Traffic’s fine, free the streets for people

Auckland’s city centre is currently undergoing change on scale possibly never seen before and nowhere more so than around Albert St with the construction of the City Rail Link underway. Streets have been narrowed or in some places cut off completely. As I’ve talked about before, it has felt that the massive reduction in vehicle capacity hasn’t had any negative impact times for vehicles with roads still seeming to flow about as well as they did before the CRL works started. Although it feels that this has come at the expense of pedestrians who now have to wait longer at lights, something I’ll talk about later in this post.

One of the best examples of just how much road capacity has been taken out of the city centre is from the corner of Albert and Customs streets. The layout is being changed regularly and so what you see below from early November is not how it is now, but the level of capacity available is the same. There’s just one each way lane east-west on Customs, one lane southbound only on Albert south of Customs and only northbound lanes on Albert north of customs.

Looking south to the Albert/Customs intersection – via emergingauckland.org.nz

Despite official predictions of chaos for drivers, anecdotal observations from many us suggested this was simply not happening. Now AT have created a report called the ‘City Centre Network Operations Monthly Report’ showing just what the impact has been and it seems our observations were correct. This report is for October 2016 but I also understand this report may become published monthly in the future too.

You can often tell an organisations priorities based on what areas they focus their reporting on, and in this case, the first and biggest section focuses on vehicle speeds and volumes. As you can see below, vehicle volumes into the CBD over the course of the day remain almost identical to what they were in October 2015 which was before the works started, just slightly down in the morning peak. Yet despite the massive loss of road capacity, speeds on the road network have actually gone up. The series of speedo graphs on the right hand side show in more detail the results for a number of major roads. Essentially if the dial is in the blue the route is faster than it was last year and the numbers show that only Customs St was slower.

cbd-monitoring-report-2016-10-speeds-and-volume-dashboard

One aspect I wasn’t aware of is that there is resource consent condition around vehicle delays being no more than 10 minutes compared to what they were before construction. It’s crazy that one mode has conditions like this put on it while the other modes don’t. Especially so to put it on the mode that is the least efficient way of moving people and that is less than half of all AM peak trips. These are metrics looked at on second page of the report. As a note, the report talks about people movement rather than just vehicles so it means with vehicles counting the number of passengers too.

This next page is frankly a jumbled mess, even putting aside the silly clip-art image. We’ve got a graph showing that a breakdown of trips to the CBD in the AM peak by mode. This also shows that the numbers are growing slightly. But by focusing on the people arriving in the city, there is a major omission of the number of people who live in the CBD already and so aren’t counted in these numbers. With the CBD population now over 40,000 and growing rapidly this is an important segment to include as will likely made a big difference on the in discussions on projects like the Victoria St Linear Park that AT want to squeeze up to fit more cars.

cbd-monitoring-report-2016-10-mode-splits

Speaking of pedestrians, one of the reasons for why travel speeds have improved is that in many intersections it appears that the signals have been adjusted to give greater priority to vehicles. We know that the double phasing on Queen St was removed and it appears that pedestrians are now having to wait longer at other intersections too. We need to get this changed and have more priority for people. This is even more important as pedestrian volumes are increasing according to the automated counters that Heart of The City have. As you can see below those counters are showing an 11% increase for the quarter to 30 September over the same time the year prior.

hotc-ped-report-2016-10

Also thinking long term, these results show that AT and the council can afford to be bolder on the future design of our streets in the city. After the CRL works finish, is there really a need to rush roads like Albert St back to unabated vehicle priority. The current construction works, and those in the future, present us huge opportunities to allow us to change the space allocation in the city.

Cities are ultimately about people and so it’s important we build our cities to support people.

The Auckland productivity premium

The Motu Institute recently published new research into the urban productivity premium in New Zealand, or the degree to which firms and workers in big cities tend to produce more and earn higher wages. This is an essential issue for urban and transport policy as it gets to the heart of why we have cities. As we’ve discussed in the past, cities offer opportunities for better connections between firms, workers, and customers, leading to better economic outcomes. (Economists usually describe this as agglomeration economies.)

In the paper – with the enthralling title of “Urban productivity estimation with heterogeneous prices and labour” – researcher Dave Maré sets out to update and extend some of his previous work on the topic. His new research investigates two issues that might bias estimates of the urban productivity premium:

  1. Imperfect competition in small markets: Firms in large cities face more competition and hence will tend to have less market power (ie ability to jack up prices) than firms in small cities. This tends to result in low estimates of the urban productivity premium.
  2. “Sorting” of skilled workers into cities: People with higher skill levels – which could mean more education, more experience, or better ideas – tend to gravitate towards cities. (Similarly, cities tend to have different mixes of firms and industries.) Not controlling for this can result in a high estimate of the urban productivity premium.

Even after controlling for these factors, Maré finds evidence of a non-negligible productivity premium in Auckland. That is,

We document an urban labour productivity premium, with Auckland firms having labour productivity that is 17.9% higher than that of firms in other urban areas, and 17.0% higher than firms in rural areas. Some of this premium is due to the mix of industries in different cities. Auckland has a disproportionately high share of employment in industries that have above average labour productivity. Adjusting for this composition reveals a smaller, but still sizeable, premium of 13.5% relative to other urban areas, and 11.3% relative to firms in rural areas.

Here’s a chart showing how other parts of New Zealand compare to Auckland in terms of productivity, after controlling for industry mix, workers’ skill levels, imperfect competition, and a range of other factors like firm size. (This chart is based on the first column in Table 3 of the paper.) As you can see, firms in Auckland are more productive than firms in other parts of NZ, with Wellington (4.2% less productive) and Tauranga (9.4% less productive) being closest to Auckland.

mare-2016-firm-productivity-in-urban-areas-chart

It’s worth noting that Maré’s new estimates of Auckland’s productivity premium are considerably smaller than his previous ones. In a 2008 paper, he estimated that firms in Auckland were around 51% more productive than firms elsewhere in New Zealand. These are obviously very different numbers! But, as explained in an appendix, the majority of the differences are due to different procedures regarding data selection and processing.

Notwithstanding the exact number, Maré’s new analysis raises a few important conceptual questions about the urban productivity premium. His analysis shows that a large share of the difference in productivity between big cities, small cities, and rural areas is down to the fact that skilled workers tend to sort themselves into cities. When we control for workers’ skill levels, we tend to get lower estimates of the urban productivity premium. Or, if you prefer that in economese:

The meta-analysis by Melo et al. (2009, Table 4) reports that studies that control for labour quality generally yield agglomeration elasticities that are 5 to 6 percentage points lower than studies that do not. In the current study, labour quality adjustment lowers the estimated agglomeration elasticity by 0.057 (from 0.079 to 0.022).

However, I’m not sure it is totally appropriate to adjust for skill levels, as it’s possible that cities’ ability to attract and retain talented, innovative, and motivated people (and productive firms) is in fact a type of agglomeration economy. In other words, we might be controlling away the effect of interest!

Open migration between Australia and New Zealand means that people who can’t find an appropriate place (urban and economic) in New Zealand can easily go to Australian cities. So the alternative for skilled people who are dissuaded from living in Auckland isn’t necessarily that they’ll go and start up a business in Hamilton. Instead, they might head across the Tasman, where their skills are totally lost to New Zealand.

What does this mean for urban policy in New Zealand? I’d tentatively identify two key ideas we might want to focus on in order to allow our cities to get better at attracting and retaining productive people and firms.

First, we need to think hard about whether our policies make it attractive for mobile people to come to (or stay in) our bigger cities. This is a key consideration for, say, urban planning reform, as high housing prices driven by constraints on housing development are an important barrier to people coming or staying. Evidence from the US suggests that, if left unaddressed, high house prices can systematically dissuade people from moving to productive places where they can put their skills to best use.

Second, we also need to think about how to preserve and enhance the amenities that are on offer in New Zealand cities. Our relatively clean air, reasonably well-preserved coastal environment (clean beaches, marine reserves, etc), and accessible forests and natural parks are important attractions, but other areas are letting us down. For instance, rural and small-town water quality is rapidly declining due to expanding dairy farming.

More relevant to transport, street design in New Zealand is pretty retrograde, leading to a lack of high-quality public spaces where people actually want to be. All too often, we insist upon shoving cars down corridors, heedless of the fact that some streets have higher value as places to be. But we know we can do better: places like O’Connell St and Wynyard Quarter give many people joy on a daily basis.

What do you think about the urban productivity premium? And how can we get more of it?

Photo of the Day: Our Out of Balance Centre City Streets

Vincent and Pitt, Thursday 5:49 pm. Every corner occupied with people wanting to cross, including eight on this silly little delight of a ‘pedestrian refuge’, or nine if you include me, as I stepped back into the vehicle priority slip lane to take the shot, including at least one genuine princess. There appears to be one vehicle using the intersection and another a long long way in the distance up Pitt street.

vincent-pitt-6pm-thrus

Auckland Transport have a lot of work to do to fix the dated modal priority that dominates City Centre streets as it is no longer fit for purpose. This design dates from a time when very few lived in the city, fewer worked there and those that did didn’t stay on to recreate in the city either. It is also from before the time that the economic and social value of well designed walkable streets were so well understood. People not in cars need more space and time afforded to them from the people that control this critical part of our public domain. The value of this in supporting the modern urban services economy and the social well being of everyone is overwhelming.

After all transport infrastructure is simply a means to economic and social ends; not an end in it self.

AA’s ATAP Funding Survey

The AA have released the results of a survey of their members about how to pay Auckland’s future transport needs, and we agree with their position.

The Auckland Transport Alignment Project (ATAP) looked at Auckland’s future transport needs and found that for the first decade alone, around $23.7 billion is needed but that based on current trends and assumptions, only $19.8 billion would be spent. That’s a shortfall of about $400 million per year. Even more would need to be spent in each of the following two decades the project assessed.

In the long term, road pricing will likely be a useful tool to both manage demand and to raise revenue to help pay for transport but it is expected that could take a decade or more to develop. As such we’ll need to do something in the interim. The ATAP report suggests that additional funding could be provided either by increasing the amount available from current sources, such as the government investing more, or from new funding tools. The report also has this recommendation on funding.

We recommend the Government and Auckland Council work together to consider options and agree on an approach to address the funding gap by mid-2017, to inform statutory funding documents.

But in all the discussions about funding, there’s been a small bit of fine print that is often missed, it has been assumed the current Interim Transport Levy would stop like intended in mid-2018.

That brings us back to the AA and their survey which has looked at their members thoughts on the outcome of ATAP and on funding options. They sent the survey to 20,000 Auckland members and had 1091 responses, the demographic breakdown of which is below. As you can see responses mainly came from older members but this may reflect the AA’s membership being older. Also, it doesn’t appear that the age breakdowns add up to 100%.

aa-atap-funding-survey-demographics

When asked how they feel about Auckland’s current transport system in its ability to meet Auckland’s needs, 61% said it was terrible (20%) or poor (41%). Just 7% said it was good or fantastic. That result isn’t all too surprising though as most people tend to think things could always be better.

They then asked for respondents thoughts based on this map. What’s notable about it is that it only shows the first decade projects, which is fair enough as the full map is quite confusing but also because many of the big road projects in ATAP are front loaded into the first decade while many of the key PT projects are in the second and third decade. See if you can spot the error with the map.

aa-atap-funding-survey-project-map-2

Asked for their thoughts on this plan and 37% said it looked good or fantastic while 42% said it looked ok. That’s a lot better but not great and it would be interesting to see how people would react and what they would want prioritised if they saw proposed strategic PT network.

The survey then asked about how to close the funding gap with the following options

  1. Delay or cancel some of the projects
  2. ‘Find’ the money by reprioritising expenditure
  3. Raise more money from Aucklanders/all New Zealanders

A slight majority (53%) thought Option 1 should be, or would be open to it being part of the overall solution.

Those two measures soared to 69% when asked about option 2. The AA say they asked respondents what portion of funding should Auckland get from the Government with the median response being 40%. This was also after explaining the size of Auckland’s population, GDP, vehicle kilometres travelled (VKT) and the expected size of the coming population growth

aa-atap-funding-survey-funding-options

The third option of just raising more money was also positively supported with 58% saying yes or maybe to it. But the AA drilled deeper on this question, asking for options on another three options:

  1. Auckland property rates increase (if you rent, assume an equivalent increase in your rent)
  2. a regional fuel tax
  3. a motorway user toll

For option 1, 69% said they were opposed and of those that were prepared to pay more via rates, the median amount they’d be willing to contribute was $100.

Option 2 was better supported with 51% saying yes or maybe to the idea of a fuel tax with just 5c per litre being the amount respondents were prepared to look at paying.

The trend continued with Option 3 and 61% said yes or maybe to the idea of motorway tolling. This is interesting as ATAP talks about road pricing across the entire road network, not just a motorway toll. Even so, AA say the median amount people were prepared was $2 per trip. That motorway tolling came out on top suggests attitudes towards the idea are rapidly changing over this issue rapidly, all the more reason to get on with it.

Next the AA asked for thoughts on the Council’s Interim Transport Levy which was brought in as a way to bolster transport funding. As mentioned, the levy was only ever meant to be a temporary 3-year fund but as I suggested the other day, it seems a bit silly to replace it given we still need to find an extra $400 million a year and the levy would help in making a nice dent in that figure. It seems the survey members mostly agree and 67% said they’d be comfortable without grudgingly accept keeping it.

Lastly, they asked about selling assets and as you can see below, this was much more of a mixed bag.

aa-atap-funding-survey-assett-sales

All up some fairly interesting and useful results, particularly as it feels like the support for road pricing has been increasing over the last few years.

The AA, like us feel that the interim transport levy should be retained. It’s in place now and has a comparatively high level of support compared to some of the other options.

Mr Irvine says the beauty of continuing the transport levy is that, without changing anything, we would generate about $175 million of investment each year.

“That’s a big chunk of Auckland’s share of the funding gap, and we want Council to have a good look at what other options exist to make up the rest.”

What do you think of the AA’s survey and the results from it?

Tweet of the Day: 21st Century City

21st Century City

Not sufficient, but essential: The provision of a high quality spatially efficient Rapid Transit Network in a city may not guarantee city quality and a flourishing urban economy, but neither are likely without one. In this century.

Transport Spending in NZ in 2016

More was spent on transport in Auckland during the last financial year (to end of June 2016) than any time in the past, at least in nominal values. Based on the NZTA’s funding data, $1.435 billion was spent in the region in the year to June-2016, up slightly from $1.414 billion spent in the 2015 financial year. Although it’s quite likely that these figures only include spending associated with the National Land Transport Fund (NLTF) and not council direct spending, such as has been happening with the City Rail link where the council funded 100% of the early works (which the government will share the costs of in the future).

The graph below shows how much the council and the NZTA say they spent and it’s risen substantially from a comparatively paltry $400 million in 2002. Also on the graph you can see Auckland’s share compared to the entire country which has been hovering around the 35% mark. This is slightly more than Auckland’s share of the national population (over 34%) but below Auckland’s share of GDP (36.6%). Of the over $1.4 billion spent, 51% of it went on various state highway projects and maintenance.

transport-spending-akl-2016

Below is the same data but at a national level, although I only have it back to 2005. It shows that at $3.94 billion, we spent slightly less than the previous year. At a national level, an even greater share went on state highways with 55% of all spending going on them.

transport-spending-nz-2016

So how did other regions fare? Here’s how the 2016 figures broke down by region.

transport-spending-regions-2016

Because regions vary so much, I’ve also broken this down per capita to get a better picture of where the spending occurred. Like last year, the West Coast seems to dominate but this will be mainly due to the maintenance needed on a large road network covering a very low population base. Also like last year, the Waikato comes in second on the per capita stakes but this is more due to the large amount of construction going on with projects like the Waikato Expressway.

transport-spending-regions-per-capita-2016

I’ve also looked at the results based on spending per vehicle kilometres travelled (VKT), as a proxy for spend per travel. This method is probably a little unfair primarily to Auckland and Wellington which have larger uses of public transport than other parts of NZ.

transport-spending-regions-per-vkt-2016

Next, I’ve taken a look at what the money is being spent on however I’ve excluded the small ones such as transport planning as it’s difficult to see them on the same scale as road spending. You can see that spending on new and improved roads increased in the last year while the opposite was true for road maintenance. Combined both road spending was slightly less than last year which is in line with the overall results above. But PT spending was also down too and down substantially. I’m not sure of their reason for this but as you’ll see shortly, it wasn’t the result of changes in Auckland. You can also see spending on walking and cycling becoming more visible.

transport-spending-nz-by-activity-2016

Here is just the cycling info showing how dramatic a change it has seen in the last few years.

transport-spending-nz-on-cycling-2016

Finally, here is the same break-down by activity for Auckland. The thing you notice compared to the whole of NZ one is the difference in the levels of new road spending vs maintenance. Of course, public transport is also more of a factor in Auckland, as you would expect.

transport-spending-akl-by-activity-2016

 

Overall some interesting data on what we spend our transport money on.

Phil Goff’s first rates proposal

Yesterday Mayor Phil Goff released his proposal for rates in Auckland for the 2017/18 financial year, which starts on 1 July 2017. The proposal includes several things related to some of the issues we talk about that I thought I’d cover off. Firstly, though the high-level stuff.

The Mayor is proposing a 2.5% general rates increase to honour his campaign promise on rates. But given how much investment Auckland needs, especially in infrastructure that is simply not enough and so he’s also proposing a couple of new ways to raise revenue, this includes:

  • Raising up to $30 million from a new visitor levy to replace ratepayer funding currently spent on attracting visitors and supporting major events.
  • Introducing a targeted rate for new large-scale developments to pay for major new infrastructure, increase Auckland’s housing supply and discourage land-banking
  • Government support to implement a regional fuel tax to help close the $400m gap in transport infrastructure funding identified by central government and Auckland Council under the Auckland Transport Alignment Project
  • Bidding for a significant share of the Government’s Housing Infrastructure Fund

The infrastructure fund mentioned at the end is the $1 billion contestable fund that can only be used to build infrastructure for greenfield developments and is only open to applications from Auckland, Christchurch, Hamilton, Queenstown and, Tauranga. It was already assumed that Auckland would get the vast bulk of that $1 billion available. While it’s only for greenfield infrastructure, I guess it means it could just free up other council resources that can be used for non-greenfield infrastructure.

The proposed visitor levy is unsurprisingly already being opposed by the tourism industry. The paper says the council can’t levy a specific bed tax but can do something to the same effect by charging a targeted levy on accommodation providers and say indicative analysis suggests it would add $6-10 to the cost of a nights stay in a 4-5 star hotel.

While mentioned above, the discussion of fuel taxes, as an eventual replacement for the Interim Transport Levy, is only that the mayor wants to have the discussion so definitely nothing will be changing on this in the next year or two, especially given the government has been hostile to the idea. It seems a bit silly to me to then go and replace the Interim Transport Levy. While it was only ever meant to be temporary it feels like it has been effective and was also a good way for the council to ensure the funding went to areas they really wanted focused on, like public transport and cycling infrastructure. Does this also suggest that Goff won’t push for actual road pricing and stick with an easier and likely less effective fuel tax option?

The one area I did find particularly relevant to some of the discussions we’ve had is around the targeted rate for large-scale developments. Essentially for the same reason the government’s infrastructure fund exists, Auckland is expected to add about 110,000 homes to its urban edges in the coming decades and it’s going to cost a huge amount to pay for the council’s share, potentially up to $10 billion just for transport. And all of this while a lot of new or upgraded infrastructure is needed in the existing urban area too. The infrastructure needed has been the subject of the Transport for Future Urban Growth (TFUG) work. For example, here is the preferred transport network for the South showing just the major infrastructure planned.

TFUG - Draft Preferred Plan - South

 

The proposal would see a targeted rate applied to an area that is expected to developed that would help fund the infrastructure needed to service that area. The council say this has a number of advantages, including:

  • increasing land holding costs, thereby weakening the incentives for landbanking
  • reducing the reliance on existing ratepayers across Auckland to subsidise new housing developments
  • creating a closer link between the rates paid by landowners in a specific area and the uplift in the value of their land as a result of it being available for development
  • establishing a more predictable and secure revenue stream for council

It seems like a fairly elegant part of the solution to the issue of how fund that expensive and large scale greenfield infrastructure but does so by effectively increasing the price of housing in these areas which is bound to be opposed by land owners and developers. It could however also be argued that it particularly benefits those who have pushed to restrict housing development options closer to the city as their actions have helped in pushing more development to the edges and now they might not have to share many of the costs.

In addition to the proposals for what will be charged, there was one other issue of relevance to the blog in the paper under the title of other budget changes. These are potential changes that the council say don’t meet the significant and materiality thresholds but are likely to have high public interest. The item is titled Mass Transit Network.

An expanded and well-connected mass transit network is at the heart of Auckland Transport’s plans for supporting growth in existing urban and future urban areas. Auckland Transport has indicated the intention to accelerate planning and design works on routes and the most optimal mode, whether it be bus or light rail. It has also indicated the opportunity for early acquisition of strategically important properties. The debt impact is projected to be approximately $40 million in 2017/18.

Speeding up the process for these big PT projects would certainly be welcome.

What do you think of the Mayors proposals?

Zoning reform: How California got into the mess it’s in

This is the latest in an ongoing series on the politics and economics of zoning reform. Previous posts have argued that the benefits of enabling urban development generally outweigh the costs, but that local government political dynamics may serve as a barrier to achieving those benefits. As a result, any plausible reform programme must account for political and institutional dynamics, which can either speed or stall change.

The state of California represents one extreme when it comes to reforming zoning laws. Simply put, there have been some minor steps forward, but since the 1970s the overall direction has been towards tighter restrictions on development. For instance, the ‘Great Downzoning’ of Los Angeles in the 1970s and 1980s has never been substantially reversed:

FrameWORK_Housing_ZoningCapacity

The great down-zoning of LA (Morrow, 2013)

As Joe Bousquin lays out in a sharp article for Builder magazine, California’s restrictions on housing development are the unintended consequence of several important policy changes in the 1970s. These have combined to create a situation in which it is systematically difficult to build, leading to continually rising home prices:

According to a widely referenced 2015 report from the California Legislative Analyst’s Office (LAO), the Legislature’s nonpartisan fiscal and policy analysis arm, since 1980, California has built half of the housing units it needed—about 100,000 per year—to keep up with demand. And that’s just in aggregate. In high-demand locales like the San Francisco Bay Area and Los Angeles, the housing deficit is even greater. “Most of California’s coastal counties needed to build three times as much (or more) housing as they did,” the report claims.

Stated differently, during the past 36 years, California did not build the additional 3.6 million homes that it needed to keep its skyrocketing prices in check. To put that number in perspective, it would take the collective efforts of every home builder in the country, building nonstop at 2016’s projected pace of 1.26 million housing starts, three years to put a dent in the state’s problem.

The report concludes that NIMBYism, local communities’ lack of financial incentives to approve more housing, and anti-growth proponents who go to daunting lengths to block development have contributed to the problem, as well as more inveterate challenges such as a scarcity of suitable land along the coast and an ever-increasing population.

Two particular bits of legislation have had broad detrimental effects. First:

In 1970, the then–California Governor signed the California Environmental Quality Act (CEQA), the state’s broad development review mandate, into law. It’s been at the heart of California’s housing shortage ever since.

Modeled after the National Environmental Policy Act (NEPA) of 1969, CEQA originally was cast as a progressive mandate that would protect the rolling hills, towering forests, and jagged coastlines that make California so unique. It obliged local municipal bodies to consider environmental impacts before approving new housing projects, and if any were found, to require developers to come up with a plan to mitigate those impacts.

But what CEQA has become, housing advocates say, is a bludgeoning club used by anti-growth and NIMBY interests, as well as labor groups, to either block development outright or hold developers hostage to their concessions.

There’s nothing wrong with regulating to protect environmental quality. I’m all for it. But the particular approach used by CEQA – ie case-by-case reviews for a large share of new developments – seems to be a particularly inefficient way of achieving this end. The ‘friction’ added by the review process kills off both good and bad projects. By comparison, a more certain process that guaranteed development proposals a quick yes or quick no is likely to work better for both development and the environment.

Second, a tax reduction referendum passed in 1978 significantly shifted the financial incentives facing local governments, who choose which developments to approve:

While CEQA and environmental reviews add millions in costs to housing projects, the localities that have the power to approve or block them don’t get any of that money. They also get a much smaller slice of the property taxes that often incentivize communities in other states to approve new development.

“Cities will tell you that from a property tax perspective, housing is a loser,” says David Cogdill, president of the CBIA. “You’ve created a situation where property values are going up, but the localities don’t benefit financially.”

The reason for that is Proposition 13. Voters passed the law in 1978 to cap the rate at which local property taxes can increase, and effectively put the state in charge of dolling out the money once it was collected…

That process also explains, in a way that’s as convoluted as California’s revenue structure, why the impact fees Burns and other builders pay in the state are so high. Basically, cities can either block housing with CEQA and not incur the extra costs of services housing creates, or approve that housing, but raise impact fees, which are the last best option that remains for them to increase funding.

Proposition 13 created incentives to tax new housing development heavily – or refuse it outright. It did so in an environment in which CEQA expanded scope for local governments and neighbours to object to development. This proved to be a boon for people who already owned homes in California, but it’s been a catastrophe for younger generations.

Bousquin’s article focuses on several broad institutional and policy factors as a driver of California’s zoning shambles, but I think it’s also worth highlighting a third cultural / political factor: the role of bad analysis and wishful thinking in perpetuating bad policy.

If you pay close attention to San Francisco debates over housing affordability and zoning, you notice a steady stream of weird arguments about supply and demand. Some of these are actively self-serving, while others are just confused. For instance, Leigha Beckman at SF BAMO compiles an edifying list of the “Top 10 Bay Area NIMBY moments of 2016“. Here were a couple:

2) Mission Resident Lucy Admits We Need Affordable Housing But Protests 100% Affordable Housing Complex for Seniors

1296 Shotwell St. rendering

Last year, Supervisor David Campos asked San Francisco to pass Prop I, which would temporarily ban all new housing in the Mission District unless the units are 100% affordable. An extreme proposal, and it didn’t pass. But apparently even when housing is 100% affordable, and explicitly set aside for an economically vulnerable segment of the population, residents of the Mission and Bernal Heights still find reason to oppose it.

A proposal at 1296 Shotwell for 94 units of permanently affordable senior housing failed to meet the standards of its future neighbor, Lucy, who insisted the project be reduced in size, despite the fact that this concession would eliminate affordable units. Lucy acknowledged that “every unit counts”, but with the usual NIMBY caveat that one more affordable housing project “would not solve the problems of the city.” In a rare moment of self-awareness, Lucy declined to provide her last name to Mission Local.

5) Peter Cohen, Director of an Affordable Housing Organization, Opposes Affordable Housing Initiative

In one of the most head-scratching policy oppositions in San Francisco this year, a measure put forward to increase the amount of affordable housing through a density bonus program ended up getting challenged by members of the affordable housing community itself. Yes, we were also shocked. The proposal would allow developers to add three stories to a building irrespective of zoned height limits, but under the condition that all the extra units are affordable. More density, more affordability, and at no cost to taxpayers.

Sounds like an awesome deal (it is), but Peter Cohen, Director of the affordable housing nonprofit Council of Community Housing Organizations (CCHO), came out as one of the loudest opponents of the bill. Cohen said it was too much of a giveaway to private developers, which seems to completely miss the fact that it is actually a giveaway to middle-income families. We admit this one doesn’t technically qualify as NIMBYism in the literal sense, but Mr. Cohen doesn’t technically qualify as an affordable housing advocate, either.

Affordable housing advocates opposing affordable housing? It’s really difficult to reform policies when even the people who would benefit from changes can’t agree that they will be beneficial.

In summary, there are a few lessons from the California experience:

  • While there are good reasons to regulate to manage negative spillovers or environmental impacts from development, we need to think carefully about the potential unintended consequences of case-by-case approval processes.
  • Local governments need to have some financial incentives to approve developments, or they will stop issuing approvals.
  • The public conversation on housing affordability and zoning has to be based in facts and evidence, rather than nonsense and self-interest. Otherwise it will be very difficult to gain consensus on what the issues are and how to address them.

Next week, I’ll look at what happened to the most recent attempt to modestly reform California’s zoning rules. Hint: It didn’t go well.

Ride Sharing & Fare Evasion – Land Transport Amendments

The Government has introduced this years Land Transport Amendment Bill, they say it will

  • Introduce new requirements that will apply to all small passenger services, by removing outdated provisions and by catering for the use of new technologies that facilitate such services
  • Make the alcohol interlock programme mandatory for repeat and serious first time drink-driving offenders
  • Increase penalties for fleeing drivers, or those who fail or refuse to provide information that may lead to the identification of fleeing drivers
  • Include new provisions to help limit fare evasion on public transport
  • Update the Act’s requirements relating to heavy vehicles to complement the new Land Transport (Vehicle Dimensions and Mass) Rule 2016
  • Make miscellaneous changes to various Act provisions to make them more workable.

I will mostly focus on the Small Passenger Services changes & the changes regarding Fare Evasion.

 

Fare Evasion

Last September Simon Bridges indicated that in the next bill he wanted to crack down on Fare Evaders on PT network, he said he believed it was costing $2m a year, and up to 5% of passengers were fare evading in Auckland.

Simon Bridges - fare evasion

The new bill will give Enforcement Officers new powers

  • To require passengers to show evidence they have paid for fare.
  • To require passengers who cannot show evidence of paying fare to provide contact details including Name, Address, and DOB.
  • To order removal of passenger from PT service who cannot provide evidence of paying fare.
  • The ability for them, or the body responsible for them to issue infringement notices for failing to pay a fare.

The Enforcement Officers will be warranted by Commissioner of Police, who can remove warrant if powers misused. The Enforcement Officers will not have the power of arrest beyond the scope of the Crimes Act 1961 which applies to all persons.

Penalties

  • An infringement fee of $150, or upon Conviction $500 for failure to pay for fare.
  • Any failure to comply with any legal orders given by Enforcement Officers will upon Conviction face a fine of $1000.

There is some defenses to the act, for example if the ticket machine is not working, the guidance also states the Enforcement Officers have the discretion to grant warnings, or to simply ask passenger to pay ticket. I think this is really good, many of us have probably forgotten to tag on once in awhile not because we are Fare Evaders, but simply in hurry, didn’t tag on properly, or just plain forgot, its only human. Also I have seen many tourists, both from rest of NZ or Overseas who have not understood the system, so I hope the Officers do show some discretion. Many of us have also dealt with broken Ticket Machines.

Basically the main difference between is now only the Police can do the above, now ticket inspectors who are warranted will be able to do the same.

They say these changes are necessary because gating is very hard to do for all stations & has a high CAPEX/OPEX cost associated with it.

Another question will be will AT only ask Ticket Inspectors to be warranted, or will they also have the TM’s warranted.

Small Passenger Services

In 2015 the Government had public submissions on changes to the Small Passenger Services, which I believed I submitted on as a Private Individual. The suggested changes were in response to the rise of Uber & other Ride Sharing companies whose operations were legally ambiguous. Simon Bridges wanted to update the regulations to provide legal clarity regarding these companies, while also simplifying the current system. The MOT believes the new system will “Deliver benefits through more competition, allow flexibility to accommodate new technologies, and will enable transport operators to make their own business decisions on a range of issues, while the system will regulate to provide the fundamental safety requirements.”

The definition of a Small Passenger Service is “Anyone carrying passengers for hire or reward, in a vehicle designed to carry twelve or fewer people (including the driver) is operating a small passenger service.”

The Changes are

  • Removal of signage requirements.
  • An area knowledge certificate (Outdated now we have GPS)
  • Removal of requirement to complete a P endorsement course, however will still need to display driver identification card, as well as complete police check.
  • Removal of requirement to complete a Full Licence test every 5 years.
  • Removal of requirement to belong to approved taxi organisation.
  • Removal of requirement to operate service 24/7.
  • Removal of requirement to have certificate of knowledge of law & practice.
  • Removal of requirement to have driver panic alarm.
  • Creation of a Small Passenger Service Licence replacing Passenger Service License.

Drivers will still need follow within work time limits, and either as or under a person/organisation holding a Small Passenger Service Licence.

Vehicles will still need to have a Certificate of Fitness as well as in the 18 urban areas be fitted with a camera, however exemptions are

  1. Providing services to registered passengers only.
  2. Driver and passenger information (e.g. names and photographs of both driver and passenger) is available.
  3. Driver and passenger information is available before each trip.
  4. A record of each trip is available (e.g. GPS records).

Carpooling Services i.e. Apps that connect people for carpooling which is different from Uber will also be subject to different rules, for example the third-party providing must have a Small Passenger Service Licence however the drivers don’t need to meet the requirements of a Small Passenger Services driver.

So what do you think about the changes?

Guest post: carbon taxes and the NZ economy

We don’t talk about climate change on TransportBlog that often, although we should – transport is a big contributor to emissions, and the most obvious opportunity for NZ to reduce its emissions.

But most economists would agree that the best starting point for tackling emissions is to price them properly, so people and businesses are incentivised to change their behaviour. Currently, we’ve got an Emissions Trading Scheme, but it has been almost completely ineffective, because the prices are too damn low. The current price for an emissions “unit”, equivalent to one tonne of CO2, is about $19 – but over the last few years, they’ve often been only a few bucks, or at some points less than a dollar.

By comparison, a litre of petrol creates around 2.3 kg of CO2. An emissions price of $100/ tonne would add about 23 cents per litre (plus GST) to the petrol price. Not much, but enough to prompt some behaviour change – a few more people might take the bus, or cycle, or simply drive less.  At current prices, it’s more like 2 cents.

But reducing emissions doesn’t come free – there’s some short-term economic pain to come from it. The challenge will be how to cut emissions, while keeping the economy going strong. To that end, Sina Mashinchi has been looking at the macro effects of different climate policies. There’s a summary of his research below, along with a ‘poster’ explaining it – which won Sina the New Zealand Economic Policy Prize at this year’s NZAE conference.

poster-nzae-2016

New Zealand’s attempt to lower climate change-fuelling emissions by trading carbon credits is failing. But there’s good news: introducing a carbon tax and beefing up the Emissions Trading Scheme (ETS) could substantially lower emissions and lower GST – a win-win for our environment and economy.

Sina Mashinchi, a University of Auckland and Energy Centre doctoral researcher, has developed a new modelling that measures the impact of carbon pricing on New Zealand economy. Unlike previous modelling attempts by the government which used computable general equilibrium (CGE) based energy models, the new modelling approach in his study follows the historical behaviour in New Zealand economy and its responses to the various shocks, crises and policy implications through the years since 1970.

According to the findings in this research, New Zealand will need to set higher carbon prices in order to close the emission gap, but even with a carbon price at $355 in 2030, emissions would fall 14.2 percent from current levels which would be only a half of target reductions (around 27 percent) in 2030.

Sina experimented with mixes of a beefed-up ETS and a carbon tax. He found if the price of carbon credits increased to $75 right now, and rose by $20 a year from now on, and a carbon tax for non-ETS sectors was introduced and set at the same levels, the government could use the extra tax take to lower GST by 2.5 percent to 12.5 percent. This would stimulate the economy, encouraging investment in new technologies, energy efficiencies and public transport, which would create jobs. GDP would rise by an average 2.2 percent per year from 2016. This still falls short of our emission targets, but it’s a lot better than emissions going up.

Sina believes this move would be a win-win-win – good for the environment, good for the economy and good for consumers who would end up paying less GST.

What do you think? Assuming the government can get past its “business as usual” stance, what should we be doing about emissions?