In this last post for the year, I want to look at some of the things I think will be big discussion points during the year as Auckland continues to transform into a better city.
City Rail Link
With works now well underway on the first sections of the CRL the project will remain a strong talking point in 2017 as we follow its progress. We start the year with changes at Britomart with the new temporary entrance coming into use. Early in the new year the CRL team are expected to put the rest of the project out to tender.
Well also be focusing a lot on what happens to the streets after construction is finished. The works so far have shown the city can still function well with the significant disruption that’s occurred already and so we believe there’s an opportunity to vastly improve them for pedestrians, not just put them back as they were.
The government don’t like the idea of Light Rail on Dominion Rd but begrudgingly acknowledge the need for more rapid transit capacity. So in ATAP, they referred to the idea as ‘Mass Transit’ and said the NZTA would be looking at bus alternatives before confirming what would happen in the future. This work is already well underway and I’d expect it to be released early in the new year. We know AT had already put a lot of work in before deciding on the Light Rail option, including analysing many bus alternatives. So to be credible, this new study will have to show how it deals with the issues, like city centre street capacity, that led to AT picking light rail in the first place.
If they ignore those issues, it will put Light Rail on the same track to existence as the CRL did with the government and its agencies producing competing and often incomplete analysis before finally agreeing with the project.
The issue of congestion around the airport is also likely to be a big factor and one I think will only increase pressure on politicians to get this addressed.
I expect we will hear more in 2017 about how AT plans to develop the Rapid Transit Network. At the very least the Northwest Busway which was identified in ATAP as needed in the first decade. We know AT have already been doing some work looking at this. I also think we’ll hear more about other RTN projects such as AMETI and how to deal with electric trains to Pukekohe, either extending the wires or using battery powered trains.
New Network Rollout
In 2017 we are will see the roll out of the new bus network in West Auckland in June followed by Central Auckland a few months later.
Parnell Station and new rail timetable
In March the new Parnell Station is finally due to open. The old Newmarket Station building was moved to the site just before Christmas and is being refurbished as part of the station. The opening comes alongside a new rail timetable that AT say will speed up services – although that may be only by a couple of minutes so not the significant improvements that are needed.
Government elections will likely be a strong point of discussion in the coming year, especially in the latter half as voting draws near. It was of course made more interesting by John Key’s sudden resignation a few weeks ago. Transport is not usually a major talking point but we’ll certainly be watching it. Housing is certainly shaping up to be a massive issue though so it will be fascinating to see what impact that has.
We’re expecting to see a lot of progress on cycleways this year we move ever closer to mid-2018 cut off of the Government’s Urban Cycleway Fund. Some of the ones due to start this year include
- The Nelson St extension from Victoria St to Quay St
- Quay St extension to The Strand
- The next sections of the Eastern Path
- Ian McKinnion Dr
- Franklin Rd
We’re also hoping to see progress on Skypath this year now that the consent issues are out of the way.
After around 5 years of construction, in April the Waterview connection is finally due to open. It will be fascinating to see just what impact the project has as there’s a very high chance it will cause significant congestion, especially leading to the city.
SH20a – Kirkbride Rd interchange
The grade separation of Kirkbride Rd and SH20A is also due to be completed in 2017
The hugely expensive East-West link is going to get a lot of attention in 2017 as it moves through the consenting process. The NZTA lodged applications for consent just a few weeks ago and the EPA process needs to be completed within nine months of that. A lot of mainstream media focus will be on the Onehunga area where there is a lot of opposition to what the NZTA have proposed.
The Northern Corridor will also be going through the same process as the East-West link but so far there hasn’t been anywhere near the level of opposition to the project, especially seeing as extending the Northern Busway is now a key feature of the project.
Auckland Plan refresh
A big discussion this year will be the refresh of the Auckland Plan, the 30 year strategic plan for Auckland. Since the first Auckland Plan around six years ago, we’ve made significant progress on some issues, such as the CRL and Unitary Plan but we also face a lot of new challenges, especially around the provision of housing. It will be interesting to see how much the vision for Auckland changes.
We’ll obviously be following closely what happens with Auckland Transport in 2017. One big thing to watch is that AT will be hunting for a new CEO this year.
All up, 2017 is shaping up to be another huge year and we’re looking forward to seeing what happens. See you next year
Russell Brown’s Public Address article on the impending closure and redevelopment of the King’s Arms music venue got me thinking. Russell highlighted the importance of certain types of physical spaces for a music scene’s ongoing vitality:
What the King’s Arms and the Powerstation have in common is that they are reasonably large rectangular boxes, which makes them ideal rock ‘n’ roll venues. That’s a hard kind of building to find – and an even harder one to build – in the current environment. While the Wine Cellar and Whammy have done a good job of making the most of their space and Galatos seems to work well, the only real “big box” on K Road is The Studio.
As the article investigates, a confluence of positive and negative trends is putting pressure on spaces for live music at the centre of Auckland. On the one hand, the success of the city centre as a place for both employment and residential living means that redevelopment is spilling out to the city fringes that traditionally served a mix of cultural purposes. On the other hand, the city-wide housing affordability crisis is putting the screws on rents.
As I discussed in another recent post, when rents rise faster than general consumer prices across the entire city, it’s a sign that there is a shortage of housing supply relative to current housing demands. In other words, we haven’t built enough. In Auckland, if rents had kept pace with consumer prices since 2001, they’d be $120 per week lower than they actually are, or $6240 per annum. Here’s a chart:
Russell doesn’t mention it in his article, but rising rents have a second negative effect on the sustainability of a local music scene. They make it more difficult for people to start bands, as the time that would have gone towards practicing, writing songs, and hustling for gigs and recording time goes towards paying the rent instead.
David Lowery (Camper Van Beethoven frontman and one of my favourite musicians) neatly set out the link between low rents and dynamic music scenes in a 2011 blog post about the Santa Cruz milieu that spawned his band:
…music scenes rely on low property values in particular transitional neighborhoods. Neighborhoods that had once had another purpose but now had fallen out of primary use. Cheap space and a tolerance for noise are important commodities for bands.
You could argue that the old beach rentals along the lower end of Ocean street and the neighborhoods clustered around the old harbor qualified as in transition. Too seedy and rundown for beach rentals these houses were subsequently occupied by the more adventurous. Arty students, musicians and other slackers now occupied many of these cottages.
But our cottage was effectively cut off from these neighborhoods by the river levee. In retrospect I now see it was very Dungeons and Dragonsish of the locals to refer to the homeless population that slept in hideaways along the river as “trolls”. Indeed walking to my house at night I learned to steer clear of these trolls as many were quite aggressive or totally insane. You definitely felt penalized after unexpectedly making contact with these folks.
But the isolation was very good for a couple young mathematicians and songwriters. I was able to really dive into the most difficult proofs and songs in that cottage. Later when I moved to a better part of town I found that I had to go to the science library to get any deep thinking done.
If you want a vibrant music scene, you need a combination of young people – university towns are great for this – and low rents. That was the recipe underpinning the Dunedin Sound in the 1980s, and pretty much any other successful music scene.
But this isn’t just about cultural vibrancy. The same factors underpin long-run economic success, as they affect people’s willingness and ability to start and grow new businesses in a city. Entrepreneurship is very important. Economies thrive not by continuing to do the same thing over and over again, with minor refinements and productivity increases, but by generating new ideas and making new goods and services.
Affordable rents aren’t the only factor that contributes to a vibrant startup culture, but they are an important one. In this respect, tech startups are similar to garage bands: in the early stages, they need a bit of cheap space to allow them to experiment.
Apple Computer, 1977
(Other factors that probably matter include an educated population, low levels of corruption, support for primary science and research and development, an active venture capital market, and good access to markets. New Zealand does well on the first two, and iffy on the last three.)
Data on growth in inflation-adjusted mean rents suggests that constraints on housing supply in Auckland over the 2001-2016 period have imposed an implicit ‘tax’ of around $6000 on someone living here and trying to start a business. Possibly more, if you’re trying to pay the rent and rent commercial space for your business. There are obviously other advantages to being in Auckland. It’s got the best international connectivity, access to a large and growing urban market, and a talented and diverse pool of workers.
However, we can’t be sanguine that those advantages will outweigh the ‘tax’ that a lack of housing places on new businesses or creative endeavours in Auckland. Left unaddressed, rising rents will dissuade startups, resulting in a less dynamic, less prosperous economy. (And fewer good bands.)
Fortunately, there are things we can do to address this issue. The most important is to let more housing and commercial space get built, especially in areas that are accessible to jobs and other good urban things, as that’s a key factor in getting rents back in line with consumer prices. The Unitary Plan does quite a bit to enable more construction, but reforming and fine-tuning our urban planning system will be an ongoing challenge.
Improving transport choices is another key priority. The city fringe area is an attractive location for live music because it is both relatively dense (by Auckland standards) and very central. When you put on a show, people can get to it. (And, depending upon when it ends, you can get a drink and still be able to take the bus or train home.) Other parts of the city aren’t as well-connected, which serves as a barrier. Fortunately, we can fix this by improving transport choices throughout the city – more frequent bus routes, more rapid transit corridors, more safe cycleways.
What do you think about the prospects for starting bands or businesses in Auckland?
This is an addition to an ongoing series of posts on the politics and economics of urban planning reform. In an earlier post, I took a look at the costs, benefits, and distributional impacts of urban development. Basically, enabling more flexible / responsive urban growth is a good idea for society – but many of the gains accrue to new entrants to the housing market. But how large are those gains? In other words, how much lower would housing prices be if we had a totally flexible development market?
Answering this question is challenging because housing markets are complex. In economic terms, housing is both a “consumption good” – something you buy to live in today – and an “investment good” – something you buy in the expectation of future returns. Prices are affected by the current balance of supply and demand, but also by interest rates, expectations about the future, etc.
One simple way to disentangle these factors is to look at the relationship between consumer prices, rents, and house prices:
- When rents rise faster than general consumer prices, it indicates that housing supply is not keeping up with demand
- When house prices rise faster than rents, it indicates that financial factors – eg mortgage interest rates and tax preferences for owning residential properties – are driving up prices.
The reality is a bit more complex. For instance, rising prices (relative to rents) can reflect expectations that housing supply will be more limited in the future. So the increase in rents is not likely to fully capture the impact of constraints on housing supply.
With that in mind, here’s some data for Auckland. I’ve sourced mean rents from MBIE’s rental bond tenancy data and median house prices from REINZ data published by interest.co.nz, and deflated both by the consumer price index published by Stats NZ. It covers the period from December 2001 to June 2016. During this time:
- In nominal (ie non-inflation-adjusted) terms, mean rents rose from $288 per week to $512 per week. If they had kept pace with general consumer prices, they would have only risen to $392 per week.
- In nominal terms, median house prices rose from $255,000 to $821,000. If they’d kept pace with rents, they would have only risen to $453,000.
In other words, rents have outstripped consumer prices, and house prices have outstripped rents. Here’s a chart:
A simple take is that supply shortfalls matter, but so do financial factors. At absolute minimum, Auckland’s shortfall in housing supply relative to demand accounts for one-quarter of the rise in house prices over this period. (The true figure is likely to be higher, as recent increases in prices are likely to be driven in part by the expectation that Auckland’s housing shortfalls will continue into the near future.)
However, supply doesn’t explain everything. It’s likely that financial factors, like falling mortgage interest rates and tax preferences for owning residential properties (eg our lack of a comprehensive capital gains tax), account for a fair share of the run-up in house prices since 2001 – possibly even a majority of the increase.
Interest rates seem to have played an important role. According to RBNZ data, the average mortgage interest rate have declined since the 2008 financial crisis – from 8.76% in June 2008 to 5.10% in June 2016. That would have reduced the cost of servicing a mortgage by around 31%, meaning that buyers can afford to borrow a proportionately larger amount.
On the whole, lower interest rates seem to ‘explain’ a bit less than half of the increase in house prices over and above the increase in rents. Between 2000 and 2016, the cost to service a mortgage on a median Auckland home rose by around 87% in real terms – significantly less than the 137% increase in real house prices.
Here’s a chart showing a breakdown of the factors that appear to have contributed to the increase in house prices over this period, based on trends in rents and mortgage interest rates. This suggests that, of the 137% increase in real median house prices from 2000 to 2016:
- 31 percentage points could be ‘explained’ by rising rents, which reflect a shortfall of housing supply relative to current demands
- 44 percentage points could be ‘explained’ by falling mortgage interest rates, which lower the cost of borrowing money
- The remaining 62 percentage points couldn’t be ‘explained’ by either rents or mortgage interest rates – this could be due to expected future shortfalls in housing supply, or other financial factors.
It’s a bit hard to explain the remaining 62 percentage points in this chart, but some other ‘financial’ explanations could include:
- New Zealand’s tax treatment of residential property, and in particular investment properties – unlike many of the countries we ‘trade’ capital with, we don’t have any form of capital gains tax on property. All else equal, this means that we should expect structural inflows of cash into our housing market, driving up prices.
- The impact of ‘cashed-up’ buyers coming in without the need to borrow money to invest in properties – including, but not limited to, foreign buyers.
What does all this mean?
First, we do need to investigate other factors that might be distorting the housing market, like the tax treatment of residential property and the impact of foreign money seeking a safe haven. A large component of the increase in house prices can’t be readily accounted for by rising rents or falling mortgage interest rates. That’s probably a signal to probe deeper.
Second, constraints on housing development still matter quite a lot, even if shortfalls of supply over current demand (as reflected in rising rents) don’t ‘explain’ the majority of the rise in house prices. Increases in rents in Auckland over the last sixteen years have been large in average dollar terms.
If rents had kept pace with general consumer prices, the average renting household would be paying $120 less in rent on a weekly basis. That adds up to $6240 a year, or around 7-8% of the income of the average Auckland household. Large numbers.
That’s a reasonable proxy for the cost to the average renting household of restrictions on housing supply, including zoning policies that don’t allow more homes to be built in locations that are accessible to jobs and amenities. A lot of households would be a lot better off if we took a more enabling approach to development.
What do you make of this data on rents and house prices?
This is a guest post from Brendon Harre in Christchurch. It addresses an issue that’s near and dear to Transportblog: How do we better enable positive change in the built environment?
Solving the housing crisis in New Zealand will require many reforms and much effort. Some of the needed reforms will face opposition and will be difficult to implement. There will be tension between the national concern about improving housing supply versus some local interests in retaining the status quo.
I want to focus on one particular easy to implement policy option, which I think could successfully navigate this political dynamic. The essence of the proposed reform is to establish a nationwide intensification right for situations where neighbours agree. A right to reciprocal intensification will create a new urbanist tool for New Zealand, allowing a better housing intensification supply response, so that people can build in parts of our towns and cities where people want to live.
The first step would be to agree as a country on a height limit that all property owners could construct up to as a right. I would suggest three stories would be reasonable, as this is a similar scale to natural features like trees.
The ‘Six Sisters’, John Street, Ponsonby
Local areas through zoning provisions would still retain existing setback and shade planes rules that determine how far buildings must be constructed from site boundaries. For instance, a shade plane is an angle going inwards, which building height and bulk cannot exceed. It is taken from a certain height directly above the section boundary -2.5 metres in the below diagram. These rules also limit the size of buildings – and hence reduce the number of dwellings that can be built on a given site.
The second step, which is the main thrust of my proposal, is that New Zealand should adopt a system where neighbours can reciprocally agree to drop the shade plane and set back restrictions along their common border. This reciprocal intensification right could be implemented as a national policy statement under the RMA, which local authorities would then be obligated to implement. So in the above diagrams, if there was a section to the north or south and if the two property owners agree, then they would both have the right to build up to their adjoining boundary – utilising the appropriate building code for firewalls etc. If other adjoining neighbours disagreed, then on those boundaries the standard setback and shade plane rules would apply.
Of course there would be many property owners who wouldn’t want their neighbour to build right up to their boundary. But some would see the advantage in co-operating, so they have the option of adding a granny flat or redeveloping their entire site. Making this reciprocal intensification right a choice eliminates the major criticism of up-zoning. Being, up-zoning dictates an exchange of a neighbour’s access to sun, views and privacy for the opportunity to intensify. Some property owners believe they will be worse off if this exchange is codified into the zoning map.
If reciprocal intensification rights were spread across a large enough area, then this would give the opportunity for a lot of intensification – in the form of duplexes if two neighbours agree and European style terrace housing if many neighbours agree. There are 1.8M private dwellings in New Zealand – if just 1% of those properties were intensified from one dwelling to three per site over, say, ten years, that would net an additional 36,000 new homes. I am not sure if 1% and one house intensifying into three are reasonable expectations, but it shows that even with modest assumptions this proposed policy reform could have an impact on the housing market.
The main benefits of a right to reciprocal intensification are:
- It decreases transaction costs for site assembly. The national policy statement would mean no resource consent or property purchase would be required to develop sites more comprehensively. Currently to achieve site assembly, either neighbours would have to go through a complex and uncertain RMA process or a property developer would need to buy up the neighbouring sections.
- It encourages a more desirable urban form as it gives property owners the ability to build across their property frontage so that new housing faces the street. Currently our zoning rules encourage infill housing that goes down the length of the property.
- It gives greater housing supply options for building types with construction costs per square metre comparable to standalone housing. Small apartment buildings tend to be cheaper to build compared to high rise apartments because they can be built as 3-story walk-up units. There is no need for an expensive concrete elevator core, mechanical ventilation, sprinkler systems, underground parking and expensive structural engineering.
- It allows housing supply to respond to locational demand.
- It allows housing supply to respond to housing size demand. There is evidence of an under supply of 1–2 bedroom homes in the property market: The largest increase in household groups are singles and couples, yet very few one or two bedroom homes are being built.
I believe reciprocal intensification will be driven by both supply – in terms of its ability to lower the cost of infill and redevelopment – and demand. Demand will come from urban areas with high amenities – like proximity to employment, easy public and private transport access, markets/shops, entertainment and desirable natural environments like beaches, parks and forest.
In Auckland not all high amenity areas have been up-zoned by the new Unitary Plan. So for the city most suffering from New Zealand’s housing crisis there is an opportunity for reciprocal property right supply to increase housing supply in places where there is a demand for it. Density maps of Auckland indicate that outside of the city centre there is a sudden drop-off to a flat density gradient, unlike similar sized and geographically constrained cities –such as Stockholm. Economic theory indicates density should gradually decline with what is labelled the ‘missing middle’ housing.
Reciprocal intensification rights will not by itself be enough to enable all of the development we need. Other intensification restrictions such as minimum section sizes, minimum car parking requirements, site coverage rules, viewing shaft restrictions, heritage restrictions, secondary kitchens, etc may be as or more significant in the way they restrict the supply of housing intensification options and should also be reviewed by affordable housing policy makers.
However, I think reciprocal intensification rights would be a less controversial first step to intensification compared to widespread up-zoning, which results in some property owners who oppose intensification to fight such measures. These local interest groups which may only represent a minority of locals obstruct reasonable efforts to address restrictions on housing supply.
I believe New Zealand should give greater weighting to the national concern about affordable housing supply compared to the minority local interest in retaining the status quo. It has been my goal with this reciprocal intensification proposal to create a fair and appropriate first step to address this imbalance.
- This article was based on an article for Interest.co.nz titled Brendon Harre and David Lupton set out the case for more, and more variety of intensive housing options in New Zealand’s urban areas and a longer version of the article which also discussed the possibility of larger co-operative neighbourhood schemes.
- There are some architectural slides from a US city that transformed traditional standalone housing suburbs into suburbs of duplexes and terraces by reducing allowable section sizes to a little over 100sqm and by not having side yard setback and shade plane restrictions. The end result is quite pleasing.
- There is an article and podcast of an academic economic discussion of the wider costs to the economy that unaffordable housing imposes, how the various restrictions on house building contribute to this and some possible remedies, H/T Facebook group Market Urbanism.
How do legal institutions interact with economic outcomes? I think it’s fair to say that legal institutions often don’t register on economists’ radars, mainly because life is simpler when you assume the law is exogenously determined by factors beyond your control.
While such assumptions are valid for many types of economic analysis, legal institutions are not exogenously determined factors, at least in the long-run. By engaging with legal institutions, economists may be able to identify ways they could be improved. Of course reforms of legal institutions are slow to implement, but they do occasionally happen. Recent amendments to the RMA being a case in point. By engaging with legal institutions, economists can improve our analyses and help to identify possible opportunities for reform = Win-win.
The high-level question I want to answer in this post is whether these powers help or hinder urban development. My interest in these matters was prompted by the Productivity Commission’s recommendation for Auckland to establish an Urban Development Authority (UDA) with powers of compulsory purchase. That is, the UDA should have the power to expropriate privately-held property for the purposes of urban development. I think it’s fair to say the idea of an UDA with compulsory powers of purchase has attracted interest from across the political spectrum, including the Government (source).
In this post I consider why government’s need powers of compulsory purchase and, second, how should such powers be exercised. This post does not present conclusions or recommendations, mainly because I haven’t formed many yet. Instead, it seeks to identify some relevant economic and legal literature as a means of stimulating discussion.
I welcome your comments: Do you think Auckland needs an UDA and, if so, then should the UDA have powers of compulsory purchase? If yes, then what are the potential risks and how would you mitigate them? I’d also be keen to hear about possible alternatives. Enjoy.
Reference: The post that follows draws on an academic paper I am writing about government powers of compulsory purchase. In the interests of avoiding academic self-plagiarism, I should mention that the paper was written first, while this post was written second.
The historical development of most cities has been significantly influenced by government interventions. The Eixample of Barcelona, the boulevards of Paris, and the highways of New York are all noteworthy examples of government interventions that have left large and permanent marks on the affected cities.
The powers of compulsory purchase governments use to appropriate private property in order to undertake these interventions is a perennially controversial topic. One U.S. presidential candidate, for example, recently described powers of compulsory purchase as: “… absolute necessity for a country, for our country. Without it, you wouldn’t have roads, you wouldn’t have hospitals, you wouldn’t have anything.” (Team Fix, 2016). In contrast to this effusive support, Justice O’Connor’s dissenting opinion in Kelo v. City of New London argued that contemporary legal interpretations of the scope of the powers mean “Any property may now be taken for the benefit of another private party … beneficiaries are likely to be those citizens with disproportionate influence and power …” (O’Connor, 2005).
Given these divergent views, there would seem to be value in developing a clear understanding of the economic evidence on which the powers are based, certainly before we expand the number of government institutions that have recourse to these powers. In particular, I think there is a need to understand why governments need powers of compulsory purchase and how they should be exercised. The standard economic justification for the powers is that — in their absence — information asymmetries gives market power to landowners, leading to hold-out problems. This is where landowners refuse to sell so as to capture surplus associated with the government’s investment. By annulling landowners’ market power, compulsory purchase avoids hold-out problems and enables efficient levels of government investment. It’s important to note that private actors seeking to assemble property don’t face the same issues, mainly because they can negotiate anonymously to buy properties via third-parties.
Exercising powers of compulsory purchase is not without economic costs. Perhaps the most notable costs arise from involuntary transfers of property, which may result in welfare losses for affected landowners. To counter this issue, most jurisdictions require governments to demonstrate that the proposed intervention is in the public interest, and to pay adequate compensation to affected landowners. These legal requirements give rise to two additional economic questions: How should we define “adequate compensation” and “public interest”?
Neither definition is as straightforward as it first appears. Most jurisdictions define adequate compensation using market prices. Some scholars argue the value of property to its current owners, however, includes idiosyncratic attributes, such as sentimental attachment, which are not reflected in market prices (Nadler and Diamond, 2008). Other scholars argue that these idiosyncratic attributes are already accounted for in market prices, while noting that the landowner’s loss of autonomy is not (Lee, 2013).
Definitions of public use are similarly complex. In the U.S. the definition of public use has even been broadened to include wider economic impacts arising from private activities. Under this definition, governments have been allowed to use powers of compulsory purchase to appropriate private property, which is then transferred to private third-parties. The aforementioned opinion by Justice O’Connor in Kelo v. City of New London was prompted by precisely such a situation. Even where the resulting asset is publicly-owned, there are many situations where public access is restricted, for example by user-charges and/or regulations, which are on the surface not readily distinguished from private ownership. From an initial survey, the economics literature doesn’t seem to have a good answer to the question of how one defines “public use”.
Finally, the processes involved in determining adequate compensation and demonstrating public interest may generate non-trivial transaction costs. Imagine, for example, the resource cost of the recent Unitary Plan hearings, where many highly-skilled, well-paid people were paid to sit in a room for months if not years. Is it possible that the transaction costs involved in a particular legal process outweigh its benefits? I think so. At the very least, there seems to be a need to understand potential interactions between legal processes and transaction costs. It may, for example, be more efficient to offer more compensation early in the process, so as avoid transaction costs downstream.
Answers to such questions are not a trivial academic exercise. Evidence also suggests that protection of property rights affects the incentives facing governments and citizens alike, and impacts on long-run economic development (Acemoglu and Robinson, 2005). Powers of compulsory purchase may also have implications for social justice, with some studies finding that land owned by low-income households is more likely to be taken (Carpenter and Ross, 2009). Recent experiences in Auckland, whereby wealthy neighbourhoods successfully opposed the proposed Eastern Motorway across Hobson Bay, provide some indication of why such patterns may emerge. In the U.S., scepticism over the use of powers of compulsory purchase has given rise to significant opposition from across the political spectrum.
Initially simple questions are, upon closer inspection, revealed to be anything but. Understanding why governments need powers of compulsory inspection, and how these powers should be exercised, can contribute to more informed policies on Urban Development Authorities.
Of course, this doesn’t mean that I’m opposed to an UDA having powers of compulsory purchase. Personally, I’ve always been attracted to the notion of a “New Zealand Place-Making Authority” (NZPA) to counter-balance the NZTA’s movement focus on movement. I think the potential benefits could be significant. Nonetheless, the powers such an institution should have is an open-question.
Gnawing in the back of my mind is the fact that powers of compulsory purchase have in the past been used to pursue questionable outcomes. The highways of New York promulgated by Robert Moses, for example, were justified under the auspices of slum clearances. One of the great urban thinkers of our time, namely Jane Jacobs, was spurred into action by a government body wielding powers of compulsory purchase. Would ignoring the risk such things happen again be indicative of the “fatal conceit”?
Acemoglu, D. and Johnson, S. (2005). Unbundling Institutions Daron Acemoglu and Simon Johnson. Journal of Political Economy, 113(5):949–995.
Carpenter, D. M. and Ross, J. K. (2009). Testing O’Connor and Thomas: Does the Use of Eminent Domain Target Poor and Minority Communities? Urban Studies, 46(11):2447– 2461.
Nadler, J. and Diamond, S. S. (2008). Eminent Domain and the Psychology of Property Rights: Proposed Use, Subjective Attachment, and Taker Identity. Journal of Empirical Legal Studies, 5(4):713–749.
O’Connor, J. (2005). KELO V. NEW LONDON (04-108) 545 U.S. 469 (2005).
Team Fix (2016). Transcript of the New Hampshire GOP debate, annotated.
Blume, L., Rubinfeld, D., and Shapiro, P. (1984). The Taking of Land: When Should Compensation be Paid? The Quarterly Journal of Economics, 99(1):71–92.
Burrows, P. (1991). Compensation for Compulsory Acquisition. Land Economics, 67(1):49– 63.
Kelly, D. B. (2006). The Public Use Requirement in Eminent Domain Law: A Rationale Based on Secret Purchases and Private Influence. Cornell Law Review, 92:1–66.
Miceli, T. J. and Sirmans, C. (2007). The holdout problem, urban sprawl, and eminent domain. Journal of Housing Economics, 16(3- 4):309–319.
Strange, W. C. (1995). Information, Holdouts, and Land Assembly. Journal of Urban Economics, 38:317–332.
Greetings from Amsterdam. A couple of issues relating to Auckland’s local government elections have exercised my mind of late, specifically:
- Candidates for councillor in the Waitemata ward; and
- Why I voted Chlöe Swarbrick for Mayor of Auckland.
Before I get started, I’d like to make a simple statement about democracy.
The refrain “democracy is not a spectator sport” rings true to me for several reasons. The first is that my grandmother used to regale me with stories about how her grandmother would walk to work past Parliament’s gates, where women protesting for the right to vote would be chained. Every election, my grandmother would then ask me questions about politics, and emphasize the importance of voting. Her favourite line was “I don’t care who you vote for, just so long as you vote.”
The second reason is that I think effective democracy is an important determinant of long-run socio-economic success. You only have to look at the sorts of situations currently playing out in the U.K., U.S., and elsewhere to get a feel for what happens when people don’t pay attention to democracy. In particular, when a large proportion of the electorate is uninformed and/or disengaged and/or disenfranchised, then democracy tends to come back and bite society on its ass.
Now, before I get into the details of who I voted for, I feel compelled to summarize my own values – just so y’all know where I’m coming from. I’m not expecting others to share these values, of course, but it may help you understand some of the driving forces behind my voting decisions. I also think this is useful because my values don’t fit neatly into a left-right spectrum, but are instead something of a hybrid:
- I am socially liberal, insofar as I think people should be free to choose how to live their lives, unless there’s good reasons for society to intervene;
- I am moderately fiscally conservative, because I am aware that debt needs to be re-paid by future generations; the same generations who are facing the twin challenges of an ageing population and climate change. For these reasons, want to ensure we only incur debt to invest in things that will benefit future generations; and
- I have a strongly-honed sense of justice, and want to live in a society where vulnerable people are cared for. That includes future generations.
In terms of local government, my top two priorities – in order of importance – are 1) housing and 2) transport. With regards to the former, I would like to see fewer restrictions on density, so that Auckland can intensify. While I appreciate “quality urban development”, I’m not prepared to sacrifice housing affordability at the altar of aesthetic values. Let’s build a lot of houses and figure out how to do it better as we go. As for transport, I would like to see funding prioritized to projects that are 1) strategic, in the sense they support policy objectives like sustainability and equity and 2) efficient, in the sense their economic benefits exceed their economic costs.
Finally, I should say that this post is not intended to encourage you to vote for anyone in particular, but simply to explain the thought process I myself went through in determining who I would vote for. And to stimulate debate. Onwards.
men people vie for our affections
men people are standing for councillor in Waitemata: Mike Lee, Bill Ralston, and Rob Thomas. I voted for the latter, such that most of what follows should be read as an explanation of “why” Rob appealed compared to the others.
I evaluate Mike positions in some detail, largely because I have voted for him in previous elections. My democratic divorce from Mike has been rather slow, but was nonetheless difficult. Reason being that Mike has achieved a lot of great things, e.g. advocating for investment in rail and changes to PT contracting. Ultimately, however, I’ve become increasingly disatisfied with his positions on housing, which has in turn become a more important driver of my vote – as I now explain.
If you go to Mike’s website and click “What Mike stands for“, then you will find the following bullet points (source):
- Make sure the people of the inner city suburbs and Hauraki Gulf islands have a strong voice at the top table
- Protect our environment and enhance our quality of life
- Invest in the public transport Auckland needs
- Keep Supercity costs and rates under control
- Protect our unique heritage and encourage quality urban development
- Support Auckland’s thriving arts and entertainment scene
No mention is made of “housing”, which I thought was odd (NB: .“… encourage quality urban development” is too vague for my liking, as it puts “quality” ahead of “development” and is not specific about the need for housing in particular). I thought this was odd not just because I think housing is important, but also because other parts of Mike’s web-site mention the “housing crisis”. It seems odd Mike would speak of a housing crisis, yet not identify housing as a key issue under what he stands for.
Turning now to transport, one of Mike’s bullet points does mention “Invest in the public transport Auckland needs“. On the surface, this sounds promising. So I dug a bit further, and did a key word search of Mike’s website by transport mode. First I started with “rail”, which highlighted the following issues (n=47):
- Rail to the airport, where Mike appears to support a heavy rail option; and
- Parnell Station; which Mike wants accelerated.
I support long-term planning for public transport to the airport, even if I don’t feel too strongly about technologies. I also support a station at Parnell, provided it’s 1) in the right location, 2) supported by up-zoning of land use activities; and 3) does not negatively impact on rail operations. While I suspect the issue of Parnell Station is more complicated than Mike makes out, this is only a minor quibble – provided he acknowledges the technical complexities involved. Indeed, train stations, like people, “are complicated creatures full of quirks and secrets“. To borrow a line from the fantastic Mr Dahl.
A key word search for “buses” returned n=6 hits, all of which involved Mike saying buses were horrible compared to trains. This was disappointing given the current and future importance of buses to many people who live in Waitemata, including myself. I personally would like to see a number of small and large bus improvements being accelerated, such as the hours of operation for bus lanes on Mt Eden Road, and was disappointed Mike didn’t advocate for bus improvements more strongly.
A keyword search for “cycling” returned zero hits, while “walking” returned only two hits – both of which involved Mike referring to instances where he was walking, rather than the need for investment in pedestrian facilities per se. Again I was disappointed, because investment in walking and cycling is good in-of-itself, and complements public transport.
Basically, the over-arching impression is that Mike likes trains, and doesn’t have much time or passion for other transport modes. As someone who walks and cycles as a first preference, and who uses public transport in general before thinking about modes in particular, this doesn’t pass grade.
Turning now to Bill Ralston, I searched his website but couldn’t find much mention of housing. That essentially ruled him out of contention for my vote. In his transport policy, Bill argues we need to fix traffic congestion because it costs us $1.8 – 2.0 billion p.a. This figure is bogus: The costs are closer to $500 million p.a., as explained in this NZTA research report by Ian Wallis. To his credit – and in contrast to Mike – Bill does express support for buses and cycling (source):
More bus-ways – the Shore’s Northern Bus-way shows how well that can work, more bus-lanes, phased lights for buses, bike lanes and bike paths and while the CRL is not the silver bullet to solve the city’s transport issues – it will help. Get on with it.
All up I found Bill’s policies too light on detail. And, like Mike Lee, there were a few too many “grumpy man” statements. I don’t have a problem with grumpy old men per se, provided their gruffness is self-effacing and humorously applied. Like these guys.
Finally, we turn to the person who ultimately won my vote: Rob Thomas. Initially I didn’t expect to even consider Rob. I was, however, impressed by Rob’s statement in the candidate booklet, and even more impressed when I went to his website. There, he makes prominent mention of climate change upfront (source):
Climate Change is the biggest issue facing Auckland and our planet today. Temperature increases, sea level rise and the acidification of our oceans are just some of the issues that will impact Auckland over the next 50-100 years.
I agree. And while I’d like to see more central government leadership on the issue of climate change, I think it’s important that its strategic significance is also embodied in policies at the local government level.
In terms of housing, Rob was – from what I could tell – the only candidate to state explicitly on their website the need to “Build more homes in Auckland“. While light on details, the high-level sentiment is at least there – and that won him bonus points, especially when compared to the other candidates. On the transport side, Rob’s website mentioned the need for better public transport and cycling.
In a nutshell, I voted for Rob because his priorities aligned most closely with my own. If I hadn’t voted for Rob, then Mike would have been in second-place, and Bill in third.
Chlöe for Mayor
I voted for Chlöe for Mayor for two reasons. One is that she is passionate about democracy itself, which is extremely important to me. And I don’t mean “passion for democracy” in an airy-fairy, hand-wavy sense; I mean Chlöe seems keen to engage people with the nitty-gritty, gnarly issues that frequently arise in local government, and which ultimately have a significant influence on our quality of life, as discussed in this video.
The second reason I voted for Chlöe was because of her policies. The preamble to her housing policy, for example, reads as follows (source):
Auckland is in the midst of a housing crisis. The median property price is now ten times the median income. So too are rents rising, and our population of homeless and rough sleepers increasing. Reports of families sleeping in cars or garages are not uncommon, and have broken international news. Young families are unlikely to be able to realistically aspire to own a home in this market.
In this TVNZ interview, Chlöe makes it clear that she’s talking about bringing down property prices, which she considers to be a point of distinction from the other candidates, and something that is important to me. I’d like to see a 20-30% decline in property prices over the next 10 years, which basically means holding them constant in nominal terms and letting inflation eat away at the real value. Achieving such an outcome will require that we change expectations about future capital gains, which is where explicit statements – like Chlöe’s – about the need to reduce property values can be rather useful.
The preamble to Chlöe’s transport policy is similarly direct (source):
There is a lot of money ($1.4billion in 2015 alone) spent on transport in Auckland. But we’re not seeing that cost reflected in choice.
Choice is the freedom to choose how you, as the people of Auckland, navigate our city. Currently, many parts of our city are automobile-dependent, because the alternative options (public transport, cycling, or walking) are impracticable or inaccessible.
This lack of choice forces more people onto our roads at an exponential rate, as 800 new cars are registered for Auckland roads each week. More blind investment in roading projects at the expense of alternative transport results only in more cars to fill up those new, wider, shiny roads. This is why, in our 2013 Census, we saw that 74% of Auckland drove to work in their own private cars (70% driving by themselves).
To see our roads function properly, we need to invest in projects to get people – especially those people who don’t actually want to be there – off of those roads.
As your Mayor, I will advocate for a bold shift in focus: I will see that Auckland’s public transport system is a real, viable, and efficient option to get where you’re going. I will see Auckland thrive by becoming walkable, and cycleable.
Righto. If you read further down the page then you’ll find some explicit mention of the sorts of public transport (rail and bus) and walking/cycling improvements that Chlöe would like to prioritize. Generally mode-neutral, and focused on improving the effectiveness of our transport spend, rather than just increasing the spend itself. This subtle emphasis is important to me.
If you don’t know who Chlöe is and what she’s about in general, then I’d also suggest watching this video, which I think gives good insight into where she’s coming from and also some inner mettle.
Some of you may be wondering why I didn’t vote for Phil Goff. I must say that Phil ran a very close second. I thought Phil had excellent policies on housing affordability, for example, and his transport policies were also nicely balanced. Phil even mentions GPS-based road pricing, which many of you will know is close to my heart. If we had an STV voting system, then Phil Goff would have received my second ranking.
The main reason I didn’t vote for Phil Goff is simply because when I am relatively indifferent between two candidates, then I tend to vote for the candidate that brings more diversity to the table. In this case, Chlöe wins out. Notwithstanding my own vote for Chlöe, I wouldn’t be disappointed if Phil was to win.
There you have it. Even if you don’t agree, please just take the time to vote. And encourage your friends and family to do the same. I suspect low voter turn-out in local government elections is something that can only be addressed through a combination of electoral reform (online voting, ditching FPP for STV) and cultural change. Addressing the latter really begins by acknowledging that we have a problem, and starting a conversation about how it might be fixed.
Finally, some of you may be wondering what I do when I’m not pondering how to exercise my democratic right. The answer, my friends, is that I’m cycling around Amsterdam. Safely. And with an emergency potato in my pants. Tot ziens.
Caution: this post contains references to John Farnham.
I was updating the Development Tracker recently, and added another one to the list – 9 Farnham Street. It hasn’t made it off the starting blocks yet, despite a couple of attempts.
In 2008, and perhaps for some time before that, 9 Farnham Street was being advertised for a five-storey building, with three floors of office and two penthouse apartments:
Source: Google Streetview
The sign was still up in 2009, but sometime after that it was taken down. The GFC put a dampener on new development in a lot of places.
In April 2013, resource consent was granted for 14 apartments, but – shockingly – only 10 carparks. This raised the ire of some local residents, who had their story told in the Herald on 1st April, 2014, the best day of the year for airing public grievances. They decided that they were not gonna sit in silence, and nor were they gonna live with fear.
The three local residents were able to bolster their group with two elected representatives, who help to add gravitas to the obligatory photo of everyone standing in front of the site looking concerned, although sadly only one person out of five had their arms crossed.
A Parnell group is upset about approval for a big new apartment building, saying office workers’ cars already clog their street.
Farnham St residents Jill Tonks, Rosa Volz and Paul O’Connor are angry that a six-storey 14-unit block with only 10 carparks has been permitted to go ahead at 9 Farnham St after Auckland Council approved it on a non-notified basis.
Councillor Mike Lee and Waitemata Local Board member Christopher Dempsey are also concerned.
The article doesn’t specifically say what has the elected representatives “concerned” – maybe the non-notification, maybe the lack of parking, maybe the idea that anyone could put up a building on this pristine site. I’ll simply note that Mike Lee has frequently taken issue with plans or policies for new housing (to be fair, so have many other local representatives, although not to the same extent. Hopefully in the post-Unitary Plan era, we can start to move past this).
Anyway, if it’s the lack of parking that has Mike concerned, I hope that there is much more to concern him in the future. I see the number of new developments being marketed with few (or even no) carparks per unit as a positive sign, and I mean this in the nicest, wanting-to-make-society-as-well-off-as-possible kind of way.
Unfortunately, nothing has quite happened with this development yet. It seems like the apartments were on sale from Nov 2014 – Jul 2015, and were then taken back off the market (the real estate ad says the building has 18 carparks, funnily enough).
The proposed building which was marketed over 2014-2015.
The site changed hands in March this year, and no action since.
Unfortunately, the nature of our local democracy means that if you’re an existing resident with a strong current attachment to the area, you’re the voice. The potential residents – who, I should point out, are all someone’s daughter, all someone’s son – don’t get much chance to say whether they’d like to live there.