Archive | Urban strategies

Tracking ideas Sun5Mar17 – retail future, government buildings?

Online shopping rings in changes
And – with less regulation – government buildings?

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.

Online shopping rings in changes

First, floorspace use

An article on the US National Housing Institute website Rooflines proposes a change in the US tradition of ground-floor retail, upstairs residential in many city districts because online shopping is reducing physical retail demand.

Crains’ New York business website suggested the retail sector was beyond the stage of bouncing back from the online shopping trend.

Project for Public Spaces, however, argues in a January article less about total retail space, more about how many “third places” are vital for the community.

Other ideas, such as “third spaces”

Sociology professor Ray Oldenburg wrote about people needing 3 places: the home, the workplace or school, and beyond that a third place – a public space on neutral ground where people can gather & interact while experiencing a sense of ease & belonging. In his 1991 book The Great Good Place, he argued that bars, cafés, stores & other “third places” are central to local democracy & community vitality.

In Seattle, property developer Ron Sher took up the message and founded Third Place Books after the author’s central theme.

The Project for Public Spaces website said: “Along with piles of books, the stores also contain cafés, restaurants & taverns that attract users of all ages, interests & backgrounds. The common areas host community programmes such as college jazz concerts, game nights, knitting clubs, farmers’ markets, story hours & tai chi lessons, while meeting rooms in the back offer gathering spaces for more private activities like study & support groups, or foreign language & computer lessons.”

And – with less regulation – government buildings?

The Atlantic – like many US media long on Trump criticism – raised an aspect of the US presidency that may well extend the retail vacancy trend into the bureaucracy sector.

Its article was about how there’s not much to do at the State Department, and a suspicion that some early redundancies will be extended within the department. Take that a logical step further: a president who’s averse to regulation is in the prime position to get rid of it, everywhere. And the US, for all its chanting of the words democracy & freedom, is a highly regulated country.

While Mr Trump seems intent on maintaining police lines and increasing the US military presence, it’s easy to see much other regulation being sidelined. In quick time the country could see scores of government buildings being vacated.

Rooflines, 16 February 2017: Should online shopping change how we use space?
Crains, 29 January 2017: Some experts say retail will bounce back. Don’t buy it
Project for Public Spaces, 5 January 2016: Can retail space be an extension of the public realm? A look at Seattle’s Third Place Books
The Atlantic, 1 March 2017: The state of Trump’s State Department

Attribution: Rooflines, Crains, Project for Public Spaces, The Atlantic.

Regular leads: Planetizen

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Leading banker takes Australian politicians to task on governance, finance, infrastructure, urban prospects

Australian politicians’ ears must have been burning when bank chief Ken Henry addressed the country’s Committee for Economic Development in Canberra on Thursday, because he wasted no words in portraying the destruction – instead of construction – of a sound future they continued to guarantee.

The Unconventional economist on MacroBusiness, Leith van Onselen, wrote: “Dr Henry pulled no punches in admonishing the Government’s negligence in managing Australia’s mass immigration programme.”

Mr van Onselen also raised questions arising from Australian Productivity Commission reports, including An ageing Australia: Preparing for the future.

But migration & age were just 2 of the questions raised by Dr Henry, who chairs the National Australia Bank. He talked about the notion that endless growth was a practical proposition for Sydney & Melbourne, how every proposal for major infrastructure was drowned in political wrangling and – in the sector he knows best – how every tax reform proposal of the last decade had failed.

Below are some excerpts from his speech:

Business at odds with community

“According to our research, Australian businesses see our strong rate of population growth as a positive. …. In the broader community, there is considerably less support for a larger population. People are concerned about the impact of a growing population on traffic congestion, urban amenity, environmental sustainability & housing affordability. And they worry about our ability to sustain Australian norms of social & economic inclusion. These concerns are understandable.

“Australia’s business leaders have to accept responsibility for ensuring that strong population growth, and the investment opportunities that go with it, lift economic & social opportunity for all, without damaging the quality of the environment we pass to future generations. That means that we have to take an interest in traffic congestion, housing affordability, urban amenity & environmental amenity, including climate change mitigation & adaptation….

“If we want better access to skilled domestic workers, then we are going to have to offer those workers the prospect of better lives. If we want modern & efficient infrastructure, then we are going to have to take an interest in the design of our cities; we are going to have to take an interest in regional development; and we are going to have to take an interest in the planning of new urban centres.

“If we want less red tape & less regulation, then we are going to have to demonstrate that regulation is not necessary….

“Meanwhile, our politicians have dug themselves into deep trenches from which they fire insults designed merely to cause political embarrassment. Populism supplies the munitions. And the whole spectacle is broadcast live via multimedia, 24/7. The country that Australians want cannot even be imagined from these trenches….

“Almost every major infrastructure project announced in every Australian jurisdiction in the past 10 years has been the subject of political wrangling. In the most recent federal election campaign, no project anywhere in the nation – not one – had the shared support of the Coalition, Labor & the Greens.

“Every government proposal of the last 10 years to reform the tax system has failed.

“And the long-term fiscal, economic growth & environmental challenges identified in 4 intergenerational reports over the past 15 years?  The opportunities identified in the White paper on Australia in the Asian century? Simply ignored.

“The reform narrative of an earlier period has been buried by the language of fear & anger. It doesn’t seek to explain; rather, it seeks to confuse & frighten.

“Meanwhile, the platform burns.”

Growing Sydney & Melbourne

Dr Henry also spoke about the Australian budget & tax system, a strongly growing but aging population, climate change & energy security, and making the most of the Asian century.

“How will we fund the biggest infrastructure build in our history? And what about infrastructure planning?” he asked, before questioning the sense in adding 7 million people to the populations of Sydney & Melbourne:

“On the basis of official projections of Australia’s population growth, our governments could be calling tenders for the design of a brand new city for 2 million people every 5 years; or a brand new city the size of Sydney or Melbourne every decade; or a brand new city the size of Newcastle or Canberra every year. Every year.

“But that’s not what they are doing. Instead, they have decided that another 3 million people will be tacked onto Sydney and another 4 million onto Melbourne over the next 40 years.

“Already, both cities stand out in global assessments of housing affordability & traffic congestion.

“And even if we do manage to stuff an additional 7 million people into those cities, what are we going to do with the other 9 million who will be added to the Australian population in that same period of time? Have you ever heard a political leader addressing that question? Do you think anybody has a clue?

“At the very least, we are going to have to find radical new approaches for infrastructure planning, funding & construction. And that includes energy infrastructure, critical to our economic performance and our quality of life.

“The biggest challenge confronting the energy sector is that climate change policy in Australia is a shambles. At least 14 years ago, our political leaders were told that there was an urgent need to address the crisis in business confidence, in the energy & energy-intensive manufacturing sectors, due to the absence of credible long-term policies to address carbon abatement. It is quite extraordinary, but nevertheless true, that things are very much worse today.”

  • Dr Henry was Secretary of Australia’s Treasury Department from 2001-11, and was appointed a director of the National Australia Bank in November 2011 and chair in December 2015. From June 2011-November 2012, he was special advisor to the prime minister with responsibility for leading the development of the white paper on Australia in the Asian century. He’s a former member of the board of the Reserve Bank of Australia, the Board of Taxation, the Council of Financial Regulators, the Council of Infrastructure Australia and chaired both the Howard government’s tax taskforce in 1997-98 and the Rudd government’s review of the tax system in 2008-09, and he’s governor of the organisation he was addressing above, CEDA.

23 February 2017: NAB chair Ken Henry’s full speech at CEDA
Unconventional economist on MacroBusiness, 24 February 2017: Australia can’t build its way out of population ponzi
Unconventional economist, 24 February 2017: Bigger cities are engines for inequality
Australian Productivity Commission, November 2013: An ageing Australia: Preparing for the future
Committee for Economic Development of Australia

Attribution: NAB, CEDA, MacroBusiness.

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Tracking ideas Sun22Jan17 – Full steam ahead for floating city

Floating city concept gets formal go-ahead

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.

Floating city concept gets formal go-ahead

An organisation which has been working on concepts for floating cities for 8 years, the Seasteading Institute of San Francisco, signed a memorandum of understanding on 13 January with the French Polynesian Government to bring the vision to reality.

The vision is of self-sustaining communities that can withstand rising sea levels, and was piloted in Rotterdam, the Netherlands, in 2013 in partnership with DeltaSync, a design, research & consultancy firm which specialises in sustainable floodproof urban development in delta areas.

DeltaSync research in 2015 showed it was technically feasible to create floating highrise buildings of 15 floors at sea, even under hurricane conditions.

French Polynesia’s housing minister, Jean Christophe Bouissou, said the French dependency had a blue economy initiative to adapt to rising sea levels and the floating island project would have a special governing framework providing for an innovative special economic zone.

Seasteading has formed a new company, Blue Frontiers, to build the floating city.

The pilot: Rotterdam’s Floating Pavilion, built in 2013.

A bright idea or a waste of resources?

On the Futurism Facebook page there’s plenty of criticism, starting with this one: “We can’t create adequate housing for the people already living on the planet now, and you want to go and spend huge amounts of resources and money to build this kind of super-expensive crap! There is no shortage of land in the world, such absolute stupidity. Why not build on the land we already have… And maybe perfect the methods so everyone can have housing.”

Floating city image at top: Artisanopolis, submitted by Gabriel Sheare, Luke & Lourdes Crowley, and Patrick White, 3 expatriate Americans living in Chile, was first equal in the Seasteading Institute’s design competition. They used Roark 3D modelling.

Seasteading Institute
Seasteading, Floating city project
Inhabitat, 16 January 2017: World’s first floating city one step closer to reality in French Polynesia

Inhabitat, 6 June 2013: Rotterdam’s Floating Pavilion is an experimental climate-proof development
Artisanopolis portfolio
Roark 3D modelling
Futurism, Facebook, on Artisanopolis

Regular leads: Planetizen

Attribution: Inhabitat, Seasteading, DeltaSync, Facebook,

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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.

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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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.

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).

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.”

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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Deal on supermarket land opens way for Old Papatoetoe mall revamp

Auckland Council entity Panuku Development Auckland’s transformation plans for various areas around the region are about to hit Papatoetoe.

Upgrading of the mall in Old Papatoetoe will start soon following signing of a deal allowing expansion of the mall’s existing supermarket. The mainstreet mall is on a 2.5ha block Auckland Council owns on the southern side of St George St, between Tavern Lane & Wallace Rd.

Panuku’s plans for the site which will see it opened up with new plaza space and a reconfiguration of shops, making it easier & safer to get from St George St.

Foodstuffs North Island Ltd has lodged resource consent to redevelop the Papatoetoe New World supermarket and expand it on the 3065m² site the council has sold to the company. Foodstuffs expects to start that work next year.

Panuku development director Allan Young said sale of the suprmarket land was essential to trigger the next phase of works: “The sale of this land means we can get on with the carpark upgrade and the long-awaited refresh of the mall. It’s an exciting time for Papatoetoe. We have secured an excellent mix of medical & health-focused tenants for the refreshed mall and, coupled with an upgraded New World, this will really pump new life into the area.”

Work is expected to start on the carpark reconfiguration this month and the mall upgrade next month.

Panuku also plans to work in partnership with a private developer to build about 80 apartments & terrace houses on the large carpark adjacent to Tavern Lane. This project is still in the planning stages.

Attribution: Panuku release.

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Lawyers take issue with minister’s urban land target

The Government’s proposed national policy statement on urban development capacity will require councils to ensure land supply for housing & business keeps pace with growth, but partners at law firm Berry Simons say  Environment, Building & Housing Minister Nick Smith is targeting it wrongly.

Berry Simons expressed immediate concern about some of the assumptions underpinning the proposed policy statement and its effectiveness to address Auckland’s housing crisis, and followed that up on Friday with a suggestion that the NZ Government should study the impact of overseas investment on house prices, as the Canadian Government had decided to do.

The proposed policy

Dr Smith said on 2 June: “This new policy is about tackling the long-term root cause of New Zealand’s housing affordability problems. Insufficient land supply in Auckland has seen median section prices rise from $100,000 in 1990 to $450,000 now – an increase of 350%. In the same time, building costs rose 78% and the consumer price index 71%. The high section price compounds the affordability problem because the built home will also be highly priced.”

Submissions on the proposed policy statement close on Friday 15 July.

It would require councils to:

  • provide sufficient land for new housing & business to match projected growth in their region, city or district plans
  • monitor & respond to housing affordability data, building & resource consent data, and value of land on the urban boundaries
  • take into account the difference between planned & commercially feasible development capacity, and provide for over-supply to ensure competition (20% short to medium-term, 15% long-term)
  • co-ordinate their infrastructure and ensure their consenting processes are customer-focused
  • recognise the national significance of ensuring sufficient land is available over local interests.

Dr Smith said: “This policy is about a culture change to support development that connects planning decisions to economics, ensures plans are regularly updated and recognises the national importance of housing.

“This urban development policy is carefully nuanced to the different growth pressures across New Zealand’s towns & cities. There are requirements for all urban areas, but the analysis & directions become greater for medium-growth areas (between 5-10% in a decade) and most demanding in high-growth areas (over 10% in a decade).

“This new urban development policy is part of the Government’s systematic dismantling of Auckland’s metropolitan urban limit. The first step was providing for special housing areas that enable developments to be approved in the interim, contrary to Auckland’s old plans & rules. The second step was the fast-track process for a new unitary plan, to be completed in September. The third step is the Resource Management Amendment Bill that adds new specific functions for councils to provide development capacity, and this proposed policy provides detail on how this is to be done.

“This policy reform process has been based on the comprehensive work of the Productivity Commission, with its high level report on housing affordability in 2012 and its detailed work on the land supply problem in 2015.

“New Zealand’s decline in housing affordability & ownership is decades old and there are no instant or easy fixes. This systematic reform of our planning system is an important component of the long-term solution. This work is complemented by a wide range of other initiatives, such as KiwiSaver HomeStart, changes to tax law on property investment, increased investment in building apprenticeships, Resource Management Act reforms before Parliament, using surplus public land for growing housing, better utilisation of Housing NZ land & building regulations reform.”

Dr Smith said the intention was to finalise the policy and for it to take effect in October, in conjunction with the Resource Management Act changes & Auckland’s new unitary plan.

Questions for government & council

Berry Simon partner Andrew Braggins said: “While the proposed policy statement contains a number of laudable objectives, it is sadly at least 3 years too late and it will not alter Auckland’s housing supply for at least 2 years, if not longer. Worse, if Auckland Council considers that it will be ‘business as usual’ under the national policy statement, then we probably will not see any meaningful change in Auckland’s housing supply.

“To the extent that the proposed policy statement proceeds on the simplistic assumption that rising house prices & a shortage of affordable housing in Auckland is caused by a lack of land supply rather than a demand for housing that outstrips supply, the thinking underpinning the proposed policy statement is flawed and risks misdirecting government & council resources from addressing the real issues. At least 3 key points are worth making:

“The first is that made recently by an economic commentator who said: ‘Freeing up land is one thing. We need houses that are affordable for lower income people.’

“Central government must know – but does not seem to be prepared to admit – that the lack of availability of houses for New Zealanders is not due to lack of supply but rather to demand – that a very large number of both existing housing stock & those being built are being snapped up by overseas investors – young & low-income New Zealanders are simply unable to compete.

“Reports that 46% of all new mortgages in May were to investors are consistent with what we see in the market, that the bulk of special housing area houses are being sold to investors, often overseas investors.”

Wide evidence of foreign buyers

Law firm partner Simon Berry said: “We are consistently seeing that a large proportion of special housing area houses are being sold, generally off the plans, to overseas investors. The same goes for the existing housing stock – I recently heard of an example of an overseas investor purchasing 55 residential properties in a single week. The Government’s scrutiny of the market has overlooked these basic facts – unwittingly or otherwise – but all real estate agents & resource management practitioners know full well that this is happening every day.”

The lawyers’ second point was aimed at the council: “It is equally clear that Auckland Council did not pay nearly enough attention to urban land supply issues when preparing the proposed Auckland unitary plan and, while they might now be undertaking many of the assessments required by the proposed national policy statement, they are only doing so because they were directed to by the independent hearing panel charged with hearing submissions on the plan. In the meantime, the development capacity provided by the plan is well short of what Auckland needs – an issue already acknowledged by Auckland Council when it sought to introduce the out-of-scope zone changes into the plan.

Infrastructure delaying special housing areas

Third, the development of many special housing areas in Auckland is being delayed by a lack of infrastructure. The release of further land will simply not deliver the infrastructure needed to service new development – this is a matter that needs to be carefully planned by the council & its key CCOs, Watercare & Auckland Transport.”

Mr Braggins added: “Not a single new dollar in the recent Budget was allocated to Auckland’s transport infrastructure – but adding new zoned land without infrastructure & the funding to service it is only likely to distract Auckland Council & the Auckland CCOs from providing infrastructure to existing zoned land & special housing areas. This is likely to slow everything down. It’s hard to see what they can do that they haven’t already done without more money.

“No doubt the Government’s reluctance to face facts is due to the contribution that overseas investment makes to the economy. However, they should think twice before they act under this proposed national policy statement and address the other factors that they should know are the root cause of the problem.”

Canada studies role of foreign capital

The lawyers said that, like Auckland, the Canadian cities of Toronto & Vancouver were facing soaring house prices. Over 90% of all detached homes in Vancouver were worth over $C1 million.

“Unlike New Zealand, however, the Canadian Government is prepared to recognise that, although the issue is complex, the major influx of foreign capital into Canada in recent years is playing a significant role in that country’s housing affordability crisis. It has therefore set aside funds to analyse the extent to which this influx of foreign capital is responsible for the rapid price increases.

“To his credit, the Canadian prime minister obviously does not see the evidence of overseas capital contributing to increasing house prices as being ‘diddly squat’ as our housing minister does – nor is he content to simplistically blame Canada’s planning legislation, the existence of green belts or lack of land supply. Demand from overseas investors is clearly a major part of the issue.”

Consultation document
National policy statement summary
Resource Legislation Amendment Bill 2015 
A way forward for national direction
International approaches to managing development capacity 
BERL research: Business land: problems & causes
Cabinet paper: Approval for public consultation
Cost:benefit analysis of policy options
Regulatory impact statement 
Report summarising submissions made during the first stage of consultation
Productivity Commission inquiry: Using land for housing

Earlier stories:
24 June 2016: Fairgray works through the question: Who’s really the house price villain?
23 May 2016: Is it really a faraway boundary that’s raising inner-city house prices?
11 December 2015: Planning system is next Productivity Commission target
10 August 2015: Council has forthright message for Government on land for housing
19 June 2015: 
Key points from land for housing report
19 June 2015: 
Commission looks behind high land prices
7 October 2013: 
From strawberry fields to urban zones
6 April 2011:
Transformation projects get council endorsement, but only in principle
8 March 2010: 
Council says 435ha MUL shift will create 30,000 jobs
22 May 2009: 
Waitakere councillor takes swipe at ARC over procrastination
6 March 2009: 
Council approves design guidelines for Massey North & Hobsonville industrial areas
3 September 2006: 
Draft business land strategy endorsed, final version out soon
27 March 2005: 
Waitakere wants 3 MUL expansions in growth plan
2 March 2004: 
Residential land supply falls below minimum threshold
2 March 2004: 
Vacant business land capacity falls 26% in 5 years

Attribution: Berry Simon releases, ministerial releases.

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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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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.”

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.”

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

Attribution: Strong Towns

Regular leads: Planetizen

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Is it really a faraway boundary that’s raising inner-city house prices?

Is it an urban boundary 30-40km away that has pushed the price of very average houses in the Auckland isthmus’s eastern suburbs and the western fringe of the cbd over $1 million, and rising?

Apparently so. Politicians from all quarters want to remove it, although Housing Minister Nick Smith cautioned last week about boundary removal without ensuring appropriate infrastructure is developed.

Failure to get adequate infrastructure in place has been an important factor limiting greenfield projects, suburban development & city-centre intensification. The issue in all cases has been funding, it’s been an issue for decades and nobody has rushed to resolve it.

It could have been solved through bonds, which used to be part of local body financing, and a new finance structure established by councils through Local Government NZ should enable it.

In Auckland, infrastructure demands are enormous, both for new development and to expand capacity of existing networks, but ratepayers are loathe to increase their payments to the council for infrastructure that doesn’t directly affect them.

The debate is long overdue on how to fund infrastructure. Priorities for underground infrastructure, however, are in place through the Auckland Plan, approved in 2012 with updates from Watercare and the council’s internal stormwater department.

The metropolitan urban limit for the whole Auckland region has been in place for 23 years, and cemented in place in 1999 as part of a long-term regional growth strategy. The need to provide for growth was recognised, but the political structure meant the regional council’s primary concern was to prevent damage rather than to enable construction.

Expansion was provided for, but not to the extent required to meet sudden influxes of migrants, as happened in 2003-04 and is happening now. In the last 3 years New Zealand has been host a net inflow of 160,000 migrants, 74,000 of those settling in Auckland.

Such influxes suit economic priorities for consumer demand, not for steady, programmed expansion.

Another factor occurring internationally is investors’ acquisition of assets for their capital value potential, ignoring traditional measures such as income & yields.

In those circumstances, it’s not surprising that provision for steady growth hasn’t been working. First, because the provision was too inflexible; second, because population surges can’t be accommodated; third, because asset investors have turned investment logic on its head.

Now, because asset prices have risen exponentially, it’s not practical to impose a previously cheap pricing regime on development. To do so would throw local borrowers, and their lenders, into debt positions which they couldn’t escape. The answer to that is to raise the bottom pricing layer as well, which means everything else also has to rise, including fixed incomes.

In other words, inflation takes care of it, with some help.

The calls to abandon the urban boundaries are premature by a few weeks. Auckland Council has spent just under 6 years putting new, consistent planning structures in place for the whole region. The last piece of the jigsaw, the unitary plan, combines the old regional council’s land use regional plan and the 7 old territorial councils’ zone-based district plans into one, theoretically co-ordinated plan.

Auckland Council brought this plan into the public eye in June 2012, after city centre & waterfront masterplans were approved. The council finalised its recommendations in September 2013 and sent the package off to an independent panel headed by resource management lawyer David Kirkpatrick, who was made an Environment Court judge in the process.

That panel finished its hearings 10 days ago, but long before it got to the end it made it clear that it was thinking differently from the council about how the new rural:urban boundary system should work. What the panel proposes will be revealed in its recommendations back to the council, due to be delivered on 22 July. The council will decide by 19 August whether to accept the panel’s recommendations.

For over 2 decades, the power of decision on moving the old metropolitan urban limits was primarily with the regional council and is now with the unitary Auckland Council. The new council has been planning for change, and only now is beginning to push changes to urban land use, principally through its development-facilitating arm, Panuku Development Auckland; through the start of a fundamentally different transport system centred on the city rail link; and through prioritised underground infrastructure provision around the region.

As the unitary plan process began, Housing Minister Smith decided to fill in the 3 years before the unitary plan was to come into effect with the creation of special housing areas. He’s been ridiculed for the slow pace of housing development in those areas, and the number of approved development areas which have then been marketed for sale – without any development starting.

But in a place where fast-tracking is unusual, switching into top gear doesn’t happen overnight. Dr Smith’s ploy had an immediate intent of getting construction underway, but more impotently a longer-term intent of dismantling the cautious structures of the old councils.

In a release last week, he said: “I was given the housing portfolio in January 2013 and immediately identified Auckland Council’s metropolitan urban limits, set in 1993 when the population was half a million less than today, as a huge barrier to meeting housing needs both now and in the future.

“The Government’s housing programme has involved the systematic dismantling of Auckland’s metropolitan urban limit. I have used special housing areas to override the limits in the short-term while fast-tracking with the independent hearings panel a new plan for Auckland with adequate housing supply.”

The new unitary plan is only 6 weeks away from going to the council, and I’m confident it will provide a far more permissive approach to new housing because of the depth of analysis that has gone into the new plan.

“It would be counter-productive to ditch this work at this time with a simplistic approach of just abolishing city limits. We still need some rules to ensure new urban areas have appropriate infrastructure & services and that we make separate provision for industry from housing.”

On the way through that statement Dr Smith disparaged Labour & its housing spokesman, Phil Twyford, for not supporting Government thinking earlier, and Mr Twyford for insisting having no boundaries ‘will mean uncontrolled sprawl from Pukekohe to Warkworth’. Dr Smith welcomed Labour’s change in thinking.

In the unitary plan, Auckland Council has proposed urban boundaries around existing major urban areas, right down to some of the smaller settlements in the region, and has agreed to future urban zones being topped up through rezoning to ensure 7 years’ supply is available.

Opponents of having any boundary attribute escalating land prices in many fringe areas to the longstanding metropolitan limit and the ability of speculators to take advantage of that through landbanking. That position will remain so long as inadequate alternative supply is available, or perhaps through regulation.

But freeing up fringe land also comes at a price: Recent US research indicates that land well away from employment, which looks comparatively cheap, is no longer cheap when transport costs are included. Providing piping & services to sprinkled settlements is also not as cheap or efficient as moving suburbia outward in large chunks.

Work on growing employment alternatives needs to resume. Before the advent of the super-city, the region’s outer councils were working on ways to grow the business base they lacked, for both employment that would cut commuting and as a stronger rates base for council income.

Alongside the spread of business zones – which has been sorely needed for longer than there’s been any residential crisis – localised, suburban intensification should be provided for. It’s part of the unitary plan as proposed by Auckland Council, and likely to be accepted.

Intensification in outer suburbs is a useful way of offering residents more options without needing to be wholesale street-upon-street apartment blocks.

Whatever form new housing takes, infrastructure provision still needs to be prioritised, even if the strict boundary line goes.

Earlier stories:
12 May 2016: Whenuapai structure plan will be first under new land strategy
11 December 2015: Planning system is next Productivity Commission target
5 October 2015: Commission sends land for housing report to Government
10 August 2015: Council has forthright message for Government on land for housing
19 June 2015: Key points from land for housing report
19 June 2015: Commission looks behind high land prices
7 October 2013: From strawberry fields to urban zones
6 April 2011:
Transformation projects get council endorsement, but only in principle
8 March 2010: Council says 435ha MUL shift will create 30,000 jobs
22 May 2009: Waitakere councillor takes swipe at ARC over procrastination
6 March 2009: Council approves design guidelines for Massey North & Hobsonville industrial areas
3 September 2006: Draft business land strategy endorsed, final version out soon
27 March 2005: Waitakere wants 3 MUL expansions in growth plan
2 March 2004: Residential land supply falls below minimum threshold
2 March 2004: Vacant business land capacity falls 26% in 5 years

Attribution: Political releases, planning documents.

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