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?
I’ve been getting thoroughly fed up of inconsiderate drivers parking cars on footpaths and readers may remember a post I wrote about this less than a month ago. In the last few days the issue has become front page news at the herald who are encouraging outrage that some people were ticketed for the practice. I wish the media would show the same outrage when a person in a wheelchair or pushing a pram can’t get past a car parked on a kerb
The Auckland Ratepayers’ Alliance is backing furious residents of the two Orakei streets after the Weekend Herald revealed that Auckland Council parking wardens fined 27 residents in the early morning sting on cars with two wheels on the kerb.
Residents on Orakei’s Apihai and Tautari streets woke on Thursday to find $40 fines on their windscreens.
“The trouble with Auckland Council is its choice to apply blanket rules rather than common sense,” said Carmel Claridge, a spokesperson for the Ratepayers’ Alliance.
“Here a community have done the right thing by parking on the kerb to allow unimpeded access and reduce the hazard. Rather than let them be, the Council swans in with its ‘we know best’ attitude.”
Claridge said her son lives on the affected Tautari Street and believed if residents followed the rules the space left would make it impossible for emergency service vehicles to pass.
Auckland Transport is sticking by the decision, saying the road is not considered narrow and road markings are not needed to prescribe correct parking.
And you can listen to Carmel on Radio live talking about it here.
I can imagine in other situations where a ratepayers group would be furious if council/AT employed people who then didn’t do their job, a ‘what are we paying them for’ type argument. There can also be an issue – particularly in older suburbs – that vehicles can damage infrastructure just below the service, in particular water pipes. When that happens that can result in significant costs to ratepayers to fix.
Interestingly even on Google Streetview you can see the practice is pretty common.
Although a quick check of streetview shows it’s not just cars blocking footpaths. For example there’s this on Apihai St showing little regard for those using the footpath
The article contains a number of other comments blended in with what appears to be a healthy dose of entitlement.
“The people who live on this street, no one complains about it because everyone has to do it and has done it for years.”
One resident who received a ticket, Lyzadie Renault, said it was safer and more courteous to park half on the footpath.
Her home has no driveway and the family’s Range Rover does not fit inside their old, small garage that sits at street level.
“It’s common sense, it just means that people can get through easily and the whole street does it for that exact reason – nobody is trying to break the rules or is fully blocking the sidewalk, it’s being considerate for people using the road.
“When two cars are parked fully on the road, even if you have a normal-sized car, you have to go really slow, let alone for emergency vehicles or all the construction trucks and vans in this neighbourhood, plus rubbish trucks on Thursdays.”
So we’ve got ‘we’ve always parked illegally so why should we stop now’, ‘I brought a vehicle too big for my garage so should be able to park illegally’ and ‘if people didn’t do this I might have to slow down a little’.
And as you might expect, certain people/groups are jumping in to support the parkers.
Cameron Brewer thinks residents should be able to do what they want because they live in expensive houses.
Orakei councillor Cameron Brewer condemned the blitz as ridiculous. “These people pay huge rates and mean no malice but are being picked on because they’re most likely to stump up the cash to help fill Auckland Transport’s coffers.
“It’s completely unfair and uncalled for. These tickets should be waived forthwith.”
Local board chair Desley Simpson is oddly blaming intensification on something the residents say they’ve done for years
Orakei Local Board chairwoman Desley Simpson said Auckland Transport needed to address the growing issues associated with narrow streets.
“Intensification and narrow streets are causing problems in our older inner-city suburbs,” she said. “Sadly, AT haven’t stepped up to look at options to address this.”
And the AA says people should be able to break rules.
But AA’s senior policy analyst, Mark Stockdale, backs the residents and said the agency should be looking for solutions.
“The public have been ticketed out of the blue for trying to do the right thing by leaving the road clear and not blocking the footpath,” he said.
“It’s the stick instead of the carrot. Yes, the rules are the rules but sometimes the rules don’t make sense – just fining people is not a solution.”
If fining people isn’t the solution and the residents continue to claim that the road is too narrow then it seems there is a quick, cheap and simple solution for Auckland Transport. They should get out the yellow paint and put some dashed lines down at least one side of the road. That’ll solve the problem but somehow I don’t think the residents like the outcome.
A trend I and others have been noticing lately is an ever increasing number of vehicles parking on the kerb or footpath – and it’s really starting to annoy me. It ranges from a couple of tires up on the edge of the kerb to full blown parking over footpaths and blocking pedestrians. From what I can tell a couple of common reasons seem to be
- the presence of yellow no park lines where it seems that some drivers think that if they mount the kerb it doesn’t really count as parking
- trying to take up less space on the road, perhaps trying to give other drivers more space to reduce the chance of their vehicle being side-swiped (I can’t imagine this happens often).
Or course in both situations the result is it’s primarily those on foot who suffer, sometimes even having to walk out on to busy roads to get around the vehicle. For someone like me able bodied like me that’s primarily an inconvenience but for other segments of society such as some of those with prams/small children, those with disabilities or the elderly it can be a real safety risk, especially if the vehicle also blocks ramps on to the road.
Here are just a few examples I and others have seen recently however there are likely to be multiple examples every day where this occurs.
Outside Countdown Takapuna, it’s not like there wasn’t a near empty parking lot 10m away (just to the right of the image. I’ve also regularly seen small trucks in the same spot delivering things.
These guys couldn’t find a carpark so they made one up (they were also sitting in the car and weren’t too polite about me pointing out they were blocking a footpath)
This driver and their boat blocked not just the footpath but the cycle lane too.
“Its ok, the hazard lights are on” This was another driver who was very abusive at the suggestion he shouldn’t have been parking here.
And a few examples from twitter
High St footpaths are narrow enough without this happening
Trailers seem to be a common occurrence
As are couriers
Looks like a ladder on the roof, tradie?
Deliveries here are obviously a challenge but perhaps not delivering at 8:30am when people are walking to work might be a good idea.
The loading zone was full so the driver decided to wait, blocking the footpath – again Countdown Takapuna.
5 Star removals, 0 star parkers
To their credit when the cases in the CBD at least have been raised on twitter, Auckland Transport have been fairly quick to say they’ll get a parking warden out as soon as possible but my concern is the hundreds of other times these situations aren’t reported and/or they are in areas without parking wardens nearby. AT seem more than happy to put on advertising and gimmicks encouraging pedestrians to cross the road safely so there should be no reason they can’t also put effort into stamping out this potentially dangerous practice.
Are you noticing an increase in kerb/footpath parking and what do you think needs to happen to address it?
Transportblog’s written at length about the economic harm caused by minimum parking requirements (MPRs). By requiring every new development to adopt a “one size fits all” to parking provision, MPRs consume expensive land, drive up costs for businesses and households, and encouraging more congestion and less use of public transport, walking, and cycling.
Of course, even in the absence of MPRs many businesses and households would want to provide parking. But others might not. Different people have different needs and desires, and a one size fits all MPR doesn’t respond well to that.
Fortunately, many New Zealand cities are starting to cut back on MPRs. In Auckland, the proposed Unitary Plan removes them from town centres (following on from the highly successful removal of MPRs from the city centre in the late 1990s) and the higher-density residential zone. But it’s still leaving them in place in most residential zones, which cover the majority of the city.
Is this a good idea? One could argue, I suppose, that MPRs in residential zones won’t be very costly because the households living in these areas will all own cars and will therefore all want parking. This argument is a bit circular – if it were true, it would actually mean that there is little need to have MPRs. But is it true?
In order to find out, I took a look at Statistics NZ’s data on household car ownership from the 2013 Census. Every Census, Stats NZ gathers data on the number of cars owned by each household throughout the country. This data can give us rich insights into the demographics and location of Auckland’s car-free households.
Here’s one look at the data. I’ve broken down Auckland’s approximately 470,000 households by the number of cars that they own. As you can see, the vast majority of Auckland households own cars. This is a costly proposition, but frequently a necessary one due to Auckland’s under-investment in frequent public transport and safe walking and cycling options.
But let’s not look only at the mean: the variance is equally important when considering the impact of planning regulations. Approximately 33,500 households, or 7.6% of all Auckland households, own no cars. (My household falls into this category – three people, zero cars.) MPRs will require car-free households to buy parking spaces or garages that they don’t need. Sure, it’s possible for them to use garages for storage or workshop space, but it would be better to have another bedroom (or a smaller, cheaper dwelling) instead.
Car-free households face a double budgetary whammy from MPRs. Because they require retailers to over-provide parking, parking costs are bundled into the price of everyone’s merchandise rather than charged directly to drivers. This means that every time someone who doesn’t own a car goes to the supermarket or mall, they are effectively subsidising people who drove there.
In short, MPRs can be costly for households who don’t own cars. When considering the effects of this policy, it’s necessary to ask: Can those households afford to bear those costs?
Here’s some relevant data from the Census. It shows the share of households in each income band who don’t own cars. Almost all high-income households own cars, but a large share of low-income households don’t own cars. Almost one-third of households earning less than $20,000 and one-fifth of households earning between $20,000 and $30,000 own no cars.
Overall, two-thirds (66.7%) of car-free households earned less than $50,000 a year. For comparison, Census data shows that the median household income in Auckland was $76,500 in 2013. Car-free households are overwhelmingly concentrated in the bottom quartile of the income distribution, which means that MPRs are a sharply regressive policy. They impose high costs on the people who are least able to pay, while having few effects on high-income households.
Finally, it’s worth taking a look at the geographical distribution of Auckland’s 33,500 car-free households. One of the ways in which households can avoid the costs of car ownership is to live in places which offer other ways of getting around or good proximity to jobs, shops, and amenities.
I’ve put together a quick map showing the number of car-free households in each Auckland area unit. Dark blue shows areas with more car-free households, while yellow shows areas with few car-free households. A few things pop out from this map. The first is that the largest concentrations of car-free households are in the city centre – fewer than half of city centre households own cars. This is not surprising – it’s costly to warehouse cars downtown and easy to get by without one.
But don’t let that fool you: car-free households are distributed widely throughout Auckland’s urbanised area. Only 16% of the region’s car-free households live in the city centre. Many, many more people are living without cars in west Auckland, south Auckland, the isthmus and even the North Shore. Orewa has a surprisingly large number of car-free households due to its status as a retirement community.
Because car-free households are living more or less everywhere in Auckland, the blanket application of MPRs in residential areas is likely to be inappropriate. And, because low-income households are more likely to own no cars, MPRs will tend to be heavily regressive. It’s a policy that many Aucklanders simply can’t afford.
Fortunately, it’s possible to imagine and implement better policies. As Transportblog has consistently argued, we can:
- Let people make up their own mind about parking – if they don’t want it, don’t make them buy it!
- Give people better transport choices by providing frequent, reliable public transport services and safe walking and cycling options – in other words, give them the choice to go without a car
- Make it easier for people to live in areas where they don’t need cars, and make it easier for people to “retrofit” underperforming car-based places like Manukau centre.
What do you think about the equity impacts of MPRs? Do you think we could do things better?
Auckland Transport have announced that the price of parking in their city centre carparks will be changing. Currently their Downtown, Civic and Victoria Street car parking buildings have an hourly cost of $3 which is capped at $17 for the day. They also have evening rates of $2 per hour capped at $7.50 for the Downtown and Victoria St buildings and $8 for the Civic building. The reason for the different cap for the Civic building is it more frequently fills up from events.
The hourly charges aren’t changing but from 1 August AT will increase the caps at the three carparks. The changes are:
- The day rate in the Downtown, Civic and Victoria Street car parking buildings will increase from $17 to $24.
- Evening and maximum rates: Civic: Flat fee of $12 (post 6pm). Victoria and Downtown: Increase from $7.50 to $10.
The rationale for the changes is below
- Historically AT has subsidised people to drive into the city at peak times, which is adding to congestion.
- AT is continuing to move towards the customer pays for their stay approach. This replicates AT’s central city on-street parking approach
- Our prices are increasing further to dis-incentivise people from driving during one of the busiest times of the day (am peak).
- AT anticipates this move will free up some peak hour occupancy in its off-street parking facilities while continuing to provide for short stay users encouraging turn-over and availability
- The removal of the Early Bird option in December 2014 has not had the desired impact in changing customer behaviour. A further step is needed to assist in modal shift behaviour from cars to public transport, walking or cycling.
- Additional note: AT has a small percentage of off street car parking spaces in the central city and region wide. Downtown: 1937 spaces. Civic: 939 spaces. Victoria Street car park: 888 spaces.
On that last point, the chart below just how few carparks AT has compared to what else is in the city centre. In addition there’s likely to be significant increases in carpark supply over the coming years from new developments – the biggest of which is the new Convention Centre for which SkyCity want to add over 1,400 spaces. A number of other developments are adding 200-300 carparks each.
I suspect there could be one more reason why AT are pushing this now and that’s related to the CRL. Starting later this year AT start the enabling works which will see the CRL tunnels dug along Albert St as far as Wyndham St (actually tunnelling won’t begin till next year). This is going to cause immense disruption to buses and cars and as such it makes sense to try and reduce that as much as possible. Shifting more people to public transport is one way of get more capacity out of the transport system. I guess if you think about incentivising change as a case of using carrots and sticks, this change represents AT using a bigger stick.
Of course none of these facts are likely to matter to those who use the carparks and I expect there will be howls of outrage about the change – in fact I’d be surprised if it hasn’t yet been picked up by the likes of the Herald (I wrote this on Sunday). I suspect that in particular they’ll come under attack for being so honest about their desire to get more people out of their cars and using public transport. The reality is that’s kind of been happening for a long time now.
Data from the council’s annual Screenline Survey shows that from 2001-2014 all of the growth in trips to the city centre in the AM peak has come by way of public transport and most of that via the Rapid Transit Network (Rail and Busway). The number of people driving has actually declined slightly. Unfortunately despite the survey being conducted annually since the 1980’s we don’t have any data for 2015 as the council stopped it in a bid to cut costs. Hopefully AT will find a way to replicate the survey with data from systems like HOP and traffic counters as it provides an incredibly useful measure as to how various initiatives are working.
We have been sent more LRT details from AT. Light Rail is undergoing investigation at this point, but slowly more of their thinking is emerging:
Clearly access to Wynyard is the most difficult part of this route. Queen St is so LRT ready and at last a use for that hitherto hopeless little bypass: Ian Mackinnion Drive. The intersection of New North and Dom Rd will need sorting for this too- Is there nothing that LRT doesn’t fix!
They are planning for big machines, 450 pax is at the top end of LRVs around the world.
At 66m, these are either the biggest ever made, or I guess more likely 2 x 33m units. 33m is a standard dimension, and enables flexibility of vehicle size.
The contested road space of Dominion Rd. Light Rail will create the economic conditions for up-zonning the buildings here; apartments and offices above retail along the strip. But the city will have to make sure that the planning regulations support this. Otherwise it will be difficult to justify the investment. Something for those in the area who reflexively oppose any increase in height limits, reduction of mandated parking, or increases in density and site coverage rules to ponder. If they prefer to keep the current restrictions they need to be aware they are also choosing to reject this upgrade. More buses will be as good as it gets, and AT’s investment will have to go elsewhere. I’m not referring to the the large swathes of houses back from the arterials, no need to change these; it’s the properties along the main routes themselves that need to intensify; anyway these are the places that add the new amenity for those in the houses. And not just shops and cafes, also offices with services and employment for locals, and apartments for a variety of dwelling size and price. Real mixed-use like the world that grew up all along they original tram system city wide, before zoning laws enforced separation of all these aspects of life.
Last week Auckland Transport finalised their region wide parking strategy which they first consulted on a year ago. All up AT received more than 5,500 submissions.
The strategy is potentially one of the most important that AT have as parking has huge impacts across a wide range of areas so managing it right is critically important. It has the ability to impact on how people live, congestion, what mode they use, the provision of bus and cycle infrastructure and even local economies.
One of the things I really like about the strategy is that it fairly clearly sets out what the various parking management options are and also what the trigger points are for changes. The types of parking restriction listed are:
- Loading Zones
- Mobility Parking
- Motorcycle Parking
- Taxi Stands
- Buses and tour coach parking
- Car Share Parking
- Time Restrictions
- Bicycle Parking
For each of these there is a description of what the restriction is for and the policies around it. An example of this is below:
As mentioned there are trigger points as to when parking management might change, the example below is for on-street parking and shows the magic number for change is an occupancy of 85%.
There is additional information for priced parking that addresses issues such as how frequently AT will review parking demand, how it will adjust prices, the times of operation and for off-street parking this includes issues like yield targets and pass options. In addition to managing parking there are policies that cover topics such as the investment in new or divestment of off street parking facilities.
Residential parking schemes have been started to be introduced in some areas and have been proposed in others. In general our view is that residential parking schemes are unwise however they are often popular with locals and AT have created policies to deal with these. Some of the components in the parking schemes include
- Time restrictions for those without a permit.
- A cap on the number of parking permits issued based on a percentage of total car parks available,
- The ability for people to stay longer than the permit by paying a daily charge – residents also get a number of free days per year for visitors.
- Restrictions on permits to only dwellings built before the council’s Unitary Plan was notified.
- Permits that will be issued based on an order of priority which is below.
Arterial roads get special mention and importantly AT say that they will manage parking on arterial roads by potentially removing parking if it:
- Causes significant delays to the speed and reliability of public transport on the FTN, and/or
- Causes safety risks for cyclists or impedes quality improvements on the Auckland Cycle Network
Actually acknowledging that bus and cycle infrastructure is more important than parking is hopefully a significant step in AT being able to stand up to locals who claim the sky will fall if a single carpark is removed.
There are a few other policies covered in the document however the last one I want to address is Park & Ride (P&R). AT say there are currently about 5,500 P&R spaces around Auckland (with about 20% of those at Albany Busway station alone) and 80% are at capacity by 8am. AT want up to an extra 10,000 P&R spaces over the next 30 years. I’m not convinced pursuing lots of P&R is a great strategy as while they get used, they don’t actually contribute that many customers to the network. Even if 10,000 new spaces appeared tomorrow and they were all used by people who don’t currently use PT, that’s only around 2.5 million extra trips per year which is nothing really. If they do get more P&R one thing I like is they talk about opportunities including making better use of locations near stations that have an excess of parking during the week, examples include shopping centres, sports fields and even churches.
One aspect that will cause some concern is the suggestion that P&R could be charged if occupancy is high to manage demand. Many will complain however experience from Calgary shows it can be done without losing patronage. The map below shows the potential sites to investigate adding & P&R. If these come to pass there will end up a lot of space dedicated to parking and as I mentioned earlier, not that much extra patronage for it. On this AT do mention that P&R is almost a form of land banking.
Overall the document is fairly good and a welcome addition to the landscape.
Stu’s talk at an IPENZ forum the other week put forth a lot of smart critiques of and recommendations for the transport profession. I was particularly taken by this slide:
Stu argues that failing to account for the “opportunity cost” associated with using valuable land for moving cars can lead us to misallocate resources. This isn’t a new idea, but it’s an important one. Here’s what William Vickrey, who received the Nobel memorial prize in economics for his work on congestion pricing and auctions, had to say on the topic in 1963:
“a cost benefit analysis can justify devoting land to transportation only when the savings in transportation costs yield a return considerably greater than the gross rentals, including taxes, that private businesses would be willing to pay for the space. This in turn means that an even greater preference should be given to space economizing modes of transport than would be indicated by rent and tax levels. And our rubber-shod sacred cow is a ravenously space-hungry, shall I say, monster?”
Things have changed quite a bit since Vickrey’s time. For one thing, urban land prices have risen quite a lot in recent decades. For another, the long driving boom seems to have abated in most developed countries. In many cities, this means that the opportunity cost of space-hungry transport modes has increased.
I’ve had a go at putting together some evidence on this for Auckland (or New Zealand cities in general). Unfortunately, long time series on land prices and traffic volumes are not readily available, so I’ve had to use two proxy variables:
- I’ve used RBNZ’s national house price index, which goes back to 1962, as a proxy for land costs. I deflated the index by RBNZ’s long-run consumer price index to net out the impact of inflation. It’s probably reasonable to use this as a proxy for land prices given the fact that land prices have driven most increases in house prices over this period.
- I’ve used NZTA’s annual average daily traffic counts for the Auckland Harbour Bridge, which Matt’s compiled going back to 1961, as a proxy for overall traffic volumes. This is probably reasonable as they’ve followed similar trends – they boomed together in the 1960s and have flattened simultaneously over the last decade.
I’ve graphed the two indices below. Prior to 2000, traffic volumes generally increased faster than house prices. (Although you could argue that house prices started to rise faster in the 1990s.) Since 2000, house prices / land values have generally risen much faster than traffic volumes. (National-level data understates the degree to which land prices have risen in Auckland, in fact, as house prices flattened but never declined after the GFC.)
As an aside, in case anyone says that house prices have never fallen in NZ, take a look at the 1970s. Real house prices dropped by almost 40% from their peak in 1974 to the trough in 1980. In real terms, they didn’t recover for 20 years. However, this was masked by the overall high inflation rates prevailing in the 70s and 80s. If something similar happened today – and it could – it would have a catastrophic effect on household wealth and financial stability.
What can we conclude from this data? Potentially, quite a lot.
First, this data shows that Stu’s observation (and William Vickrey’s) is highly relevant for policymaking. Land prices are going up faster than vehicle demand, meaning that the opportunity cost of a space-hungry, car-based transport system is increasing. If this continues, our best option for achieving a transport system that uses resources productively will be to invest in space-efficient transport modes: rapid transit, cycleways, and the like.
Hooray for rapid transit!
Second, this may help to explain why growth in driving has stalled and growth in public transport demand has accelerated. My hypothesis is that the increasing value of space, rather than increasing fuel prices, is a fundamental driver of the increased viability of PT and non-car modes.
When land prices rise faster than car use, it tends to create incentives for the use and development of more space-efficient transport modes. This happens through two channels:
- First, transport agencies, which have constrained budgets for transport investment, find that they can’t build as many space-hungry roads when land prices are high. They face the choice of spending lots of money to acquire land, or spending lots of money to tunnel underneath valuable properties. So while New Zealand has ramped up its spending on roads, it may be getting less bang for buck.
- Second, private individuals and businesses, face higher costs to use or provide parking. In the absence of serious market distortions, this will mean that people provide less parking and/or charge higher prices for it. This in turn encourages people to use alternative modes.
I’d like to close with a comment from another Nobel economics laureate, Paul Krugman: “Productivity isn’t everything, but in the long run it is almost everything.” One key to achieving higher productivity is to change your approach in response to changing prices and changing demands. If space is getting more expensive, it’s imperative to use it more efficiently!