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Auckland PT fares to get a whole lot better

The next revolution of public transport in Auckland now has a date, August 14. That’s the day that the city will finally shed its clumsy and expensive fare system with Auckland Transport finally implementing what they call Simplified Fares, also known as integrated fares, which will be smarter and in many cases cheaper.

Currently Auckland has a stage based system where you pay for every bus, train you use based on how many stages you pass, with only a small transfer discount for those that use multiple services. With Simplified Fares it will shift to paying one fare for your total trip based on how many zones you travel within and that includes using up to five services to get to your destination over a four-hour period. Even better is the cost for most trips is set to get significantly cheaper for a lot of people thanks to the new fare structure.

The confirmed fare map is below and AT say this about it.

Zone overlap areas (grey coloured areas on the new fare zones map) at some zone boundaries allow for travelling to the edge of the zone borders without crossing into another zone.

The zone overlaps are much more defined than they were in the consultation which is good and there are a few new/bigger ones too, such as at Westgate and Otahuhu

Simplified Fares Map

And here is the fare table

With an AT HOP card, you will pay for one entire journey from A to B, instead of paying the fare on each bus or train separately.

During your journey:

  • You can use up to 5 buses or trains within 4 hours, just ensure you transfer between each trip within a maximum of 30 minutes.
  • Tag on and off each bus and train as you do now and simply count the number of zones you travel through to find out your fare.

Simplified Fares - Fare Table

As mentioned for many fares will get cheaper or at least not get more expensive, in fact AT advised me that they calculated 99% of all trips taken will fall into that category which is great news. As an example of just how much cheaper this makes trips, here are a few personal examples. They don’t entirely reflect the costs I pay as I usually use a monthly pass simply due to how expensive it can be but that also makes it a good example.

I live not far from the Sturges Rd train station and travel to Takapuna. This usually involves me catching a train to town and since the bus changes for the CRL transferring to up to two buses, a Northern Express to get me to the Victoria St bus stop where I transfer again to a bus going direct to Takapuna (as an alternative I sometimes catch the NEX to Akoranga and transfer to a local bus or walk). If I was to use normal HOP fares that would be:

  • 5-stage train to Britomart = $6.00
  • 1-stage bus to Victoria Park = $1.30 ($1.80-50c transfer discount) – I could reduce this to $0 if I used the City Link or walked up to Wellesley St but both are less convenient.
  • 2-stage bus to Takapuna = $2.60 ($3.10-50c transfer discount)
  • Total = $9.90

Instead with Simplified Fares I would pay for 4-zones, Waitakere, Isthmus, City and Lower North Shore and all up that would be $6.00. That’s a saving of $3.90. Even if I was just going to the city, for 3-zones I would be paying $4.90, a saving of $1.10 over the current HOP price.

If you don’t use HOP – why wouldn’t you and now over 80% of trips are by HOP – cash fares are changing too. The fares have been rounded to a dollar amount which should help make it easier for drivers needing to give change. See AT’s website for those details.

In addition to the zonal fares, AT have introduced a new child weekend fare which looks good with a maximum trip cost of 99c for using HOP with a child concession.

A new AT HOP child weekend fare will be the most you pay for weekend and public holiday bus and train journeys when paying with an AT HOP card with a child concession applied (excluding SkyBus services).

You can take up to 5 bus or train trips over a 4 hour period with a maximum transfer time of 30 minutes between each trip and pay a maximum 1 zone fare (99 cents from 14 August 2016) regardless of how many zones you cross.

Like the monthly pass, AT are also moving to a single Daily Pass which will cover all zones. It also comes with a price change and will be $18 as opposed to the two passes it replaces being $16 and $22. I can’t imagine too many would buy this. AT have said in the past, and reconfirmed to me recently that they want to eventually move to having daily and weekly fare caps which would solve this issue.

At this stage the new fares only cover buses and trains. I’m aware that AT plan to integrate ferries into the mix although that doesn’t necessarily mean there will be fare parity. We’ll have to wait to hear more about this from AT.

Overall this is going to be great for Auckland and I can’t wait for it to be implemented.

Guest Post: Rethinking our Town Centres for People (Thinking Orbital not Radial) Part 1

This is a guest post submitted by reader Harriet. 

Town Centre Upgrade

We talk so much about how to make the CBD more pedestrian friendly by removing general traffic, and concentrating on public transport and active modes instead, but do we do this enough for our town centres? For the CBD we talk about traffic calming, diverting and even removal of cars for places like Queen Street, so why don’t we apply the same logic to our town centres?

Town centres for the most part sit along main arterial roads. As Auckland has expanded outwards, and over time became more auto focused, these roads have increasingly become through routes for people driving past, rather than functioning as places. Let’s think about the CBD. Is Queen Street a through route arterial or is it focused on access? Policies especially since the 90’s have encouraged motorists to use orbital routes by reducing the speed limits on Queen Street, Barnes Dance crossings, and street upgrades to encourage pedestrian access. In the future Queen Street could become a pedestrian mall with LRT (Light Rapid Transit, or light rail). In a way Symonds Street, Albert/Nelson/Hobson are like western and eastern ring roads. Most motorists therefore freely elect to use these orbital routes. So can applying the same principles to our town centres which presently have radial through roads and instead change it up investing in orbital routes instead which will allow traffic to still flow around, but leaving our Town Centres free for people. Could this be a win win?

Mt Albert was once a strong historical town centre with access to the old tram network, it has now fallen into decay. The local board has lately fought for revival and DART has brought an upgraded station but people still flock to St. Lukes Mall or the CBD.  Anyone who has been to Mt Albert can see that New North Road is used as a through route for people driving to New Lynn, Avondale and further afield, not for people coming to Mt Albert. New North Road thus has been upgraded for this purpose being a dual carriageway through the town centre, not including the protected parking on the station side and on-street parking on the other side. Traffic lights are phased for vehicle flow and the walkways remain decayed and cracked. All this creates a seriously unfriendly environment for pedestrians and shoppers. The new town centre plan really does little to change this. It keeps the same amount of lanes, not adding in any real cycle or bus priority with really token improvements to aesthetics.

Tram heading to Mt Albert

What if we treated Mt Albert the same way we would treat Queen Street, or even the ways other cities would treat their own versions of Queen Street? What if we wanted our town centres to be destinations, not another set of traffic lights? What if we wanted to create great town centres for people without even hurting traffic flows? It’s possible, if just like the CBD here and in other cities we think orbital not radial.

Here is my alternative proposal. If we rail-bridged the Woodward Road level crossing (which needs to be done regardless) and if we diverted New North Road down Carrington Road and Woodward , we would remove one level crossing and create a bypass of Mt Albert Town Centre. From the Woodward Road/Richardson Road intersection to the Mt Albert Road/Carrington Road intersection there would be a section of road completely free from general traffic. The area especially on the NAL (Western Line Side) is mostly post-war low density retail, light industrial, re-purposed warehouses and a service station. If we pedestrianised the old New North Road this would leave enough room for cycle lanes, shops to re-purpose the old walkways into outdoor space and of course plenty of space for pedestrians. If up-zoned to allow mixed use and higher density this would create plenty of area for apartments, offices and retail right next to Mt Albert Station and a future light rail terminus for the Sandringham Road LRT, all without drastically affecting traffic flows. Traffic instead would use the orbital route or potentially switch to SH16 when the upgrades including Waterview are completed.

Objections would be:

  1. Parking (always  parking) – Study after study has shown that retail owners greatly overestimate the amount of customers who come by car compared to active modes and PT. That after improvement to active modes & PT more customers tend to visit not less. Also, with more residents as part of the mixed use potential development, there will be a larger base of local shoppers who can simply walk to the centre.
  1. Bus Access – In the long run, before 2023, it is possible to have both Sandringham Road LRT which could potentially terminate at Mt Albert and likely to have the CRL with potentially 5 minute frequencies to Henderson and the City plus a 3 train per hour crosstown service. We are moving to a best practice bus network which would mean there will be significantly fewer New North Road buses after the CRL, as well as Electric Buses which will be more Town Centre friendly due to less pollution both noise & air. In the short run buses could use the Town Centre with strict rules on idling & speed restrictions.
  1. It will create a negative outcome for some on the new orbital route – Perhaps in some ways, however, the proximity of the town centre and increased transport options would likely increase their property values and they would have access to the improved town centre. Also, Woodward Road is busy at present and the removal of the level crossing would be of great benefit to the residents.
  1. Wouldn’t it be better to just reduce the traffic? Possibly. However, I wanted to show a win-win situation where through motorists wouldn’t realistically be affected travel wise and the local people would have their town centre returned to them. Who doesn’t love win-win?

If we think orbital and not radial is it possible we could have a Swanston Street in every town centre in Auckland, such as Kingsland, Mt Eden, Glen Innes, Sandringham, Avondale, New Lynn, Ellerslie and more?

Is it possible that with a little creative thinking, town centres can become great places just like CBDs or like Santa Monica Promenade? What do you think, any ideas of your own? Also, let me know in the comments if you would like this to become a series as I do have ideas for the above.

Santa Monica Promenade

An electric network, one year on

It seems like only yesterday and at the same time forever ago that Auckland finally rolled out electric trains across the region (except for Pukekohe). Yesterday marked one full year since electric trains rolled out to all lines. Electrification was the result of a strategy a decade in the making but the originated in dreams and discussion going back to at least the 1920’s.

Coming to the western line soon

Since going all electric the results have been fantastic and the constant increases in train use have been both impressive and staggering. In the last year alone patronage has gone up by 2.9 million trips and AT say that over the last 12 months just under 17 million trips have been made, an increase of over 20%. The sparks effect in action. The growth has been so strong that we’ve surpassed usage predictions originally set a decade earlier despite implementation occurring two years after initially planned. Those predictions expected us to hit about 15.7 million by the end of the June 2016 (rounded up to 16m). Instead we surpassed that mark in April and as of 30 June hit 16.8 million trips in one year.

2016-06 - Rail Patronage

Shortly after all services went electric, the final of the 57 trains we ordered arrived in the country but it definitely won’t be the last. With growth exceeding expectations and a lot more expected, even before the CRL is complete, we’ll soon need some more.

AT are also keen to having electric trains run all the way to Pukekohe but doing isn’t cheap and estimated at over $100 million just for the infrastructure. As such, AT have been working with supplier of the trains to investigate the option of battery powered versions. As I understand it they would be exactly the same trains as we have with about 10 fewer seats in the middle/trailer car which is where the four-tonne battery along with associated equipment would go. By being otherwise identical it means that in the future if we ever did install wires the batteries could be removed and the trains would be identical to what we already have. As the services would go all the way through to the city, buying a batch of them would then free up some of the current trains to add capacity to services. One of the biggest issues is that even if the government approved funding for the trains tomorrow they would take at least two years to get here.

Below are some figures from AT.

  • Patronage has risen by 2.9 million trips
  • Trains have travelled 3.8 million kilometres over the last year
  • There are now 158,000 rail services operated a year
  • The busiest time on the network is between 7.30 and 8 on weekday mornings
  • Britomart is the busiest station and at peak in the morning there are 6,500 passengers using the station an hour
  • Punctuality for services has improved from 82 to 96 percent – although some of that is due to lengthened timetables
  • For the year to April (the last data available at the time of writing), farebox recovery has increased from 30.4% to 37.7%. The cost per passenger km travelled has decreased 27% from $0.469 to $0.343.

But while there has been some great news as a result of the move to electrification, we still haven’t yet seen much in the way of speed improvements and the train timetables are slower today than they were with diesel trains. This has been due to a combination of factors including dwell times, line speeds, signalling issues etc. Last year Auckland Transport started working on a big list of initiatives to improve the trains including making them faster and more reliable. Some of those tasks have been completed and are contributing to the improved performance figures but others, such as improving dwell times remain a distant dream.

I understand the next timetable change, which is likely to be in February, will finally incorporate the benefits from some of the initiatives into improving performance. Whether that will include any changes to dwell times remains to be seen.

EMU + Rail improvement action plan 1 - Jun - Sep

Overall the improvements to rail services and the network have been considerable and very welcome. AT’s target for this year is for rail patronage to hit 19.5 million trips. With the growth we’re seeing and what can be expected in the next few years following integrated fares and the new network we should see that mark easily reached.

CRL Station Features

When going through the City Rail Link business case for yesterday’s post, I left out one aspect I thought readers might be quite interested in, details about the stations being added or upgraded as part of the project. They say

Station entrances have been designed to address the needs of each station in terms of function, performance and personality, as well as the needs of the particular urban context into which they are to be inserted. Effort has been made in placing and configuring the above-ground components of the station entries and other station components to maximise local benefits. This included consideration of:

  • potential for architectural treatments and materiality
  • scale, massing and form
  • activation of street frontages
  • preserving important heritage structures
  • transit oriented developments
  • potential to explore inclusion of Iwi cultural landscape and design themes.
Aotea Station Design Platform Mar - 16

Aotea Station platform

On to the details about the stations themselves, this is laid out in the the table below

 

CRL Business Case - Station information

Britomart will get three additional escalators but also lose one entrance. With a reduction to four platforms post-CRL I’m guessing some of the new escalators could relate to improving access at the eastern end of the station. As for losing an entrance, AT have said the gateline will be moved from the platform level up to the CPO so this might suggest the entrance out the back of the CPO could close.

 

Aotea will have a lot of escalators including about four sets to/from the platform. It’s also good to see them stating that the station is future proofed for a future North Shore line – which would be under Wellesley St. The only concern is that the platform is quite narrow at only 9.6m for what will be the busiest station on the network but I guess the various escalators will help somewhat in moving people.

Aotea Station Design Exploded View

The Karangahape Rd station platforms are a little narrower but the station isn’t expected to be quite as busy. In the post yesterday I highlighted how they expect up to 34,000 during the AM peak. The report suggests about 20% of that will go to K Rd while Aotea and Britomart get around 40% each. As a rough guess that seems about the same width as some of stations in other parts of the network. It’s worth pointing out that side platform aren’t really on the outside like other stations but more like two halves to an island platform with cross passages  directly between them.

Of course it’s a shame that they’re not building the Beresford St entrance as that would make the station more useful.

Karangahape Station Platform View

Karangahape Station Platform

If you’re interested in how the stations will be built, the info below gives some idea.

Aotea Station

Construction for Aotea Station will be staged so that only one of Victoria Street, Wellesley Street and Custom Street West is closed at any one time. As Aotea Station is on the critical path, early enabling works to divert the stormwater culvert in Albert Street are planned to reduce the overall construction programme.

Components of the Station construction include:

  • southern construction yard and shaft
  • Wellesley Street West intersection structural works covering relocation of the street furniture and utilities, constructing the roof slab and reinstating the Albert Street/Wellesley Street intersection for public use, constructing the station box to platform level, the structures for the station entrance, ventilation, and mechanical and electrical equipment. The base slab at platform level will be designed to span the tunnel works for the future North Shore Line. This section of the station is on the critical path as it must be completed to receive the TBM from the first tunnel bore.
  • Victoria Street intersection structural works covering the street furniture, utilities relocation, constructing the roof slab and reinstating the Albert Street/Victoria Street intersection for public use, construction of the station box to platform level from the adjacent section and the structures for thestation escape passage and entrance
  • Durham Street intersection structural works including carefully removing the heritage bluestone wall (for reinstatement on completion), construction of the roof slab and reinstatement of the Albert Street/ Durham Street intersection for public use, and construction of the station box to platform level. This section of Aotea Station is on the critical path, as it must be completed before the rail track installation works can proceed to Britomart Station.

After completion of the tunnelling and structural works, the station will be accessible for fit-out.

Karangahape Station

The construction sequence for Karangahape station needs site preparation, service protection/diversion, and demolition of existing buildings followed by construction of the main entrance shafts, excavation of the sloped entrance escalator shafts, and construction of the permanent works after the mined tunnels have been completed. The Mercury Lane shaft must be completed before the down main TBM reaches this location. After completion of the tunnelling and structural works, the stations will be accessible for fit-out.

Govt ignored advice on allowing EVs in bus lanes

In May the government announced a package to try and increase the number of electric vehicles in New Zealand as a way of reducing emissions – a laudable goal but some of the government’s proposed some measures missed the mark. At or at least near the top of the list was the idea to allow for electric cars to use bus lanes and the Northern Busway.

Northern Busway

Enabling electric vehicles to access bus and high occupancy vehicle lanes

Access by electric vehicles to bus and high occupancy vehicle lanes (lanes where a vehicle must have more than a certain number of occupants) will be of value to households and businesses. Access to such lanes will mean electric vehicles will be able to travel more quickly than vehicles otherwise held up in traffic.

At the same time, the changes will also empower road controlling authorities to allow electric vehicles into special vehicle lanes (such as bus lanes) on their local roading networks.

The Government will make changes to the Land Transport Act and Rules to allow electric vehicles to drive in bus and high occupancy vehicle lanes on the State Highway network, which it controls. One example is the Northern Busway in Auckland.

As I said at the time, the idea is madness and defeats the whole purpose of having bus lanes which is to make buses:

  • faster, making them more attractive to use and can also make them time competitive with driving.
  • more efficient, because buses are faster they can run more services can be run for the same cost or alternatively fewer vehicles and drivers may be needed
  • more convenient as if they allow more services to be run it means higher frequencies so less time waiting at bus stops.
  • more reliable as they’re more likely to arrive at stops and the final destination on time.

It’s now been revealed by the Herald that the government ignored advice to at least consult with councils first before announcing the idea and highlighting that at least one council is ruling it out.

Andy Foster of the Wellington City Council said his city had the country’s highest rate of public transport use “by far” and did not foresee it opting for the change.

“Traffic getting in the buses’ way is not conducive to maintaining reliable timetables.”

Foster, who chairs the council’s transport and urban development committee, said he saw “no chance” that electric vehicles would be allowed to use the city’s bus-only lanes.

“Bus lanes are generally very well respected by motorists. If some vehicles start using bus lanes because they are [electric] there is a greater risk that others which are not [electric] will do so too.”

They also say Auckland Transport and the Christchurch City Council seem cool on the idea although the NZTA say they have begun initial discussions with Auckland Transport to investigate the potential of permitting electric vehicles on the Northern Busway

Back when this policy was announced I sent an Official Information Act request to the Ministry asking for details relating to the idea. I received back some excepts from a report looking at options for promoting EVs but it had been sitting in my inbox for a while. It includes the suggestion that the Minister consult councils on the idea first as well as a few other interesting comments. For example, not only did they recommend talking to road controlling authorities (RCAs) first, they say the NZTA expects none of the major RCAs would implement it.

EVs in Bus Lanes OIA - Considerations

I find the point that the NZTA highlighted that such and idea was unlikely to work as the RCAs wouldn’t want to implement it as much more damning than the fact he didn’t consult with them

They expand a bit on the efficiency impact portion below highlighting that it will likely impact PT and general traffic congestion. Even more so bottom paragraph below confirms the bus lanes will be full soon but that people will still want to drive in them.

EVs in Bus Lanes OIA - 1

As a way of implementing the idea, it was suggested to either use legislation to declare EVs as allowed in all bus or transit lanes or give RCA’s the power to decide on what lanes to allow EVs to use. Thankfully the Minister at least chose the second option but given the responses above, it seems unlikely to they’ll approve having EVs in bus lanes. That raises the prospect despite the government suggesting it, it won’t actually be possible anywhere. That in turns means the whole point of the policy would be a flop and will have wasted precious resource from the ministry. I wonder if the government will quietly drop it.

Of course if they really want to get more use out of bus lanes one idea would be to provide more funding to put more buses on which would have the added benefit of making PT much more useful.

The Full CRL Business Case

Back in April Auckland Transport released a summary of a business case they’d produced for internal use to help with their planning and procurement for the project. The new business case took into account all of the changes to the project that have been made over the years as well as AT’s improved understanding of the project and other changes within Auckland. The business case found the project has a Benefit Cost Ratio of 1.6-1.7 thanks to $2.96 – $3.2 billion in benefits coming from the project.

CRL Benefits graphic

Last week the herald triumphantly announced that the cost of the CRL had blown out by a cool $500 million up to $3 billion but as I wrote following that article, the actual cost was $2.5 billion +/-20%. So it could be that when tendered the project comes in lower than currently expected. The cost blowout was overblown. While looking at some details for that article, I found that Auckland Transport had actually published the full business case online (8MB), not just the summary like they had earlier.

While the summary was useful, the full business case contains a lot of information and so with this post I thought I’d have a look at some of it.

The first thing that I noticed is the report pulls a lot of history and previous reports together as part of explaining why the project so important. Perhaps one day I’ll do a post in more detail about this info but if not, I’m sure it will be a useful resource for students and studies in the future.

Construction

The diagram below can take a bit to understand but shows roughly where, when and how construction will take place across the entire project.

CRL Business Case - Construction Time Diagram

Related to construction, this comment caught my eye as part of talk of altering some designations (page 50).

Changes to provide for the relocation of ventilation equipment at Aotea Station to Kingston Street and the associated relocation of the Bluestone Wall (approximately 3m to east)

I’m guessing in part this is about providing better footpaths along this part of Albert St.

This diagram shows the cross section for the bored tunnels. They say it needs an indicative internal tunnel diameter of 6.24m.

CRL Business Case - Tunnel Diameter

CRL Capacity

The report gives an indication as to the capacity the rail network will have once the CRL is built.

Once the principal constraint has been addressed, with the CRL turning Britomart into a through station, it will be possible to run up to 24 services per hour, each way, through the Link, with initial plans for 18 services per hour in the peaks. Ultimately, advanced systems and further investment might see that figure rise to 30 services per hour.

Currently Britomart is limited to 20 trains arriving per hour so we go from that to 36 an hour with the CRL initially and up to 24 in the future while we might eventually get up to 30 an hour. They say that whilst the actual operating plan will be confirmed closer to the opening date, the running pattern below is what they used for planning and modelling purposes.

Post CRL running pattern at start

They’ve say the planning is based modelled demand and capacity needed for each line. The western line is used as an example:

Figure 13 below shows as an example how train capacity was matched against predicted demand by decade by line, in this case the Western Line for 2023. The capacity line represents 6 tph x 3 car service starting from Swanson, 3 tph x 3 car service starting from Henderson and a 3 tph x 3 car peak overlay starting from Henderson. Similar analysis was carried out for other lines and decades.

and

Over time, as demand increases, as the fleet size is increased, an increasing number of trains can be lengthened to 6 car operation, and the span of operation of the peak overlay can increase from 1 hour to 3.

CRL Business Case - Western Line Demand and Capacity

This suggests the plans are to only run 3-car trains at the opening of the CRL. As covered later, I think they’re underestimating just how popular the CRL will be and given we already have 6tph, some of which are 6-cars in length, and on some services they’re getting full I think AT will need to revisit this. I’m also personally unhappy that despite the CRL there is no service improvement past Henderson (or at Manukau).

One last interesting comment on this, they say “until sufficient level crossings are addressed on the western line, a Henderson – Otahuhu service has no capacity to operate”.

Patronage Modelling

There has been a lot of modelling on patronage – although like most previous predictions we’ve seen I think they’re on the low side. The CRL will be transformational and change like that is hard to correctly predict when using models that are based on current habits.

The table below shows the current and predicted AM peak trips to the city (CRL includes the three CBD stations).

CRL Business Case - AM Peak Rail Arrivals in City

It is expected that about 40% of that growth (green) comes from people otherwise using buses (but they may still use a bus to get to a station), the remainder is from new trips or those who would otherwise have driven. I’m a bit sceptical about just how much impact the CRL will have for buses as from memory Britomart was meant to decimate bus usage but it has grown too. Also the table below shows where patronage is expected to change. It seems unlikely that some of those routes will see any impact at all, for example on Richmond Rd.

CRL Business Case - Patronage Change

As part of the modelling, the future patronage projections were updated to reflect the surge in usage we’ve been seeing in the last few years – but only for the short term and so they decided to leave the long term predictions unchanged. They say that “it is clear that this is highly conservative” and my gut feeling is that after opening we’ll quickly see usage rise to hit 45 million rail trips a decade or more sooner than they suggest. The biggest limiting factor is likely to be that we won’t have enough trains due to the wrong modelling saying they aren’t needed yet.

CRL Business Case - Overall Rail Patronage

Development

The summary document talked about how just within the CRL footprint there was 4.9ha of developable land with a potential floor space of 210,000m² to 250,000m² and which has an estimated value of $1.2-$1.4 billion. The business case also looks wider development across the city enabled by the CRL. They say modelling suggests the CRL will increase the feasibility for new dwellings within rail station catchments by 41% from about 40,000 to around 57,000. It’s also worth noting that the Mt Eden figure excludes the land counted earlier as part of the CRL footprint.

CRL Business Case - Resi development feasibility by rail station

Economics

As mentioned the CRL has a BCR of 1.6-1.7 depending on the growth scenario and using the standard NZTA evaluation manual. That BCR stacks up even under higher discount rates and cost sensitivity testing.

CRL Business Case - BCRs

CRL Business Case - BCR range

For those economist types, the report breaks down all of the various components of the benefits that have been calculated.

Costs

The table below shows the capital costs of the CRL inflated to the expected dollars of the day.

CRL Business Case - CAPEX

This shows the costs by year

CRL Business Case - CAPEX by year

Operating costs are estimated at around $50m per annum when the project opens rising to nearly $80 million by 2046. As a comparison, last I saw we spend around $100 million on running trains in Auckland and the report suggests that due to the CRL providing shorter routes there will be savings on the running costs outside of the tunnel. The estimate that in the first year there will be around $20 million in additional fares from the CRL but that will also be related to the anaemic growth they expect.

CRL Business Case - OPEX

 

Overall I thought there was some fascinating additional information within the business case.

IPENZ talk: Our future with climate change

This Wednesday the Institution of Professional Engineers New Zealand is running a seminar on our future with climate change. It’s open to the general public as well as IPENZ members, so come along if you’re interested in the topic.

Apologies for the formatting on their advert; I couldn’t figure out how to copy it across properly:

IPENZ Transportation Group Auckland invites members to:

Our Future With Climate Change

A joint event with EECA, NZPI and CILT. This event is free and open to the public.

“This event will be looking at what a sustainable transport future for NZ looks post the 2015 United Nations Climate Change Conference…both now and then into the 2040s…What will our energy patterns and sources look like? How will we be travelling? What will we be travelling in? Why will we be travelling? How resilient will our future be? How will energy help and hinder us?”

Date: 20th July 2016

Venue: Studio One (the Artstation), 1 Ponsonby Rd Ponsonby, Auckland.

Time:  5:00pm – Drinks and networking (There is a free bar tab so come in early!)
6:00pm  – Presentations

RSVP: janicemiller@outlook.co.nz

Our Future with Climate Change
Our Future with Climate Change
Our Future with Climate Change - Sponsors

Council to decide on Skypath funding this week

The council will decide on Thursday if they will go ahead with a funding arrangement for Skypath.

Skypath Consent - From Westhaven

An item (Page 21) at the council’s Finance and Performance Committee gives an update on the project, much of which will be nothing new to those who have been following it. This includes that progress has been made on a number of areas such as that the wind tunnel testing requested by the NZTA found no significant concerns and that progress has been made on connections to Skypath with projects such as Seapath having been consulted on and getting strong public support.

Seapath March-16 Route

Seapath Proposed Route

The second item (Page 25) is the key one though and looking to get agreement from the councillors to move forward with the project. It has the following recommendations to councillors.

That the Finance and Performance Committee recommend to the Governing Body that it:

a) agree to proceed with the SkyPath project and that the hybrid Public Private Partnership proposal is the preferred procurement option to deliver SkyPath.

b) authorise the Chief Executive to enter into all necessary agreements in relation to the SkyPath proposal, subject to minimal financial impacts, and to take any other actions in the Chief Executive’s delegation to facilitate the progress of the project.

c) agree to make appropriate provision for the project in the 2017/18 Annual Plan and the 2018/28 Long-term Plan.

The council have been working with the private backers of the project (the PIP Fund) for a few years now to investigate options for financing the project. The preferred approach is for the PIP Fund is to build it as a PPP in which the council underwrites revenues up to a certain level.

The PIP Fund’s PPP proposal is to finance, design, build, maintain and operate SkyPath as a user pays facility for 25 years, after which it “reverts” to Council ownership. In return:

  • Council would underwrite actual revenues to a pre-agreed dollar amount in the “base case” (the agreed financial model that sets out the cost envelope), and have a share of upside profits above a specific threshold.
  • The PIP Fund’s returns depend on it managing its costs and performance within the parameters of the fixed base case. Any cost overruns are the PIP Fund’s responsibility.

That this private project will likely have a portion of its revenue underwritten by the council has long been one of the key arguments for those opposing it. They claim it will be a failure from not enough people using it – lumping costs on ratepayers while simultaneously claiming it will be so popular the local streets in Northcote will be overrun by people on bikes

Unfortunately the attached reports have blacked out the exact details of costs, revenues, thresholds etc so we can’t see just what those are. But unless something drastic has changed, it is still likely to represent a good deal for Auckland even if the council has to honour the underwriting. The last we saw the project was expected to cost $33 million, a significant sum but since the government came to the cycleway funding party with the Urban Cycleway Fund, there are already projects underway that cost more and are not likely to be used as much. One such example is the Glen Innes to Tamaki Dr shared path. This is not to say the GI to Tamaki Dr project is bad, it’s a great project in its own right but that when it comes to benefits, it simply can’t compete with opening up a walking and cycling connection between the North Shore and the city.

In the past the council have been largely very supportive of the project – or at least supportive of investigating it. Only two councillors have consistently voted against it being George Wood, whose constituents stand to benefit the most from the project, and Sharon Stewart. In addition Cameron Brewer and Dick Quax also voted against providing some extra funding to the investigations. Given his ardent opposition to the project, George is almost certainly going to continue to try and fight the project.

While the council will be making a decision this week on whether to financially support the project, we might be still waiting for some time to the outcome of the Environment Court Appeal. It is currently expected that the hearing for it will happen in October or November. In saying that we learned recently that one of those appealing the project had pulled out citing the costs of fighting the project. I’m guessing they more likely realised that it was a fight they wouldn’t win.

Meanwhile, the Herne Bay Residents Association Incorporated has withdrawn its appeal because it believes the project is not feasible so will not “see the light of day”. Therefore, its efforts were “a waste of time and money”.

The group’s co-chair Christine Cavanagh said as a responsible organisation it did not intend to waste residents’ money on an “unnecessary appeal” that could cost hundreds of thousands of dollars.

The Northcote Residents Association are still fighting though and are appealing to the public for cash to help them do that. As of writing this post they’d raised almost $9,500 but that is a long way from the potential hundreds of thousands their Herne Bay brethren suspect will be needed. They’ve also sent this out in response to Auckland Transport looking at implementing a residents parking scheme which would prevent people from driving to the bridge and then using Skypath, one of the key arguments the residents have used against the project.

How to reduce Auckland house prices

Arthur Grimes, the former chair of the Reserve Bank board, caused a stir with his proposal to crash Auckland house prices by 40% by building lots more housing:

My call for policies to drive a house price collapse is driven by my personal value judgement that it’s great for young families and families on lower incomes, to be able to afford to buy a house if they wish to do so. My concern is not for older, richer families, couples or individuals who already own their own (highly appreciated) house…

Research at Motu (accessible from www.motu.org.nz, and published in international scholarly journals) shows that (given current interest rates and incomes) a 1% increase in the number of dwellings relative to the population leads to a reduction in house prices of around 2.2%. Thus a 40% fall in house prices means that the number of dwellings in Auckland would have to expand by around 18% relative to the current dwelling stock. On top of that, the stock has to increase to reflect population growth. So with, 2% population growth per annum, the stock of dwellings in Auckland would have to increase by roughly 30% if prices were to fall by 40% over the next 6 years.

There are currently around 500,000 dwellings in Auckland. A 30% increase in dwelling numbers over 6 years translates into an extra 150,000 houses over that time – i.e. 25,000 extra houses per year for each of the next 6 years. This estimate contrasts with much smaller (and nonsensical) estimates of housing shortages that are often quoted. The reason is that those smaller estimates (e.g. 10,000 extra houses) would just leave prices where they are!

Now, I’m not quite as confident that the spillovers from a large drop in housing prices could be contained without significant effects on financial stability or the real economy. And there are definitely many challenges to technical feasibility, including zoning, infrastructure capacity, and availability of builders. But I fully agree with Arthur’s framework for thinking through supply and price dynamics.

It’s a welcome break from much of the usual commentary about the supply and demand balance in Auckland’s housing market. For example, it’s common to hear statements like, “Auckland’s population grew 22% between the 2001 and 2013 Censuses, while the number of dwellings in the city increased by 19%. Therefore we’re only 3% short.”

I’d describe this as the “quantity surveying” approach to market analysis – i.e. count up the number of people, count up the number of homes, and compare the difference. It’s not good economics, as it completely fails to consider:

  1. Desired outcomes from the housing market: As Arthur observes, an appropriate goal is for young people and low-income families to be able to access the housing market. We’re trying to achieve lower prices, not a certain ratio of dwellings to people.
  2. Underlying relationships between supply, demand, and prices: As Arthur points out, in order for prices to fall, the housing stock must be rising faster than population. Exactly how much faster depends upon the degree to which there is pent-up demand for housing that hasn’t been met in the past.

With that in mind, let’s take a closer look at Arthur’s figures. He argues that:

the stock of dwellings in Auckland would have to increase by roughly 30% if prices were to fall by 40% over the next 6 years… [which] translates into an extra 150,000 houses over that time – i.e. 25,000 extra houses per year for each of the next 6 years.

Why is an additional 30% increase in dwellings needed when Auckland’s population has only grown by around 30% over the last 15 years? Doesn’t that seem a bit too large?

From a quantity surveying perspective it does, but from an economic perspective, it’s totally sensible. To see why, we need to think about what rising housing prices mean. If the supply of a good – housing in this case – is constrained, prices must rise until some potential buyers give up and go elsewhere. In the Auckland housing market, that could mean:

  • Moving elsewhere in New Zealand – surely a factor behind recent price rises in Hamilton, Tauranga, and beyond
  • Moving overseas – a total loss of that person’s capabilities to the NZ economy
  • Staying in Auckland and living in overcrowded or unsafe housing – which disadvantages them and costs the public health system and social agencies
  • Living in a car or on the streets – it’s frankly appalling that I even have to mention this.

The fact that Auckland’s prices have been rising more rapidly than prices in the rest of the country (which are affected by the same bank lending conditions and macroeconomic trends as Auckland) is an indication that price-driven rationing is probably occurring. There is likely to be a significant amount of pent-up demand for Auckland housing – and if we figured out how to meet it, the city would get bigger. (Leading to, among other things, increased agglomeration economies.)

Finally, it’s worth discussing Arthur’s thoughts about where new housing should be constructed. He takes the SFBARF view: build absolutely everything everywhere:

So how can we get these extra houses and where can they go? Some people favour intensification and some favour expansion of the city’s footprint. The size of the task means that both are required.

Auckland is lucky that it has plenty of farmland around it and – contrary to popular myth – farmland is almost worthless in farming uses compared with residential use. Expansion is therefore required, but with a proviso. A change in the zoning of rural land to residential gives the existing landowner a massive uplift in value – i.e. a multi-million dollar gift from the community. To my mind, this value should accrue to the community that grants the zoning change. The Public Works Act could conceivably be used (or changed) to enable Council to buy rural land at a premium (say 50%) above the rural land value and then all extra value uplift would accrue to the Council to be used for infrastructure and services for the enlarged community.

Auckland also has plenty of opportunities for intensification in areas where developers would wish to intensify and where people wish to live. For instance, Tamaki Drive is ready made for high-rise apartments where tens of thousands of people would no doubt wish to purchase apartments. Of course climate change may make development on Tamaki Drive a risk, but a few blocks back from the sea – on the ridges overlooking the harbour – would work just as well. Lift the restrictions on the heights of new developments, and I expect that we would see an utter transformation in the intensity of housing from Orakei through to Glendowie.

Why can’t we do it with sprawl alone? There are two answers. The technical answer, which we’ve extensively covered on the blog in the past, is that new infrastructure to greenfield areas is expensive and time-consuming to develop. The time lag to intensify sites that are already served with infrastructure can be smaller, provided that consenting is straightforward.

However, the economic answer is, to my mind, even more important. Research into the determinants of property prices in Auckland consistently finds that proximity to the coast and proximity to the centre are two of the most important attributes for buyers. People value the amenities that come with coastal living – that’s a significant part of the attraction of being in Auckland – and they value the consumer amenities and employment accessibility that are concentrated in the centre.

A sprawl-only plan may work from a quantity surveying perspective – it would raise the ratio of dwellings to people – but it would mean growing away from the coast and away from the centre. The next swathes of farmland to be developed – east of Flat Bush, west of Orewa, and north of Kumeu – are all a long way inland.

This will work for some people, but for many it will miss the point of living in Auckland. If we are to meet growing demand, we will also have to think hard about how new residents will access to the city’s man-made and natural amenities.

Sunday reading 17 July 2016

Welcome back to Sunday reading. This week, a different take on housing markets. We normally focus on issues like zoning and development that affect the quantity of housing that gets built in a city, but things aren’t necessarily all hunky-dory once the housing’s there. Mike Konzcal writes about “the violence of eviction” in Dissent Magazine:

A central premise of markets is that people who can afford to pay the price will end up where they belong. According to this assumption, eviction is simply a correction made by the market, one where people simply end up in a cheaper house that’s better suited to their income. But this is not what happens. One important reason is because there are very small rent differences across the poorest and richer parts of the Milwaukee. “A mere $270 separated some of the cheapest units in the city from some of the most expensive,” writes Desmond. In the poorest neighborhoods, median rents for a two-bedroom were only $50 less than in the city overall. Meaning, people who are evicted aren’t automatically reshuffled by the market to cheaper housing, because such housing simply isn’t always available.

This is because prices don’t determine who ends up where, landlords do. Desmond writes, “landlords were major players in distributing the spoils. They decided who got to live where.” No matter what else the poor have in common, “nearly all of them have a landlord.” Rather than a facile notion that people end up where they best belong, we see that people’s respective power dictates where they end up, and in poor neighborhoods, landlords have the power.

Landlords make decisions heavily informed by race. White and black families live at opposite ends of Milwaukee, but they might as well live in different galaxies. The black families can’t find any landlords willing to work with them in the white parts of the city, rendering false the idea that they could simply move if they so wished. The white families, for their part, refuse to look in the black ghetto at all, and receive a location dividend based on their race.

The way landlords choose to screen tenants reshapes the housing market in fundamental ways. Having kids, for instance, usually means an instant rejection. This is particularly tough on single moms, who are often already in difficult economic situations, and the children themselves. Eviction means school connections and deeper community roots, essential for children, are impossible to sustain.

Kim-Mai Cutler (Techcrunch) also wrote an excellent article about racial exclusion in housing markets, looking at the history of a single community in Silicon Valley: “East of Palo Alto’s Eden: Race and the formation of Silicon Valley“. It’s a long exploration of the dark side of the American (housing) dream.

Do we need to think about housing markets differently? Perhaps. In general, I think the case for renters’ protections and public involvement in providing rental properties of last resort, i.e. state houses, is stronger than we usually think.

Does this mean we need to rethink our approach to market analysis more generally? Perhaps. Eric Beinhocker puts forward the case for reinventing economics to take better account of market failures, behavioural economics, and complex, nonlinear relationships. He writes:

New economics seeks explanations of how the economy works that have empirical validity. Thus behavioural economists run painstakingly crafted experiments to explain actual human economic behaviour. Institutional economists conduct detailed field investigations into the functions and dysfunctions of real institutions. Complexity theorists seek to understand the dynamic behaviour of the economy with computer models validated against data.

In my book The Origin of Wealth (2007: 97) I offered a table to summarise the contrast between traditional economics and the new economics perspective. I provide here an updated version.

Screen Shot 2016-05-26 at 11.56.54 PM

Traditional economists often respond that the limitations of orthodox theory are well recognised and there is much work being done to relax restrictive assumptions, introduce more realistic behaviour, heterogeneity, institutional effects, dynamics, endogenous innovation and so on. They are correct and this work is a very positive development for the field. However, much of this work introduces just one element of realism to an otherwise standard model – a bit of behaviour here, a bit of institutional realism there, and so on. It is very hard or even impossible to relax all of the assumptions at once without throwing out the whole structure of the model – in particular without abandoning the core idea that the economy is an equilibrium system.

The radical challenge the new economists have accepted is to relax all of the unrealistic assumptions at once, move to the right column of the above table, and create an economics that has much greater fidelity to the real world. It is an enormous challenge and it requires a new toolkit and methodologies.

For boring mathematical reasons, I’m a bit sceptical that Beinhocker’s research agenda will converge to a tractable set of models. But even so, there’s value in seeing what happens when you relax the conventional assumptions in traditional economic models. Sometimes the models no longer work.

On a completely different note, let’s take a look at some lessons from Paris. TransitCenter reports on the success of their new outer-suburb light rail network:

The Paris tramways have proven exceptional not just because there are so many of them (nine, with more in the planning and construction phases), but also because they are so popular. Ridership is 900,000 per day, which is five times greater than America’s busiest light-rail system (Boston’s Green Line) and greater than any subway system in the U.S. except New York.

All this is taking place on a network whose first line opened just 24 years ago and whose entire existence many visitors to Paris might not even be aware of, given that the routes are in the less touristy parts of the region…

It takes just a few seconds looking at the RATP map to see why the Paris trams are so useful. In Paris’s hub-and-spoke transit network, they are the rim of the wheel, connecting the ends of Metro and RER lines in far-flung parts of the region. All nine lines offer at least two stations that connect to other modes of transit. Some offer many more:

No. of transfers No. of total stations Pct. of stations with transfers
T1 8 36 22%
T2 4 24 17%
T3a 12 25 48%
T3b 8 18 44%
T4 2 11 18%
T5 2 16 13%
T6 3 21 14%
T7 4 18 22%
T8 3 17 18%

It’s not just, as the map implies, that the tram lines travel near other transit stations. In most instances, the streets and stations are designed to make the connection as smooth as possible. Here, for example, is the T1 tram where it meets the M7 Metro line at the La Courneuve station in Aubervilliers. The stairs to the underground Metro platform deposit riders right at the tram:

Google Street View

Google Street View

Even commuter rail stations don’t present an obstacle to tram transfers. Here again the T1, this time at the Noisy-le-Sec rail station on the RER:

Google Street View

Google Street View

The ability of the trams to link existing transit is not a happy coincidence, but rather an explicit goal of the network’s planners. According to Sandrine Gourlet, a STIF deputy director who spoke to Le Figaro about the trams back in 2012, the agency calculated that forcing customers to make transfers that take longer than two minutes produces a ridership drop of 10 percent.

That’s a lesson well worth applying in Auckland’s public transport network.

And now for two bits of history. First, Envirohistory NZ takes a look at “vanishing forests: the pre-European transformation of the South Island“. We think of New Zealand, and the Southern Alps in particular, as a relatively untouched natural environment. But the truth is that humans have massively transformed the ecosystem since arriving. We terraformed New Zealand:

When we encounter the extensive tussocklands of the eastern South Island [see below right], it is hard to imagine any other landscape in that place – so much a part of the “natural” New Zealand landscape have they become. Yet, as explored in a previous post What is natural? The tussocklands of Lindis Pass, this is in fact a human-induced landscape; the tussocklands have replaced podocarp and beech forest [see left] that once covered the South Island. However, this occurred long before any written history was established, and this environmental history has had to be pieced together through painstaking paleoenvironmental research.

New ground-breaking research, undertaken by an team of both New Zealand and international scientists, has determined how, to what extent, and over what time-frame large tracts of South Island forest were destroyed…

Pollen records show that before Polynesian arrival in New Zealand, 85 to 95% of the country was heavily forested, with low scrub and herbaceous plants above the treeline. The South Island supported beech (Nothofagus) forest at wetter, higher elevations, and podocarp forest (rimu, miro, matai, kahikatea, totara etc) at drier, lower elevations.

However, between the arrival of the first settlers from the Polynesian Islands 700 – 800 years ago to the European settlement of New Zealand in the 19th century, 40% of this forest had disappeared from the South Island, mainly on the eastern side [see forest cover maps below left]. What makes this remarkable is that this extensive deforestation was achieved by small, largely transient, non-agricultural populations in places remote from any settlement, and occurred throughout the relatively large South Island in only a few decades.

envirohistory-nz-forest-cover2

Humans obviously don’t always get it right. An architectural historian, Dr James Alexander Cameron, takes us on a tour of “great mistakes in English medieval architecture“. A bit too much mead involved in the construction of some cathedrals, I think:

One of the great things about medieval art and architecture is that people just went in and did things. They didn’t build models and scale them up, building great cathedrals and abbeys was a learning process as much as anything else. This means many of these apparently perfect aspirations to the Heavenly Jerusalem have some often quite comical mistakes, corrections and bodge-jobs that once you see, you can’t unnotice. There do seem to be a few more of them in English architecture than anywhere else, that makes it all the more fun to study…

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Selby Abbey, nave, north arcade, early twelfth century

Selby Abbey, nave, north arcade, early twelfth century

Ok even I know arches don’t look like that

Just a bit of settlement abbot, nothing to worry about

I don’t know why we even bother sometimes

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Canterbury

Canterbury Cathedral, south-east transept, south wall, triforium, early 1180s

Canterbury Cathedral, north-east transept, west wall, triforium, early 1180s

Uhh, master William, we’ve had a small problem in the triforium, some guy springed the arch at the wrong pitch and oh god it looks ridiculous

Naw, leave it, yeah

Seriously? William of

Sens had us redo loads of things because they were not up to s-

Look, I’m going to get this thing finished on time or my name isn’t WILLIAM THE ENGLISHMAN

And now for something a bit more local, although still controversial. The great Island Bay Cycleway blog explains why “the hypocrisy around cycleway safety needs to stop“. It’s a must-read article, and not just because they quote some blog posts I wrote:

Any objective discussion about safety on our roads really starts and ends with motorised traffic. To argue that separating people on bikes from cars, trucks and buses travelling at 50 kph is less safe overall is disingenuous and dangerous. If we really care about safety then let’s focus on motor vehicles and have a discussion about things that will actually make a difference.

Let’s talk about dropping the speed limit across Wellington to 30 kph. Let’s talk about about the design of roads and road geometry that encourages people to keep to safe speed limits. Let’s talk about giving pedestrians and cyclists on paths priority over turning traffic at side streets. Let’s talk about having more traffic lights and pedestrian crossings. And let’s talk about removing more on-street parking from Wellington’s roads in order to make more room for cycleways and footpaths (in Island Bay it is actually the preservation of so much on-street parking on The Parade that creates almost all the key risks that people perceive with the cycleway).

If we just don’t want to talk about these things that’s fine, life is full of tough choices and trade-offs and we might not be prepared to make some of those. But if we are prepared to mitigate, manage and ultimately accept the significant risks associated with having motor vehicles in our cities and suburbs please don’t be a hypocrite and tell me we can’t do the same for a cycleway.

To close, University of Auckland economics professor Ryan Greenaway-McGrevy explains (at interest.co.nz) why intensification is the only way we can bring down housing prices without imposing large losses on existing homeowners:

Suppose that house prices stood still, and that nominal household incomes grew at 3% per year, which is slightly higher than the 2.7% average rate of general inflation since 2000. It would take about twenty-four years for nominal incomes to double. That would lock a generation out of the property market. (And that is with an optimistic inflation rate; there are significant deflationary pressures in the global economy that could be here for the long term.) Another way to look at it: If house prices stay at the levels they are at now, household incomes would have to grow at about 5.1% to hit the Council’s target by 2030. Unless we strike oil in the Hauraki Gulf, that is just not going to happen.

The calculus is inescapable: House prices have to halve. They have to go back to 2006 levels. That is a difficult reality to come to terms with. And it will be even more difficult to actually achieve…

It is possible that some combination of the more reasonable demand-side policies would succeed in bringing down property prices by fifty percent. But such a policy would be quite reckless, and possibly push the economy into recession. It would come at a huge cost to those who have diligently used housing as a savings vehicle. And it would also push the mortgage on many recently-purchased homes underwater. That is a terrifying prospect for many families, because it massively increases the downside of involuntary unemployment for the breadwinner(s). Moreover, the reduction in household wealth would likely cause property owners to cut back on spending, lowering economic growth, and exacerbating the risk of recession.

Any policy that caused property prices to halve would not be fair to these groups of people. But the status quo is not fair to prospective home buyers either. The only policy option that is fair to both groups is to increase urban density.

To understand why, first note that there is a distinction between the price of a property and the price of a dwelling. With increased density there will be an increase in new dwellings supplied to the market, putting downward pressure on dwelling prices. But this does not mean that the price of property has to fall. Property that can be redeveloped under the relaxed density restrictions will retain its value: You can always bulldoze the villa and build two homes that make better use of the available space. That option to redevelop will be capitalised into the value of the property – and could in fact increase property values – provided that the unitary plan grants the right to redevelop.

Which brings us to the crux of the issue.

Increasing urban density is the only policy that ensures that both current and prospective home owners can win. Any other policy – including the status quo – will punish one of these groups. With increased urban density the average price of a dwelling will come down – allowing families to purchase a home at a reasonable cost – but the price of developable property will retain its value – ensuring that many current property owners won’t lose on their investment.

Property owners that oppose increasing urban density in their suburbs should be aware that properties that cannot be redeveloped could fall in value once the supply of dwellings increases. If they are not comfortable with a capital loss, then they should be lobbying for greater density in their neighbourhood – not opposing it.

That’s it for the week. Until next time!