as well as housing north-west of Silverdale, a strategy that would increase jobs & education and reduce the commute. That kind of thinking needs to be revived.

Completion of the Auckland unitary plan enables the course of infrastructure provision to be more clearly defined (the appeals still to be determined shouldn’t drastically alter this), but there will still be questionmarks over how much more intensive development might be put in train in the inner suburbs.

Back to Dr Romem

Today’s Ideas page traverses ideas on infrastructure funding, inclusionary zoning as a way of introducing some more affordable housing, and city shape (focusing on Auckland being linear, having satellites, or concentrated around nodes).

This journey over the weekend has taken me to a wide range of views on transport, land use, access – starting with American, returning to New Zealand via international links (Wendell Cox, co-author of the Demographia studies with Hugh Pavletich of Christchurch; and housing & urban development thinker Phil Hayward of Lower Hutt, whose comments appear in a couple of the international & local threads).

At my first stop, Dr Issi Romem’s Can US cities compensate for curbing sprawl by growing denser? offered 4 central points:

  • The link between housing production and outward expansion is unmistakable: cities that expand more produce proportionally more new housing
  • Throughout the country, housing production is skewed towards low density areas
  • Densification has slowed down across the board, and especially in expensive cities, undermining their ability to compensate for less outward expansion
  • Unless they enact fundamental changes that allow for substantially more densification, cities confronting growth pressure face a tradeoff between accommodating growth through outward expansion, or accepting the social implications of failing to build enough new housing.

While Dr Romem’s research shows his first point appears true historically in the US, in Auckland at least that may be much less so in the last 5 years. On his second point, land price & ease of development are the crucial factors. Auckland has a short history of apartment building (though a long history of much less intensive sausage-block flats), and it’s come in bursts. Building consents are now approaching the 2004 level, but the price range is limited – almost entirely above what’s deemed “affordable”.

Romem says less outward means less overall

Dr Romem is the chief economist at BuildZoom, a San Francisco website aimed at matching clients to construction contractors. He was previously an economist at OnPoint Analytics, earned his PhD in economics at Berkeley, and consulted for the Bay Area Council Economic Institute on matters involving transport, real estate & the regional economy.

In this report, he found that, when cities change their pace of outward expansion, their rate of housing production tends to change accordingly.

“Both expensive & expansive cities are economically vibrant and face pressure to grow, but whereas expansive cities like Atlanta, Houston & Phoenix continually provide ample new housing at affordable prices, expensive cities like San Francisco, New York & San Diego do not. Since the 1970s, expensive cities have failed to produce enough new homes to keep real housing costs steady, and as a result they have curbed their population growth and sent real housing prices on a long-run upward spiral.”

He saw 2 key reasons for housing production to correspond so closely with outward expansion:

  • Undeveloped & low density areas produce a disproportionately large share of cities’ new housing. Restricting the flow of undeveloped land “into” a city chokes off subsequent rounds of densification, because low density areas add new housing more readily than denser ones, and
  • Cities which curb their outward expansion are also likely to curb densification within the existing footprint, eg, through more restrictive land use policy.

“Housing production’s skew towards low density areas is important, because it is consistent with the notion that a greater inflow of undeveloped land helps cities produce more housing, through both initial development & subsequent rounds of densification. For reasons explained earlier, eg, with respect to vacant lots, such densification is easier in low density areas. Crucially, expansive cities’ namesake outward expansion keeps low density areas more plentiful there than in expensive cities. In contrast, expensive cities have limited their inflow of undeveloped land by curbing their outward expansion, thereby choking off the initial development of new areas as well as subsequent rounds of densification.”

Densification has slowed down across the board, but much more so in expensive cities

Dr Romem said an important development of recent decades was the increasing paucity of densification: “During the first post-war decades, it was fairly common for areas to grow more dense through construction on vacant lots, and in particular through the replacement of older structures with new ones containing more dwellings. The data show that densification has grown far less common over time, especially in the expensive cities.”

He said the results were similar for areas first developed before World War II.

“Aside from the slowdown in densification, the numbers also tell us that in the US today, substantial densification is the exception. Just 3.8% of areas adding over 1 home/acre (4/ha) and just 0.95% adding over 2 homes/acre over the span of a decade is not very much, and the fraction of areas that cross the 4- & 10-home/acre (16- & 40/ha) thresholds each decade is also exceedingly small. In fact, the vast majority of the developed area of US cities maintains a fixed level of density that doesn’t usually change much over time….

“By curbing their outward expansion, expensive cities have stemmed their subsequent supply of low density areas that are flush with opportunities for further development. A sizable share of densification occurs through infill – not the kind of infill for which planners reserve the term, but simply construction on vacant land scattered within developed areas. The best land is used first, and as densification progresses the remaining lots are fewer and increasingly more challenging to build on, until redevelopment ultimately becomes the only alternative.

“Expansive cities maintain a robust supply of fresh land that is in the early phases of the progression. In contrast, expensive cities’ reduced rate of outward expansion means that most of their land is farther along in the progression, and as a result it is getting harder for them to densify. It is no coincidence that builders today report an unprecedented shortage of vacant lots that is most pronounced in the West & the North-east, where expensive cities cluster.”

Dr Romem’s assessments may also have been true in New Zealand, Auckland in particular, but the intensification trend is strong at the moment. Building consent figures over the last 2 years show intensive housing (apartments, retirement village units, townhouses & suburban units) showed 29.4% of consents nationally were for such intensive development in the July 2015 year, falling to 28.5% of a bigger total (up from 7600 of 25,700 to 8300 of 29,000) in the July 2016 year. I don’t have the breakdown for each market segment for Auckland alone.

Auckland apartment pricing has risen since the market bottomed in 2011. The market in standalone homes has skyrocketed in that period, but the 2 markets differ in their foreign input. Overseas investors have strongly influenced recent house prices, but have had a much longer association with the apartment market, which has relied on marketing overseas in this boom & the last one to get projects started.

The path forward

Dr Romem saw 3 paths forward in the US:

  • Cities that expand with gusto will maintain housing at more affordable levels, but this will further entrench the ills associated with sprawl; today’s expansive cities are already on this path
  • Avoiding expansion, and maintaining the status quo with respect to densification, will divert population growth towards more accommodating cities and render housing increasingly unaffordable for a growing share of the population; it will unequivocally change the social character of these cities, while keeping their physical facade intact, and
  • Enacting fundamental changes to land use policy that prompt far more substantial densification than any US city has undergone to date; expensive cities would have to embrace redevelopment; if new transport infrastructure connects undeveloped areas to the city, or functionally tethers existing nearby cities to it, then such infrastructure amounts to a catalyst for expansion.

Cox says research supports stance against ‘forced density’

Wendell Cox, principal of Demographia, wrote the book War on the dream: How anti-sprawl policy threatens the quality of life 10 years ago. In an article on the New Geography website on Wednesday, The incompatibility of forced density & housing affordability, he said Dr Romem’s research “supports the conclusion that anti-sprawl policy (urban containment policy) is incompatible with housing affordability. He quoted Dr Romem’s finding: “Cities that have curbed their expansion have – with limited exception – failed to compensate with densification. As a result they have produced far less housing than they would otherwise, with severe national implications for housing affordability, geographic mobility & access to opportunity, all of which are keenly felt today as we approach the top of housing cycle.”

Journal accepts the sprawl argument

In the Wall Street Journal, Laura Kusisto wrote: “Building sprawling suburbs is better at making cities affordable than building tall towers, according to research released Wednesday. Environmentalists, urban planners & economists are pushing cities such as New York & San Francisco to build more housing to help combat rapidly rising rents and home prices that are crowding out the middle class.”

At CityLab, Richard Florida noted the expansive versus expensive comparison and said if most development was low density it would amount to sprawl even if the overall urban footprint didn’t increase, and asked: “Do we continue to try to sprawl our way to the American dream, or do we add the density that powers innovation & economic growth?”

A Planetizen report said Dr Romem’s research “shows that housing affordability increases with a region’s ability to build outwards, as opposed to upwards. Densification largely has not accompanied efforts to curb sprawl.”

The Planetizen take was that the research found “sprawl may be bad for the environment & liveability, increasing dependence on the automobile and making transit less practical, but in terms of housing affordability, it’s a winner”.

In comments on the Romem report, Phil Hayward of Lower Hutt wrote (in a much longer comment): “I believe that everywhere that intensification & redevelopment have been adopted as significant proportions of planned housing supply, the results have been the opposite of the anticipated ‘affordability’. Site values increase to incorporate ‘development potential’ as soon as any rezoning occurs, which increases the costs that developers need to sustain while at the same time reducing their margins. All the gain falls to the incumbent owners of sites. In many cases, the expected ‘supply’ does not materialise.”

Hard boundaries go as immigration spike continues

Auckland, as a region with urban boundaries for 20 years – and “hard” boundaries for most of that time, in that they weren’t easily changed without going through protracted litigation – has been the main host for 2 immigration spikes, in 2003-04 and the present one that began with the turnaround from net outflow to net inflow in January 2013.

The latest annual net inflow was 69,000, of whom 32,200 were destined for Auckland. Neither inflow has been matched by an adequate rise in housebuilding. Consents for new homes issued in the last 12 months, 29,000 nationally, 9600 in Auckland, would barely house the national inflow while the Auckland consents would be inadequate to house all the new migrants, let alone internal migration & natural increase.

That can be turned into an excuse, aided by slow consent processes. Auckland was also behind during the 2003-04 immigration spike, but builders worked to catch up

For the first of those migration spikes, Auckland’s policy statement on land use was in the hands of the now-gone regional council. For the second, it’s in the hands of the successor unitary council, and the spike has coincided with the 3 years it’s taken to get the council’s unitary plan from start to almost finished. The housing accord with the Government through that period has enabled a lift in consents, though still well short of demand, and a finalised unitary plan will make intensification easier in many areas.

The “forced density” Mr Cox writes of is not what we have in Auckland, although the Government is leading rebuilds & newbuilds in 3 suburbs – Hobsonville Point, Glen Innes-Tamaki & Northcote. 2 of those projects involve rejuvenating Housing NZ properties, with additional intensive housing, while Hobsonville Point is all new (except for repositioning of a couple of handfuls of former Defence Force houses) and is being built by private contractors.

Current consents for apartments are no longer just in the central city, and include a number of high-price projects – upward of $10,000/m² for some consented 2 years ago, higher than that for more recent projects.

Occupants of those, and of new retirement villages, will free up existing housing, much of it in city fringe suburbs. The question, then, is: Where is the supply for lower market levels?

The answer is that it’s not going to appear until land prices ease, interest rates rise, speculation diminishes and developers & designers adjust their sights.

Links:
Issi Romem, BuildZoom, 14 September 2016: Can US cities compensate for curbing sprawl by growing denser?
Wendell Cox, New Geography 21 September 2016: The incompatibility of forced density & housing affordability
Planetizen, 16 September 2016: If housing affordability is top concern, let metro regions sprawl
Wall Street Journal, 14 September 2016: What if urban sprawl is the only realistic way to create affordable cities?
Richard Florida, CityLab, 14 September 2016: The difficulties of density
Phil Hayward comment, 18 September 2016

Inclusionary housing another debate that’s international

Debates over housing affordability, inclusionary zoning, sprawl & urban boundaries are international and can often relate to what happens in Auckland.

Jamues Brasuell wrote on the Planetizen website this week that Portland, Oregon, was considering a new inclusionary zoning policy – ending a statewide ban – but some believed it would have the opposite effect to that intended.

The inclusionary zoning policy is up for debate following a decision by the state to repeal a statewide ban on inclusionary housing requirements. City Observatory columnist Joe Cortright, a panellist at an Urban Land Institute forum on it, suggested ending parking requirements instead, saying inclusionary zoning & weakened urban growth boundaries weren’t effective tools for reducing the price of housing.

Mr Cortright focused on the consequences of “bursting” Portland’s urban growth boundary, saying that possibility, combined with new inclusionary zoning, could make Portland’s affordability worse.

He argued 7 points:

  1. Affordability is about growing up, not out
  2. The market demand/affordability problem is in the urban core
  3. Adding more supply in the core is the key to addressing affordability
  4. Inclusionary zoning increases market prices
  5. Inclusionary zoning creates only token numbers of affordable units
  6. Inclusionary zoning requirements would encourage further sprawl. (Because inclusionary zoning is likely to apply only to housing built in Portland, but not in suburban jurisdictions, it will effectively be a way of penalising & disincentivising dense development in the city relative to housing on the periphery)
  7. If we want to make housing more affordable, let’s get rid of parking requirements. (Oregon actually does allow inclusionary zoning – for cars, in the form of parking requirements. Requiring parking reduces the amount of land that can be used to house people, and directly drives up the price of new homes & apartments. These costs get passed on to homebuyers & renters. Studies show that in urban centres, parking requirements drive up rents by something in the order of about $US200/month. If we want to increase affordability we ought to be getting rid of this kind of hidden housing tax).

Links:
Planetizen, 19 September 2016: Inclusionary zoning & unintended consequences
Planetizen, 4 February 2016: Cortright: Oregon legislation would make housing affordability worse
City Observatory, 3 February 2016: Bursting Portland’s urban growth boundary won’t make housing more affordable (and a number of counter points in the comments)

Infrastructure funding options

Only when it doesn’t work does anybody think about infrastructure, says Just Economics LLC director Rick Rybeck.

In an article for Revitalization News, Funding infrastructure to rebuild equitable, green prosperity, said divorcing payment from infrastructure from payment for it made it harder to understand how the money was spent.

People also didn’t understand that, when infrastructure was designed & implemented well, it often inflated the price of well-served land. Where does that lead? “The infrastructure we create to facilitate development pushes development away and is partly responsible for sprawl,” he said. User charges, including road user charges, could help focus the mind on cost.

Just Economics says on its website it helps communities harmonise economic incentives with public policy objectives to:

  • reduce blight by putting vacant & boarded-up properties back into use
  • enhance business & employment opportunities
  • fund transit & other public infrastructure
  • reduce parking & traffic congestion
  • enhance housing affordability
  • enhance the environment, and
  • reduce sprawl.

The company says it accomplishes these goals by helping communities re-engineer taxes, fees & regulations so:

  • incentives embedded in taxes, fees & regulations encourage the private sector to create jobs, affordable housing, transport efficiency & sustainable economic development
  • needed public revenues are obtained, and
  • government sustainability, efficiency & competitiveness are enhanced.

Related pieces

These articles led me to several related articles on various websites. Check them out:

Charles Marohn, Strong Towns, 19 September 2016: Infrastructure spending for dummies
Revitalization News, 15 July 2015: Funding infrastructure to rebuild equitable, green prosperity
Rick Rybeck, report for Washington DC Tax Revision Commission, 2013: Funding long-term infrastructure needs for growth, sustainability & equity
Just Economics LLC (Rick Rybeck)

Making NZ a home for planning thinkpieces

A group of professionals who want to raise the level of public debate & understanding about housing, infrastructure, cities & planning launched the Making NZ blogsite in July.

I’ve quoted some of them below about the launch & their reasoning, but Making NZ cracks a mention today because of links to a number of its contributors who’ve commented recently on topics above – notably intensification & affordability.

Blog editor Matthew Webster said the group of contributors saw affordable housing, economics, infrastructure & design as important components.

Phil Hayward, an independent researcher, writer & lobbyist on urban policy issues, said: “A lot of urban policy is based on plausible assumptions that actually are not supported by real-life experience anywhere. For example, changing zoning to allow more intense development is always forecasted to unleash far more supply of housing units than what actually ends up being built. This is mostly because these zoning changes cause land values to increase even faster than otherwise and, as Arthur Grimes pointed out in a 2010 paper, all the profit potential is captured in land values rather than in newly constructed buildings.

“We should learn from the decades of over-estimated housing supply by urban planners in the UK, and avoid a replay of their costly & now-irreversible blundering.”

Development planning consultant Phil McDermott said: “Transport policy in our largest & most troubled market aims to focus investment in already intensively developed urban areas, raising environmental & financial risks. It’s a double whammy for unaffordability. Existing urban areas with limited capacity for growth receive expensive improvements. While that will increase the desirability of living there for some of those that can afford the higher costs & inflated property values, it leaves many more stranded without access either to traditional suburban housing or to multi-unit dwellings of any quality.

“One key, in the case of Auckland, is to free up for development sufficient greenfields land so the land value/rent curve is at least stabilised from the fringe back into the inner city, allowing more affordable & better quality housing to be developed citywide.”

Links:
Andrew Atkin blog, Building Utopia, 12 June 2013: Auckland versus Los Angeles
Making NZ, for urban planning that works
Phil Hayward, Making NZ, 1 September 2016: The myth of affordable intensification
NZ Herald, 29 February 2016: Dushko Bogunovich & Matthew Bradbury: Curing Auckland’s growing pains
Peter Nunns, Transport Blog, 7 March 2016 (and a long line of comments): The linear city and other science fictions

Attribution: BuildZoom, New Geography, Planetizen, Wall St Journal, CityLab, City Observatory, Strong Towns, Revitalization News, Just Economics, Making NZ, Andrew Atkin, Phil Hayward, NZ Herald, Transport Blog

Regular leads: Planetizen.

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Tracking ideas M20June16 – Sprawl & infrastructure, tiny house rules

Sprawl not the problem, infrastructure is
Affordability versus rules

Tracking ideas is a Bob Dey Property Report section devoted to ideas on property questions such as urban strategies & design, many from overseas but with relevance to Auckland.

Sprawl not the problem, infrastructure is

Charles Marohn, founder of the Strong Towns organisation in the US, writes about ever-topical subjects such as sprawl & intensification without the dogmatic approach of many American protagonists.

He wrote about the term ‘sprawl’ a couple of months ago, got drawn into a debate on definitions and came out the other side still saying sprawl wasn’t the problem he was trying to solve.

The problem is the development of infrastructure which can’t be sustained long-term. It will be fine for a couple of decades, and then the repairs come due – at great cost. One of those is roads, another is underground pipework.

We have the same issues here, and the stentorian monologues of recent weeks – of politicians saying ‘This is what you will do, or else’ – ensure that we will suffer those problems. In small towns we already do. With an ageing population, a proportionately shrinking workforce, changing imperatives.

Will the newcomers – the next generation, immigrants – want to pay to dig up & replace old pipes if they can get new ones more cheaply without the dig?

‘Inter-generational equity’ is a term I became acutely aware of as it was bandied about a decade or so ago, and I cringed. Now it’s in the handbook. It supposedly meant passing some of the cost of developing infrastructure on to future generations who would benefit from it.

What it really meant was handing large debt & tired or obsolete assets to your grandchildren.

Back to Mr Marohn: “I’ve repeatedly made the claim that Texas 2016 is essentially California 1986. Texans pride themselves on having a high growth, dynamic economy, free of legacy costs & burdensome regulations….just like California did a generation ago.

“California got started on the suburban experiment 3 decades ahead of Texas (thanks to a more forgiving climate) and has arrived at the logical destination 3 decades earlier. The Lone Star state need only look west for a preview of coming attractions.”

Detroit the story of America

Detroit is the town where they made the cars that enabled suburbs everywhere to sprawl into the sunset, and it’s now hit hard times. Mr Marohn again: “The auto-centric style of development undermined the resiliency of the city, tearing down social, political & financial strength that had made Detroit one of the world’s greatest cities. Once this strength was undermined, once Detroit became a fragile city, it was only a matter of time.

Detroit is the story of America: hard won, incremental gains replaced with an illusion of wealth ultimately sustained by a mountain of debt.

Dallas story familiar

On Dallas, Mr Marohn’s sub-headings will tell you a familiar story:

  1. Rising revenues
  2. High debt levels
  3. Persistent structural deficits
  4. Dissatisfied population

Auckland Council & the entities it controls have an abundance of critics of their performance. We all have our gripes, and a council survey out this week shows we’re very much at the ‘dissatisfied population’ stage.

The question, for Mr Marohn, was this: “How can Dallas be growing robustly, have relatively high tax rates and yet have persistent & large budget deficits? It’s not wasteful government. It’s not incompetence. It’s not right-wing crazies starving the government beast. The problem is that growth on the top line is not turning into growth of the bottom line. For each dollar of revenue the city is receiving, it is taking on far more than a dollar of liability & expense. In the second life cycle of the growth Ponzi scheme, that can be covered up with debt (done that) but, ultimately, the lack of financial productivity starts to produce recurring, structural deficits that have no obvious cause and no apparent solution.”

Links:
Strong Towns, 15 June 2016: Dallas, a budget soap opera
Strong Towns, 7 June 2016: We are all Detroit
Strong Towns, 20 April 2016: The sprawl conversation
Strong Towns, 18 April 2016: Sprawl is not the problem
Strong Towns, tag: The suburban experiment
Charlie LeDuff: Detroit, an American autopsy (published 2013)
Strong Towns, 10 December 2015: America’s suburban experiment

Affordability versus rules

Housing affordability is an issue around the world. This San Francisco take on it, by Johnny Sanphillippo, sets out many of the barriers you might face here:

“Many years ago when I was infinitely younger & a lot poorer I rented a little 9ft x 18ft (about 3m x 6m, so 18m²) backyard cottage behind an old Victorian in San Francisco. Today you might call it a Tiny House or Micro Flat. But back then it was just a 1930s potting shed that had been fitted with a toilet, shower & kitchenette. I was incredibly happy there.

“The space was exactly what I needed, the rent was low, and I didn’t need roommates to make ends meet. The landlord was also happy to have rental income to augment his pension as he aged. This was ‘affordable housing’ that was entirely supplied by the private sector without government subsidies. Yet every aspect of this little backyard cottage is completely illegal under today’s zoning & building codes.”

Link:
Johnny Sanphillippo, Strong Towns, 16 June 2016: Affordable housing that might have been

Attribution: Strong Towns

Regular leads: Planetizen

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Tracking ideas M6Apr15 – exurbs return in US, suburban intensification starting in Auckland

Exurbs return in US, suburban intensification starting in Auckland

Into the first 7 years of the 21st century, far-out subdivisions were popping up on the outskirts of the outskirts of American cities – “the exurbs”. Come the global financial crisis, which the Washington Post now terms the Great Recession, mortgages couldn’t be paid, developers who’d been relying on new buyers to keep subdivisions rolling forward found both funding & customers were drying up, and the “exurb” era looked over.

This coincided with a strengthening campaign to intensify urban areas, which has generally been focused on “the city” in US terms, the cbd (central business district) or city centre here.

Washington Post blogger Emily Badger wrote about the return of the exurb last week, and Planetizen picked up on her article, but I think both have started from the “all or nothing” mindset about planning & development, and Planetizen has skewed Ms Badger’s view further than she intended.

Not surprisingly, the mass of residents the new subdivisions were aimed at couldn’t possibly all fit into a cbd without dramatic upheaval. Just as a starter, expanding utility capacity (water, sewers, transport systems) has to be slower & more expensive in an already developed area than in a greenfield subdivision, though the road from centre to exurb will change the overall cost. And people intent on having a backyard aren’t going to like being cooped up, especially if no new amenity is provided to break up the cbd asphalt.

Again not surprisingly, in gradually improving economic conditions, US Census analysis has shown the trek to exurbia has started again.

Planetizen’s take on the Washington Post article last week was this: “For nearly a decade, the narrative of the move back to the city has held sway in American life. But newly analysed Census data indicate that the presumed death of the suburbs may have been premature.”

The Planetizen article, Suburbs come roaring back, continued: “After a century of suburbanisation, it seemed that urban trends in the US had reversed themselves. Centre cities were getting denser, nicer & more vibrant. No one in their right mind would live in a suburb any more. Millennials cared more about urban amenities & living close to one another than they did about yards & personal space. Centre cities, for the first time in decades, grew faster than did suburbs. Entire subdivisions, their residents ravaged by mortgage debt, turned into ghost towns. Newly analysed Census data says, not so fast.”

Emily Blodger, in her Washington Post blog, was more nuanced as she told of the growth of the exurbs stalling, producing a new American phenomenon, the abandoned ghost subdivisions: “These scenes & demographic trends left the impression that maybe Americans had changed their minds about exurban living. New Census data, though, suggests that 8 years after the housing crash, Americans are starting to move back there again.”

The article was based on analysis by Research Professor Bill Bley of the Population Studies Centre, Institute for Social Research, University of Michigan, who’s also a senior fellow of the Brookings Institution’s metropolitan policy programme.

Forgotten: The buyer’s motive

The figures won’t lie. What comes next, though, is the attribution of motive: “The fledgling trend, captured in data through 2014, raises questions about whether American preferences for where & how to live truly changed much during the housing bust, or if we simply put our exurban aspirations on hold. At the same time, the shift calls into question a parallel & popular narrative: that Americans who once preferred the suburbs would now rather move into the city.”

These publications are influential, so I looked for the balancing interpretations of motive – not to be found. One of the most surprising absentees was the motivation of the buyer. Were they exurb aspirations in the first place? Could it be that the new exurb subdivisions have a price advantage? Could it be that inner-city housing has become overpriced? Or could it be that intensification will work well in many suburban settings?

Those are 3 obvious influences – not necessarily related to preference – that affect home buyers. What disturbs me most about these types of article, and also about much of the intensification v sprawl debate in Auckland, is the lack of thought given to suburban intensification – the how, not whether.

Council planners have proposed schemes in the unitary plan allowing for scaling up of density around Auckland’s scores of neighbourhood & town centres, which have faced considerable opposition. But, while the opposition remains widespread, a number of developers are getting on with suburban intensity which won’t hurt anybody (apart from adding to traffic congestion, an issue I’ll deal with in detail in the near future).

The masterplan for Hobsonville Point makes a point of placing apartment blocks nearest the new schools. New Lynn has a large parking & apartment building right next to the semi-submerged new station and the state of the town centre makes it ripe for further intensive development.

Apartments above or beside retail are starting to appear around some suburban centres. These developments can be far better than the “all or nothing“ mindset because they provide for people to stay in their communities – perhaps single parents, the elderly, and also young singles, taking advantage of beaches, sports clubs, walking to shops and, importantly for urban activity, shorter commutes or easier access to public transport.

They can also, unfortunately, be stern reminders of our utilitarian, cost-dominated developer streak, as in boutique retail at ground, upstairs apartments, plenty of parking, concrete everywhere…. Soul, nowhere.

Both the exurb & intensification thinking here needs to be far more than simply plonking down a home. The equation has to include good access to jobs, shops, schools & amenities – integrated solutions.

Links:

Planetizen, Suburbs come roaring back
26 March 2015, Washington Post blog by Emily Badger, New Census data: Americans are returning to the far-flung suburbs
Brookings Institution, demographer Bill Frey (but I can’t find anything by him relating to this article)

Tracking ideas is a Bob Dey Property Report section devoted to ideas on property questions such as urban strategies & design, many from overseas but with relevance to Auckland.

Attribution: Planetizen, Washington Post

Regular leads: Planetizen

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Transport specialist Litman itemises cost of sprawl

The cost of sprawl in the US, worked out by Canadian transport researcher Todd Litman: $US1 trillion/year, or about $US3000 for every person who lives there.

About $US640 billion of that cost is on the heads of the people who live a long way from their work.

The whole community pays at least $US400 billion more, and Mr Litman’s “best estimate” is $US500 billion more, to accommodate people who live far from town.

In a story a fortnight ago, I bemoaned the absence of sound figures to measure the costs of sprawl v intensification in Auckland.

Mr Litman has come to the rescue – although not completely – in an 89-page study commissioned by the New Climate Economy, Analysis of public policies that unintentionally encourage & subsidise sprawl.

One particular figure I’d been pondering was for parking & travel. Mr Litman has an answer: For your garage at home plus a driveway, a parking spot at the other end of your commute plus the access lane into the parking building, and a share of the tarseal in between, your car requires a bigger footprint than the average house (about 240m² versus about 200m²).

The research paper, produced in partnership with LSE Cities (an international centre at the London School of Economics & Political Science) says it “details planning & market distortions that foster sprawl, and smart growth policies that can help correct these distortions”.

Mr Litman, founder & executive director of the Victoria Transport Policy Institute in British Columbia, was lead author of the report.

He wrote: “Sprawl increases the distance between homes, businesses, services & jobs, which raises the cost of providing infrastructure & public services by at least 10% and up to 40%. The most sprawled American cities spend an average of $US750/person/year on infrastructure, while the least sprawled cities spend close to $US500. In its Better growth, better climate report, the New Climate Economy has found that acting to implement smarter urban growth policies on a global scale could reduce urban infrastructure capital requirements by more than $US3 trillion over the next 15 years.

The report works quickly through a long list of cost factors, all with references that include web links. These include determining the optimal amount & type of urban expansion for different types of cities, and policy reforms that could result in more efficient & equitable development patterns.

Mr Litman has also discussed criticisms of sprawl cost studies & smart growth policies, saying: “An abundance of credible research indicates that sprawl significantly increases per capita land development and, by dispersing activities, increases vehicle travel. These physical changes impose various economic costs, including reduced agricultural & ecological productivity, increased public infrastructure & service costs, plus increased transport costs, including consumer costs, traffic congestion, accidents, pollution emissions, reduced accessibility for non-drivers and reduced public fitness & health.

“Sprawl provides various benefits, but these are mostly direct benefits to sprawled community residents, while many costs are external, imposed on non-residents.”

In a chapter on demand for sprawl, he wrote: “As households become wealthier they tend to demand larger houses & gardens, but responding to this demand does not necessarily require sprawl. As discussed previously, in most urban regions (depending on a city’s ability to expand), smart growth can accommodate 35-70% single-family or adjacent (townhouse) housing.

“Advocates of low-density development policies claim that nearly all households prefer sprawl neighbourhoods, citing consumer surveys which indicate that most households aspire to own a single-family home in a quiet neighbourhood. However, more detailed analysis indicates that households also want smart growth attributes and will often choose more compact neighbourhoods if they have suitable features.

“For example, the US National Association of Realtors’ community preference survey in 2013 found that, although most Americans prefer single-family homes and place a high value on privacy, they also desire the convenience of walkable, mixed-use communities with shorter commutes & convenient access to public services.

“When faced with trade-offs between specific attributes, a majority of respondents choose smaller-lot homes that provide shorter commutes & short walks to schools, stores & restaurants over large-lot houses in more automobile-dependent neighbourhoods.

“Another survey found that households would prefer an urban townhouse over a suburban single-family home if they saved on average $C130/month in housing costs. This price incentive is comparable in magnitude to the public services savings provided by more compact development, as described later in this report, indicating that many households would choose smart growth locations in response to more efficient development & utility pricing.”

Mr Litman said one issue of uncertainty was the portion of sprawl costs currently internalised through location-based fees, such as development impact fees: “Since few jurisdictions currently apply location-based development & utility fees, this value is probably small, so the model assumes 10%.” [New Zealand is one of those jurisdictions where councils charge development contributions.]

Links: New Climate Economy study
US Federal Highway Administration highway statistics report, table HM72
Victoria Transport Policy Institute
LSE Cities
Auckland Council, Cost of residential servicing study
NZIER, 13 February 2015: Moving on up: Relaxing land use restrictions can lift Auckland city

Earlier stories:
13 March 2015: Is it so hard to measure sprawl v intensification costs?
13 March 2015: Quax puts his questions on sprawl v compact costs
2 March 2015: Economic report for council an exhortation to relax land use rules
23 January 2015: Building cost research a onesided analysis
30 October 2012: Government ticks off answers to all Productivity Commission recommendations
13 April 2012: Productivity Commission misses key affordability point – again

Attribution: Study report.

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Kotkin heads new urban issues website

A new urban issues website, the Centre for Opportunity Urbanism, has been formed by Joel Kotkin (executive director), Wendell Cox & Tory Gattis (both senior fellows).

Mr Kotkin, the Roger Hobbs distinguished fellow in urban studies at Chapman University in Orange, California, is executive editor of the New Geography website, writes the weekly New geographer column for Forbes.com and is executive director of the new Houston-based centre.

Mr Kotkin & Mr Gattis co-authored the original opportunity urbanism studies & City Journal article about creating a city philosophy focused on upward social mobility for all citizens as an alternative to the popular smart growth, new urbanism & creative class movements. Mr Gattis writes the Houston strategies blog and its twin blog at the Houston Chronicle, Opportunity urbanist,

Mr Cox is principal of St Louis-based international public policy consulting firm Demographia, is author of Demographia world urban areas on population densities and is co-author, with Hugh Pavletich of Christchurch, of the Demographia international housing affordability survey.

Nancy Sarnoff wrote in the Houston Chronicle of the centre’s first meeting last Thursday: “As more cities across America embrace dense, urban-style development, a group of academics have launched a think tank to promote & defend the widespread development across Houston that highlights its suburban-style soul.

“The Centre for Opportunity Urbanism, a group funded by some of this region’s biggest developers, wants Houston’s combination of urban progress & sprawling growth to become an example of smart urban planning for other cities to follow, not the other way around.”

Mr Pavletich said it would be a useful site, “an easy contact point for policy, industry people & others to access research on infrastructure financing (Texas-style municipal utility district structure, deed restriction structures, construction costs and other helpful urban land use information”.

Links: Centre for Opportunity Urbanism
Houston Chronicle, Think tank believes Houston should be a model for other cities
New Geography
City Journal, America’s Opportunity City, Lots of new jobs and a low cost of living make Houston a middle-class magnet

Attribution: Website, Houston Chronicle, Pavletich note.

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Is it so hard to measure sprawl v intensification costs?

Most cities of the world manage a certain amount of intensification without too much worry. Their gains include greater use & higher value for small areas, a shorter distance to provide services, and presumably lower costs as supply is shared by a greater number.

But Auckland really has no history of intensification, apart from a limited number of taller office buildings in the cbd.

I wouldn’t have thought it would be so hard to work out the difference in cost of laying a kilometre of pipe or wire or tarseal to a subdivision versus laying a shorter distance to a highrise, or a midrise building.

But it is, apparently, very hard.

And in a city where the sprawl versus intensification argument continues as if multi-storey residential buildings were imported from Mars – against the wishes of the populace and against the greater good – it would be helpful to have some definitive answers.

Construction starts are being made on the first in a proliferation of new apartment buildings in the cbd, around the fringe of the city centre – and also in some suburban centres and on some suburban streets. They will, again presumably, help in providing detail for further study of comparative costs.

In the meantime, one study of limited value made it to an Auckland Council agenda yesterday.

I wrote about this new study, the Cost of residential servicing study, a month ago, when I concluded it wouldn’t satisfy the critics who want to be able to say compact is definitely more expensive than sprawl, or vice versa.

One set of figures that was available – a breakdown of the infrastructure costs by development type, from a case study analysis – showed the low density developments were, on average, the most expensive to service, costing an average of $33,890/dwelling, while the high density developments cost an average of $28,077/dwelling. However, there was a considerable variation in costs between sites of a similar density.

Howick councillor Dick Quax, who’s been adamant that there’s no evidence to show intensification is cheaper for the home buyer or for the city than the suburban tradition of the last 70 years – and therefore there’s no evidence to support the council policy of encouraging compact development – provided a list of 7 questions to council housing project office director Ree Anderson on the latest study, and started at the council’s Auckland development committee meeting yesterday by saying his first question wasn’t answered adequately.

Those questions & answers appear in a separate story, Quax puts his questions on sprawl v compact costs.

Ms Anderson gave a short presentation yesterday explaining how an initial intention to produce a cost of growth study had turned into the lesser study on the cost of servicing residential development, excluding private costs.

It arose through action 15 of the council housing action plan, adopted in 2012, and a desire for research showing the true cost of servicing different types of development and accessing the impacts of location & typology.

However, Ms Anderson said when the council sent out requests for expressions of interest to do the research, a decision was made not to proceed with the originally envisaged full study because a lot of historic information was hard to obtain or was dealt with differently by each of the 8 legacy councils.

The approach taken was to carry out 12 case studies to reflect different density types & locations, using actual costs or estimates based on known projects. Only the public costs of servicing sites were included, ignoring private costs such as travel.

Ms Anderson said the study, by CIE (the Centre for International Economics, Australia) & engineering consultancy Arup, showed that “where there was spare capacity in existing networks, the cost of servicing infill developments was generally found to be cheaper than greenfield developments.

“Once infrastructure is in place, the incremental cost of further development may be small, even though overall cost is large. The council will need to consider the extent of spare capacity in networks across Auckland to help determine incremental costs. Proposed development sites need to be examined in detail to understand the influence of site-specific characteristics on costs, such as soil type and slope.”

She said another study was under way to understand household preferences for different types of development.

In the committee debate yesterday, Cllr Quax said the new council which took over from 8 councils around Auckland in 2010 had needed a cost of growth study right from the outset, when the Auckland unleashed paper on growth was produced.

As for his questions from staff, and the responses, he said: “The first question that I had, I don’t think has been answered adequately. While we have these sites [in the case studies] looked at, most of the intensification will probably be mixed urban & suburban, small sites. How relevant is this study to that?”

Ms Anderson: “I think the broad conclusion of quantums… if you have existing capacity with existing infrastructure, on average it is cheaper.”

Cllr Quax: “Average, I don’t think is the correct term that should be used here. It should be all things being equal. If there is no capacity in an existing brownfields area and you have to pull up services… I suspect the cost would be much larger.”

Ms Anderson: “The capital expenditure might be higher but the operating costs – the legacy councils didn’t have all that information – would be lower, if you had proximity to the cbd your costs would be lower.”

Cllr Quax: “One thing the study did show, though, was those areas closer to the cbd had higher costs because of the higher subsidies for public transport. I’m pleased that we finally got the study.

“The study doesn’t actually tell us, doesn’t endorse or follow the council narrative, council rhetoric that all brownfields development is less expensive and that greenfield development is more expensive. It depends on a whole bunch of variables and those relate to capacity, on the network, and one of the things it doesn’t take into account is the private costs, and private costs are significant to people in Auckland. In fact, if you can buy yourself land on the periphery you can save yourself hundreds of thousands.

“It won’t be useful where it does cost more, but I think going forward it will be very very useful, looking at various special housing areas & so forth. But it’s taken a long long time to get this report. It would have been helpful to have this as part of the section 32 [part of the unitary plan, now before an independent hearings panel]. It probably needed to be done by September 2013 [when the council endorsed its proposed unitary plan for consultation].”

Cllr Chris Darby said the report didn’t go into whole-of-life costs: “Those costs of locating in greenfields go on & on & on, that many find it impossible to get themselves out of. Cllr Quax refers to some savings buying on day 1, but it’s from years 5 to 50 those costs go on & on. And it’s all Aucklanders who subsidise greenfields, and to a lesser extent subsidise brownfields.”

Cllr Penny Webster, commenting from her time as Rodney District’s mayor before the super-city was introduced in 2010, noted that one way greenfield costs were dealt with in those days was for the council to work with developers so, together, the public & private sectors got infrastructure done.

Cllr Bill Cashmore, from Franklin, said that while the council had the urge to encourage development of a compact city, “we’re going to have huge employment development in the south – Puhinui, Drury South, potentially Glenbrook.”

Cllr Cameron Brewer returned to the debates of 2013, when Cllr Quax & he led a small revolt against the drive toward compact in the unitary plan, with some success in the final writing of it. “What I get out of this, we heard during 2013 particularly and the fight over residential intensification versus greenfields, was the huge cost  of greenfield development.

“How we consulted over the unitary plan – that was put out as a fact, that greenfields was more expensive than brownfields infill, and the point I get out of this is providing infrastructure for greenfields is more expensive….

“I suppose this is good evidential material that doesn’t completely vindicate the claims black & white, and none disagreed with them, that greenfields was more expensive. (But) you look at Stonefields – when you factor in wastewater etc, it is more expensive than building medium density in Weymouth.

“And that does not match the rhetoric, the spin. The impression also given [in 2013] was that Weymouth would be far more expensive than Stonefields, where you had the advantage of intensification. There is huge variation depending on the density, depending on the location, and greenfields can certainly happen on a good cost:benefit ratio.”

Independent Maori Statutory Board chairman David Taipari moved away from the focus on sprawl versus intensification to note – and this is a note he could have made about a lot of planning documents – “it can be turned into a tool that says why not to do things rather than enable to do things. I’m interested in the council providing it as a tool why to do things.”

Ms Anderson said it was a tool to inform just one element of the whole subject.

Finally, from Cllr Quax, a question on travel that seemed to show private costs being taken into account: “’The average trip from the city fringe may cost 4 times more than from the cbd’. If we’re not taking private costs into account why has that been emphasised? Is that a cost to the council or to the private individual?”

Council financial policy manager Andrew Duncan said it wasn’t the private costs of going to & fro that were counted, but the costs of providing the road or network and of operating it.

Cllr Quax: “Only 13% of people in Auckland work in the cbd. In Howick, only 8% travel to the cbd to work.”

Mr Duncan: “I’m pretty confident that our traffic modellers take that into account.”

Out of that debate & the answers given, I figure the sceptic will remain sceptical. But do we need to worry or care about the true costs, both public & private, of different kinds of building? At the moment, the cost of city-fringe housing is skyrocketing, largely due to high demand for & low supply of sections mostly zoned to remain lowrise.

In city development terms, it makes sense for the suburbs closest to the central business district to be the most densely populated. Some in Auckland are intensively developed even though the buildings are lowrise, but the further out of kilter city-fringe house prices go, the sooner an explosive confrontation on the shape of the city must occur.

Link: Cost of residential servicing study

Related story today: Quax puts his questions on sprawl v compact costs

Earlier stories:
2 March 2015: Economic report for council an exhortation to relax land use rules
9 February 2015: Case studies make for difficult infrastructure cost comparisons
27 October 2014: Sprawl, density, a worthwhile US index and our blinkered approach
16 January 2012: Compact versus sprawl the Auckland battle for 2012
2 June 2010: Infrastructure costs chart sets scene for new intensification v sprawl debate
22 May 2007: ARC rejects land constraint as unaffordability cause

Attribution: Council committee meeting, agenda, residential study.

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Quax puts his questions on sprawl v compact costs

In response to an Auckland Council-commissioned study, the Cost of residential servicing study, Cllr Dick Quax asked 7 questions and got responses from council housing project office director Ree Anderson.

Those questions & responses, set out below, accompany the article, Is it so hard to measure sprawl v intensification costs?

Q1: How relevant are the conclusions when the case study is based on developments of 500-1000 homes on especially large repurposed sites, when the vast proportion of intensification will be bespoke one-offs on small sites?

Answer: The case studies identify the maximum dwellings produced. These include developments that were less than 500 (eg Weymouth, New Lynn) as well as those with the range of 500-1000. The case studies would occur on a staged basis, not all at once, and would vary in scale, including smaller developments.

Q2: By forcing all developments to occur within growth boundaries, does that force some development to occur where it might be more expensive than might otherwise be the case?

Answer: The council agreed through the Auckland Plan that there needs to be sufficient ready-to-go land (zoned and with bulk infrastructure in place) available to meet the demands of growth. The Auckland Plan has a target of having an average 7 years’ ready-to-go land supply. Supply is currently in the order of 6 years, but with the 21 special housing area plan variations in progress, a further 3 years’ ready-to-go land is in the pipeline. The Auckland Plan also had a 30-year growth boundary (the rural:urban boundary) and is developing an urban land release strategy to enable timely release of land and delivery of infrastructure. In this way the capital & operational costs associated with infrastructure delivery is more effectively & efficiently managed. See also response to question 4 below.

Q3: Should the council be planning for the provision of future public open space by zoning and compensating the rural owners at rural land values?

Answer: The council has spent $161 million on land, primarily for open space purposes, in the first 4 years since forming as a new council. The council is looking to enhance a range of partnerships to help it deliver amenities such as parks in the future; this could be in the form of philanthropy, such as has occurred with the many generous gifts of land for parks in the past, eg Cornwall Park.

Q4: The study acknowledges that there is a lack of data on operating costs – and “that capital expenditure alone may not adequately reflect cost differences between sites”. Based on that comment, do operating costs increase for higher density locations where there will be greater disruption and underground infrastructure is more difficult to access?

Answer: While the capital expenditure may be higher in a brownfield area, the operational expenditure is likely to be lower because of existing services that are already in existence. It is more costly to service areas on the city fringe than the isthmus, eg, average trips from the city fringe may cost 4 times more than those near the cbd.

Q5: The council has assumed in its planning that costs for development are lower in high density locations. Now that those assumptions are no longer valid or cannot be substantiated because of lack of data on how detailed capital & operating data is recorded, what changes have been made to accommodate those changes?

Answer: The council has relied on information from its council-controlled organisations, particularly Auckland Transport & Watercare Services Ltd, who have advised that intensification & containment is a more cost-effective way of delivering infrastructure than otherwise. This information was used during the preparation of the Auckland Plan. The cost of residential servicing study confirms that “low density developments were, on average, the most expensive to service…”

Q6: What are the implications of the study’s findings for special housing areas?

Answer: The findings of the study indicate that, where there is spare capacity in existing networks, the cost of servicing infill developments is generally cheaper than greenfield developments. In this respect, the future emphasis for special housing areas can be on brownfields that are served by infrastructure networks with spare capacity, as the special housing area programme has enabled sufficient greenfield lands to be brought on-stream to improve overall land supply. This will be in keeping with the overall goal of the Auckland Plan to optimise the existing investment in infrastructure.

Q7: On the basis that the council governs in the interests of all Aucklanders, why did the study not include private costs?

Answer: When the study was initiated, there was a request to try to extend the study to be a broader study – that would result in a cost of growth study, but it was determined that it was not possible using the case study approach to undertake such a cost of growth study, and so externalities that would have been included in the latter were not included in the cost of residential servicing study. As well, user costs (eg heating, electricity, gas) were removed at the EOI/RFP (expressions of interest, request for proposal) stage as they were seen to be a private cost. The council chief economist explains that public policy focuses on the costs & benefits that are not internalised.

Link: Cost of residential servicing study

Related story today: Is it so hard to measure sprawl v intensification costs?

Earlier stories:
2 March 2015: Economic report for council an exhortation to relax land use rules
9 February 2015: Case studies make for difficult infrastructure cost comparisons

27 October 2014: Sprawl, density, a worthwhile US index and our blinkered approach
16 January 2012: Compact versus sprawl the Auckland battle for 2012
2 June 2010: Infrastructure costs chart sets scene for new intensification v sprawl debate
22 May 2007: ARC rejects land constraint as unaffordability cause

Attribution: Council committee meeting, agenda & presentation.

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Economic report for council an exhortation to relax land use rules

A line in Wednesday’s agenda for the monthly meeting of Auckland Council’s regional strategy & policy committee refers to an information item, technical publications from the council’s research & evaluation unit produced over the last 8 months, but you will find the latest publication only by chance.

The research unit highlights 2 reports, Auckland’s housing market: spatial trends in dwelling prices and affordability for first home buyers, published last September, and the 2014 State of Auckland report cards.

The one that’s missing, with a publication date of 13 February, is Moving on up: Relaxing land use restrictions can lift Auckland city, a discussion paper prepared at NZIER (the Institute of Economic Research) by Dr Kirdan Lees and quality assured by the institute’s principal economist, Shamubeel Eaqub.

It’s an exhortation to build beyond a number of the limits imposed by councillors when they finalised the proposed unitary plan for consultation last September. But, like a report by Motu Research which Building, Housing & Environment Minister Nick Smith hailed in January, it’s a low-rent attempt at swaying people with what can not be called research.

The Motu paper’s authors said it was the view of developers and therefore lacked balance, and they were true to their word. It was unbalanced. The NZIER paper has a headline which isn’t substantiated anywhere in the report’s 25 pages.

According to the executive summary, “We use a simple, calibrated, monocentric spatial model (the Alonso‐Muth‐Mills model) that does not account for the benefits of land use regulations such as improvements in amenity values associated with the city. We estimate that the collective suite of land use regulations, that apply to height, density & other land uses, currently costs families about $933 every year. Removing these rules reduces travel times and lowers the cost of housing.”

This is perhaps the most explanatory sentence in NZIER’s discussion paper for Auckland Council:  “Even polycentric models would give but we need to be clear – we are approximating a rich reality – that includes polycentric centres of activity – with a simple model.”

You could describe that as congested nonsense. I’ve picked on a sentence which is missing at least one word and, with 3 dashes, gives options on how to connect the pieces.

The selection may be unfair, but the sentence is important because it’s an attempt at describing the modelling exercise, and assumptions from it, as difficult. The exercise was a failure.

While it produced some theoretical travel costs – a theoretical consequence of a case not made out – the nearest it got to substantiating a case that rules imposed for a reason amount to an unnecessary cost was to run a stock model. If the exercise had been to pick rules without clear reason for their continued existence, and to assign both costs & benefits to them, the paper would have had some validity. But that wasn’t done.

Throughout the paper, dated 13 February, much is made of Auckland’s geography, the isthmus, the harbours, inability to crowd much housing at the centre, but the modelling is used to demonstrate that housing density reduces and house size increases the further from the city centre.

Geography & topography certainly make Auckland an unusual city, one that doesn’t easily fit the model best applied to landscapes that stretch forever, as around Australian cities and much of the US. As far as I can see from this attempt, the best advice would have been to abandon that model and try some other gauge.

One that might have been much easier to use, and would have produced more useable results, would have been to take a selection of suburbs – fringe, middling & distant. For example, Remuera, Epsom, Mt Eden, Mt Roskill, Herne Bay, New Lynn, Massey, Takapuna, Glenfield, Browns Bay, the Hibiscus Coast, Warkworth, Papakura, Hingaia, Pukekohe.

Most on that list are “middle class”. They’re a range from which a researcher could ascertain comparative housing price & cost movements over a long period, along with transport costs.

But, as NZIER recognised, Auckland’s geography & topography make it unusual. There are many small areas where the land & house prices vary sharply from those of near-neighbours, places such as beach & clifftop streets.

On the upmarket side of that equation, a beachfront bach 40km from the cbd can be worth $3 million and a house 1km away an eighth of that figure. Much of the housing in an old bach suburb might be worth not much more than land value, while housing on similarly sized sections around the cbd fringe has been escalating in price because of scarcity, with absolutely no view beyond the boundary.

The model NZIER has used counts commute distance, time & cost from home to the cbd, and only to the cbd. NZIER might have been better to use meshblocks (small groups of houses), which other researchers have used to make calculations about Auckland housing, and, for the commute, might have used typical travel times & distances (this kind of study was done for the abandoned eastern corridor motorway that was to have taken traffic from the eastern isthmus & Manukau’s eastern suburbs into the cbd; as that proposal morphed into the Auckland-Manukau eastern transport initiative at the end of 2004, the important point about the route was that few commuters would have travelled the full length).

Auckland has at least 50 centres with retail activity of some substance, a number of commercial districts and several large industrial suburbs. Commuters travel in all directions, but research could show a range of common standard commutes. Owners of businesses in those retail centres, and their staffs, are likely to live locally, while many industrial workers will have much longer commutes.

Many people working in the building trades will work locally, yet may face inordinately long travel times due to worsening congestion. The cost of their production is increased unnecessarily by a failure, not of their making, to provide basic infrastructure. Those tradespeople – and governments (local & central) – have a common aim of erecting more buildings for a decent return.

Well, you would think they have a common aim. The tradespeople do, at least. Governments? Along with exhortations to build more, we’re into our second migration spike of the millennium, so the build that was considered desperately necessary without that spike is becoming even more desperate. Tradespeople don’t create migration spikes.

On the local & regional government fronts, one of the major exercises of the last 15 years has been to plan, and plan, at exceedingly large cost to all the contributors to intended development. Among the outcomes, there’s a patchwork of catchment & structure plans, but now central government wants things to move faster. Was that a decade-plus of unnecessary caution on behalf of the receiving environment, or will the next decade be one where caution is thrown to the wind and the next generation is left to fix yet another mess?

One of the sub-headings in the NZIER study is this: “Many factors lift house prices but land use regulations matter”. Writing from a one-dimensional perspective of immediate financial cost, the NZIER researchers figured that the many rules & regulations for construction increase the price of a house.

The researchers could have looked at the array of rules introduced for apartment construction in Auckland over the last 20 years, as an actual example, and could have ascertained the reasons for them quite easily. These are rules requiring minimum apartment sizes, balconies, direct sunlight into living spaces, bike storage space.

And why were these rules introduced? Because developers were erecting apartment buildings without any of these basic features. Yes, those rules added to the immediate cost. And yes, allowing construction that doesn’t meet even a modest standard is the surest way to create slums.

As the Motu research paper did, the NZIER research counts rules to ensure the building trades meet minimum standards as a cost, with no benefit taken into account.

The NZIER study paper refers to other constraints, too, such as maximum building heights affecting floor:area ratios. It says policies such as this that restrict land use “increase amenity in highly localised areas of the city but increase the cost of land through the rest of the city. As activity relocates elsewhere, demand to access the amenity in those areas increases, while restricting supply means people have to live further away. That pushes up the cost of development, not just in the local community but right across the city, as demand for housing shifts to other locations across the city.”

Both pieces of “research” amount to empty quote marks without the balancing input on the value of rules: If the rules kept developers from creating slums, those rules had more enduring value which should be taken into account.

Links: NZIER study paper, Moving on up
Motu Research paper
Auckland Council, technical reports list
Auckland Council, spatial trends paper

Earlier stories:
23 January 2015: Building cost research a onesided analysis
8 October 2014:  Affordability: An essay in response to today’s council economic quarterly & housing research

Attribution: Council agenda, RIMU reports, Motu Research paper.

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Case studies make for difficult infrastructure cost comparisons

Auckland has a new “cost of growth” study with a new name – the Cost of residential servicing study – and it won’t satisfy the critics who want to be able to say compact is definitely more expensive than sprawl, or vice versa.

The study findings will go to Auckland Council’s Auckland development committee on Thursday.

The study has figures, but they’re from case studies, so the authors have pointed out that they can’t be taken as gospel for pricing in a particular category, although there are averages for different parts of the region.

Those geographic averages show developments in the north are the most expensive to service, costing around $40,374/dwelling. The south’s average was $38,736, the central area $30,967 and those in the west cost $29,496.

Cost differences between sites reflect a number of different factors. For the greenfield areas the costs are typically driven by the need to expand network infrastructure, water, wastewater & transport.

In brownfield areas, the network infrastructure is generally already in place and, where there is spare capacity in the network, the marginal cost of providing infrastructure to an additional household in these locations is found to be comparatively low.

However, the average cost of expanding the network to cater for growth in these locations may well be higher than in greenfield sites. Consequently, it is important that there is a good level of understanding about the level of excess capacity in the existing networks when planning the location of future developments.

A breakdown of the infrastructure costs by development type, from the case study analysis, showed the low density developments were, on average, the most expensive to service, costing an average of $33,890/dwelling, while the high density developments cost an average of $28,077/dwelling. However, there was a considerable variation in costs between sites of a similar density.

The study was prepared in response to action 15 of Auckland Council’s housing action plan, adopted in December 2012.

The council commissioned CIE (the Centre for International Economics, Australia) & engineering consultancy Arup to undertake the Cost of residential servicing study in 2013. The Ministry of Business, Innovation & Employment cosponsored it. The purpose of the report was to undertake more thorough empirical research showing the true cost of servicing different types of development and assessing the impacts of location & typology.

The 12 case studies were a mix of residential developments completed & underway) in different areas and of varying scale & density. Infrastructure cost information was sought for water, wastewater, stormwater, transport, schools, community services & parklands.

Link: Cost of residential servicing study

Attribution: Council report.

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