Gotta start with the local this week, as local news has been been interesting, and though not without struggle, generally very positive. Not that the coverage has been good, a notable exception is outgoing Metro Editor Simon Wilson’s summary here:
Councillors – the slimmest majority of them – have voted for long-term strategic planning, not short-term political expediency. Good on them. Theirs is just about the only example of such political bravery we’ve seen in this country for years.
Which, of course, is not how the New Zealand Herald sees it. You might think our local paper would campaign for a better deal for Auckland on issues like this. But no. Why bother, when it’s easier to rouse a rabble with invective against Len Brown and rates?
And, in a Sunday Reading first, here’s a plug for getting out of bed and nipping down to your cafe or magazine retailer to pick up a copy of the fresh-off-press latest Metro for my article on the history and possible future of Light Rail in Auckland:
For those who want to stay put, here’s a lesson for the NZ Herald from the Sydney version for how to cover good infrastructure projects, ‘Sydney’s Light Rail…':
The Herald does not support any one mode of transport over another. In a metropolis like Sydney, trains, buses, the private car, light rail, cycling and walking all obviously have their role to play.
But the government should invest money in the mode of transport that fits the particular need of a particular space and of a particular travelling public.
This is an extremely important point. ‘Fitness’ in a Darwinian sense does not mean strength or stamina, it means appropriateness for a particular niche; how well a thing fits; its fitness. How well an organism fits in its ecological niche determines its success. So it is with transport modes, what a city needs will not be the same as what a provincial town needs, and even in certain parts of a city different options and services will be more appropriate than others. Getting the mix right will influence the performance of that place, its efficiency and productivity. In the competitive ecology of cities the ‘fitness’ of a place’s infrastructure and systems really does mean survival or not.
And on that issue of right mode for the job, here is this week’s summary of why more traffic lanes in urban areas simply leads to more driving and more congestion, via Grist:
We’ve said it before and we’ll say it again: Adding more roads — and more lanes on those roads — does absolutely nothing for gridlock. It’s counterintuitive, perhaps, but it’s true: Five years, $1 billion, and at least one new traffic-hell moniker later (“Carmageddon”), L.A. drivers on the 405 freeway actually added a minute to their daily commutes, in spite (or because?) of a snazzy new carpool lane.
via Guardian Cities: Dublin becomes the latest city to see its future with fewer private vehicles dominating its streets:
A car-free Dublin?
As we recently explored, some cities, especially in Europe, are starting to discourage or even ban private car use. Now Dublin is poised to become the latest city to join the fray. Next City reports that Dublin’s City Council and Ireland’s National Transport Authority have proposed to ban private cars in sections of the city centre, in order to ease traffic problems and make Dublin a more pleasant place to live. The reduction of cars will also free up room for a new tram line, planned for 2017.
Returning to the local the Salvation Army has thoughtfully entered into the development discussion with a new report: Mixed Fortunes:
Geography matters in the real world, although it is often not that important in the worlds of economic theory and public policy. At the beginning of a seminal paper for economic geography Nobel Laureate Paul Krugman remarked that, ‘It seems fair to say that economic geography plays at best a marginal role in economic theory… On the face of it this neglect is surprising. The facts of economic geography are amongst the most striking features of real-world economies, at least to laymen’1.
Based on current trends it is apparent that New Zealand is on a divergent growth path and that this path risks the creation of two New Zealands – Auckland and the rest. Recently released population forecasts suggest that over the next 25 to 30 years Auckland may account for over 60% of New Zealand’s population growth and that Aucklanders, in time, will make up about 40% of this population. In general, Aucklanders will be younger, wealthier, better skilled, and more ethnically diverse than the rest of New Zealand. Within such differences are the seeds for a growing divide in values and expectations.
One for the map and data nerds: Who owns the digital map of the world? asks Citylab:
Google Maps defines the way we navigate from A to B, for free, and it does so extremely well. It also sells its API to its a number of businesses. As of 2012, Apple, Foursquare, Craigslist, and Wikipedia (to name just a few) all built their maps using the Google Maps API.
But today, none of those companies are using Google—partly because of how much Google started to charge for its services and data, and because of the limitations it draws around what companies can do with them.
All four of the aforementioned companies moved to using OSM (partially, in Apple’s case) because it’s free, and often as good as Google. And because the value of proprietary map data is rapidly plummeting as OSM gets better and better.
On the subject of maps, here’s something I thought I’d never agree with: A New London Tube Map. Not just an update but a redesign, and by an amateur too. The rightly famous Harry Beck map from 1931 has been much updated and is unrivalled in the way it quickly came to symbolise the city itself. Now as London rides the global urban rail boom with a huge addition of new services, Beck’s model is coming under enormous strain. ‘SameBoat’, a Hong Kong resident, has made the best new iteration I have seen. Even if it does turn the famous bottle into more of a bed-flask:
Lastly, here’s a unique urban highway, also via Grist: Oslo builds a its bees a highway of flowers.
Oslo is transforming a strip through the city into a series of bee pastures — parks, and green roofs, and balcony flower beds — each a short flight from the next. I like to imagine that from the air you could look down and see ribbon of blossoms, stretching from one side of the city to the other.
Yesterday was really a day of funding news with the other big talking point being the Council finally adopting the Long Term Plan. The budget agreed yesterday is significant as for transport it represents probably the biggest single shift in funding priorities in many generations. Unimaginable just a few years ago, over half of the council’s transport funding (if you exclude renewals) is going towards public transport combined with around 10% going to walking and cycling – not including projects funded as part of other road projects.
The step change in funding has come about in part due to the transport levy now agreed – $99 for households and $159 for businesses. The impact the levy has is shown below as it enables the Interim Transport Programme.
*some of the figures might have changed slightly from when this table was produced
In many ways I think Auckland has not been served well by it’s councils (and governments) who for decades have been too scared to make some tough choices and as such failed to invest enough in transport. The budget passing at 10-9 (two who most likely would have voted for it were away) shows that a large number of councillors wanted to continue this trend.
While I understand that people don’t want to pay more rates, the fact the money is going towards significantly investing in modes that we’ve neglected for decades and that are growing strongly is a positive thing. I suspect that if measured based on a return on investment metric we’d be getting a pretty good deal.
We and future generations should thank the 10 councillors from across the political spectrum who were brave enough to look to the future when making this decision. Those that voted for the budget were:
- Len Brown
- Arthur Anae
- Bill Cashmore
- Linda Cooper
- Chris Darby
- Alf Filipania
- Mike Lee
- Calum Penrose
- Wayne Walker
- Penny Webster
Of course the Herald ran with the story that many would see rates were going up over $1000. The council clarified that today with the following figures.
If there’s one area I think people should be upset it’s that the they have to pay GST on top of the transport levy. With around 454,000 households that’s almost $7 million a year extra going to the governments coffers that could be spent elsewhere. It perhaps wouldn’t be so bad if the government would promise to invest that GST back in to Auckland, that’s potentially a lot more cycleways or bus lanes.
I was a bit surprised to hear the Property Institute of New Zealand warn of an “apartment bubble” in Auckland earlier this week. I was even more surprised when I read their press release. The CEO, Ashley Church, is predicting a bubble as a response to 1) banks being likely to decrease their deposit thresholds on apartments from 20% to 15%, and 2) the Reserve Bank potentially bringing in “loan-to-income restrictions”, where mortgagees would then only be able to borrow X times their income.
The press release then gives a hypothetical chain of events:
1. The Reserve Bank restricts mortgage loans to a percentage of household income – effectively making the purchase of freestanding residential homes almost impossible to all but the very wealthy.
2. With median household incomes of just $76,500 – home buyers flock to the apartment market to find properties which comply with the new rules.
3. The relaxed deposit rules, by the major banks, allow buyers to borrow a little more if the apartment is new – (on average, a little over $400,000 if we adopt the Brit formula) – and this combination fuels a new wave of apartment building and streamlined marketing programs designed to entice buyers.
4. Property Investors – many of whom have also been caught by the new rules – also start buying apartments in large numbers.
5. The combined effect of this new wave of buyers quickly pushes up the price of apartments – fuelling an ‘apartment bubble’.
6. Perversely – the quality of new apartments suffers as developers focus on the ‘low-end’ of the market so as to appeal to as wide a range of potential buyers, within the Reserve Bank rules, as possible.
7. Meanwhile, the cost of renting free-standing homes in Auckland also increases as demand outstrips supply due to the absence of traditional property investors buying these types of properties.
8. Within 7 to 10 years Auckland becomes a highly ‘intensified’ city with large numbers of low quality apartments dotting the landscape and free-standing residential homes becoming the preserve of the well-off and wealthy renters.
However, this chain of events misses out half of what defines a bubble. He’s postulated a rise in prices, sure. But where does the subsequent decrease happen? To me, this sounds like a recipe for a one-off, permanent increase in apartment prices. A permanent shift in the demand curve, as it were. I’m not making any predictions on apartment prices, I’m just pointing out that the chain of events here doesn’t actually include a drop in prices, and therefore isn’t a bubble.
Moving on from that (rather important) point, there are a lot of other strange things in this press release. Firstly, it seems a bit far-fetched that the Reserve Bank would impose harsh restrictions to the extent that only “the very wealthy” could afford freestanding homes, and the press release also ignores the price response (i.e. prices would drop, and many people would still end up in those homes – there aren’t enough “very wealthy” people to fill them all up).
Secondly, if the Reserve Bank is going to clamp down on Auckland home loans, it’ll be because they’re worried about a city-wide bubble. I’d say this is a much bigger concern than an apartment bubble – it’d affect a lot more people.
Point 7 is one I’ve been reading a few variations of recently, which doesn’t follow from economic intuition. If landlords drop out of the market, do rents to rise? Given that each landlord dropping out of the market means there’s an owner-occupier there instead – and therefore a smaller rental market on both sides – the effect on rents might go either way.
Points 6 and 8 in the chain of events are odd too, essentially scaremongering about large numbers of low-quality apartments. The press release continues in a similar vein:
Mr Church says that he is aware that a focus on ‘intensification’ through building more apartments is consistent with the Auckland Unitary Plan and that some might see this outcome as a good thing – but he notes that this provision is also strongly rejected by a large number of Aucklanders and shouldn’t be forced on the city by the Reserve Bank.
“The drive for Intensification is based on a political ideology and is rejected by a large number of Aucklanders. It should only happen if Aucklanders want it”.
It’s a strangely political statement itself, coming from an organisation which began as the professional body for valuers. The PINZ’s statement in March that “the Reserve Bank Governor needs to “stop chasing shadows and stick to his knitting” seems a bit ironic.
As an aside, I think it’s great that the banks reviewing their lending policies on apartments; after all, it’s a more established market now than it was ten years ago, and there’s (hopefully) a lot less speculation going in that market than there was in the mid-2000s boom-bust. The banks will still be cautious about lending for leaky or leasehold buildings, and perhaps shoeboxes, and once those are taken out of the equation the apartments that are left should have a manageable level of risk.
On the whole the government’s new policy of opening up excess land in Auckland for development is not a bad one. As I mentioned when it was announced, the devil was always going to be in the details and on that front the government hasn’t been doing so well. The two most prominent issues that have emerged have been:
- The dispute with local iwi over whether they should have the first right to buy the land. Interestingly the iwi have noted that they support the policy and actually want to be involved in the development of housing. They are heading to court today over the issue.
- That the vast majority of the first piece of land the government showed off turned out not be owned by the government but instead by the council. The site is shown in yellow below.
Combined the issues suggest an element rushed policy making where the details simply haven’t been thought through. In my view, of the two the first is by far the most serious issue and one probably best left with others to talk about. The second one raises some additional questions – some of which have been highlighted well by Deputy Mayor Penny Hulse.
First and foremost, as part of the Unitary Plan the site is zoned as part of the metropolitan centre as shown below.
The zoning means it’s possible to build mixed use and up to 18 storeys on the site although it feels like it has mixed potential. It’s sandwiched between the motorway and some large, not overly pedestrian friendly roads – Manukau Station Rd should have scaled down after the motorway was finished. It kind of has the feeling of being land in the middle of a motorway interchange.
The image below shows the intersection of Manukau Station Rd and Wiri Station Rd/Davies Cres. As you can see it looks like a traffic engineers dream with slip lanes on all corners and extra lanes for those turning right
On the plus side it is just across the road from the Manukau Train Station and new MIT campus while obviously a short walk to the rest of the Manukau city centre. That alone makes it odd that the government suggest only putting around 60 terraced houses on the site. This isn’t to say the site should have to be developed to 18 storeys but given its location and the demand for housing it seem insane to only think about putting 60 dwellings on it.
The situation raises two questions in my mind.
- First why is the government aiming so low. Is it just that they simply don’t get the urban reality and think that everyone only wants low rise? Some government ministers – such as Bill English – have at least acknowledged that intensification is needed and issues such as NIMBYism need to be addressed. This is one of the locations that such intensification can easily occur without any issues from surrounding neighbours. Bernard Hickey had a good piece in the Herald yesterday suggesting that the council and government need to do more to show that density isn’t bad, this is just one of many easy opportunities to do so.
- Secondly one of the reasons this hasn’t been a bigger issue is the council have said they’re keen to work with the government on developing the site (to a higher density). Given this is the case then what have the council and its CCO’s being doing just sitting on the land for so long. Surely if they were concerned about it they should be getting on with developing the land rather than just sitting on it, effectively land banking.
Contractor Magazine have run an article on the CRL early works, here.
Here is an update on projects underway or planned to start soon on the northern part of the route.
How Auckland’s transport system develops and how it is paid for is probably something that will be debated until the end of time. That doesn’t mean we should just sit back and endlessly debate it though. Almost everyone agrees that something needs to be done to and it seems many are even prepared to pay extra for it.
If there’s one thing that’s been clear for many years now it’s that Aucklander’s want more choice in how they get around. Many have either travelled to, lived in or come from other cities around the world that provide residents with greater transport choices and have therefore seen first-hand the benefits greater options provide residents. However in Auckland they primarily turn to the car as for most that’s the only realistic option for getting around. The car might be preferred by many but a lot of people would love to have options and that’s come through in survey after survey. The most recent case of this was the Long Term Plan where the feedback was overwhelmingly in favour of focusing more on public transport and cycling. The desire for more transport choice was something the AA noted too in their survey.
It’s this strong feedback that is almost certainly a factor in the majority of the council’s Interim Transport Programme – which is possible due to the new transport levy – going towards PT and active modes.
However the transport levy is only meant to be an interim step until a longer term funding solution can be found. During the LTP the council consulted on taxes and rates or tolls on motorways. I was quite surprised that just over half supported the tolling options in some manner – although that could also be an outcome from the binary choice that was presented.
To be honest I’m not a huge fan of motorway tolling – or at least not what was proposed. That’s because I feel that just targeting motorways is likely to have a number of large side effects such as pushing a lot traffic that would otherwise be on the motorway onto arterials and then making it more difficult to roll out PT and cycling initiatives. A road pricing scheme that was more focused on getting the most out of our entire road network by better managing demand rather than a scheme focused primarily on raising revenue seems like better option to pursue.
Unfortunately it doesn’t seem like any kind of alternative funding method is going to get much support from the government. They’ve previously signalled they don’t like the idea of tolling or other ways of raising taxes which is why the council adopted a transport levy. Now it seems they are ruling out the toll idea completely with Radio NZ reporting that Transport Minister Simon Bridges has written to Mayor Len Brown saying the government is unwilling to even consider the idea.
This stance is really quite absurd. It’s not like Auckland was just asking for a huge wad of cash the government but instead just to be allowed to raise funds in a new way to pay more projects itself and the political risk in doing so sits firmly with the council, not the government. It makes me wonder what the government is so afraid of, that it will be so successful that Auckland improves faster and better than they’d like.
I’m not sure if this is just the reporting or if it actually reflects Bridges/the government’s views however if it’s the latter it’s concerning that he seems to be suggesting that the only role in PT is in reducing congestion rather than it enabling greater access to the wider city. It reflects that the government seem to see PT only as an option of last resort for the poor or those that can’t stand congestion rather than it having the ability to be a mode of choice. One such example is the Northern Busway which now gets high usage all across the day thanks to the investment to give it a congestion free and therefore a time competitive route.
He’s proposing a year-long negotiation with the council on an agreed 30-year programme focusing on reducing congestion, and boosting public transport where that reduces congestion.
Of course Len Brown seems to be acting like nothing’s ever happened with Radio NZ reporting that he still thinks the government might eventually change their mind and approve it. I think he’s dreaming if he thinks that and also if he thinks the government is going to respect the council’s transport plans. In fact given the time-frames involved it seems more like the transport accord is more of a way to buy some time on making a decision.
This news comes hot on the heels of a report from the OECD suggesting that Auckland/the government needs to consider road pricing but to help manage the congestion. They also note that more PT would be needed to give people more options and the ability to avoid the costs. Note: there’s quite a number of concerning aspects of the OECD report which I’ll cover in a separate post.
If you’ve been keeping up with the news or if you’ve been following our Development Tracker, you’ll know that there’s a lot of new office development activity starting to happen in Auckland’s city centre. And a significant amount of it right on the CRL route:
Image from SkyscaperCity – development along the CRL route. Includes some non-office buildings, and doesn’t show all the office buildings discussed in this post
- 151 Victoria Street West, with 17,600 square metres (sqm) due for completion later this year.
- There’s 40,000 sqm of office space going up at the southern end of Wynyard Quarter in the VXV park. This is across three buildings, Fonterra, Datacom and VXV Three, due for completion in 2016 and 2017.
- Also, there’s 125 Queen St which is currently being refurbished. That’s 15,000 sqm of space coming back into circulation after being vacant for some years.
- The Downtown Shopping Centre redevelopment – this will add 35,000 sqm of office space for completion in early 2019. It will get underway next year, when the City Rail Link works begin.
- 1 Mills Lane is being developed by Mansons and will have enough space for 4,000 workers.
- Precinct Properties is developing 48,000 sqm of office space across five buildings in Wynyard quarter. The first stage of 12,000 sqm gets underway shortly.
- Mansons are also developing 10 Sale Street, with 10,000 sqm of space.
All up, the projects currently under construction will provide space for more than 5,000 workers. The proposed projects would accommodate at least another 10,000. This excludes developments which currently seem to be off the boil but could come to life at any time, such as Shortland Star and the Britomart Central building.
This is during a time when CBD vacancy levels are at record lows, and the city centre simply doesn’t have the office space it needs to grow employment.
So, assuming these buildings are completed more or less on schedule, and the number of jobs grows to fill the new space available – all of which seems a reasonable bet, in the current climate – these would be significant increases in employment. Nationally significant, even. By comparison, New Zealand has increased employment by just 93,000 people in the last four years. Currently, the Auckland city centre has around 90,000 employees (in the Auckland Central West/ East and Auckland Harbourside area units), or 100,000 if a slightly wider definition is used (adding in Grafton East and Newton).
This sounds like a “good news” story, and for the most part it is. However, the reason we’re so interested in employment numbers on TransportBlog is that the government has said it will only support an early start on the City Rail Link (CRL) if Auckland is on track to meeting two targets – one based on train patronage, and one based on city centre employment.
We’ve written extensively on these targets in the past. We don’t think the employment target is a valid way of deciding when the CRL should start, for a number of reasons. It propagates the myth that the project is all about the city centre, which it’s not. It’s also a target that has little to do with the effectiveness of the CRL. Plus, there’s the “chicken and egg” situation where the CRL is actually the project needed to dramatically improve city centre accessibility, allowing much more employment (and other) growth there.
When John Key announced the government targets for early support of the CRL, he said that city centre employment would have to increase by 25 percent. As it happened, the target was so poorly defined that the Ministry of Transport had to go away and decide exactly how it would be measured. As I’ve argued in the past, the definition they eventually decided on was rather unfair, requiring 24,000 employees to be added to the CBD between 2012 and 2020. The linked post suggests that a start date of 2006 is “more consistent with the reference to the [City Centre Future Access Study] in National’s targets”.
So, as the government currently defines the target, do these new developments put us on track to achieve growth of 25% by 2020? No. Even if all these developments go ahead – and the Precinct Properties work at Wynyard is likely to take longer to be completed – we would still be a long way off achieving the target by 2020. However if we define the target in the way that I’ve argued is more consistent, we are on track. We’ve already had growth of around 13,000 employees since 2006, and with the developments that are currently under construction or proposed, we have a very good chance of reaching the remaining 11,000 by 2020.
This would be a really good time for the Ministry of Transport to take a hard look at their targets, and reassess whether they are defining them in the most sensible way. The good thing about the target being so vague is that they’ve left themselves a lot of wriggle room to reinterpret it from the current hardline position. This would be easier politically than scrapping it altogether. If they do what I’ve suggested, it won’t be long before the Prime Minister is able to come out and say, “With strong growth in train patronage, and city centre employee numbers set to grow substantially, the CRL has met our targets for early financial support, and we will be will be full financial partners to the Auckland Council on this”. Now that would be a good news story.
I guess this is just one of those ones we should have on high rotate. The advice from the North American consultants in 1965 for Auckland at the height of the sprawl era was this: ‘a co-ordinated bus and rail Rapid Transit plan‘ to go along with the gradual construction of motorways. How prescient this looks as the following 50 years have shown how inefficient and expensive a monomodal autodependent transport plan is for cities.
And now as we finally inch towards the partial delivery of just such a system it is plainly obvious how rational it is; ongoing 20% growth on the Rapid Transit Network settles the long running claims that it would never work in Auckland.
It is extraordinary that the government claims Auckland Transport and Auckland Council don’t have a good plan. It’s only the same plan that we’ve always had, but have never been allowed to implement. First because the various councils ‘couldn’t agree’ but now because there is insufficient ‘alignment’ with the government’s plan, which is undisclosed in any holistic form, but clearly is just more motorways everywhere. The Auckland plan, is evidenced, popular, already working, but starved of cash.
‘To 1986 and beyond…‘
And here, on a projected future motorway map you can see the core rail part of the ‘coordinated bus and rail Rapid Transit plan‘:
*Thanks to the excellent Auckland Library archive.
Yesterday the Architectural Centre in Wellington have launched a fund raising campaign to fight NZTA’s continued waste of our money on expensive lawyers for their hopelessly unimaginative and retrogressively conceived Basin flyover project. Here’s the Give-A-Little site with a recap of the situation.
The government aren’t the only one discussing budgets today as the Auckland Council are holding a session of their budget committee. It will see the council discuss the recently approved Accelerated Transport Programme which has been brought about by the introduction of a $99 levy per residential property to pay for transport. I’m not sure if the councillors who have since written to Len Brown asking to discuss the levy again will be able to do so or not. As we know the Transport Levy allows for around $170 million a year worth of extra investment in Auckland for three years. We already have a rough idea of where the money will be spent, this is shown below.
We also had a decent idea of what projects will be funded and it looks pretty good – although for most of it we didn’t know just how much money had been assigned to individual projects. One part of the agenda for today’s meeting finally gives us that detail. The most interesting parts are in Attachment A & B.
The first attachment lists each project in the council’s overall Auckland Plan Transport Network (APTN). Three separate columns list how much the was budgeted for the project over the next ten years based on the APTN, the do not much Basic Transport Network (BTN) and a third column what will the outcome is under the levy funded Accelerated Budget.
The tables show there has been quite a bit of change among some projects, presumably reflecting additional thinking that has gone one since the LTP analysis was done. As an example some projects have been re-scoped which has resulted in increases or decreases in costs or changes in timing has brought funding forward that was previously outside the 10 year horizon of the LTP. An example of some of the changes are below.
However changes over the 10 year plan are in some ways a bit meaningless as there will be another LTP in three years that will likely rehash the priorities and also have to deal with changes in funding that will likely result from the proposed Transport Accord. As such it’s only really worth focusing on the next three years and the tables below show just how much funding is proposed for each project over that time. Unfortunately it’s not the highest quality but if needed click through to the PDF linked earlier to get a slightly better version.
By the time you read this the council will likely have already discussed this item so feel free to add to the comments if any changes happen.