Unitary Plan Recommendations Revealed

Yesterday the council released the recommendations from the Independent Hearing Panel (IHP) for the Proposed Auckland Unitary Plan (PAUP) and as expected when there are over 1000 pages of recommendations there’s a lot to talk about, way too much for one post. As we also expected there is a mix of outcomes, some are good and others not so good. An overview of the changes is provided in this 123 page report which is what I’ll mainly focus on for this post.

First up the council had a couple of big wins with the IHP agreeing with many of their high level objectives for managing growth, such as:

  1. Affirming the Auckland Plan’s development strategy of a quality compact urban form focussed on a hierarchy of business centres plus main transport nodes and corridors.
  2. Concentrating residential intensification and employment opportunities in and around existing centres, transport nodes and corridors so as to encourage consolidation of them while:
    • a. allowing for some future growth outside existing centres along transport corridors where demand is not well served by existing centres; and
    • b. enabling the establishment of new centres in greenfield areas after structure planning.
  3. Retaining the Rural Urban Boundary (together with a substantial area of land zoned Future Urban Zone inside it) as a means of managing large-scale growth and infrastructure planning (this last point has a bit of a catch though which I’ll cover off later.)

That means the IHP didn’t just throw everything out and start from scratch but have made changes that address many of the shortcomings from the notified plan and the biggest of these is that the notified plan simply didn’t allow for enough growth. In this regard the IHPs recommendations are said to lie somewhere between what the council originally notified and what submitters like Housing NZ were after which was much more widespread upzoning across the region.

One of the areas they haven’t changed are the residential zones themselves. There are still the main urban zones of Single House (SH), Mixed Housing Suburban (MHS), Mixed Housing Urban (MHU) and Terraced Housing and Apartment Building (THAB) and many of the rules for the zones, such as height limits, remain the same. One big change is the removal of density provisions on the MHS so it matches the MHU and THAB zones – although there are various development standards and levels at which resource consents apply. Importantly where each zone is applied has also changed, one example being that the council walkable catchments for higher density zones of 200-400m while the IHP have recommended it be doubled to 400-800m. It is those and other amendments which are behind the changes in development capacity.

The level of development capacity has been a crucial issue for the IHP. They have agreed with the high side predictions of need to provide around 400,000 dwellings over the next 30 years and that for planning purposes it’s better to err on that high side. In short better to allow too many dwellings to be built than not enough. To this end they also say:

It became apparent early in the hearings that in the development of the proposed Unitary Plan the Council had relied on the theoretical capacity enabled by the Unitary Plan, rather than on a measure of capacity that takes into account physical and commercial feasibility, which the Panel refers to as ‘feasible enabled capacity. Feasible enabled residential capacity means the total quantum of development that appears commercially feasible to supply, given the opportunities enabled by the recommended Unitary Plan, current costs to undertake development, and current prices for dwellings. The modelling of this capacity at this stage is not capable of identifying the likely timing of supply.

When you look at the PAUP in this regard there becomes a huge issue with it estimated to only be able to provide 213k dwellings, well short of the 400k needed. Through the changes they’ve made they estimate that the feasible enabled residential capacity has almost doubled, going from 213k to 422k. As you can also see, the biggest two changes have come from within existing residential areas and within centres and mixed use areas.

Recomended UP - Change in Feasible Capacity

The impact of the changes can be seen on the two maps below showing what was feasible under the PAUP on the left and what is feasible under these recommendations. As you can clearly see there is a lot more development that has been enabled – although it seems more still could have been done on the isthmus.

Recomended UP - PAUP vs Recomended Feasible Capacity

You may recall the Auckland Plan development strategy had a 70:40 split, up to 60-70% of development occurring within the existing urban area and 30-40% occurring on greenfield land. Yet thanks to council getting scared of the noisy groups opposing housing, the PAUP as effectively flipped those numbers around. While the IHP have recommended that spatial distribution be deleted, the changes above have helped to return the Unitary Plan to that level. This is shown below.

Recomended UP - Distribution of Capacity

The table below is based on some early analysis by council on the recommendations showing how much land was included in PAUP vs what is in the recommendation. As you can see there are some quite significant differences.

Recomended UP - Zoning ha Changes

As mentioned earlier, the Rural Urban Boundary (RUB) stays but it has been changed significantly, both in scale and how it will work in future. One key change is the IHP say the exact location of it should be decided at the district plan level. That means it could be changed in the future through private plan changes. That makes it a soft boundary and as I mentioned yesterday, could make it more difficult to plan big infrastructure projects.

Lastly just to quickly touch on one of the points I raised yesterday that I haven’t already covered, parking rules. The IHP have retained parking maximums in the City Centre Zone while the other Centre zones, the Business, Mixed Use and THAB zones and the Centre Fringe Office Control area have neither minimums or maximums with the main exception being for retail and commercial services activities where a minimum of 1 space per 30m² has been recommended. This is a big win for the major retailers who wanted minimums for anti-competitive reasons, making it harder for small businesses particularly in town centres to afford to compete. Outside of the zones mentioned previously, all other areas will have minimums applied.

In another post I’ll look at comparing the maps of the proposed plan and what has now been recommended.

The council are due to start formally debating the plan on August 10 and have that wrapped up on August 18 so the plan can be formalised. If they don’t agree with an IHP recommendation they can’t just reject it and instead have to provide an alternative solution and produce a cost benefit ratio for it. Overall the recommendations represent a vast improvement to the Unitary Plan and while not everything is what we hoped for, there was always going to need to be some compromises. After dragging on for about four years now, the finish line is in sight and it seems to me that councillors should just be encouraged to pass the plan as it is.

Unitary Plan: what to look out for

So today’s the big day that the independent hearings panel’s recommendations on the Unitary Plan get unveiled. It’s not exaggerating to say that this is a hugely important document as the rules and controls included in the plan determine what is allowed to be built and where.

The Unitary Plan is a monumentally huge plan, running over 9000 pages apparently and with very complicated overlapping controls relating to zones, overlays, precincts, development controls, urban boundaries and so on. However, 95% of the plan is probably of little interest to most people and won’t be what the big debates over the next few weeks will centre on. So let’s run through what I think are the big issues and what you should look out for when the plan is released at 1:30 this afternoon. In a rough order of importance:

  • Zoning in the central isthmus and around major public transport corridors
  • The location and nature of the Rural Urban Boundary (RUB)
  • Height limits in centres
  • Parking rules
  • Residential development controls

Let’s go through each in turn.

Zoning in the central isthmus

The biggest disappointment with the Proposed Unitary Plan was how little upzoning occurred in the parts of Auckland that have the best transport options and are market attractive to higher density development – namely the central isthmus. This was a direct contradiction from the Auckland Plan’s development strategy, which highlighted the isthmus as a key location for growth:

ap-paup

Since the Unitary Plan was notified in 2013 the importance of upzoning this area has increased further, with Auckland Transport announcing plans to build light-rail along some of the key arterial roads to ease bus congestion in the city. Ensuring the planning rules in this part of Auckland enable a lot of redevelopment into terraced houses, townhouses and apartments is crucial to the question of whether light-rail should go ahead or not.

The ATAP interim report highlighted a shortfall of 50,000 dwellings on the isthmus in the Unitary Plan compared to the Auckland Plan so we’re not talking about a little tinkering here and there with the upzoning. We’re talking significant change from what was in the proposed plan.

My best guess is that the IHP will recommend more upzoning in the isthmus, but probably not enough to close the 50,000 dwelling shortfall. It will then be really interesting to see how the politicians respond and whether the councillors representing this part of Auckland actually want to do something bold to improve housing affordability or not.

The Rural Urban Boundary

A lot of discussion about how the Unitary Plan can help bring down houses prices has focused on the Rural Urban Boundary (RUB) and the supply of greenfield land. As I explained back in May, much of this talk misunderstands what the RUB is – which is a long-term line that separates land likely to be urbanised at some point over the next 30 years compared to land intended to stay rural in the long-term. Changing the location of the RUB isn’t the main way to make more greenfield development happen: there’s already an area of about two Hamilton’s of greenfield land inside the RUB and the key is being able to service it with (expensive) infrastructure. But the chatter continues and it will be interesting to see both where the IHP recommends the RUB goes, as well as whether it’s a “hard RUB” (only able to be changed by the Council, giving greater certainty to infrastructure providers about where development might happen and allowing them to invest with confidence) or a “soft RUB” (able to be changed by anyone through a private plan change, removing certainty for infrastructure providers and making their investments much more risky).

I’m not very optimistic about this one, as it seems likely the IHP will recommend a soft RUB, which could actually delay greenfield development by making infrastructure investment far more difficult to plan and a much riskier proposition.

Height Limits in Centres

The Unitary Plan has a pretty sophisticated hierarchy of centres, from the City Centre right down to the tiniest little neighbourhood centre. Generally these areas are the focus for a lot of future growth and a real mix of uses: allowing retail, offices and apartments to be built. The real test will be in relation to the height limits of these centres and whether they allow enough redevelopment potential for it to be viable and for a good chunk of Auckland’s future growth to be located in areas where people can do many of their daily tasks without having to travel far at all.

I think there might be some improvements in the IHP’s recommendations but this will be strongly linked to where the panel land on the volcanic viewshafts as it is these view protection restrictions that limit heights in many of the most important centres for redevelopment (Newton, Newmarket, Mt Eden etc.)

Parking Rules

We’ve been going on about the evils of minimum parking requirements for years and the Unitary Plan takes some good steps towards eliminating or lowering these stupid rules. The council’s closing statement to the hearing on parking suggested the main area of contention was whether minimums should apply in major centres, with some major retailers arguing for them for anti-competitive reasons because they were worried that people visiting the area would park in their carparks. Importantly, the council’s position on residential parking minimums shifted from the proposed plan so that nowhere will more than a single space be required per dwelling (and in a lot of zones, no parking at all will be required).

I’m pretty confident of a good outcome here and a major step forward in reducing the evils of parking minimums. There’s always a chance the IHP might have read Donald Shoup and get rid of parking controls altogether.

Residential Development Controls

Before the Unitary Plan was notified in 2013 this is where most of the controversy was focused: on the detailed rules and regulations that governed height limits, density controls, setback requirements and many other restrictions in the residential zones. However, in the hearings this became less of an issue as most of the major submitters came to an agreement with the council to relax density controls and instead focus on controls that affect the building envelope (height, site coverage etc.) In general this is a step in the right direction, as it is density controls (how many square metres of land per unit) which really undermine the provision of affordable housing as they force larger house sizes to maximise profitability.

Without reading through the screeds of detail it looks like a reasonably good outcome is likely here. However, this section really just lays out the rules relating to each zone: how the zones are distributed is a whole different question and will inevitably be the focus of so much discussion going forward.

Is a “lack of land supply” the Council’s fault?

Over the weekend Bill English was interviewed on “The Nation” about the budget and how it contained very little to respond to Auckland’s housing crisis. The Minister seemed very keen shift housing discussion away from the budget, instead laying the blame on the Council (well one that hasn’t existed for 6 years).

Bill English - The Nation May-16

Yes, but we don’t make the decisions, Lisa. Auckland City Council make the decisions. Even the government can’t build a house in Auckland unless Auckland City Council frees up the land, provides the subdivision consent, processes all the consents, provides the building consent and allows the house to be occupied…

…This kind of takes us back to where I started here — the people in the cars, the first-home buyers who are locked out of the Auckland market, Auckland infrastructure. People will look at this and think that you are effectively asking those people to hold tight for at least another year so that you can afford to give tax cuts.

No, that’s not the case. For instance, for the cases that have been in the media around living in the cars, a lot of those are a bit more complex than people might realise. But in any case, we have more money than we can spend on places, on houses for people in serious housing need in Auckland. The problem isn’t money; there’s enough of that. The problem is getting enough houses. Even though Auckland City is actually completing 40 houses every working day, it’s still not enough. And that’s why in the next few months we’ve got to work hard with the Auckland City Council to get more houses, because the government can’t just magic up houses; they have to be built by real people on real land. And that’s controlled by the Auckland City Council…

…Okay, well, just let’s look at some of those figures. I mean, experts can’t agree exactly, but they think that we’re down about between 20,000 and 50,000 houses in Auckland — we’re short of those — and that we need to build about 13,000 a year to play catch-up. We’re not building 13,000 a year, so the supply must be getting worse.

Well, and that’s in the hands of the Auckland City Council, who are the people with the legal and community responsibility to get more land available so that more houses can be built faster. We’ve been through this in Christchurch. You can ramp up the construction workforce. You can change the planning rules. In Christchurch, house prices are flat to slightly falling, despite the fact that two or three years ago there was very substantial demand. And I might say the same kind of stories about it. Now, there was a lot of tension at the time in Christchurch as the system cranked up supply to meet the strong demand.

The thing is you point the finger at the council there, but the council has been very clear about the fact it needs help with infrastructure. it says it needs 3 billion in the next 10 years for infrastructure. Where do you think that money’s coming from? Because the council’s nudging its debt ceiling. It can’t rate people off their properties. So where is the money coming from?

Well, fundamentally, that’s Auckland’s issue to deal with. We are certainly contributing. I mean, right now we’re in intensive negotiation for a contribution of over $1 billion from the taxpayer to an Auckland City Council transport project called the Central Rail Link. Now, in the normal course of events, they would pay for that. We’re negotiating where taxpayers will pay for that. That’s a significant reduction in the burden on the council, and it allows them to pay for other infrastructure.

Minister, isn’t it central government’s responsibility to assist with that infrastructure?

No, fundamentally it isn’t. It is the council’s responsibility. That’s the deal. They get to decide on how their city is planned, and they get to pay for the development. And for a lot of the people living outside Auckland and inside Auckland, there are real benefits from growth. And part of the puzzle here is that as more people turn up in Auckland and as incomes rise, growth is good. The council benefits from that, and so do ratepayers. And so they’ve just got to work out a better alignment between the funding and the growth.

A lot of blame laid on the Council (and also a weird interpretation of what’s happening with the City Rail Link as usually government has paid for 100% of rail infrastructure projects, it’s actually odd that the Council is paying around 50%, but that’s a whole different debate!)

This “blame the Council” game is also popular with a number of supposedly informed commentators:


But is this a fair criticism? Is the Council holding back land supply and slowing down the construction of desperately needed new housing? This is worth looking at a bit further.

One of the reasons the government amalgamated the eight previous and often bickering councils that governed Auckland and set the newly formed single council the task of coming up with a 30 year vision for Auckland (The Auckland Plan) and bringing together all of various plans and civic functions of Auckland.

Where the Unitary Plan provided the vision, the main tool at the Council’s disposal to enable or restrict land supply is through the Proposed Auckland Unitary Plan. Compared to the old plans that governed development and use of land, the Unitary Plan enables around 11,000 hectares of additional “Future Urban zoned” land to be developed. At a broad 60/40 split between growth inside and outside the old urban limits, and at a high population growth rate, this is enough land for around 30 years of greenfield land. As I explained in this recent post, it is a really really big amount of land. This is not the plans of the previous councils and addressing issues like land supply was exactly why the government amalgamated the council in the first place.

So the Council has certainly outlined its intention to enable a lot more greenfield development to occur in the future. In a basic sense, the amount of “land supply” has gone up a lot. Let’s leave aside the question of whether this is enough “Future Urban” land and focus for now on the criticism that the Council has been far too slow to increase land supply. There’s actually a decent amount of evidence to show huge hurdles have been cleared to speed this process up. For example:

  • Government made changes to the RMA to allow the Unitary Plan hearings to be fast-tracked in at least half the time the process would normally take – although it’s worth noting that the Council originally requested that the plan would be granted immediate effect upon notification and which the government rejected.
  • Special Housing Areas were established that essentially brought forward the Unitary Plan (in its proposed version) and created a fast-tracked consenting process

In some cases Special Housing Areas were rejected by the Council, which could be seen as a way of slowing down land supply. However, in the main these occurred because of transport problems on the State Highway network, which is owned and operated by the Government through NZTA.

Of course the Council is not blameless when it comes to decisions it has made to increase housing supply and improve affordability. In February this year the Council made a completely stupid decision to withdraw its evidence from rezoning hearings because a majority of the councillors were worried about three storey buildings in suburban areas, areas with existing infrastructure where new development could happen tomorrow if the planning rules allowed it. As expected that proved completely pointless as other submitters such as Housing NZ were still allowed to use the Council’s evidence.

Overall it’s hard to see what more the Council could have done over the past few years to speed up the supply of greenfield land. The fact is that developing this land takes a long time – not just to go through the RMA processes but also to get that land serviced with infrastructure and ready to build. Even with all the money in the world, a major wastewater pipe or new road takes a number of years to build and greenfield growth often can’t occur without it (no point building new houses if the taps don’t work and the toilet doesn’t flush). It’s time that politicians and supposedly informed commentators realised this.

The strange side effects of parking subsidies

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:

IHP jetski

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.

Census journey to work Auckland mode share chart

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?

Removing the RUB won’t necessarily work as planned

Yesterday Phil Twyford announced that it would be Labour’s policy to abolish Auckland’s Rural Urban Boundary (RUB), as part of a policy to improve housing affordability.

Labour wants the Government to abolish Auckland’s city limits to get people out of cars, caravans, garages and tents.

Labour housing spokesman Phil Twyford said the urban growth boundary had to go because it has fuelled the housing crisis and people would not be forced into bad circumstances if the Government acted.

“The Government should rule out any possibility of an urban growth boundary in Auckland Council’s Unitary Plan if it is serious about fixing the housing crisis,” Twyford said.

“Over 25 years the urban growth boundary hasn’t prevented sprawl, but it has helped drive land and housing costs through the roof. It has contributed to a housing crisis that has allowed speculators to feast off the misery of Generation Rent, and forced thousands of families to live in garages and campgrounds,” Twyford said.

“Labour’s plan will free up the restrictive land use rules that stop the city growing up and out. It will stop land prices skyrocketing, and put the kibosh on landbankers and speculators.”

There’s no doubt Auckland has a housing crisis at the moment, with house prices increasingly dramatically over the past five years. Rents rose more slowly but the impacts for some families are still alarming. There’s also no doubt that planning restrictions have played their part in creating this crisis – by making it too difficult to build the required number of houses that Auckland has needed.

Addressing regional scale issues like housing and transport was one of the key reasons Auckland Council was amalgamated in the first place and why one of its first tasks was to rewrite the city’s planning rulebook through the Unitary Plan.

But will abolishing the Rural Urban Boundary help? To answer that question it’s important to understand what the boundary is, and what it isn’t. As its name suggests, the RUB is the boundary between land where urbanisation is anticipated and provided for over the next 30 years and land which is intended to remain rural over that time. If you take a look at the map below, it is the black dashed line that separates the yellow-coloured “future urban” zoned land from the brown rural zones:

rub

It’s also important to recognise that the RUB doesn’t exist yet as it’s part of the Unitary Plan being decided by the Independent Hearings Panel. It’s quite a different tool to the old metropolitan urban limit (MUL) that was typically set up against the edge of the existing urban area and made any urban expansion a significant challenge.

The RUB, by contrast, isn’t designed as a permanent boundary. It provides for a substantial amount of greenfield growth – enough to meet 40% of Auckland’s growth over the next 30 years.  The scale of the areas in yellow is highlighted in an Auckland Transport video that looks at the future transport requirements to enable their urbanisation:

The main argument against the RUB is that it creates a scarcity of land where urbanisation is possible, which drives up the price of that land. Over time the high price of land translates into higher house prices and reduced affordability. Fair enough. But what can we actually do about that?

As Auckland Transport’s consultation video above shows, the RUB isn’t simply a line on a map: it’s a plan to provide publicly-funded infrastructure to new urban areas. If you wanted to expand the yellow future urban zoned areas on the map, you’d also have to find the money for additional infrastructure.

In other words, greenfield land is in scarce supply because it’s currently farmland that requires roads, pipes, train stations, parks, schools, hospitals and a myriad of other infrastructure investment to take place before development can actually happen. Making a dent in the housing shortfall by enabling more urban expansion to occur is therefore entirely about speeding up infrastructure, rather than whether or not there is a line on a map.

As we’ve talked about before, the costs of supplying bulk infrastructure to greenfield areas are large. It is time-consuming to investigate, design, consent and build these projects. There’s no quick and cheap way to make a whole heap more greenfield land “development ready”.

In fact, removing the RUB could easily disrupt existing infrastructure plans and slow down overall development. If you take a look at the work that’s been done on transport for future urban growth, the networks are optimised around the location of the RUB. Scattering small developments around the region could force AT and NZTA to react to piecemeal development rather than taking a more strategic approach to infrastructure development.

I suspect that the first thing to get cut due to funding pressure would be the city’s rapid transit plans, which have already been delayed long enough. This would have the perverse effect of putting a damper on the 60-70% of development that’s intended to occur within the existing urban area.

TFUG - Draft Preferred Plan - Northwest

In short, abolishing the RUB isn’t a straightforward proposition. It’s not actually obvious that you could abolish it, as infrastructure plans would simply turn into a de facto RUB.

Ironically, Twyford acknowledges as much in his press release, where he says:

There is a smarter way to manage growth on the city fringes by properly integrating land use with transport and infrastructure planning. There should be more intensive spatial planning of Auckland’s growth areas in the north, north-west and south. Land of special value can be set aside, like the northern coastal strip or Pukekohe’s horticulture soils. Corridors should be acquired and future networks mapped for transport and other infrastructure

Let’s unpack this. First, he says that he’d like to see “intensive spatial planning of Auckland’s growth areas” with “future networks mapped for transport and other infrastructure”. That sounds a lot like the process that Auckland Council and Auckland Transport are currently undergoing for the yellow-coloured future urban land.

Second, he says that “land of special value can be set aside, like the northern coastal strip or Pukekohe’s horticulture soils”. That sounds a lot like some sort of boundary between urban land and non-urban land, which is exactly what the RUB is intended to be. Basically, if you read beyond the headline soundbite, Twyford’s policy starts to sound a lot like Auckland Council’s current policy, just under a different name.

That shouldn’t be a surprise. After all, the current government has been looking at this issue for half a decade now, and they’re pretty critical of restrictions on land supply. If it was a simple matter to abolish the RUB, they probably would have done it by now.

So what could we do differently?

There aren’t necessarily any “magic bullet” solutions to land supply. Greenfield land needs infrastructure to be useful, and infrastructure is expensive and slow to build. Shifting some of those costs onto developers, either through development contributions, targeted rates, or design rules that reduce the need for hard infrastructure (e.g. stormwater pipes) can allow more of it to happen. But the problem is that the developers push back, which limits the gains that can be had in this area.

Consequently, other policies are also needed to enable housing supply. That means relaxing or removing restrictions on building height and density within the urban area. While Tywford and Labour have also said they support this approach, they devoted only a single sentence to it:

Freeing up growth on the fringes needs to go hand in hand with allowing more density – so people can build flats and apartments in parts of the city where people want to live, particularly around town centres and transport routes.

That’s a great aspiration, but to be useful it needs to be backed up by specific policies to limit the use of height limits and other density-killing rules like minimum parking requirements. For example, would Labour lift building height limits throughout the urban area? If so, how high?

Lifting building height limits and density controls would have some immediate benefits for housing supply. For one thing, the transport networks and water pipes have mostly already been built, meaning that there’s no lag time waiting for the infrastructure providers. For another, it would make the housing market a hell of a lot more competitive by opening up lots of new development opportunities in the places that people most want to be.

This would also have the benefit of allowing people to avoid the high transport costs associated with sprawling development patterns. Even given Auckland’s dispersed employment patterns, the further out from the centre people live, the further they need to travel to work. This map from a Ministry of Transport analysis of the 2013 census data which shows how far people travel to get to work based on where they live:

This trend is repeated around the world, with more spread out cities requiring a greater amount of travel and, consequently, a higher proportion of income being spent on transport. In some cases this can end up outweighing any savings in housing costs. If we’re going to lift restrictions on housing construction, it makes sense to prioritise lifting the ones that also pose a barrier to efficient travel patterns.

Locked Out

6:45pm tonight at the AMI Netball Centre Northcote there is a housing affordability debate with some interesting speakers, head along:

Locked-Out-twitter-image

 

Housing Issues Hotting Up

Housing issues in Auckland have become a fairly constant news piece in recent years and the affordability issue has become louder and louder. And it’s not just people wanting to buy a house either but also for renters as rental prices rise too, something that is particularly tough for those on low incomes.

We know that one of the key tools to helping unlock development in Auckland is of course the Unitary Plan – depending on what final form it takes. It reached a new milestone last Friday as the Independent Hearings Panel held its final hearing on it. The amount of work the panel has undertaken has been significant. There were 9443 submissions and 3951 further submissions. The hearings began in September 2014 and there have been 242 days of hearings and there were more than 10,000 pieces of evidence.

Between now and July they’ll be working on their final recommendations to the plan which will be voted on by the council. With elections coming up it’s anyone’s guess as to which way councillors will vote. One thing that does seem clear though is that pressure is increasing on them from the government, in particular Housing Minister Nick Smith.

On the weekend he told by both TVNZ’s Q&A and Newshub’s The Nation that he will be imminently releasing a National Policy Statement (NPS) under the RMA which will put pressure on the growing councils like Auckland to open up land.

“Next month I will be producing a national policy directive under the [Resource Management Act] that will put far tougher requirements on growing councils to ensure they are freeing up long-term the land that is required so that we don’t get into the sort of juggernaut that has been at the core of the unaffordable housing problems in Auckland.”

At first blush that sounds similar to the “throw open the gates” type statements he made when he was made housing minister however since that time he seems to have moderated some of his comments and gained a better understanding of some of the finer issues such as density restrictions that prevent intensification. As such I am hopeful that the NPS he’s developing will also address these constraints too.

I also hope the government consider the impacts on infrastructure as part of any policy. Just throwing open the land might sound like the immediate solution but that land also needs infrastructure to support it and that isn’t cheap. The Council, Auckland Transport and NZTA have been working on the Transport for Future Urban Growth which is planning for about 110,000 dwellings on greenfield land and just the major infrastructure is likely to cost around $8 billion.

Yesterday Smith also became a bit more personal calling Councillor Mike Lee a NIMBY, a hypocrite and part of the problem for opposing intensification in Herne Bay.

“Mike Lee is guilty of Nimbyism,” said Dr Smith.

The Government has designated the site of the old Gables pub a “special housing area”. That allows for fast-tracked development, with between four to seven of the apartments “affordable housing”. It’s about getting more housing into inner-Auckland’s “urban intensification”.

But neighbours don’t like it, and, local councillor Mr Lee is on their side. Mr Lee wrote earlier this year, saying the development was “overriding the civil rights of neighbouring property owners”.

Dr Smith responded, saying he found Mr Lee’s position “ironic”, “odd” and “part of the problem”.

“We cannot have that sort of Nimbyism. That’s at the core of where Auckland has gone wrong. That’s why I’ve politely written back to Mr Lee and said ‘actually, you are being a hypocrite’.”

Nick Smith on Housing

Unfortunately, in many ways Nick Smith is right, over the last few years Mike Lee has fairly consistently voted against rules that would enable more housing, especially in the in inner suburbs.

John Key is also threatening the council and at his weekly press conference yesterday said:

The Prime Minister also warned that the Government would not be able to “sit back” if Auckland councillors did not deliver enough houses in the city.

Asked to elaborate, Mr Key said ministers would make announcements in this area soon.

Could the government ultimately force the Unitary Plan through if the councillors don’t approve it or worse could they install commissioners?

While I don’t agree with everything they’ve said, one positive is that the government have made some better noises around some housing issues. In saying that they also remain very quick to blame the council for the current issues when they need to take a share of the blame too. The reality is the Unitary Plan process is one the government created and more so, some of the ideas like an NPS could have been pushed years ago. Other tools that they’ve implemented such as the Special Housing Areas have resulted in at least some developers using it as a tool for to increase the value of their land-banking.

The bad news is that even if the government and council’s all do their bits well, our housing issues are something that could take decades to resolve. We’ll now have to await with interest to see what comes out of the budget and out of the NPS the government are preparing.

Unitary Plan Fantasies

Introduction

In this post I discuss two related questions that concern common “fantasies” about the Unitary Plan, specifically:

  • Question #1: To what degree has Auckland’s density changed during the last few decades?
  • Question #2: To what degree does the balance of brownfields/greenfields development in the Unitary Plan differ from the past?

We might be able to agree on answers to these two questions. Why? Well, they are positive questions, insofar as they refer to attributes, i.e. density and brownfields/greenfields development, which are able to be subject to empirical measurement and testing.

Ideally people would agree on answers to important positive questions before moving onto normative questions, because the latter are not empirically testable. An example of a normative question would be: “How much weight should we place on the preferences of existing homeowners versus potential homeowners? I hope the difference is obvious; normative questions tend to be gnarlier.

It’s often helpful to separate positive from normative statements. People can often vehemently disagree on the answers to normative questions, while still agreeing on the answers to positive questions. Hence, in this post I will try to provide clear answers to two important positive questions that seem to be frequently misunderstood by those who oppose the Unitary Plan. Rest assured that I hope to tease out some of the important normative questions in more detail in a subsequent post.

Question #1: To what degree has Auckland’s density changed during the last few decades?

The answer to this question is simple: In the last 10-15 years the population density of Auckland has increased. In this working paper, Peter quantifies the density for various New Zealand cities, which are summarised in the following table. We see that Auckland’s population-weighted density (i.e. the density at which the average resident lives) has increased by around one-third (33%) in just over a decade.

As Peter discusses in this post, increased density is consistent with other empirical data. When we look at population growth in Auckland, we find that the population of central areas, especially the city centre, is growing faster than other places in the region. Waitemata (which covers most of what we refer to as the “Isthmus”) stands head and shoulders above the rest in terms of population growth, both in total and relative (%) terms, as shown below.

The increase in density observed in central areas doesn’t seem to be caused by regulations on urban expansion. Instead, Auckland seems to have grown denser primarily because there is increasing demand from people to live and work centrally, i.e. as a result of people’s preferences. Research by Arthur Grimes, for example, has found that Auckland’s central areas have become much more valuable relative to less central areas, as illustrated in the figure below.

This change is significant, and is mirrored in cities elsewhere, such as Amsterdam (NB: Amsterdam has always controlled urban expansion, providing further evidence to suggest that controls on urban expansion are not behind changes in the relative values attached to centrality). Increasing density in Auckland are also consistent with the experience in Sydney and Melbourne, as illustrated in the figure below (NB This figure is taken, incidentally, from the excellent ChartingTransport website). Here we see that density in both Sydney and Melbourne increased by a similar % to that observed in Auckland. 

So from where I’m sitting the answer to the first question is fairly clear: Over the last 10-15 years or so Auckland has become a much denser place, and it’s become denser because more people and firms want to locate in central areas. As far as I know the sky hasn’t fallen on our heads. Indeed, from what I can tell Auckland has been doing relatively well of late. 

In this context, the imposition of regulations preventing intensification would seem to have the following impacts:

  1. Reduced development and higher property prices;
  2. Fewer people and jobs being located in central areas;
  3. Increased urban expansion, with associated infrastructure, congestion, and energy costs; and
  4. Transfer of wealth from those who have less to those who have more (further reading).

The likes of Richard Burton, Dushko Bogunovich, and David Seymour may argue that the costs of regulations preventing intensification are outweighed by the benefits, e.g. maintaining the “character” of inner-city suburbs.

I know of no quantitative evidence to show this is the case. On this basis I think it’ fair to say that their claims are unsubstantiated, at least in quantitative sense. I note that recent changes to the RMA (passed, incidentally, with the support of the ACT Party) places a higher bar on the economic evidence needed to support restrictions on development. In the absence of such evidence, and given the large body of quantitative evidence that demonstrates the costs of regulations that prevent intensification, arguments against intensification would seem to be rather flimsy. I can only hope that the IHP agrees.

Question #2: To what degree does the balance of brownfields/greenfields development in the Unitary Plan differ from the past?

The answer to this question is hinted to in the previous discussion: In the last two decades most development has happened within the existing urban area, i.e. brownfields. More specifically, development has been split 71% and 29% between brownfields/greenfields respectively. Data supporting this analysis is summarised in the table below, which is extracted from the Development Strategy published by the Auckland Council (available here).

The historical percentage of brownfields/greenfields development is similar to that enabled by the Unitary Plan (60-70% and 30-40% for brownfields and greenfields respectively). At this point I think it’s worth highlighting a rather extraordinary exchange from Peter’s recent post on the linear city (source).

Capture2

To explain:

  • “Brian” asks Duskho Bogunovich (who works for Unitec and has publicly criticized many aspects of the Unitary Plan) what proportion of Auckland’s historical growth has been accommodated within the urban area (“brownfields”) and what proportion has been outside (“greenfields”); and
  • Duskho replies with “I don’t know” but then suggests a ratio of 1 part brownfields to 5-10 parts greenfields. Converting this into percentages would imply that Dushko believes 9-17% of historical development has been brownfields, with the balance in greenfields.

Dushko’s numbers are at odds with the data presented above. Indeed the data flips his percentages around completely. Now, in Dushko’s defense this particular question asked about the last *30* years whereas the data presented above goes back only *20* years. On the other hand I can’t see this ratio changing too dramatically though even if we went back one more decade.

The key takeaway message from this exchange is that 1) Dushko doesn’t know the actual brownfields/greenfields ratio and 2) the data which is available suggests a brownfields/greenfields ratio that is at odds with his intuition. I personally would expect that those who oppose the Unitary Plan, such as Dushko, would spend some time familiarizing themselves with the empirical evidence, especially when such evidence is crucial to the argument they are themselves advancing.

Keep this issue in mind when you consider another one of Dushko’s comments (source):

But forcing massive intensification inside Auckland cannot fix the housing crisis anyway … The city must grow both ways – up and out – to allow the land and housing market work properly. And getting the ‘up/out’ ratio right is crucial … this ratio for Auckland is probably 1:2. That is, 1/3 should be growth by intensification, and 2/3 by growing out (new suburbs; satellite towns; redistribution to the outer region – Waikato and Northland). Sadly, the council, in its ‘compact city’ ideological zeal, managed to get this ratio exactly the opposite – 2:1. The ‘70% fantasy’. This is PAUP’s fatal flaw. That’s why the Plan is a dud. And will never be implementable. Unless we use the North Korean approach.

In Dushko’s world, Council via the Unitary Plan is “forcing massive intensification” that is at odds with the “right ratio” for intensification. Dushko’s sees evidence of “ideological zeal” and “fantasy”, ultimately concluding that the PAUP is “fatally flawed” and a “dud”, which will not be able to be implemented unless we resort to North Korean style policies. Hyperbole much?

Especially when one considers the empirical data. Put simply, the Unitary Plan simply is proposing to continue long-established trends in Auckland’s urban development, which have resulted in steadily increasing density with a 70%/30% brownfields/greenfields split.

People like Dushko might argue that we would be better off if changing these trends. I’d disagree but, hey, let’s have that debate. It’s fair game.

What doesn’t seem fair game is for people like Dushko to criticize Council’s Unitary Plan and suggest it represents a “radical” change from the past, when in most respects it’s business-as-usual. Perhaps the only way the Unitary Plan can be described as “radical” is that it provides for only 80,000 new homes to be developed over coming decades, when official population projections suggest we will need approximately 400,000.

Conclusions

I started this post by posing two “positive” questions, to which I have since suggested the following answers:

  • Question #1: To what degree has Auckland’s density changed during the last few decades? Auckland has become 33% denser since 2001. This change appears to be driven more by the growing desire of people and firms to locate centrally, rather than regulatory controls on urban expansion. The increase in density observed in Auckland, and the increasing value placed on central locations, is consistent with trends observed in cities overseas, such as Sydney, Melbourne, and Amsterdam; and
  • Question #2: To what degree does the balance of brownfields/greenfields development in the Unitary Plan differ from the past? The last two decades of Auckland’s developent has seen a 71% to 29% split between brownfields/greenfields development respectively. This data seems to be at odds with the views of many people that oppose the Unitary Plan, who argue that Council is forcing “intensification” and a “compact city” on Aucklanders.

What do you think is fact or fantasy when it comes to the Unitary Plan? And on that note, what is your fantasy for Auckland. In 20 years time would you prefer to be 1) more dense; 2) less dense; or 3) about the same as now? Vote below.

Housing NZ’s Unitary Plan zoning

When the councillors voted to withdraw the councils Unitary Plan evidence three weeks ago, one of the arguments against doing so was that other parties – and Housing NZ in particular – were pushing for much greater density than what the council were proposing. It was said that the council should be involved and at the table to provide a more balanced viewpoint and councillor Alf Filipaina even highlighted the extent of intensification Housing NZ were calling for. While councillors had obviously seen or been briefed on the HNZ Submission, it wasn’t public, but that changed late last week and the level of changes they want in some areas is substantial. HNZ are important as they are the biggest land owner in Auckland with around 6.5% of all residential property.

Firstly, at a high level the images below show the level of change possible under the notified unitary plan, what was expected in the Auckland Plan and what is in the HNZ submission. What you can see is that under the notified plan there is almost no change to large swathes of Auckland and even where there is change, it is mostly in the some to moderate category. By comparison the HNZ submission is like the Notified version of has been put on steroids. They have also indicated that they’ll be calling the council’s expert witnesses for cross-examination to support their submission where needed.

PAUP - Notified vs HNZ submission PAUP - Notified vs HNZ submission - legend

There is also this version which shows how much the HNZ position has changed since their original submission.

Another way of showing the extend of change is the percentages of housing in each residential zone – this is based on housing stock identified in submissions. This is included in a presentation (55MB) to the Independent Hearings Panel (IHP) and is also broken down at a local board level – Rodney, Waiheke and Great Barrier boards are missing. As you can see in the areas where they’ve made submissions there is significantly less single house zoning and greater emphasis on the mixed housing zonings which allow for sections less than 500m². It’s interesting that even in this submission the Waitemata Local Board area remains as one of the areas with the highest levels of single house zoning.

PAUP - HNZ submission - zone changes - all

These figures are also backed up with map examples of some areas showing what was originally proposed in the notified plan, what was proposed in December in the now withdrawn changes, what it would be based on HNZ principles and what HNZ have actually submitted. Below are a few of the more dramatic examples, white is single house, cream is mixed house suburban, tan is mixed house urban and the strong yellow/gold is Terraced House and Apartment Buildings.

Grey Lynn/Westmere

You can see the HNZ plan would remove the single house zoning from the entire area.

PAUP - HNZ submission - Zones - Grey Lynn Notified

Grey Lynn/Westmere Notified Plan

PAUP - HNZ submission - Zones - Grey Lynn Jan Proposal

Grey Lynn/Westmere January Proposal

PAUP - HNZ submission - Zones - Grey Lynn HNZ

Grey Lynn/Westmere HNZ Submission

Pt Chevalier

Similar to Westmere you can see significant extension of the mixed housing Urban zoning and in addition also much greater use of the THAB zone around the town centre

PAUP - HNZ submission - Zones - PT Chev Notified

Pt Chev Notified Plan

PAUP - HNZ submission - Zones - PT Chev Jan Proposal

Pt Chev January Proposal

PAUP - HNZ submission - Zones - PT Chev HNZ

Pt Chev HNZ Submission

Mt Albert

In the notified Mt Albert map you can also see one reasons why the council proposed changes to the zonings. The notified version has many anomalies such as a single section with different zoning to all of its neighbours. This was tidied up in the now withdrawn proposal.

PAUP - HNZ submission - Zones - Mt Albert Notified

Mt Albert Notified Plan

PAUP - HNZ submission - Zones - Mt Albert Jan Proposal

Mt Albert January Proposal

PAUP - HNZ submission - Zones - Mt Albert HNZ

Mt Albert HNZ Submission

They don’t cover the entire city but there are many other examples shown in HNZs presentation who say the changes are enough to enable double the increase in capacity of the notified plan. It’s going to be interesting to see what comes out of the hearings and what the panel recommend. With the council out of the picture HNZ will have a much stronger chance of getting their desired changes though. In many ways what HNZ have suggested is much more in line with what the Unitary Plan should have been all along, perhaps creating a silver lining to decision of late February.

If a final plan more in line with what HNZ suggest ends up being recommended by the IHP it will be fascinating (probably quite frustrating) to see how groups like 2040 and the councillors who oppose the plan react.

While on the Unitary Plan there was also this piece on the recent debate by TV3s The Nation on Saturday. One of the most bizarre parts is where Auckland 2040 head Richard Burton claims the issue is all about young people trying to buy their first home as a villa in Ponsonby – I doubt many are trying that – and that instead suggests they’ll have to buy somewhere smaller or further out. Yet his organisation has been the one leading the fight to prevent smaller dwellings being built and further out in 2016 is quite different from what further out was when he was young.

 

Should council investment follow where growth occurs?

A couple of days ago Deputy Mayor Penny Hulse raised a point that I’ve suggested from time to time for years, that the council’s investment should match the areas experiencing the most growth. It was part of an article in which she also decried the argument used by some in the recent Unitary Plan debate that suburbs close to the city should not have any change as they are “aspirational suburbs”, something she calls distasteful.

“Not only is more money being spent in these suburbs closer to the CBD, there’s also an expectation that there is not going to be much growth in them,” Hulse says.

“And as someone who lives out west – that really strikes me as being fundamentally not right.”

Zoning along the main transport corridors and close to town centres should be equal “whether it’s Remuera or Glendowie or Glen Eden”, she says.

Hulse says the concept of “aspirational suburbs” has been a recurring theme over the past few months.

Residents of inner-city suburbs have espoused the view that their suburbs “should pretty much stay as they are because they are leafy and beautiful and that people out west and down south should simply accept that their suburbs aren’t as worthy of preservation”.

….

“And there’s a certain amount of prejudice creeping into this discussion, which I find distasteful.

“Their preference is that the west is probably of less importance, and to save some of the ‘lovely suburbs’ in their area, the west should just suck it up and grow more.

“Now if the south and the west were also going to accept the bulk of the expensive infrastructure investment, like light rail which is being promoted in places like Dominion Rd and through the Eden-Albert area, then maybe this would be a more equable discussion.”

It’s an interesting point and as mentioned above, one I’ve suggested before. Population growth across Auckland needs to be supported by a range of physical/social infrastructure and more services. Whether that be better public transport and bike lanes, improvements to our streets, water supply, parks, community centres or a range or other things, the growing population needs to be supported. And in an environment where there is a great desire to reduce rates or keep rises to a minimum that means we have to get better at prioritising what we invest in.

So let’s look at a few examples, below are the zoning maps in the Unitary Plan as it was when notified. If you had $400 million to spend would you do so on a single road to create an additional connection to a peninsula where almost no growth is allowed to occur or would you spend it the area/s that aren’t scared of change and as such have been zoned to allow a lot more people to live in them. In case you need a reminder the darker yellow/orange areas are Terraced House and Apartment zones while the dark peachy colour is the mixed housing urban zone. By comparison the Whangaparaoa Peninsula is almost exclusively a single house zone. That means unless someone is holding vacant sections, the look of the peninsula isn’t going to change much any time soon.

PAUP maps - West vs Whangapararoa

If local politicians knew there wouldn’t be any investment in improvements – or at least much more limited investment I wonder how that would change perceptions on the housing debate?

Of course as usual it would never quite be that simple. I suspect that whatever sense of entitlement that exists around housing will also exist around council investment too and there would be a lot of complaints about paying rates and “not getting anything in return”

There are also other complicating factors, such as where investment is needed due to the impact somewhere else. Auckland Transport’s plans for light rail are a good example of this. They have suggested up to four routes on the isthmus though some of the most hostile anti-change areas in Auckland. As I understand it, one of the key reasons for looking at light rail is the limited space within which buses are already struggling. In that case the primary beneficiary might be someone who lives on/near one of the four isthmus routes who would have better transport options but it may mean that city dwellers and visitors also have big benefits from reduced bus and car volume, noise, pollution, congestion etc.

All up it’s an interesting idea and one that might have merit in some form but it also isn’t likely to be practical for all situations. What do you think, should the focus as much investment as possible on the areas that allow for growth?