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Location affordability in New Zealand cities – is greenfield growth really affordable?

Several weeks ago I attended the annual New Zealand Association of Economists conference in Auckland. Geoff Cooper, Auckland Council’s Chief Economist, had organised several sessions on urban issues, and as a result there was a lot of excellent discussion of urban issues and Auckland’s housing market. You can see the full conference programme and some papers here.

At the conference, I presented some new research on housing and transport costs in New Zealand’s main urban areas. My working paper, enticingly entitled Location Affordability in New Zealand Cities: An Intra-Urban and Comparative Perspective, can be read in full here (pdf). Before I discuss the results, I’d like to thank my employer, MRCagney, for giving me the time and the data to write the paper, along with several of my colleagues for help with the analysis, and Geoff Cooper for suggesting the topic and providing helpful feedback along the way.

The aim of the paper was to provide broader and more meaningful estimates of location affordability that take into account all costs faced by households. In my view, widely-reported sources such as Massey University’s Home Affordability Report have too narrow a focus, looking only at house prices. However, a range of research has found that transport costs vary between different locations depending upon a range of factors such as urban form, availability of transport, and accessibility to jobs and services. And transport costs are pretty large for many households!

I used two methods to provide a more comprehensive estimate of location affordability in Auckland, Wellington, and Canterbury. First, I used Census 2013 data to estimate household housing, car ownership, and commute spending at a detailed area level within each of the three regions. This allowed me to estimate variations in affordability between areas within individual regions. Second, I used household budget survey data to get a sense of how New Zealand cities stack up against other New World cities.

My main findings were as follows:

  • First, rents (a proxy measure for housing costs) tended to fall with distance from the city centre. However, commute costs tended to rise with distance – meaning that outlying areas were less affordable for residents once all costs are included. This was consistent with previous work on location affordability in New Zealand and the United States.
  • Second, international comparisons suggest that Auckland and Wellington have relatively high housing costs and that this may be driving some of the affordability findings. While this finding lines up with previous research that’s focused on house prices alone, it’s important to note that the location affordability estimates suggest that a focus on greenfields growth alone may not save households money.
  • Third, while I didn’t identify any specific policy recommendations, I’d recommend that (a) policymakers should consider all location-related costs when attempting to address affordability for households and that (b) further research should focus on removing barriers to increasing the supply of dwellings in relatively accessible areas.

And now for some pictures.

These maps show two measures of location affordability within Auckland. The left-hand map shows estimated housing costs (i.e. rents) as a share of median household incomes at a detailed area level. Broadly speaking, this map shows that expected housing costs fall between 20% and 30% of household income in most of the city, although some areas are relatively less affordable.

The right-hand map, on the other hand, incorporates expected car ownership and commute costs. Overall location affordability is lower throughout the city. Expected housing and transport costs rise to 40-50% in areas of west and south Auckland, as well as the entire Whangaparoa Peninsula. The most affordable areas for their residents tend to be in Auckland’s inner isthmus suburbs.

Auckland map 1 Rent share Auckland map 2 HT share

(Click to enlarge)

I’ve also combined this data into a graph that presents location affordability by distance from Auckland’s city centre. The bottom (blue) line shows housing costs as a share of median household income, weighted across all area units within each 2-kilometre concentric circle radiating outwards from the city centre. It shows that, on average, households spend a similar share of their overall income on housing costs in both close-in and outlying suburbs.

The top (red) line shows that combined housing, car ownership, and commute costs increase as a share of household incomes with increasing distance from the city centre. On average, households that live further out of Auckland spend more on location-related costs, as lower lower rents are offset by added commute costs.

Auckland H_T distance chart

The results for Wellington and Christchurch were broadly similar – although with a few interesting differences related to their urban form and transport choices. However, as this is the Auckland Transport Blog, I’m going to suggest that you read the paper to see those results. It’s long, but it also presents a lot of new data on housing and transport costs in New Zealand.

Robert Ellis’s apocalyptic vision of Auckland

This blog has often written about Auckland’s 1950s-era motorway development plan, which transformed the city in fundamental ways. New Zealand painter Robert Ellis was one of the first to grasp the significance and character of that transformation. His Motorway/City series, painted in the 1960s and 1970s, shows roads invading and dividing urban space. (As they proceeded to do in real life.)

The Auckland City Gallery is about to host an exhibition of Ellis’s paintings that will run from 9 August 2014 to 15 March 2015. From the press release:

Opening on Saturday 9 August at Auckland Art Gallery Toi o Tāmaki, Robert Ellis: Turangawaewae | A Place to Stand is the first solo exhibition in a public museum by senior Auckland artist, Robert Ellis in his ‘hometown’. Including many of his most important paintings, the exhibition will present Turangawaewae Maehe 1983, painted in 1983, a gift from the Friends of the Auckland Art Gallery to mark their 60th anniversary this year.

‘Together with Auckland artists Colin McCahon, Milan Mrkusich, Pat Hanly and Gretchen Albrecht, Ellis is nationally regarded for producing ambitious paintings on a large scale,’ says Auckland Art Gallery Senior Curator New Zealand and Pacific Art, Ron Brownson. ‘As a major figure, Ellis’ art addresses many cultural issues. His subjects range over tensions between transport and urbanism, contrast ecology with spirituality and look at the on-going nature of Māori-Pākehā relations.’

Here’s one of the more well-known works from Ellis’s Motorway/City series, which can usually be seen in the City Gallery:

Now, I’m an economist rather than an art historian, but Ellis’s vision of the city seemed to be something new in New Zealand art. New Zealand artists had not tended to focus on cities – think of all the attention Colin McCahon lavished on New Zealand landscapes – and when they did, it was to present vague, idealised scenes. Ellis was different. He showed the city in the process of expanding and mutating, and in the process creating a different New Zealand.

Here’s number 15 from the Motorway/City series. It contrasts New Zealand’s stereotypically bucolic rural space (below) with the encroaching city (above). The latter is dynamic, disordered, vaguely sinister. (What was it that Allan Ginsberg wrote about “Moloch whose love is endless oil and stone”…) And it is ceaselessly growing into the countryside.

In other paintings, Ellis depicts the city not as the invader of a rural landscape but as an invaded space. Motorway/City number 22, for example, appears to show an existing urban fabric, complete with a more or less rectilinear street grid, that has been overwritten by the smooth curves of the motorway. The pre-existing city has rendered incomprehensible in the process – notice how the lines of the motorway draw in your attention instead.

I’m often struck by how quickly artists and writers grasp emerging truths, especially when compared with technical experts of various stripes. Robert Ellis’s art was an especially prescient view of New Zealand cities – painted at a time when New Zealand had barely begun to think of itself as an urban country and when the promise of the motorway was still novel enough to be seductive. I highly recommend going to see the upcoming exhibition.

How should we value the future?

Transport networks and urban planning can have extremely long-lived effects on society, the economy, and the environment. The government’s decision to invest in an electrified commuter rail network for Wellington in the 1930s led to an early form of transit-oriented development in the region. Wellington’s post-war urban growth has been concentrated in areas served by rail lines – providing the region with long-lasting benefits.

800px-WellingtonRailMap

Source: Wikipedia

In Auckland, of course, things were very different. After the role that rail played in Auckland’s early development, successive governments decided to:

And, of course, these years of refusal were coupled with a decision in the 1950s to invest heavily in a motorway network for the region. The Master Transportation Plan of the era contains some truly awe-inspiring concept designs, including an elevated Quay St motorway that would have doomed any chance of Auckland’s recent waterfront revival:

1950s Transportation Master Plan Quay St

Leaving aside a few extremely white elephants, many elements of the plan are quite familiar to modern Aucklanders. The Southern and Northwestern Motorways and the Harbour Bridge were built, kicking off development booms in Manukau, the North Shore, and West Auckland. In a 2010 Policy Quarterly article, Andrew Coleman assessed the effects of motorway development in Auckland and the US, concluding that:

transport infrastructure choices can have long-term and potentially irreversible effects on city form. A city that chooses to invest in roads rather than public transport infrastructure to improve its transport system is likely to reduce the efficiency of any subsequent public transport investments, by causing population and employment in the city to disperse widely over space. When making decisions to build roads, therefore, the city planners need to take into account the way roads affect the operation of subsequent transport infrastructure investment choices.

So it’s worth asking: Are we valuing future outcomes in the right way? In economese, this means asking about our “rate of time preference”, or the degree to which we value present-day outcomes over future outcomes.

A 2011 NZIER paper by Chris Parker provides a fairly accessible introduction to this topic. (Transportblog reviewed the paper when it originally came out.) Parker highlights how much of an effect different discount rates can have on our decisions about the future. As Figure 1 below shows, an 8% discount rate – recommended by the NZ Treasury – means that we place no weight on outcomes that occur 40 years in the future. (To put that in perspective, the average New Zealander lives twice as long as that. I certainly expect to be alive in 40 years!) A 3% discount rate, by comparison, means that we place a much higher value on outcomes that far in the future.

NZIER discount rate comparison

Last July, NZTA decided to lower its discount rate from 8% to 6%. This change means that transport evaluations now place a slightly greater weight on future outcomes than before. However, as NZTA’s documentation showed, we still discount the future to a much greater extent than countries like Germany (3% discount rate) and the UK (1% to 3.5%).

NZTA’s new discount rate might still be too high to properly account for the long-lived effect of infrastructure development on urban form. As we’ve seen, Auckland and Wellington are still benefitting from, or coping with, with the effects of investment decisions made 60 to 80 years in the past. Under current evaluation procedures, we wouldn’t have considered such long-lasting effects.

A new research paper by economists at the University of Chicago and New York University suggests that people place significant value on outcomes that occur dozens or even hundreds of years hence. The authors measure long-term discount rates using an innovative method that relies upon observing differences between the prices for freehold and leasehold houses in the UK and Singapore:

In Giglio, Maggiori and Stroebel (2014), we provide direct estimates of households’ discount rates for payments very far in the future, by studying the valuation of very long (but finite) assets. We exploit a unique feature of residential housing markets in the UK and Singapore, where property ownership takes the form of either very long-term leaseholds or freeholds. Leaseholds are temporary, pre-paid, and tradable ownership contracts with maturities ranging from 99 to 999 years, while freeholds are perpetual ownership contracts. The price discount for very long-term leaseholds relative to prices for otherwise similar properties that are traded as freeholds is informative about the implied discount rates of agents trading these housing assets. This allows us to gather information on discount rates much beyond the usual horizon of 20-30 years spanned by bond markets.

This analysis suggests that long-run discount rates are significantly lower than those we use for project evaluation – in the range of 2.6%. In other words, people making significant financial decisions today place some value on outcomes for future generations that they will never meet:

We use these estimated price discounts to back out the implied discount rate that households use to value cash flows to housing that arise more than 100 years from now. We find the discount rate for very long-run housing cash flows to be about 2.6% per year. Interestingly, we find similar implied discount rates in both the UK and in Singapore – two countries with very different institutional settings.

The authors suggest that their findings have implications for intergenerational fiscal policy and climate change policy. They’re also likely to have implications for the way we evaluate transport projects. Today’s planners should take care to preserve and improve transport options for future generations, rather than “locking in” a particular urban form.

Finally, with that in mind, it’s worth recalling the findings of the 2012 City Centre Future Access Study, which compared options for improving transport capacity to Auckland’s growing city centre. In Section 7 of the Technical Report, the authors found that when a longer evaluation period (60 years vs. 30 years) and a lower discount rate (5.7% vs. 8%) were used, the benefit-to-cost ratio of the City Rail Link almost doubled. In other words, the CRL looks even more valuable for Auckland if we take a longer-term view.

If our great-grandparents had decided to invest in Auckland’s rail system in the 1930s, we’d still be thanking them for it. Because they didn’t, though, we’re just getting around to electrifying Auckland’s rail network and still debating whether to build the CRL to unlock greater frequencies across the entire network. It is essential that we take a longer-term view on transport investments than we have previously done.

So, what’s your discount rate?

SHA’s and Transport Investment

A few days ago I looked in depth into the locations of the Special Housing Areas that have been released so far, allowing for over 33,000 new houses. The locations of these are not spread evenly around the city, or evenly amongst the greenfield areas. Therefore this should cause the council and Auckland Transport to rethink some of their priorities for transport investment. Firstly this should give further impetus to the need for some important Congestion Free network projects, which will benefit existing areas and new developing areas.

There are nearly 9,000 dwellings to be built to the North-West of the city, in areas like Kumeu. This area is currently hopelessly served by public transport. For example it takes nearly 1.5 hours to get the bus into town at peak times, and on weekends it is not much better as bus operates a hopelessly windy route, diverting through Henderson on the way from Westgate to the City! The extra development planned adds extra emphasis to the case for the North-Western Busway, which would provide a very quick link from the North-West into the city. While some would call for a diesel rail shuttle to be provided, this has been investigated by Auckland Transport but found to be poor value for money. The busway would result in a much higher frequency and much faster services than the rail shuttle, which would take over an hour. The proposed frequent bus network only shows 15 minute frequency to Westgate, however the scale of development should mean the frequent service should soon be extended to Kumeu and Huapai. The developments in this area are likely to be low density, so sites for several park and ride stations need to be investigated. These types fringe areas are the right type of areas to expand park and ride, not valuable urban sites. The busway would not just benefit new developments, but also existing suburbs along the North-Western like Massey and Te Atatu.

NW and UH busways

This 9000 houses also covers areas like Hobsonville and Whenuapai. Again the only route between the North-West and the North-Shore is an infrequent and wandering service that takes well over an hour for a 20 minute car journey. The new network offers some improvement, with a slightly more direct service, however still designed for local traffic rather than trips between West Auckland and the North Shore. This is where the Upper Harbour busway we proposed in our Congestion Free Network comes in. This will also be useful for people living in the Kumeu and Westgate areas as not all these people will be working or want to travel to the CBD, so quality links to centres in the North Shore are important too. Again the form of development is likely to mean that several busway stations with park and ride will also be required at the major motorway interchanges.

Through the southern corridor over 4800 dwellings will be built. 2200 of these are in the Addison area, which hugely strengthens the case for the Addison station that has long been proposed to serve that growing area. Another 1800 of these are in the Franklin area, which further builds the case to ensure the electrification extension to Pukekohe proceeds soon. 1000 of these are at a totally new greenfield site as Wesley, north of Paerata. As this is 5km north of Pukekohe a new station at Paerata/Wesley should proceed here with some urgency.

The 5000 dwellings to be built in the Flat Bush area will further add to congestion is the already car dependent south-eastern suburbs. While Flat Bush is in an awkward location in relation to potential rapid transit routes, the Te Irirangi Drive busway would help connect residents to the closest centre of Manukau with its brand new station and tertiary institute, and also to the mall at Botany.


Eastern busways

 

The need to invest in transport projects which benefit these areas, should also show the need to rethink lower value projects across the city. First of all there are less than 900 dwellings north of the existing urban area at Albany, and these are at Silverdale. Note that means there are none on Whangaparoa Peninsular, Warkworth or Wellsford. First on the deferral list should be Penlink, which has a very high cost, high environmental impacts and low economic and transport benefits. It is difficult to see why this project should proceed when there is little growth in the area. A few extra ferries to the city seem like a much better idea to improve transport for people of this area. Deferring Penlink would free up $200 million to spend on much more high value projects. The lack of new development north of Orewa is yet further ammunition against the need for the Puhoi – Warkworth Highway to proceed. The $760 million required for the project should be reallocated by the government to serve areas of Auckland that are actually growing, rather than further delaying or canceling important infrastructure like busways. Across the city there are various other low value roading projects than should be deferred or downsized to free up money for more transformational public transport investment.

Downtown: Little Queen St

This is a quick post on the Downtown site. Precinct Properties, the owner of the Mall and the two existing towers [Zurich Hse + HSBC Building] between Lower Queen St and Lower Albert St, are expected to lodge a resource consent in a couple of months for a total rebuild of this site. We expect this proposal to include:

  • a 36 story tower on the south west corner, opposite the Customs Hse
  • 3 story retail precinct in between the three towers
  • an unknown quantity or location of carparking
  • the reinstatement of streets, or ‘street-like’ ground level public realm through the site instead of QE II Square.

Other significant and related issues:

  • Construction is expected to begin next year [2015] and will include the tunnels for the City Rail Link through the site, regardless of the government’s position on this project. Council funding is secured for this.
  • Buses will be removed from Lower Queen St and moved at least in part to Lower Albert St. Lower Queen will become a vehicle free pedestrian space at least for the length in front of Britomart Station.

We are told to expect both a new east/west street connecting the Piazza in front of Britomart to the buses on Lower Albert and a north/south street between Quay and Customs. The later is a reinstatement of a previously existing street called Little Queen, and is what I am focussing on in this post.

In 1966 10 highly detail topographical maps were produced from arial photographs of Auckland City, now in the Auckland Libraries Collection [where the black and white images in this post are also from]. These maps are a fantastic source of detailed information on 1960s Auckland; here is a close-up of the Downtown site before the current 1970s mall was built there, the CPO turned Britomart Station is bottom centre between Calway [sic; should be Galway] and Tyler:

Little Queen St 1966

So running between the Ferry Building and the Customs House was Little Queen St. The Harbour Board owned all the reclaimed land in the vicinity of the port and, like POAL today, it was focused on making more of it, either out of the sea, or in this case, it contrived to invent real estate out of a public road in order to ‘rationalise’ that resource. Presumably the trade off then with the city and the citizens was how we came to get the most dreary public space in the city: QE II square, proving for ever that not all open space is equal, especially urban open space.

Little Queen St 1973

The east side looking towards the sea and Ferry Building [and one person].

Little Queen St Esat 1070-75

The same side from a higher angle with a couple of humans and more than 10 buses. The street is pretty wide, wider it seems than its Melbourne namesakes; Little Collins and Little Bourke. Or perhaps just emptier?

Quay and Little Queen 1965

Quay St from the Ferry Building looking towards Lower Queen [The still extant Endeans building on the left and the Cupola of Britomart poking above], Little Queen on the right. 1965. Plenty of tarmac.

The history of this site is fascinating* as it is a clear example of the failures of mid twentieth century modernist urban master planning. But the outcome we are familiar with now isn’t simply a matter of design fashion but also the demographic, social, and commercial landscape of the period; the spirit of the times.

montgomery ward huntington beach ca 1966 pleasantfamilyshopping

The 1960s and 70s were at the height of the ‘flight from the centre’ period, a time of anti-urban idealisation of the new decentralised suburban life. A then sexy new Californian dream of a car centred complete life away from the tired old city centre: Living, shopping, and working without bothering with the old fashioned, degraded city. Clean, convenient, new. Supported and subsidised by Central and Local government policy in a myriad of ways, especially in transport spending in Auckland once Robbie’s Rail was killed. This lack of confidence in the city and disregard for the existing urban built environment was the dominant theme of the time so I guess it is of no surprise that the outcome of that Downtown redevelopment is suboptimal.

There was vocal opposition to the design we now have when it was proposed, in particular the shading of the new Square by the now HSBC building was, correctly, predicted to be severely limiting, and for years it struggled commercially [although more recently I believe it was one of  previous owner Westfield's better performers, and their only property without onsite and free parking], the site now clearly offers its new owners a huge opportunity but only if completely redesigned and rebuilt. And that opportunity is simply people. The return of people in concentrations to a now more exciting and busy city environment that only good public transport and dense land habitation can provide.

In this regard then, it is essential that the quality of the new work; both the architectural form of the new buildings and the relations between these buildings; the negative space between, these new streets, are of the highest standard, and provide real public spaces, unlike the faux public space of the suburban mall, or the formlessness and inauthenticity of the current QE II square. And in this the challenge is greater than at Britomart as there are no pre-sprawl era buildings to revive to give structure, scale, and continuity, and still the blocking mass of the HSBC building [which covers the northern end of the old Little Queen St] as well as a new tower to accommodate. Precinct and their architects have a great deal to balance but they know if they get it right all else will follow: The people.

A critical difference now is that these new projects are not for and by people that see little value in the city, a place only fit for escape. In that sense they are building for a new age, and one that offers the chance at least of the return of those powerful but difficult to summon qualities of great cities and great city places: Enchantment, mystery, possibility.

No pressure then.

 

* There is a totally absorbing history of the lead up to the downtown development in the Architecture New Zealand 2. 21013 by architect Dennis Smith. Highly recommended. Shows various schemes, perfectly of their time, and all completely dominated by car parking.

UPDATE: The kind folks at Architecture Now have put Dennis’ great article online now: http://architecturenow.co.nz/articles/a-short-history-of-the-sixties-downtown/

 

Manukau Redemption

It is very hard to consider Manukau City Centre up till now as anything other than a planning failure. Or at least an indictment of the auto-centric policies that it manifests. Despite huge investment in driving and parking amenity, siting at the confluence of motorways and arterials, and many efforts to stimulate growth and development there, it has conspicuously failed to thrive for the decades since this plot was plucked from its bucolic obscurity and chosen as the poster child for the decentralised centre idea. Sure it has not entirely failed; it has bumbled along with the help of central and local government investment [IRD, Courts, police, City Council, etc etc, all built here to give it a reason to be].

Along with the clear contradiction in its conception: A centre designed by those who believe that having a centre is a bad thing, it has long been clear that wilfully siting the place just too far away from the nearby main rail line [because cars were the only future] has long been a critical mistake. Which is why we now have the less than ideal work-round of the stubby branch line with its currently suboptimal low frequency and poor siting.

However, help is at hand. In one bold move the first MIT campus building looks like it really could go a long way to redeem this whole series of poor decisions. That is a lot to ask of one building and it will take more time and other changes to the area, in particular the planned bus interchange station, but the quality of this project gives real hope for Manukau City Centre. How so?

1. This is a TOD, Transport Oriented Development, of the first class:

MIT_4198

 

It’s not just handy to the Train Station: It is the Train Station. And this is no accident, as with the coming Bus Station, there is a lot of thought behind this integration; obviously the new facility will bring a new source of users [up to 5000 students, plus staff], but that each of these public amenities are so well intertwined that they will feed off each other; MIT will benefit from the people passing through its flagship campus to use the transit amenity and visa versa, in a virtuous circle:

“Weaving the train station, bus interchange and education institution together is our way of welcoming people into the space, encouraging people to look around and interact with the building without barriers. If the travelling public can see members of their own community studying, it’s a daily reminder that this education is a real, accessible possibility for them too.”

-MIT Chief Executive Dr Peter Brothers

The building opens to students in September, just as the new Electric trains start on the Eastern Line, and a new better timetable in October.

2. This is a fine building; and it has been shaped in many ways by the architects’ determination to mesh with the Station below. The six story atrium is a powerful space with a light touch, because of the train trench below both the inverted gable of the roof and the floors around the space are suspended from above, floating lightly from hangers rather than resting on columns:

MIT_4150

MIT_4151

All that structure that’s not in the Atrium is clearly visible elsewhere in the building, particularly in the exterior ‘diamond brace’ pattern, but also in this massive cross brace at the entry; dramatic, sculptural, and reassuring.

MIT_4212

3. It’s just the beginning. This the first of a series of MIT buildings planned for the space above the Train Station. When complete they will not only occupy currently low value land, bring thousands of more students to enliven the Centre, and all with plenty of alternative options to driving, but also act to contain Hayman Park; providing it with a useful barrier to the busy arterials and tough weather from the south, but will also provide people and eyes onto this currently rather formless and underused public space. Even more important the expansion of the campus this way will help pull the balance of the whole Manukau Centre towards the Transit Stations and help mitigate the suboptimal siting of them on one edge of the Centre. Buildings instead of parking and space over the station here:

MIT_4161

4. View through the brise soleil and part of the exoskeleton down on to the site of the coming Bus Station; shifting the balance:

MIT_4173

5. Humanising a dreary part of town. Here’s the side facing the Park, this will have food outlets and will bring life and containment to this end of Hayman Park:

MIT_4221

5. AT and AC have put the previously flabby Davies Ave on a road diet too. As outlined here when announced. So there is a real chance of this area becoming a rare island of peopled civility between the big box vapidity of Lambie Drive and the standard dreariness of the mall over by Gt South Rd.

MIT_4218

The dramatic pattern of the MIT building’s expressed structure cuts a fine figure in the watery winter light. Very pleased MIT upscaled the original plans to seven stories from four. That would have been too squat on such an empty site [They're subletting some of the space they don't currently need].

And finally this is exciting because it is a concrete example of an engaged and motivated client working well with Auckland Council, Auckland Transport, and talented designers like Blair Johnston and the team Warren and Mahoney coordinating Transport Planning and Land Use, public and institutional investment, and good design for an all round better result.

What all of Auckland needs and hope for Manukau City Centre yet.

The building is officially opened later today. And on Saturday there’s an open day with free train travel:

MIT Manukau’s Open Day Festival

10am – 5pm on Saturday the 28th of June

Manukau Train Station & MIT Manukau

Cnr Manukau Station Road & Davies Avenue

Manukau CBD

 

Free train travel to and from the Open Day + Free entry – everyone is welcome.

 

NZ Initiative’s ideology short-changes compact city debate

The New Zealand Initiative last night released a think piece on the trade-offs of urban form – entitled “Up or Out“. Given the extensive recent debates in Auckland over the Auckland Plan and the Unitary Plan, plus the ongoing issue of housing affordability, it’s helpful to have further analysis and research in this area. Unfortunately, it seems as though some ideological assumptions behind what the NZ Initiative has come up with mask many of their conclusions – somewhat ironic given that one of the key thrusts of the piece is (valid argument) that we need to step back from assumptions and look at the data.

The general approach of the paper is reasonably logical – it analyses some of the benefits of a compact city approach, questions whether they hold true and then compares those benefits to some of the costs. Firstly, looking at agglomeration:

Part of this debate has centred on the agglomeration benefits that come from urban proximity. This is an important discussion point because agglomeration is often cited by planners as the clincher in their argument for compact cities. We do not reject the economic advantages to situating businesses and consumers closer to one other. After all, people and firms in urban areas tend to be more productive than their counterparts in less well-populated areas.

However, these advantages are only detectable as agglomeration benefits when the positives of proximity outweigh the costs of density. This is a balance that any city, regardless of urban form, has to strike if it is to survive. And yet this report shows that the restrictive planning regulations required to deliver the utopian vision of a compact city often tips the balance towards the cost side of the urban ledger.

You can tell from the use of the phrase “utopian vision of a compact city” that they have started out from an ideological position that density is bad.

It does make some sense that agglomeration benefits would have a limit. Yet if we look internationally there are much much larger cities and much much larger urban cores than Auckland – and we find that often it’s the larger cities and larger urban cores which are growing the fastest. The paper even references the significant agglomeration benefits from the CRL’s business case before going on to counter-intuitively suggest that agglomeration benefits in central Auckland appear to be on the wane.

However, the main argument is that the two main negatives of congestion and higher land prices need to be balanced against agglomeration to work work out whether building “up” or “out” is the right approach. Let’s work through the arguments made by the paper on each individually:

Congestion is one of these costs. Traffic congestion data from the United States shows that the most congested metropolitan areas are often the ones that have chosen to pursue compact development. Additionally, quantitative research into transit investments over a 26- year period using data from 74 US metros shows public transport had no long-term impact on road congestion. This stands at odds with the perception that high transit penetration is the solution, not an aggravator of gridlock.

Digging a bit deeper into how they arrived at this conclusion, it seems as though the same methodological mistakes around the measurement of congestion are being made as occurs with the Tom Tom surveys – focusing solely on congestion severity and ignoring issues like congestion exposure. The key point here is that low density car dependent cities may have less intensity/severity of congestion (because they’re so spread out) but whatever congestion there is has to be experienced by everyone because there are no alternatives. In a place like New York, the roads may be congested but to the vast bulk of people this doesn’t matter because they’re walking, cycling or using the subway.

The other gigantic flaw in the paper placing so much emphasis on the issue of congestion is the inconvenient analysis undertaken a couple of years ago which shows the most congested US cities are actually the most economically productive. While it’s more likely economic success causes congestion than the opposite, the congestion doesn’t seem to be holding these places back.

congestion-gdp

The key takeaway from this is that while congestion is annoying and perhaps theoretically should hold back economic performance, if we look at different cities across the USA it doesn’t seem to be doing this. It’s also interesting to compare how we view congestion on the transport network to other areas of society. For example people will choose to go to a restaurant that is busy, even if it involves waiting rather than go to an empty one next door. The crowded and congested restaurant is successful while the empty one is not. If we expand that to a city scale, many people would prefer being in a busy and interesting place with lots of other people than an empty city.

Moving on to land prices, this is seen as the other main negative resulting from a compact city approach that should be balanced against the agglomeration benefits:

Another cost is land. From the perspective of local government in New Zealand, compact cities are desirable because they limit the amount of roading, water and social infrastructure that will need to be provided. Yet by limiting the supply of land, city officials are inadvertently putting a scarcity value on housing in this country, which ranks among some of the least affordable in the world. Equally, the onerous regulations and zoning restrictions required to steer development along the compact model add to the scarcity value of housing. This scarcity value is not limited to housing, and businesses facing higher property costs will pass these on to customers in the form of higher prices, and where they cannot, firms will look to relocate to cheaper areas – a process that is already happening in Hamilton, a beneficiary of fleeing Auckland firms.

We’ve covered off this debate many times before in the past few years as the Auckland Plan and then the Unitary Plan were hashed through in great detail. While limiting the supply of land will theoretically drive up its price, when it comes to housing affordability the issue is the cost of housing more than the cost of land. Furthermore, it’s the cost of housing in particular areas that’s the issue – there’s plenty of affordable housing in Papakura, Clendon, Pukekohe, Waiuku and other far flung parts of Auckland. The huge price escalation is happening in the inner areas – and I can’t quite see how it’s possible to create more land in Grey Lynn or Mt Eden (although of course it’s possible to get more housing out of that land through intensification).

Going back to the paragraph quoted above, what’s particularly odd is the sentence “…the onerous regulations and zoning restrictions required to steer development along the compact model”. Given that enabling intensification is about the removal of zoning restrictions so people have more flexibility to do as they choose with their land, I wonder whether the NZ Initiative has completely misunderstood what planning does and does not do. One is not forced to build terraced houses in the Mixed Housing Urban zone – contrary to popular belief!

The other crazy thing that the paper completely ignores is the gigantic amount of sprawl that has been enabled in Auckland through the Auckland Plan and the Unitary Plan. In one big bang the restrictions on land supply in Auckland have been pushed outwards – even though the result of this is likely to be extremely expensive and not actually what people want anymore. Have the authors been completely ignorant of the Unitary Plan by accident or deliberately?

The paper then briefly touches on health issues – it seems to be cherry picking data and making assumptions based on how cities were in the 19th century to come up with conclusions that seem strangely at odds with what books like “Happy City” suggest. I’ll leave those details to a future post though.

Overall, the paper thinks that it’s come to some grand conclusions:

We have shown through academic research and the historic record that compact cities are not a panacea for the social, financial and infrastructural problems gripping modern cities today. There is no ‘one size fits all’ solution to urban costs, and the sooner we abandon ideology, the sooner we can start developing nuanced solutions to issues like congestion and skyrocketing property prices.

The aim of this report was not to generate specific policy recommendations but to unpack the highly technical argument surrounding urban form changes for the average citizen to participate in the discussion. Still, it is evident at a high level that overly centralised planning and decision making structures are one of the major contributing factors driving urban costs in New Zealand and further afield.

The conclusions are not completely wrong – in highlighting that cities are complex and any ‘one size fits all’ approach is likely to fail. However, in both key areas of critique (congestion and land prices) the paper has made some fundamental oversights – like ignoring the complexities of congestion and its seemingly minimal impact on economic performance, like ignoring the huge amount of additional land supply provided by the Unitary Plan and like ignoring that a key part of the compact city approach is liberalising planning rules within existing urban areas.

Perhaps unsurprisingly, but certainly disappointingly, the paper promises much but inevitably fails to deliver beyond repeating a simplistic ideological perspective on forms of urban growth – falling into the very trap it so merrily accuses others of doing.

Photo of the day: Auckland’s Land Supply Problem

I’ve posted this before on social media sites but this is a good example of why we have a land supply problem. Huge areas of our urban area are either well underdeveloped or are used for parking.

Land supply problem

Comparing the CMJ

This is a graphical representation of just how much land we’ve turned over to out motorway network. The image below is of what effectively constitutes the Central Motorway Junction (CMJ). This is 49 hectares in size.

CMJ Size comparison 1

It kind of reminds me of some sort of alien creature latched on to the southern end of the city sucking out its life.

As a comparison the second image shows what is really the core of Auckland’s CBD and is home to tens of thousands of jobs. This is also 49 hectares in size including the space taken up by roads within the boundary.

CMJ Size comparison 2

And how they look compared to each other:

CMJ Size comparison 3

Now this isn’t to say that if this land wasn’t a motorway it would be as developed or as valuable as the land in the core of the CBD, but particularly the parts west of Symonds St would be very different. You may remember this post which showed what the area south of K Rd used to look like – a dense inner suburb that if it still existed today would probably look a lot like Ponsonby or Freemans Bay. It’s been estimated that the construction of the CMJ displaced around 50,000 people which at the time was almost 10% of everyone living in the region.

Newton 1959 - 2010 - 2

Mighty River Rail: A Fresh Future?

Looking at a number of separate but current issues got me thinking about the possibility of the return of passenger services on the existing rail lines through the Waikato. These include:

  • The potential appeal of well connected and well designed satellite towns.
  • The difficulty of retaining vitality and that appeal in many existing country towns.
  • New challenges and opportunities for a number of Waikato towns caused by the rerouting of SH1.
  • Population growth pressures on Hamilton and Auckland and the poor quality of recent ex-urban spread.
  • The existing rail lines and legacy stations in the Waikato.
  • The coming availability of Auckland’s current diesel passenger trains.

Starting with the last point I would like to stress that I am not proposing a Hamilton-Britomart intercity service. This idea has a great many practical problems in particular the crowded condition of both Britomart Station and the Auckland network, it is simply too hard to fit additional services through the Auckland network without more track and the CRL to free up station space at Britomart; so no time soon. But also the fact that the market for such a direct service is unproven and likely not large, especially as it would not be competitive with buses using the motorway for price or speed. The billions being spent in the Waikato countryside is speeding the road route there and even if the Auckland network can jam up at anytime for any number of reasons [I spent a loathsome hour getting from Otahuhu to the city on SH1 last week], it still will be hard for the existing rail route to be competitive. At least until such a time as it could run reliably and directly through the Auckland network at speed.

No I have another suggestion that is to embrace the available resource of the line by going instead for coverage and local connectivity. But it starts in Auckland still. The plan is for Auckland’s new electric trains only to reach as far south as Papakura so a few of the current diesel trains will remain as a shuttle service from that station south to Pukekohe. This system will be in place in late next year and Papakura station has been upgraded to facilitate its operation as a transfer point between the two rail systems.

So the first idea is simply to extend the coming southern shuttle between Pukekohe and Papakura south to connect with the towns of the northern Waikato already on the line. Even just extending those services south to Tuakau, the next town on the route to Hamilton, and then to the growing town of Pokeno would cost very little and offer an opportunity to test the idea. But I’m sure the people of Ngauawahia and Te Kauwhata would be pretty keen on the service too going on information from previous intercity proposals, and if a service goes that far it would be crazy not to continue into Hamilton. It would then have anchors* at both ends and not just be an appendage of Auckland’s system. On one hand then it would just be extending the Pukekohe catchment and on the other offering those country towns the chance to redevelop the areas around their stations as well as an additional way to travel within the wider region. Politically and financially it would require the Waikato Regional Council to work with AT and agree on the details. Let’s assume that’s not impossible.

As the line to Pukekohe is likely to be electrified and intermediate stations added this service could then terminate there instead of Papakura and become a much more intra-Waikato one, still linking into the big and frequent Auckland network at that network’s southernmost point for further connectivity. So the possibility arises to take the service south to all the points on the line to Hamilton and even beyond, so say:

  • Pukekohe
  • Tuakau [apparently has .5mil budget set aside for a station]
  • Pokeno
  • Te Kauwhata
  • Huntly
  • Ngaruawahia
  • Te Rapa [new station at The Base mall]
  • Frankton [Existing Station]
  • Hamilton City [The surprisingly already extant underground central city station]
  • Claudelands [new station Hamilton East]

No new track. Simply station and safety upgrades or reinstatements of legacy stations and two new at grade stations in Hamilton.

Ngruawahia Stion

By not trying to race between the two big city centres the added stops become an advantage rather than a disadvantage. It would be as much about travel between any points on the line as end to end and be a tool for regional placemaking. And of course there then is the option to include Te Awamutu to the south, and Morrinsville and Cambridge to the east for more of a pan-Waikato network.

The Waikato District Council could slowly build up a programme using the onetime opportunity of Auckland’s Diesel units in much the same way that Auckland did with Perth’s, assuming it works sufficiently. It’s a low risk chance to grow something new in the Waikato in part taking advantage of Auckland’s proximity by plugging into that bigger network but really focussing on its own region. Particularly to do something for the towns along the route.

Below is a strangely nostalgic map from NZTA designed to promote their massive programme of highway building through the Waikato countryside all this decade; trying to make costly heavy engineering seem all cosy and approachable like something in a kid’s book [particularly 1960s- just like the whole RoNS idea].

Curves.ai

Other than the attempt at cute and the apparent use of the current SH1 entirely by cyclists in the future [!], the key thing this map tells us is that pretty much all the towns on the current route are about to become bypassed. So in as much as they rely on passing traffic for business and vitality that game is up, or soon will be. But also of course in as much as their centres are severed and made unliveable by the heavy traffic speeding through them there is an opportunity too for these places. The scale of the works is more apparent in this version:

Waikato Expressway

Waikato Expressway

A reinvention for the likes of Huntly and Ngaruawhaia is going to be required, but this work usually never happens when NZTA leaves town, although surely there is an opportunity and a need to reorient these places from being focussed around the traffic that used to race through them. It will be up to the local communities and the District Council to unlock the possibilities made available by SH1 going. The chance to restitch their mainstreets back together, calm the remaining traffic; in short make place; to build a new identity and economy in these communities. Could the return of a rail service linking these places, anchored by the two big metropolises, have a role in this? The currently unused stations could certainly be a focus for redevelopment, cafes, information centres, markets etc. A focus for the rediscovery of place and character.

The rail line is less direct than the new road precisely because it connects all these old towns like pearls on a string; so I suggest don’t fight that essential characteristic of the route, use it for local interconnection and not as an attempt to imitate the highway which will soon completely bypass these towns as it expressly designed to avoid them to better serve interregional movement.

North Waikato Line

Above is a rough outline from Papakura south. It is clear that Tuakau and Pokeno could easily be served as Pukekohe extensions, then there is a bigger jump to the old towns south of Pokeno to Hamilton which would make it much more than an extension of the Pukekohe service. And finally a possible third stage east and south of Hamilton out to Morrinsville, Cambridge, and TeAwamutu. So three stages:

Waikato Line

The first stage should gain support from those advocating country living. We are often told that Satellite Towns are a great way to get the best of all worlds; right in the country, but with the social hub of a village centre, and connection to the employment, education, and action of the big city. But to get this the detail matters enormously. Quality of place takes work; those three boxes all need to be properly ticked. Here, I suggest, is a mechanism to help achieve this work.

For example look how they are marketing the spreading little north Waikato town of Pokeno:

Pokeno

Note the mention of rail right in the same sentence as the state highways as a selling point for Pokeno, yet there is no rail service, and no plan for one either. I agree it would be great if there was. Not least because it would give the town an opportunity to develop as a real Satellite Town, not just a piece of displaced sprawl as it seems to be becoming now. The station and surrounding amenity could become a village centre of the kind at the heart of the successful country Satellite Towns around overseas cities.

The TVOne report linked to on the website above is worth a look. It is a good showcase of the often confused thinking, particularly by those that consider themselves experts, on the issues of urban form and the role of transport infrastructure in shaping those forms.

Here’s a quick look at the easily available Hamilton City Stations. Hamilton being the other anchor* of this line.

Hamilton City Stations

The triangle is the existing Hamilton Station at Frankton, the rectangle is Hamilton’s big secret, the country’s first underground urban station, currently unused [edit]. And the line a rough position for an East Hamilton station, around Claudelands, with good residential walkup and next to the Claudelands Convention Centre. These are about a kilometre apart. There is a good opportunity to add a station at the back of The Base at Te Rapa, and a more difficult option for one between that and these three city stops perhaps at Forest Lake Rd. Although the surrendering of rail land for a duplicate highway through there has squeezed the corridor and added to the severance both of which would make this more difficult and expensive. So it goes. However this little urban network alone could be quite useful; Claudelands to The Base certainly looks handy, nicely balancing Ngaruawahia to the city say.

While it is the case that the forces associated with the massive road build currently taking place in the Waikato have been strongly opposed to any rail revival in the region I think for them to continue that now this would be to misunderstand the potential and the purpose of this project. As conceived here it is complimentary to the huge highway system. It is to serve those communities left behind by the Expressway; to help them develop into stronger entities in their own right. To help mitigate the shock of the departure of the highway and to take advantage of the new possibilities that must be found for these places. This project is no threat to the vast sums being spent on highways.

This is a very different argument than that for improvement and extension of the Auckland network for which there certainly is growing demand of significant scale, but I can imagine local people getting behind such a proposal. So a good first step would to hear their views here and if supported then to work towards getting some real analysis done. After all this is not a detailed proposal more a bit of free thinking. After the low hanging fruit [and admittedly Auckland centred] first stage I concede it gets trickier:

  • What sort of frequency would be required for a meaningful service?
  • Could such a frequency be justified by the ridership?
  • How to set the ticket price to stimulate uptake but also help fund operations?
  • How do you balance economic value of place and social quality against financial costs?
  • Is this the best stopping pattern?
  • Are the trains available? Suitable? Affordable?
  • Will KiwiRail be cooperative?

And finally is this the kind of thing that the people of the Waikato want?

Thanks to Jon Reeves and CBT for additional information

* Anchoring. Here is Jarrett Walker:

“So transit planners are always looking to anchor their lines.  Anchoring means designing a line so that it ends at a major destination, so that there will be lots of people on the vehicle all the way to the end of the line.  A line with strong anchors at each end will have more uniform high ridership over the whole length of the line, and a much more efficient use of capacity overall.”