Back in March, Auckland Transport announced a special shuttle to link a Park n Ride at Lloyd Elsmore Park to the Half Moon Bay Ferry Terminal. At the time it was announced I thought it was a silly idea but said that at least AT were trying things.
A LGOIMA request from reader Felix Lee has discovered just how silly the idea is.
- For the 5 trips being operated each day, can you tell me the average passenger number for each trip?
- Can you tell me the cost to operate this service?
The response from AT is below. It covers the period from 21 March when the service started to 21 May, a total of 42 working days (which is only when the service runs).
So a grand total of just 23 trips and it would seem that about 9 people didn’t even make the return journey. That seems like an abysmal failure to me.
But then we also need to consider the cost. AT say:
So over the 42 days covered above it cost about $7650 to run services on which just 23 trips were made so just over $330 per trip. Based on a quick search, at $175 for a 12 minute flight, it would have been almost half the cost to helicopter them directly to the city.
As I’ve said a number of times before, I believe that park n rides are often over-rated and clearly this example shows that parking then taking a shuttle to catch another PT service just isn’t attractive.
As I also said when this was announced, I think using the park as a park n ride is not a terrible idea but it should really be linked to bus services along Pakuranga Rd which AT have confirmed needs bus lanes in the recent information released about the Reeves Rd Flyover.
One other thing this episode highlights is the arguments over the bus colours recently. If you recall, those opposing the changes baulked at the suggestion that it might cost $9,000 to paint a bus and claimed that money could be better spent on new services instead. Here we have a service that runs just five times a day over ~2.6km for two months costing almost the same amount. This suggests that any meaningful addition to services on other routes will cost a lot more in a year than painting a few buses, the cost of which can be spread out over multi-year contract.
Coming back to the shuttle, the whole thing seems to have been a thoroughly predictable outcome. I guess the only real question is how much longer will AT keep the service running before they finally pull the plug on it?
Auckland Transport have put together a pretty good video to explain the parking strategy they adopted late last year.
Perhaps the most interesting outcome from the video is that AT are developing a parking app that will let people pay for an on street carpark. It appears that you simply tag on within the app when you arrive and tag off again when you get back to your car so no need to fiddle around with parking machines or paper tickets. I would hope that it somehow integrates with HOP balances as it would be incredibly stupid and annoying to have to have multiple accounts for different AT services.
Sylvia Park is already Auckland’s largest shopping centre, but it’s likely to get even bigger in the next few years. Kiwi Property, who own the centre, have plans to expand the retail offering, as well as adding office buildings. In the long term, even things like apartments or hotels could be added, although those aren’t part of the current plans.
A recent Kiwi Property presentation shows what’s planned for the ground floor of the centre:
On the ground floor, H&M and Zara are already under construction, but there are plans for a major new office building of 11,200 square metres (about half the size of ASB North Wharf, or a little smaller than the new Fonterra building). The building will be next to the “dining lane” area which will also be given a makeover – perhaps something like the new Brickworks precinct at Lynnmall, also owned by Kiwi Property.
The office building could get underway as early as late 2016, wrapping up in 2018.
From the same presentation, showing the upper floor:
This is a major retail expansion, with 20,000 square metres – adding another 25% to the existing mall. Next to it, there are plans for a multi-deck carpark, adding another 500 parks to the current 3,900. Multi-level retail has had a pretty mixed history in New Zealand, and there aren’t that many examples where it’s been successful (St Lukes is one). Kiwi Property will be hoping that they can support the new upstairs shops by connecting them to the new carparks, and I’d expect that those two developments would happen at the same time.
Although the total number of carparks is increasing, Kiwi Property is adding many fewer parking spaces than would have been required under the old Auckland isthmus plan. The mall expansion will add one new carpark for every additional 40 square metres of retail space.
By contrast, Section 12 of the old Auckland isthmus district plan, which dealt with parking requirements, required one parking space for every 17 square metres of retail space:
Before the Unitary Plan, which will remove MPRs from major retail centres like Sylvia Park (assuming the hearings panel approves the change), Sylvia Park basically hewed to those ratios. At present, it’s got one parking space per 18.5 square metres of retail space.
The Unitary Plan seems to have changed that – Kiwi Property is planning to expand retail space while providing less than half as much parking as would have been required under the previous district plan. This isn’t a case of maximum parking rules restraining development, either. The proposed Unitary Plan sets a maximum parking rate of one carpark per 20 square metres – a lot more parking than Kiwi Property is planning on building.
The irony is that Kiwi Property was among the major retailers arguing against the removal of MPRs from retail centres in Unitary Plan hearings. In their corporate submission and in their planning evidence, they argued that removal of MPRs would make it difficult for retailers to invest in centres:
Consequently, they proposed a minimum requirement of one carpark per 30 square metres of retail space – i.e. a higher ratio than what they’re now planning to build, although the centre as a whole will still fall within these ratios:
Now, it looks as though Kiwi Property – and their customers – stand to be among the first big beneficiaries of a policy change that they opposed. But while that’s ironic, this is an excellent development. It’s a perfect illustration of the benefits of a more light-handed approach to parking policies – and of the benefits of providing good transport choices to retail centres.
Sylvia Park is lucky enough to have a train station right next door, and bus links which are likely to get a boost in the next few years. As the centre keeps growing and public transport keeps improving, Sylvia Park will increasingly rely on its transit links to support its growth. Other retail centres are likely to follow the same pattern as Auckland rolls out its new bus network and continues integrating rapid transit into the city fabric.
Parking policies are frequently bizarre. Parking is, after all, a private good – it is both rivalrous (two cars can’t park in the same space at the same time) and excludable (if you don’t want someone parking in your space, you can keep them out). In that respect, it is more like a refrigerator than a public park.
But unlike a refrigerator, there are all sorts of public subsidies and regulations affecting parking. Although refrigerators are arguably more of a necessity of life than parking, councils don’t impose minimum refrigerator requirement for homes and offices. Central government doesn’t provide a tax subsidy for employer-provided refrigerators. And councils don’t invest in (or subsidise) public refrigeration facilities.
And if they did, it would almost certainly result in some perverse outcomes.
A recent NZ Herald story provided an example of how parking subsidies can lead to odd outcomes. (It was also a fine example of meaningless “gotcha” journalism, but never mind that!)
They are the crack team of economic and planning experts charged with sorting Auckland’s future growth.
But a member of the Unitary Plan independent hearings panel has fallen foul of the city – after sneakily parking a jetski in a central city council carpark for almost a month.
The mystery jetski appeared three to four weeks ago, taking up a Queen St park reserved for the panel listening to submissions on the future of the city.
Here’s the jetski in question:
The article implies that the panel member in question is rorting the system or acting unethically by using their employer-provided carpark to store a jetski. But, if you think about it, it’s actually a good illustration of the poor logic behind many existing parking subsidies.
Let’s back up a step: what subsidies are we talking about, exactly?
In the Auckland city centre, carparks have a market value, which is a good thing. The removal of minimum parking requirements in the 1990s led to an increase in the price of parking – and also to increased development as new buildings weren’t encumbered by the need to provide unnecessary but costly carparks. At present, Auckland Transport is leasing downtown carparks for between $110 to $490 a month – although the cheapest ones are fully sold out. Private operators seem to be supplying them at around $250-$300 per month.
So an employer-provided carpark in the city centre is likely to be worth somewhere in the range of $3000-$6000 per annum. Because fringe benefit tax isn’t levied on carparks, this is worth the equivalent of $4500-$9000 in salary for people paying the top marginal tax rate (33%). (As the panel members probably do.)
That’s a large public subsidy for a small bit of concrete!
In theory, the rationale for the tax subsidy on employer-provided carparks is that it makes it less costly for people to commute to work, and hence encourages people to enter the workforce. But the panel member’s jetski illustrates the absurdity of that approach.
For one thing, people have (or should have) a range of choices about how to commute. Some prefer to drive. Others may take the bus, train, or ferry, or walk or cycle to work. Consequently, a significant share of commuting trips don’t end in a carpark. Based on Census data, around half of the people working in the city centre in 2013 didn’t drive to work. A bit over one in four workers throughout Auckland didn’t drive to work.
Consequently, trying to subsidise commuting by subsidising parking is likely to be a distortionary and inefficient policy. Some people will change transport modes in response to cheaper parking, resulting in additional road congestion in peak periods. Others will be left with a subsidised parking space that isn’t much use to them.
The panel member who used their parking space to store a jetski probably falls into the latter category. They might walk to work, or take the bus or train. This leaves them with a bit of costly concrete that they don’t need to store a car – so why not use it to store another vehicle instead? I can’t blame them for that.
The jetski has apparently been removed from the parking space, but the policy distortions that led to it being there in the first place remain. So what could we do about that?
The key is to realise that our ultimate aim is to enable mobility, not to simply provide carparks, and make policy accordingly.
For some people, mobility means a monthly public transport pass, or a bicycle and access to a shower at work. But current fringe benefit tax policies discourage employers from offering those solutions to their employees – an employer-provided PT pass would be taxed as regular income, while a carpark is exempt from tax. We need to level the playing field.
The best way of doing so is by removing the fringe benefit tax exemption for carparks, but if that’s not political possible then a good alternative would be to exempt PT passes from FBT, as the Green Party has proposed.
Another alternative would be to offer people the option to “cash out” employer-provided carparks. It’s especially bizarre that employers aren’t required to offer this choice, as the current government changed employment law to allow people to exchange one week of annual holiday for the equivalent in cash. Why not adopt the same approach for carparks, which could easily be worth more than holiday pay for many workers?
Lastly, we also need to make some choices beyond how we price and subsidise parking. Getting a great range of transport choices will often require us to use existing road space differently. Sometimes the only way to get a dedicated bus lane or a safe, separated cycle lane is to remove a few on-street carparks. We need to look at those choices in a holistic way – i.e. do they improve overall mobility and access to destinations – rather than simply insisting that all carparks must stay in place.
How do you think we should address parking subsidies?
Auckland Transport started a unique park & ride and shuttle today in East Auckland. It’s something we first learned about in the board report last month. Auckland Transport will use the parking in Lloyd Elsmore Park for commuter parking with a shuttle to the Half Moon Bay ferry terminal for users to connect to ferries.
In a first for Auckland, a local park is being used as a park and ride to service public transport in the eastern suburbs.
The free park and ride at Lloyd Elsmore Park in Pakuranga will have a shuttle bus running to and from Half Moon Bay Marina on weekdays. The six month trial begins on Monday (21 March), providing a safe and convenient place for people to park for the day.
AT is providing the service at the request of the Howick Local Board in an attempt to mitigate a lack of parking at the marina.
There will be two trips in the morning and three trips in the afternoon to meet the 8:15am and 10:15am departing ferries and the 5:45pm, 6:20pm and 7:05pm arriving ferries.
Howick Local Board Chairman David Collings says it will provides people living in Pakuranga, Howick and surrounding suburbs with a great option for getting into the city.
“This initiative provides additional parking for ferry users, but simply at a different location. Ideally long term I’d like to see commuters consider walking, cycling or even car-pooling to the ferry.”
“Driving into the city centre from this part of Auckland is time-consuming and costly by the time you take into account car parking. Catching a ferry is a great way to travel and with AT providing this park and ride, it makes it even easier,” he says.
The park and ride is a point-to-point service with no stops along the way and is dedicated which means it will wait for ferries if required. It is free of charge until Zonal Fares are introduced in late July. Trip durations are expected to be 10-20 minutes depending on traffic conditions.
Mark Lambert, General Manager at AT Metro, says the service adds to the numerous successful park and ride services around the city.
“The park and rides at bus, train and ferry interchanges have proved incredibly popular especially the Northern Express. This trial is a slightly novel approach in that we are providing a shuttle service to a ferry terminal.”
And here are the shuttle times – for some reason there is no shuttle to the earlier sailings or the midday ones.
Regular readers will likely be aware that we’re not a huge fan of park & ride as they can be very expensive and not deliver all that much patronage. But I think the idea of using infrastructure that may have otherwise been sitting idle is a good one – although that changes again when it requires a dedicated shuttle to operate. In many ways it’s good that AT are at least trying stuff.
In saying that the situation also highlights one absurdity with the East Auckland situation. Pakuranga Rd at this point is a 6 lane road plus median – there are no bus or bike lanes. As part of AMETI, Auckland Transport have suggested putting bus lanes on Pakuranga Rd as far as Highland Park. If they did that it would probably be faster to catch a bus to Panmure and then transfer to a train than it would to catch a bus to the ferry and then ferry to town.
The Additional Harbour Crossing as currently proposed is a pair of tunnels containing six traffic lanes between the motorway at Esmonde Rd rejoining it at Spaghetti Junction [The CMJ] in the city. The publicly available schemes also show additional rail tunnels between Akoranga and Wynyard Quarter, but no connecting network for any trains to actually use. It is clear to see the appeal for NZTA of straightening and simplifying SH1 past the bridge, but the outcomes for the city are much less certain. Below for example is version T1:
Clearly this or the other versions that date from 2010 are not the current versions NZTA are developing now, but until new versions are released these are still worth looking at in some detail as neither the various physical constraints or the overall aims that drive these options have changed. The options can be seen here.
Considering these there are several high altitude observations I think are important to begin with:
- This will be the most expensive urban transport project ever undertaken in NZ; claimed to be $4-$6 billion. Two to three times the cost of the CRL.
- Not least because of the massive cost it is extremely unlikely that both sets of tunnels and systems would be undertaken at the same time. They will be staged; one will precede the other.
- The road scheme is essentially a SH1 bridge bypass, and therefore optimises through traffic, however it does not make any new connection that is not currently available nor in fact any increase in capacity on SH1.
- There is little spare capacity in the CMJ for additional vehicles so the new connection will remain the current three lanes north and a reduction from four to three lanes south.
- Essentially the bridge becomes a massive on/off ramp for city traffic and unless and until the rail tunnels and line are built more buses on bus lanes across the bridge will be the PT part of the project.
Here’s the set of variations currently available for the city end, all versions involve four tunnels under Victoria Park [3 new ones]:
All schemes also involve massive new interchanges on new reclamations at the North Shore end with flyovers and multiple connections between crossings, not unlike the new interchange at Waterview currently being built. Like the outcomes for traffic on North Shore local roads, the impacts of this project will be neither small nor all positive north of the bridge. However for this post I just want to focus on the city-side implications.
Assuming the road crossing is built first, which is consistent with assertions by politicians and officials with phrases like it will be ‘future proofed for rail’, as well as the lack of any real work yet on a rail crossing, it is worth asking exactly where will the new traffic enabled by the extra capacity across the harbour go once in the city?
Because the new crossing plugs directly into the CMJ, three lanes in and three lanes out, and because there are no planned increases in capacity through the CMJ, nor any space for any without further massive tunnelling, in effect the new capacity will be all on the bridge, so coming from the Shore this new traffic will all have to be accommodated by just three off ramps [same in reverse heading north]:
- Cook St; with new direct connections through Victoria Park
- Fanshawe St, especially for buses on new bus lanes
- Shelly Beach Rd, and then on to Jervois and Ponsonby Rds.
None of these exits can accommodate any increasing in traffic well, or without considerable disbenefit, especially if that increase in traffic is large.
- Cook St is pointed directly at the heart of the city, so this contradicts policy of reducing vehicle volumes in the city centre and is likely to infarct daily at the peaks as Cook St is close and perpendicular to Hobson and Nelson Sts which serve the Southern and Northwestern motorway flows. Gridlock is likely at the controlled intersections unable to handle large and peaky traffic volumes to and from these motorways. Additionally land use in this area is changing and intensifying making it even less suitable for the high speed motorway offramp it already hosts.
- Fanshawe will have reduced capacity for general traffic as a multilane Busway will be required to take the increased bus volumes from the bridge, and anyway is already at capacity at the peaks.
- Shelly Beach Rd is a narrow residential street not suited to the high volumes and high speeds it already suffers from the bridge now. Furthermore there is no benefit and little capacity for the streets beyond Shelly Beach Rd, particularly Jervois and Ponsonby Rds for a large increase in vehicle volumes.
Nonetheless, here are the forecasts they have come up with, Shelly Beach Rd with a 63% increase, is basically filled with bridge traffic by 2026 and the new crossing:
20,300 additional cars modelled for Fanshawe + Cook St with the AWHC option (assume that is all day on a weekday?). Even at the best sorts of turnover that would require around 10,000+ new carpark places. The downtown carpark has 1890 spaces. So where exactly do we put six new downtown carpark buildings? And what six streets get sacrificed to feed them?
20,300 cars carry perhaps 25,000 people. The CRL at capacity will carry that entire amount in 40 minutes. As could a North Shore rail line of similar specification. If the net outcome of this project is to take 20,000 commuters to midtown, why not do it with rapid transit at a third the cost with none of the traffic congestion?
“The significant increase in traffic movements conflict with many of the aspirations outlined in current Council policies, strategies, frameworks and master plans.”
–P 65 Additional Waitemata Harbour Crossing Network Plan, NZTA, 2010.
Obviously these higher traffic volumes are not good for every pedestrian, resident, and general city user in these areas but there is one other group that this situation in particular is going to make miserable, and that’s the motorist. There is a word for all this additional driving everywhere on city streets: congestion. Yup this increase in capacity across the harbour may speed that part of the journey but it’s going to make arriving anywhere in the city in your car much more hellish than it is now. And don’t even think about finding or affording somewhere to park.
What NZTA’s consultants say about this:
The increased traffic flows through St Marys Bay on both Shelley Beach rd and Curran St look to lead to particularly poor and unfixable outcomes:
It seems optimistic to say that because there are cafes, and strongly increasing pedestrian volumes, on Ponsonby Rd, that drivers won’t try to drive there, especially if other bridge exits are controlled or too busy. After all the first rule of urban traffic is that it will expand to wherever it is allowed to go. So, in the end, taking measures to dis-incentivise drivers to use these exits, is the consultant’s advice:
It does seem kind of odd to spend $4-6 billion to increase capacity across the harbour only to then introduce other measures to try to stop people using it.
And it won’t be just parking, there’s also likely to be tolls, it appears the model says they can pretty much eliminate the traffic problem with an $8 toll!:
If only there was a way to enable more trips without inducing more and more cars to also be driven into the crowded city streets. After all the City Centre has been growing strongly without adding more cars most of this century:
In fact it looks like we are already at or even above the limit of desirable vehicle numbers in the city, and future developments like replacing car access to Queen St with Light Rail are likely to make even current numbers face pressure.
Additionally there is an issue with bus volumes as well as car numbers on the city streets, even though the New Bus Network, the CRL, and Light Rail, if it happens, will reduce bus numbers from other parts of the city, there is certainly a limit to the numbers of buses from the Shore that can be comfortably accommodated too. Below is the predicted year of maximum bus capacity at major entry points to the city. The role of the CRL in reducing bus number pressure from the Isthmus is obvious, so why not do the same thing for buses from the Shore?
So perhaps the answer is to reverse the assumed staging and build the rail Rapid Transit tunnels first, leaving space for the road crossing to come later. This certainly looks physically possible in the maps above. This would enable all of those possible trips across the Harbour that NZTA identifies to still be served but without any of the traffic disbenefits that so clearly dog the road only crossing. In terms of people capacity two rail tracks can carry twice the volume of six traffic lanes. Furthermore it can be built without disturbing the current crossing and its connections. And rail crossings have proven in the past to be good alternative routes in an emergency.
This would add the real resilience of a whole other high capacity mode across the Harbour instead of simply more of the same. It would make our Harbour infrastructure more closely resemble Sydney’s where most of the heavy lifting in terms of people numbers is done by Rapid Transit, as shown below. We already have ferries, buses, and cars bringing people across, isn’t it time we added the particular efficiency of electric rail?
It seems particularly clear that whatever we add next really can’t involve trying to shove ever more vehicles [cars and buses] onto our crowded city streets; that will simple hold everyone up.
All the information above was gleaned from the work done some six years ago for NZTA, from here, and Auckland has moved on a great deal from where it was then. Among other things that have been proven recently is that when we are offered a high quality rail system we will use it. We are also discovering the value of our City Centre as a place to live, and work, and just be in, and how this is only possible to continue this improvement with fewer cars on every street. We certainly believe that there are more options for a far greater Auckland than the simple binary ones studied above: the road crossing ‘future proofed’ for rail, or the ‘Do Minimum’ which is nothing.
So we have asked, as part of the Auckland Transport Alignment Process, for a Rapid Transit crossing as the next additional crossing to be modelled too. So we can compare the status quo with the road crossing, and with a Rapid Transit crossing separately. Additionally we know that AT are now working on how various rail systems could work so in time there will be properly developed rail options to compare with the road one.
There is time as well as the need to get this right, the Western Ring Route will begin to become more complete next year with the opening of the Waterview tunnels, and that whole multi billion dollar system is of course an alternative harbour crossing system and will alter both the performance of both the Bridge and the CMJ. Similarly decisions about AT’s proposed LRT system too has a bearing on options, as will the opening of the CRL next decade. Not least because the addition of these high quality systems will make movement through the city without a car much more common, as is the case in many overseas cities of Auckland’s size and quality.
The road crossing looks very much like an extremely expensive ‘nice to have’, that duplicates and tidies up the State Highway route, something to add when the missing alternatives have been built and there is spare budget to spend on duplication. Because on balance the road first additional crossing proposal really achieves little more than this:
While the answers to this question are largely sell-evident, it’s great that NZTA have recently released a summary of their view: Benefits of Investing in Cycling in New Zealand.
Follow the link for the full PDF, below is a summary of the seven ways NZTA have identified as beneficial. Followed up by a few images that do the same thing.
1. Investing in cycling is giving people what they want
People want cycling infrastructure. Many people say they’d like to cycle more, especially if separated cycling infrastructure was provided.
2. Cycling makes towns and cities really liveable
Cycling improves quality of life in towns and cities. ‘Quality of life’ rankings consistently show bike-friendly cities at the top.
3. Cycling makes travelling around urban areas better for everyone
More people cycling potentially improves traffic flow so travel times are shorter, more predictable and reliable, and the transport network performs better. Bicycles are considered to impose 95 percent less impact on travel flow than an average car.
Getting just a few people onto bikes can15 make a di erence to tra c ows. On the congested 5km Petone to Ngauranga section of State Highway 2, for example, research suggests that only 10-30 vehicles out of the 250-280 vehicles occupying the space at congested times are causing the congestion.16 Evaluation of Hastings’ iWay cycling network indicates there was a 3.6 percent reduction in tra c volumes soon after it was built.17
4. Cycling is great for the local economy
Cycling saves people money to spend in their local communities. With no fuel, registration, warrant of fitness and parking costs, and much lower purchasing, maintenance and insurance costs compared to operating a car, people who cycle have more money to spend on other things.
Cycling potentially also boosts retail spend. Various studies have shown that cycling infrastructure can lead to an increase in retail sales.25 People who cycle have been found to be more likely to stop and visit shops more often, and to spend more money at those shops over time, than people who drive.26 Cycleways that run past shop doors can be a very good thing for retailers.
5. More cycling means reduced costs for the council
An increase in cycling saves councils money. This is especially clear where populations are expected to grow. In Christchurch, for example, where 50,000 additional car trips per day are predicted in the city by 2041 unless there is a mode shift to walking, cycling and public transport31, more cycling would mean reduced costs for additional road capacity, maintenance and operations.
6. Cycling is great for the environment overall
A small reduction in short vehicle trips potentially generates signi cant reduction in carbon emissions. Shifting 5 percent of car trips to bicycle could reduce emission impacts by up to 8 percent.33 Similarly, reducing trips by car can reduce the amount of other air pollutants.
7. Cycling makes people healthier and more productive
Cycling reduces the incidence of a range of serious illnesses.
In New Zealand, physical inactivity contributes to around 8 percent of all deaths37, and one in three adults and one in ve children are overweight38. The Ministry of Health reports that only 50.5 percent of New Zealand adults are regarded as sufficiently active for health benefits and physical inactivity is the second leading risk factor of disability adjusted life years.
This is the first half of a two-part series of posts. It summarises a few ideas that have been banging around the back of my head for a while – basically, an attempt to answer the question: “What can economics do for cities?” In this part, I discuss a couple of important concepts: agglomeration economies, which underpin cities’ existence and ongoing success, and the potential role of pricing mechanisms for managing urban ills.
What do cities do?
Cities mean different things to different people. They are places to work, places to play, places to invest, places to consume, places to conduct politics, places to realise one’s individuality, places to blend into the crowd. (And many, many more things beside.)
In fact, one of the features of a successful city is that it can mean different things to different people, and attract and retain them for different reasons. Cities exist because they are efficient and diverse.
Economists use the term agglomeration economies to describe the advantages of urban scale and density. If you operate a business, locating in a city will allow you to access more workers, more customers, and more new ideas. But even if not, an urban location still offers advantages – more restaurants and retailers, a larger dating pool, better access to education and healthcare, and more choices about how to work, live, and get around.
New research from the Netherlands finds that agglomeration economies in both production and consumption are important, albeit to a different extent in different cities. Furthermore, ignoring agglomeration economies is a risky proposition for cities:
As history has shown (see, for example, what happened to Detroit or the decline in the population of Amsterdam and Rotterdam referred to above), current successes provide no guarantees for the future. This is what Gibrat’s law tells us, growth is independent of current size. Future growth is therefore largely independent of past success. The chances for policymakers that try to row against the tide are small. A successful policy requires to ‘go with the flow’. Large investments in infrastructure in a declining city do not satisfy any real demand but lead to large financial burdens for the local population, making these cities even less attractive. However, policy can make a difference in growing cities. In order to remain on the short list of hot spots, policymakers in these cities have two margins to work on.
- First, the city has to be attractive for innovative entrepreneurs and enterprises to locate their business.
- Second, the city has to be an attractive choice for high-educated top talent as a place to live in.
In other words, urban success is a dynamic process. Cities can’t stand still – they must be capable of attracting new people and generating new ideas and opportunities. Simply identifying some things that people like about a city and then freezing them in amber is a recipe for long-term urban failure.
1. Incentives and prices matter, so it’s important to get them right
We need change, but we don’t necessarily need change at all cost. Most development is good, but some has deleterious side-effects. A new factory may contaminate local air and water quality. A coal-fired power plant will damage our climate. A new subdivision may pump traffic onto congested roads. A new retailer may attract more people to park on already-crowded streets.
Policy responses to these challenges can heavy-handed and inefficient. While negative (and positive!) spillovers are abundant in cities, some cures may be worse than the disease. A good example is minimum parking requirements, or MPRs, which require new developments to provide a defined minimum amount of parking. The aim of this policy is to prevent parking from spilling over onto neighbouring streets and properties.
Unfortunately, MPRs tend to be both inefficient and ineffective. They are inefficient because (a) there is usually poor evidence for choosing minimum ratios, meaning that many businesses and households are compelled to purchase more parking than they need and (b) they tend to be more costly than alternative approaches to parking management. Furthermore, they are often ineffective, as people continue to complain about a lack of parking even in places where MPRs have led to a major oversupply.
Better pricing is often a better alternative to blunt policy instruments. As any economist will tell you, if you want less of something, put up the price! This approach is applicable to a wide range of policy areas, especially in cities. For example:
There are several important advantages to using prices, rather than regulations or construction, to discourage negative spillovers. First, pricing respects people’s ability to make good choices. If we had a carbon tax, it wouldn’t prevent someone from burning petrol or farming cows. But it would make them pay the full social cost of those choices.
Second, prices can change in response to new information. AT’s new parking policy is a good example of this – they will monitor demand for on-street parking and tweak the prices up if occupancy is too high. This reduces the risk of screwing things up due to forecasting errors.
Third, and most importantly, prices provide governments, businesses, and households better information, which can enable them to make better decisions. Over time, this will result in significant dynamic efficiencies. For example, congestion pricing will help transport agencies plan infrastructure upgrades. Rather than having to guess whether people will value expanded roads – which frequently leads to errors – they will be able to measure the actual value that people place on travel.
Tomorrow: Part 2.
Parking, parking, parking! In many places in many cities – even eco-friendly German cities – the price of parking is distorted by minimum parking requirements (MPRs). In these places, local governments regulate an over-supply of parking, which in turn holds down prices.
The Auckland city centre is not one of those places, as MPRs were removed from the area inside the motorway cordon in the late 1990s. As a consequence:
- New developments provide a lot less parking. For example, the new Commercial Bay building would have had to provide over 2000 carparks if it was subject to the same MPRs as the rest of the Auckland isthmus. It’s actually providing 278 carparks – 85% less.
- The price of parking is higher, as new parking garages must “compete” with other land uses, such as valuable commercial, retail, and residential space. If parking doesn’t pay its way, it doesn’t get built.
Furthermore, the price of parking will tend to rise over time as a result of supply and demand interactions. New demand for parking will tend to be met with increased supply. However, new parking supply will tend to be costlier, as cheap surface carparks are likely to be redeveloped and new city centre parking will increasingly be provided in expensive structures.
In fact, parking fees has been rising. In November 2014, Auckland Transport announced that it would end earlybird discounts – meaning that all commuters would pay an all-day rate of $17 to park. In July 2015, AT hiked the all-day price to $24. Other operators have followed suit. For example, Sky City now charges $22 for earlybird parking – whereas it only charged $14 in 2013.
Of course, not everybody pays to park. According to a 2007 survey of city centre parking spaces summarised in a recent report, there were 22,639 public carparks in the city centre, and 22,121 private non-residential carparks attached to businesses. Here’s the table:
In the Auckland city centre, it is almost always necessary to pay to use public parking – e.g. parking garages or on-street parking. Private carparks attached to businesses may be offered as part of compensation packages, which means that people give up a bit of salary in exchange for a carpark that they don’t have to pay to use on a daily basis. Alternatively, employers may choose to rent them out for a monthly fee.
But here’s the thing. This data suggests that at most 50% of the nonresidential parking in the city centre is being offered free of charge. People using the other 50% must pay to park, either on an hourly or daily basis. The price to park for a day is now in the range of $20, and hourly prices tend to be higher.
In other words, the average price that people pay to park in the city centre could easily be $10/day or more, assuming that 50% of drivers get “free” employer-provided carparks and the remaining 50% pay market rates of around $20/day. Furthermore, the cost for the marginal parking user will tend to be higher, as the removal of MPRs means that they will be more likely to pay full market rates for parking.
This leads me on to the curious case of the Additional Waitemata Harbour Crossing (AWHC). Or rather, the peculiar assumptions about city centre parking prices that are incorporated into the transport modelling for AWHC.
If constructed, AWHC would be New Zealand’s most expensive single transport project – coming in at a cost of $5-6 billion to bore road tunnels under the Waitemata Harbour. A project of this magnitude demands extra-special care to validate all the model inputs and workings and ensure that they are as realistic as possible. Errors on a major project can have costly ramifications.
With that in mind, here are the parking price assumptions from the 2010 business case for the project. (They can be found on page 42 of the project’s transport modelling report.) They assume that the average price to park in the city centre was $2.83 in 2006, rising to $7.72 in 2041:
It is not clear how these assumptions were chosen, but they do not seem plausible. As I discussed above, the average parking cost in the city centre today could easily be higher than the modelling is assuming for 2041. Getting parking prices back in line with the modelling assumptions would require them to fall by perhaps 30% over the next decade.
A reduction in parking prices is highly unlikely without a major policy shift and a boat-load of investment in uneconomic city centre parking garages. In the absence of MPRs, parking must pay its way. It will not be built if it does not provide a competitive return to business or residential floorspace. This means that new parking will tend to be supplied at a considerably higher price than the AWHC modelling envisages.
Lastly, it is worth noting that parking prices can have a significant impact on transport outcomes. Public transport tends to be cheaper than driving if you have to pay for parking – but more expensive otherwise. Consequently, unrealistically low parking price assumptions will bias transport modelling results by inflating demand for driving and depressing demand for public transport and other non-car modes.
What do you think will happen to city centre parking prices?
The announcement of the Commercial Bay development last week got me thinking about minimum parking requirements.
MPRs were removed from the city centre back in the late 1990s. Prior to that point,all new developments were required to provide parking at roughly the same rate as suburban developments. After that point, individual developers, businesses, and residents got to choice how much parking they wanted.
I’ve always thought that this was a strong factor in the downtown revival we’ve seen since then. If they hadn’t been removed, money that has gone into developing housing and space for businesses would have been diverted into unproductive parking spaces instead.
Precinct’s new 39-storey tower on the waterfront shows what a difference MPRs make to development. Commercial Bay will ultimately have 39,000 m2 of commercial office space, 18,000 m2 of retail space, and 278 carparks. It’s going to be a big, bold addition to the waterfront. But it simply wouldn’t be possible if MPRs were still in place.
To get a sense of the difference that MPRs would make, I went back to the Auckland isthmus district plan, which will soon be replaced by the Unitary Plan. For developments outside the city centre, it required:
- one carpark for every 40m2 of office space, and
- one carpark for every 17m2 of retail space.
In other words, if those MPRs still applied to the city centre, Commercial Bay would have required over 2000 carparks. That’s seven times as much parking as the developers actually want to build. Effectively, it would mean constructing the equivalent of AT’s Downtown Car Park at the bottom of the tower. Say goodbye to ground-floor retail. Say goodbye to laneways through the building. Say hello to bad air quality and inhospitable accessways cutting up the footpath.
Furthermore, MPRs would have dire financial implications for the project. According to Precinct, Commercial Bay will cost $681 million to build. If MPRs required the development to include another 1750 carparks, at a cost of $30-50,000 apiece, it would add $50-90 million to the cost of the project. That suggests that MPRs would impose a “regulatory tax” of 7-13% on downtown development.
But would all those extra carparks have any value? In a word, no. The fact that Precinct chose not to build them suggests that they don’t see the value in providing parking spaces rather than office or retail space. And, as a corollary, it’s likely that their tenants and customers don’t see the value in having seven times as much parking, either.
It’s not as though there are any pressing social requirements for another 1750 carparks, either. Three six-car electric trains can deliver the same number of people to the city centre. At present, Britomart can do that every ten minutes at peak times. After the City Rail Link is constructed, it will be possible to double rail frequencies through the city centre. And our public transport system can do all of this without adding to road congestion – which you can’t say about people driving into the city centre.
The high costs of minimum parking requirements aren’t limited to the city centre. Down in Christchurch, for example, a neighbourhood bar and restaurant is having to shut up shop due to MPRs:
Two Christchurch business owners are “disgusted” by the city council’s ruling they need to create 62 extra car parks to continue operating as is, saying they will likely close their bar.
Dwayne and Tiffany Vaughan, who run Kaizuka Eatery and Garden Bar in Cashmere, have been engaged in a year-long stoush with the Christchurch City Council over its licensing arrangements.
The council said the owners changed the scale of the business operating under the on-licence. The cafe was initially a small part of a garden centre but had grown to take over the premises.
The owners needed an on-licence variation that would in turn trigger resource management and building consent requirements.
According to the City Plan, 10 carpark spaces were required per 100 square metres of public floor area, but reductions could apply. The 800sqm bar had 18 car parks, meaning it would need another 62 to meet the requirements.
Setting aside the complete insanity of even having MPRs for bars – why on earth would we want to encourage people to drive to the pub? – this requirement imposes large costs for parking spaces that don’t seem to be necessary for the business. (After all, it’s been operating since March 2014 with the current number of parking spaces.)
It would probably cost over $1 million for the bar’s owners to comply with MPRs, assuming that they would have to spend around $20,000 to buy land and build carparks. The benefits of this policy are vaguely defined and potentially negative, if abundant parking encourages more people to drive and drink.
All of which begs the question: Why do we still have this costly and useless policy?