Book review: William Fischel, Zoning Rules! (2 of 2)

Over the holidays, I read William Fischel’s new book, Zoning Rules! It’s an important text for anybody seeking to understand why zoning (and urban planning in general) was invented and proliferated, and how they influence the shape of our cities and societies.

In the first part of my review, I examined Fischel’s analysis of the origins of zoning. In short, it was the homeowners who dunnit: their demands for restrictions on land use led local governments to put them in place. This is an inconvenient truth for critics of planning, as it suggests that there will be ongoing, bottom-up pressure to reverse any liberalisation of controls.

Fischel Zoning Rules cover

This week, I want to look at Fischel’s analysis of the economic efficiency of zoning. It’s well thought out and a bit counterintuitive.

Fischel focuses mainly on “exclusionary zoning”, which refers to policies like minimum lot sizes or minimum dwelling sizes. These policies implicitly require people to have a certain minimum amount of income or wealth to live in a suburb or neighbourhood, as land is often expensive.

A local example is Auckland’s single house zone, which requires a minimum lot size of 600m2. If you want to know why house prices in much of the isthmus start at upwards of $1 million, it’s because you’ve got to buy lots of expensive land to get a house there.

The single house zone in the notified Unitary Plan (Source: Aaron Schiff)

Exclusionary zoning is a hard case to defend, because it is often predicated on keeping “the wrong types of people” out of a place. This can have serious negative consequences across multiple geographic scales:

Zoning is not simply retarding the mobility of the poor from central city to suburbs. According to an important study by Peter Ganong and Daniel Shoag (2013), land use regulation is retarding the mobility of low-income people within the entire nation… [They] show that rising house prices have substantially reduced America’s intranational tradition of moving to opportunity. Like some other researchers, they have found that high housing prices repel potential workers from regions (Raven Saks 2008; Young, Varner, and Massey 2008) and that this pattern is strongly associated with land use regulation (Gyourko, Mayer, and Sinai 2013). [Zoning Rules!, pp. 164-165]

Notwithstanding these issues, Fischel lays out the argument in favour of exclusionary zoning. At least in the US, minimum lot sizes interact with local property taxes (and local expenditures) and with the large number of local governments in the US. In this context, they can play a role in managing fiscal burdens on local governments, albeit with an economic cost.

Fischel begins by observing that local property taxation in the US funds a range of services and local public goods. This includes some things that are locally-provided in NZ, such as transport, parks, and libraries, as well as many services that are provided by central government in NZ. For example, local property taxes provide the overwhelming majority of funding for primary and secondary schools in the US – education consumes around 36% of local government budgets. Police and fire departments are also funded locally, and some local governments run their own welfare systems, provide water and power, etc, etc.

Many of these things can be thought of as “common-pool” goods. If overconsumed, they become rivalrous – i.e. one person’s enjoyment of them reduces someone else’s ability to enjoy them. However, they’re difficult to exclude people from at the point of consumption. (Although certainly not impossible, as toll roads and congestion pricing schemes show.)

Wikipedia types of goods table

Different types of goods (Source: Wikipedia)

In this context, exclusionary zoning can be used to regulate access to common-pool resources – or, at least, to ensure that new entrants to the community have sufficient financial means to pay for their share. As the logic goes, if you have enough money to buy 600m2 of land, you also have enough money to pay sufficient property taxes to put your children through school. This can be described as “fiscal zoning”:

What the present chapter has argued is that the community itself – its elected and appointed officials, more or less responding to established residents – actively shapes and manages the property tax system in a way that would be difficult to do with any other tax base. Local land use regulation constrains the wholesale tax-avoidance behaviour that bedevils most other potential tax bases. Supplemented by revenues from impact fees and negotiated exactions from developers, fiscal zoning makes most development pay its own way. [Zoning Rules!, pp 160-161]

Of course, a key assumption that Fischel is making is that residents have choices about where to live, both at a national level and within individual urban regions. (Or, in economese, there is Tiebout competition between local governments.) This seems like a plausible assumption in the US, where there is a very large number of local governments – perhaps 85,000 in total. For example, here’s a map showing the fragmentation of local government in Massachusetts, which has 50% more inhabitants than New Zealand but roughly four times as many local governments.

In principle, choice between different local governments that offer different planning rules, taxes, and public services should ensure that everyone has a place to go – regardless of exclusionary policies in any one town. Consequently, Fischel takes a moderate view on the good or evil of individual policies. When commenting on Houston (which lacks comprehensive zoning) and Portland (which combines an urban growth boundary with policies to enable infill and intensification), he concludes that:

It is difficult to be too censorious about either city in a nation where most adults have some choice about where to live. [Zoning Rules!, p. 312]

That being said, Tiebout competition seems to work in principle but not in practice. As I discussed last week, bottom-up demands for restrictive planning rules are widely distributed – every community has its share of loud homeowners who will argue in favour of preventing change. Consequently, tight land use restrictions also seem to have proliferated widely. The exceptions, in the US, are places with relatively undemocratic local governments that do not have to respond to the demands of voters:

The South is different from both the North and the West. The South lacks the fragmented local governments that characterize the North, and it uses the voted initiative sparingly and hardly at all on land use matters [unlike the West]… If the demand for zoning is an expression of popular control, why has the South refrained from developing similar mechanisms by breaking up counties into more autonomous municipalities and enabling the voter initiative for land use measures? The answer is the legacy of slavery and racial segregation… [which] undermined the creation of local institutions… [Zoning Rules!, p. 315]

To conclude, it’s worth considering whether Fischel’s arguments about the efficiency of exclusionary zoning apply in New Zealand. In my view, they do not:

  1. Unlike the US, New Zealand has a small and decreasing number of local governments78 in total. Consolidation of borough councils in 1989 and the creation of the unitary Auckland Council in 2010 are likely to have reduced competition between local governments. This is in some respects positive, as it prevents small councils from simply assuming that their neighbours will house the people they don’t want, but it may also imply an increasing need to restrict local governments from pursuing exclusionary planning rules to prevent them from exercising their monopoly powers.
  2. Unlike the US, local governments have much more limited fiscal powers and responsibilities. Crucially, they do not have to fund schools, which are an important common pool resource that is funded locally in the US. As a result, there is no good reason to regulate to keep people out of individual school districts – I’m looking at you, Grammar Zone – as those schools are funded by everyone’s taxes, not just local property taxes.

Consequently, the case for exclusionary zoning to “keep the wrong people out” is likely to be especially weak in New Zealand. That doesn’t mean there’s no case for urban planning at all – after all, other types of rules are often aimed at managing real nuisances and spillovers associated with development.

What do you make of the arguments for and against exclusionary zoning?

Unitary Plan zone changes part 2

Last week the council released its preliminary position on zoning changes to for the Unitary Plan. The focus has predictably been on the changes to residential areas with those opposed to providing housing claiming high rises are about to sprout across the suburbs. Despite the noise the changes allowed are actually fairly minor with over 77% of Auckland still limited to two storeys and another 17% limited to three storeys.

Looking at the maps over the last week I’ve noticed a couple of other interesting changes.

The addition of Light Rail

Light rail was only announced by Auckland Transport at the beginning of the year and it seems the council have been quick to add it to the maps but interestingly not all of it. AT’s current light rail plans would over time see tracks laid down Sandringham Rd, Dominion Rd, Mt Eden Rd and Manukau Rd with the first two using Queen St and the latter two using Symonds St.

The new maps show light rail but most interestingly not all of it. Only the route down Dominion Rd then Denbigh Ave/Stoddard Rd (to a depot) is shown in full. In addition is a spur down New North Rd to Kingsland train Station but the rest of Sandringham Rd along with Mt Eden Rd and Manukau Rd are not shown. The Queen St and Dominion Rd to Stoddard Rd sections line up with the first two stages AT list on their website however the section to Kingsland is only included with the whole Sandringham Rd line.

My understanding is AT are looking at bringing forward the extension to Kingsland as a way of mitigating some the impact that will be caused by CRL construction works and full trains that may otherwise be leaving people behind.

I’m not overly worried about some lines being missing as due to them being in the road corridor I imagine it’s much easier to add light rail than it is other changes.

UP Light Rail Dom Rd

You may also notice the CRL doesn’t seem to show the connection from the east although again that may just be an error as we know it’s consented and AT’s train plans show it as essential.

A much bigger change from a land use perspective is a large extension of industrial land around Manukau. In the original plans the land to the west of SH20 and along SH20B is listed as Rural Production as shown below.

UP Manukau Zoning Old

In the new maps this land has been changed to light industry as you can see.

UP Manukau Zoning New

I wonder if this will foreshadow the NZTA claiming they suddenly need to spend hundreds of millions upgrading SH20B

There’s also an extension of Light industry to the north of Ascot Rd and west of Kirkbride Rd. In the original plan only the area bordering Kirkbride Rd was listed as Light Industry. The black dotted line is a revised Rural/Urban boundary.

UP Mangere Light Industry

In the North there is a lot more Future Urban land around Dairy Flat that has been zoned for as the two maps below show (Future Urban land is Yellow while the brown is Countryside Living.

Original Zoning

UP Dairy Flat Old

New Zoning

UP Dairy Flat New

Any other big changes you’ve noticed?

Unitary Plan zone changes

In recent weeks the Herald would have you believe that the council bogeymen are about to turn up on your doorstep in the middle of the night and force you to turn your house into a “highrise” three storey terraced house or apartment – note: even just using the terms three storey and high-rise together is utter stupidity. They’ve been ratcheting up the hysteria after they learned the council was looking at making changes to the zonings in the Proposed Auckland Unitary Plan (PAUP) currently being heard by a government appointed independent panel.

Before going any further it’s worthwhile giving a quick recap of what’s been happening.

  • In 2010 the government amalgamated the eight Auckland councils into one body. One of the rationales was to address inconsistencies in planning across the region. The new council was also required to come up with a 30-year vision for the region, which became known as the Auckland Plan and was adopted by the council in 2012.
  • As each of the former councils had their own rules around what could be built, and how, the next step was to turn that long-term vision into reality. To do that, the council needed to shift the city to a single RMA-compliant planning rulebook – a Unitary Plan. Traditionally with district plans councils propose them, get feedback and they then go through a hearings process, with some appeals potentially going to the Environment Court. In early 2013 the council took the step of releasing a draft version of their plan to get early feedback – they had over 21,000 pieces of feedback covering over 100,000 individual points. One of the reasons I think they got so much feedback was that the Herald drove a lot of hysteria around it – much like we’ve seen again recently – through deliberately deceitful and one-sided reporting. This also led to the creation of groups opposing it like Auckland 2040.
  • Following the consultation and analysis of the submissions on the draft plan, the Council made a number of changes before launching the formal PAUP in late 2013. Importantly the councillors who decided on what it should contain did so just a few months before the 2013 local body elections, and as such the original plan was watered down a bit following the hysteria that had been generated. The PAUP was then open to submissions which would be part of the formal hearings process. They received 9,400 submissions and 3,800 further submissions on the plan.
  • The government, through special legislation, allowed for a slight fast-tracking of the normal RMA process which otherwise could have dragged the process out to 7 or 8 years (based on other district planning changes). The process meant that the hearings panel would hear submissions and review the evidence before making recommendations on the plan. Any aspects the council agreed with would be implemented, while any they didn’t agree with would be subject to normal RMA process and appeals.

That brings us up to now. As part of the hearings process the council are allowed to make a final submission in response to the issues raised by the public. They say they are currently confirming their position on a range of topics and one of those is zoning. Taking into account a range of factors, the council is suggesting some changes to the zones in the plan that determine what can be built where. It’s these changes which have had the Herald and a number of councillors worked up. The factors include

  • the submissions and evidence
  • the interim guidance on some topics from the hearings panel – such as on viewshafts and heritage controls
  • further analysis of the zones i.e. fixing inconsistencies
  • amended infrastructure plans such as the addition of light rail on the isthmus

Now you may have seen reports a few days ago that the mayor quashed a motion by Councillor Dick Quax signed by eight other councillors calling for the public to be allowed to submit on the changes the council are making. It’s being presented by some as the council working to some sort of sneaky agenda, but as explained above is actually just the council effectively having their right of reply in the process. To allow submissions on that would not only go against the RMA process, but would only serve to delay the Unitary Plan process, increasing costs and leaving it longer before we have a coherent plan affecting the ability to improve the supply of housing.

So what is the council actually proposing? The reality is there aren’t that many changes overall, and even less when you look at what is allowed in each zone. For housing there are five different zones across Auckland which are briefly explained below.

  • Large Lot zone – As the name suggests this is very large sites, and is often only found near the edge of the city.
  • Single House zone (SH) – Again as the name suggests this is for a single house, up to two storeys, on a site that is a minimum of 600m²
  • Mixed Housing Suburban zone (MHS) – This allows for up to two-storey terraced houses on sites and given some of the other controls means they would tend to have a very similar bulk and scale to the single house zone. It also allows for the likes of granny flats on sites. I’d say a common use theme in these zones will be single houses on ~300m² sections
  • Mixed Housing Urban zone (MHU) – Very similar to above. The main change is that it allows for up to three storey terraced houses; however, importantly, it is is still subject to rules such as height in relation to boundary.
  • Terrace Housing and Apartment Buildings zone (THAB)- This represents a more significant shift than the zones above. Feedback from developers said it wasn’t viable to build four-storey apartments due to the step change in costs (lifts, fire systems etc. become needed), and as such the proposed THAB zones would be ineffectual. As a result, the council are upping the height limit in THAB zones from 4-7 storeys to 5-8 storeys.

All of the height limits are of course maximums, so someone could build a one-storey cottage if they wanted. The changes also don’t have an impact on other controls such as height in relation to boundary, site coverage etc.

A summary showing the impact of the changes to the zoning is shown below. As you can see there’s been roughly a 6% shift in housing now becoming Mixed Housing Urban while there’s a similar shift out of single house. While the numbers are similar, it’s not a case of shifting the Single House areas to MHU. As I understand, for most properties that do have change, it’s just a single step, e.g. some Single House areas have become MHS, and some MHS areas have become MHU.

PAUP zoning changes - Dec 15 2

So based on this around 77% of Auckland’s residential land will be capped at two storeys with another 17% capped at three storeys. That’s hardly turning the city into high-rise Hong Kong.

On to the maps themselves. The changes to the council’s submission won’t be finalised till next month, but they’ve decided to release them now so people can see them. Helpfully they’ve also included the original maps to be able to compare with. It’s worth noting that the new maps haven’t been loaded up to the council’s GIS viewer yet. The city has been split into 43 different areas to make it more manageable for people. I’ll only show a few examples for this post.

You can see the changes made in the ‘Preliminary Position’ maps as they have a blue or black border around them. If I’ve understood correctly, the black borders represent changes in relation to submissions or issues raised during the hearings. The blue borders are where no submission has been received but the council think the zoning needs to change to fix inconsistencies in the map.

Below are a couple of examples from areas where there has been strong opposition to providing a range of housing options.

Western Isthmus

This area was one of the most controversial for us, as despite its relative proximity to town and decent public transport, much of the area was locked up in the single house zone. You can see quite a bit of change along some of the corridors where light rail is planned, especially on Sandringham and Manukau Rds – by and large reflecting some of what’s there now. Another big change you can also see that most of the area to the South West of SH20 has gone from single house to MHS. In some cases I could also see some down-zoning from MHU to MHS – such as along Rosebank (not in this picture).

PAUP zoning changes - Dec 15 - Western Isthmus

Takapuna/Milford

You can see sprinklings of upzoning from SH to MHS or MHS to MHU but nothing significant. In some case the changes in zoning really just reflect some of the built form that’s there now.

PAUP zoning changes - Dec 15 - Takapuna-Millford

I’d urge you to go to the council’s website to have a better look at the maps (at the bottom)

As expected many of the changes seem sensible and nothing to be alarmed about, and the rants of the Herald and others seem to once again be completely misplaced. Rather than scaremonger around the height of buildings (which aren’t even high), it would be much better if the Herald could lead a conversation about how we ensure new buildings have good design that complements the area. A set of well designed three storey terraced houses could have less impact than a poorly designed two storey single house.

ProdCom calls for Submissions on Urban Planning

The Productivity Commission has put out a paper calling for submissions on Urban Planning, here. It’s a very wide ranging, going right back to first principles where they have discovered that:

Yet even among planners, there appears to be no agreed definition of “planning” or “urban planning”, and writers have struggled with whether a definition can be provided.

Despite this lack of theoretical certainty I think we all know urban planning when we see it, or perhaps more accurately its outcomes. Pleasingly the paper begins with a short history of Petone which is used to illustrate the accretive and accidental nature of city forming:

PETONE

 

  1. The changing nature of urban areas

    Urban areas are dynamic, complex places. Land uses and neighbourhoods can change dramatically in response to economic, technological and demographic forces.

    One example of this evolution comes from Easterly, Freschi and Pennings (2015), who explored how a single stretch of a New York City street changed over four centuries of development. Easterly, Freschi and Pennings concluded that it is “difficult for prescriptive planners to anticipate changes in comparative advantage, and it is easy for regulations to stifle creative destruction and to create misallocation.” (p. 1)

    The town of Petone in Lower Hutt illustrates the diversity of influences that shape urban areas. [Below] provides an outline of its history, although inevitably many important details and events are overlooked. The transition of Petone – from a Māori village, to the intended site of a major colonial settlement, to a working-class industrial area, a run-down town, at various times a retail destination, and a desirable residential neighbourhood – show how unpredictable the evolution of our urban areas can be.

Given this surely accurate observation, shouldn’t any attempts at controlling the form of our cities in fact shy away from control but instead aim for incentivisation? Won’t nudging the direction of individual impulses be likely to be more effective that prescriptive programmes? And much less likely to result in unwanted unintended consequences, like out of control dwelling inflation. After all it appears that even the most egregious of city ordinances are well meant, no matter how much damage they do either indirectly or to other aims. And city building is full of contradictory impulses; for example nothing allows more retention [if not preservation] of older building than economic stagnation, yet surely it is fair to say there are few if any councils that would consciously pursue policies of economic ruin in order to bolster their worthy desire to preserve their city’s built fabric?

Another example is the whole history of auto-priority of the last 60 years across the developed world; so often expensive road and parking infrastructure was built with the very aim of reviving or maintaining the economic life of places, yes these investments simply reinforced their decline and unsuitability of these places for the brave new world of driving focussed city. For example Auckland’s City Centre only really began to recover from the flight of the motorway/sprawl era once Minimum Parking Regs were inverted- replaced with Maximums instead. Thereby nudging development and use of the city towards walkable proximate-focussed more intense land use. In fact MPRs must rank very high up the list of the most destructive yet well meant influences on city development, see this disastrous example from the sadly much governance-abused city of Christchurch; so prioritising ease of parking that the actual destination become untenable and disappears. Mandated parking oversupply is a form of urban self-harm so ubiquitous in mediocre conurbations that it’s become invisible: it’s the teenage cutting of city-management.

The question next becomes what scale of nudge is required to incentivise more productive city building and city using; nudge or shove? Denmark for example, has a 180% tax on new cars and one the highest bicycle usage rates in the world. These two things are surely not unrelated [see here for context, however]. Japan, Singapore, and Hong Kong all have the most widespread and financially successful urban, and in Japan’s case, inter city, Transit networks and all also have significant barriers to car ownership and use, as well as planning rules that enable more efficient land use. See here.

Here is the ProdComm’s quick history of the urban development of Petone:

The evolution of Petone

Prior to European settlement there was a large Te Āti Awa Pa at Pito-one. The New Zealand Company’s surveyor, Captain William Mein Smith chose the Heretaunga (Hutt) river valley for the site of their planned settlement “Britannia”, and the Company ships began arriving in January 1840. Relations between Māori and the settlers were positive in large part due to the hospitality and mana of local chief Te Puni. The grid street plan drawn up in England was soon abandoned. In March the river flooded the settlement, and a fire and earthquake followed in May. Britannia was largely abandoned by the end of 1840, with the settlers having moved to Pipitea/Thorndon, which Colonel Wakefield had long favoured for the settlement.

In 1847 there were probably no more than 20 settler households left, and it remained almost wholly deserted until 1875. The land was poor quality for grazing, and the Hutt River flooded at least annually. Pito-one Pa, with a population of 136, remained the largest and best-fortified pa in the Wellington area. In 1855 a major earthquake lifted the area, draining a portion of the lower valley.

In 1874 the Wellington-Wairarapa train line opened. A large railway workshop was built in Petone. That same year a butcher, James Gear, began to purchase and lease land around the Petone foreshore for a slaughterhouse. It was attractive for the cheap flat land, proximity to the harbour and railway line, and the small size of the local population to be offended by the waste and smell of the facility. In 1883 the company built a 380m long wharf, demolished in 1901. A large wool mill was established in 1886.

Petone grew rapidly, and was gazetted as a town in 1881. A series of factories and breweries were built. Schools, churches, newspapers, sports and social clubs were established in the 1880s, many of which survive today.

A local farmer, Edwin Jackson, sold portions of his land piecemeal with unsurveyed rights- of-way. The result was that by 1885 there was local concern that Jackson Street was an embarrassing series of dog-legs, of varying width along its length. Jackson Street was extended when the land was bought by the borough solicitor on behalf of the Crown in 1888. Blood and offal went straight into the harbour, attracting sharks, so Jackson built a swimming bath near the waterfront. Plans for a gasworks were abandoned in 1897, and the land that had been earmarked for this use was purchased by the council as a recreation ground. But the council declined to buy Jackson’s baths, and a ratepayers poll in 1901 also decided against a purchase, so they were closed.

By the early 1900s Jackson Street was the hub of Hutt Valley commercial activity, with notable stores such as McKenzies, McDuffs and Liebezeits. The Grand Theatre opened in 1916. But Jackson Street’s haphazard alignment was still a problem and between 1927 and 1938 the council widened and straightened Jackson Street, with buildings shifted back on rails or demolished.

New Zealand’s earliest state houses were built in Patrick Street from 1906, although they were sold in the 1930s. Council chambers were built in 1903 and a town clock in 1913. A new wharf was constructed in 1907. Industrialisation continued: Lever Brothers factory opened in 1919, Sunlight Factory in 1924, and a number of car plants in the 1920s and 1930s. Three out of every four cars in New Zealand were said to come from Petone up until the 1950s. The town produced many successful sportspeople and the Petone Rugby Club numerous All Blacks.

Petone, by local standards, was densely populated and heavily industrialised, ugly, grimy, lively and close-knit, more like an English industrial town than a New Zealand one. (Butterworth, 1988, p. 13)

But from the 1950s the area began to decline, as some industries closed and residents moved to the new suburbs of the Hutt Valley. A number of state housing flats were built from the 1950s to the 1970s on the eastern part of Jackson Street. The Borough Council designated an area north of Jackson Street as an industrial zone, and

[t]he result of this was that no one was allowed to improve their properties, which meant many fell into disrepair and were sold off to developers. It was impossible for young Petone people to get a loan to buy property in their hometown so many left for Wainuiomata or Upper Hutt. The town become a place of rented properties owned by absentee landlords. By the mid seventies and eighties Jackson Street was pretty much derelict. (Johnston, 2015, pp. 93-95)

The Council proposed building a ring road around central Jackson Street, to create a mall in the centre of town at a cost of $10 million and the demolition of 80 houses. But significant local opposition stopped the project, and many councillors were voted out.

Petone wharf took its last cargo in 1976. The Gear meatworks closed in 1981. Long- established stores closed and the council chambers were demolished in 1986. Deregulation of the New Zealand economy resulted in many of the remaining factories closing. Developers who were demolishing and rebuilding in Wellington regarded Jackson Street as a place of little commercial potential, so its old buildings were left untended. In turn, “this stagnation ironically preserved the historic CBD as a desirable social and economic centre” (Johnston, 2015, p. 177). Petone recovered in the 1990s as industrial land uses gave way to big box retailing in the west of Jackson Street. Petone again became a retail destination, and this benefited the smaller shops along Jackson Street. A burgeoning bar, café, gallery, and retail sector followed. In 1996 the Historic Places Trust recognised Jackson Street as an Historic Area, but this had no regulatory force. There were a number of battles between local heritage groups, developers and the council over the next decade.

The “character homes” of Petone and its proximity and transport links to Wellington made Petone a desirable residential neighbourhood. A number of apartments were built or converted, consistent with council design guidelines. In 2014 it was announced that many of the state housing flats on the eastern part of Jackson Street were to be demolished, but the Patrick Street cottages survive and are protected. The Grand Theatre, which closed in 1964, was used as an electrical shop, furniture business, and in the 1990s was converted to an apartment complex with boutique shops below. Today, the site of the Gear meatworks is a supermarket, and Petone wharf is a popular fishing location, with fewer sharks than in the past.

Source: Butterworth, 1988; Johnston, 1999, 2009, 2015.

Three storeys does not equal highrise

The debate about intensification has come roaring back to life in the last day or so following a beat up by Bernard Orsman in the Herald about the unitary plan process.

Tens of thousands of homes in Auckland’s leafy residential suburbs are being rezoned for multiple townhouses and apartments and Auckland Council says homeowners will not be notified about the changes.

The central isthmus suburbs of Pt Chevalier, Epsom, Mt Eden, Mt Albert, Glendowie and St Heliers; the North Shore suburbs of Birkenhead, Glenfield and Takapuna; Whangaparaoa Peninsula, rural towns such as Kumeu and the southern suburbs of Howick and Mangere Bridge are among areas affected by the changes taking place behind closed doors.

…..

Tomorrow, the Unitary Plan committee will meet behind closed doors to approve changes to the single house zone in north, south and east Auckland.

This follows a decision by the 11-member committee on November 10 to approve changes to the zone on the Auckland central isthmus and West Auckland.

The council has rewritten the rules for the “single-house zone” where one- and two-storey houses are typically set amongst trees and gardens. New rules mean tens of thousands of houses no longer qualify and will be rezoned to a “mixed-house” zone to allow for townhouses, studios and apartments of up to three storeys.

Are we really down to the stage of scaremongering about three storey townhouses, a housing typology found frequently overseas and even in many parts of Auckland already? In fact for a city like Auckland three storey townhouses are perhaps the ideal missing middle of the housing. On top of being fairly spatially efficient they can be built in existing suburbs and not look out of place as they’re often no higher than a two storey house with a pitched roof. They’re also generally cheaper and easier to build than apartments as they don’t require expensive features like lifts or complex sprinkler systems.

One vs three storeys

Three storey terraced housing alongside some single storey houses in Epsom

So what’s really happening? The answer is much less secretive and much less alarmist than the herald like to make out.

The Proposed Auckland Unitary Plan (PAUP) was notified by the council in 2014 and since then an independent government appointed panel (IHP) has been going through the almost 10,000 submissions and supporting pieces of evidence submitted by the public and the council. The IHP will eventually issue a recommendation back to the council on the PAUP based on the submissions and evidence and that is almost certainly going to be different from what the council originally started with.

Along the way the IHP have been challenging the council on various topics and also issuing interim guidance on issues such as around the levels of heritage protection and viewshafts. As part of the process the council have been required to consider rezoning changes which is exactly what they are doing based on what’s happened so far it’s what’s likely to happen based on the interim guidance issued so far.

Notified UP - Central

The council are looking at changing some of the lighter coloured areas to allow for more development

I know I’ve skipped a lot out but kind of brings us roughly to where we are today with the council are looking at better defining where development can occur. From what I’ve read it seems they are looking at expanding the mixed housing suburban and mixed housing urban boundaries.

It seems to me that a lot of the angst in the article probably originated with the 2040 group who have long opposed much of the intensification planned. As a result of this the interim guidance my guess is they’ve been seeing the writing on the wall that more intensification would be allowed so they’ve complained to the Herald.

Following the article a number of politicians have heaped on the idea of intensification. One of those is David Seymour who based on his party’s politics you’d think would support removing restrictions to property rights claims it will have enormous implications for congestion, character and school zones. He is also quoted as saying

“It’s also a betrayal of young people in its assumption that they can never own a house and must live in apartments

The real betrayal of young people is by those who have opposed any change to the city, especially in the area of housing where prices have been pushed up or some people have been pushed out half way to Hamilton.

Six Sisters John St

The ‘Six Sisters’, John Street, Ponsonby – three storeys is hardly highrise

Of course many young people would live in an apartment or terraced house if more were able to be built to bring prices down in the areas they want to live. Part of the reason for this is often they are quite different from their parents in that they don’t aspire to a house in the suburbs where driving is the only option and they have to frequently do things like mow lawns and manage gardens. As for driving, well Auckland Transport have already said they’re looking at building a light rail network across the central isthmus which will help in moving lots of people without suffering from congestion.

Disappointingly it also appears that new mayoral candidate Phil Goff is starting to go down the line of backing off intensification in some areas. Stu has more on this in a post later today.

It will be interesting to see what the council come up with in terms of rezoning. Ideally the ishmus would look much more like West Auckland in the map above with a lot more mixed housing urban allowed (3 storeys).

Photo of the Day: ‘The Model Demonstrates…’

The model demonstrates that basic spatial interactions between land uses and transport infrastructure are the most powerful factors that govern the patterns of metropolitan growth.

Land use and Transport

Indeed.

Thanks to our London branch.

The future cost of Auckland’s sprawl

Auckland needs to be able to accommodate up to 1 million more people over the next 30 years, that’s a lot of growth and means the city needs around 400,000 more dwellings. The Auckland Plan set the high level strategy of having up to 70% of that growth occur within the existing urban area while up to 40% would be outside that. The Proposed Auckland Unitary Plan (PAUP) identified large swathes of land outside the existing urban boundaries for future urban land – some of which is already being developed as Special Housing Areas.

The council is now consulting on a Draft Future Urban Land Supply Strategy which will show how that release of land will actually occur over a 30 year period including specifying where and when bulk infrastructure will be built. They say specifically it will

  • help to inform Auckland Council infrastructure asset planning and management and its infrastructure funding priorities and sequencing. It will feed directly into the Council’s future Long-term Plans and the Annual Plans
  • help to inform central government, such as the Ministry of Education, with medium to long-terms projections, location and investment decisions
  • help to inform private sector infrastructure providers with forward planning and investment decisions

Overall this seems like a good idea, concentrating development in areas where it is able to be accommodated rather than developing land completely ad-hoc which could create funding issues for the council and other infrastructure providers. As the document points out, a consequences of ad-hoc development could be that it sucks up enough resources that it affects the ability to improve the rest of the region. What is most interesting about the strategy is this comment:

The analysis done for this Strategy is of sufficient scale and specificity to broadly determine bulk infrastructure requirements.

In other words this is more than just drawing some lines on a map and pulling out the colouring in pencils. The council have actually put work into determining just what bulk infrastructure will be needed to enable the predicted future growth and the result is actually quite scary and raises the question of just how affordable any new dwellings will be – more on this soon. It’s also important to remember that the bulk infrastructure talked about is really just the core of the networks provided by the council and other agencies. In addition to it developers would need to add all of the local infrastructure such as the local street and water networks.

The PAUP identified six large general areas and a few small standalone areas where future urban growth would occur. This covers about 11,000 hectares which they say could accommodate around 110,000 dwellings. The six main areas are:

  • Warkworth
  • Silverdale, Wainui East, Dairy Flat
  • Kumeu, Huapai, Riverhead
  • Whenuapai, Redhills
  • Takanini, Opaheke, Drury, Karaka
  • Pukekohe, Pareta,

The strategy splits up the areas into five year intervals based on a suite of principles. The map below shows these areas along with the key bulk infrastructure they need.

Future Urban Land Stategy - July 2015

 

As mentioned above, the part of the strategy that is most interesting is the high level costs to provide the bulk infrastructure which is done to a decade level. The table below shows this along with how many dwellings each time interval delivers. In total the council have estimated that around $13.7 billion of bulk infrastructure is needed over the 30 year period, this is made up of

  • Transport – $6,700 million
  • Water -$2,250 million
  • Wastewater – $2,200 million
  • Other – $2,500 million

These cost are further broken down by decade along with the number dwellings expected in the table below.

Future Urban Land Stategy - Costs - July 2015

Breaking that down we have

  • 1st Decade – $111k to $140k per dwelling
  • 2nd Decade – $179k to $234k per dwelling
  • 3rd decade – $93k to $120k per dwelling

Those seem like some crazy high costs, especially if you consider them on a per house basis. Next imagine what the land prices for these new sections would have to be to cover the costs if the council were able to pass the full costs. Combine that with the costs to the developer of providing the local infrastructure and these areas are not going to be cheap, losing one of the supposed advantages of greenfield developments.  The reality is only some of these costs are likely to be passed on meaning that existing ratepayers will effectively be subsidising this greenfield growth.

This outcome actually that much of a surprise, research as part of the Auckland Plan looked at potential growth scenarios and found sprawly land use patterns were the most expensive outcomes for the council due to the need to provide so much new infrastructure.

Of course none of this to say that intensification isn’t without its costs however many often those costs are ones which would still be needed for the sprawl development too.

Consultation on the draft strategy closes on 17 August.

How might the RMA amendments and the Auckland Plan impact on the Unitary Plan?

The advertisement below is from the last local government elections. Here Councillor Denise Krum rallies against the draft Unitary Plan, especially the degree to which it enables “intensification”. Denise’s advertisement claims the draft Unitary Plan is “too intense” and will “change our streets forever”. Instead, Denise advocates for greater restrictions on the degree to which property owners can develop their property in the urban area, and more expansion of the city. Denise was subsequently elected.

Denise Krum

Denise is particularly critical of 3 storey height limits, and goes to the trouble of hoisting herself up (some might say by her own petard) in a scissor-lift so as to highlight differences in building heights.

From this advertisement it seems clear Denise does not support the draft Unitary Plan and instead considers restrictions on intensification as being necessary to preserve community well-being. It is notable the advertisement does not contain any references to any research or surveys which support the positions Denise adopts on these issues. Is it too much for me to expect political advertising to include references to evidence supporting the positions being advanced? Perhaps.

When it comes to planning, however, evidence matters. Recent 2013 amendments to the RMA increased the burden of proof with regards to S32 reports, especially in terms of the economic analysis that should be undertaken to support proposed policy provisions. For those who are not familiar with planning jargon, a “S32 report” attempts to evaluate the effectiveness of proposed policies in comparison to potential alternatives. The 2013 RMA amendments requires S32 analysis to identify, and where practicable quantify, the economic benefits and costs of proposed policies. Some smarty-pants lawyers had this to say about the RMA amendments at last year’s NZPI conference (source):

“Arguably the most significant and material change is an expansion and detailed elucidation of the reference to “benefits and costs”, in the context of assessing efficiency and effectiveness … Post 2013s 32(2) requires, in much more detail, the following:

An assessment under subsection (1)(b)(ii) must—

(a) identify and assess the benefits and costs of the environmental, economic, social and cultural effects that are anticipated from the implementation of the provisions, including the opportunities for—

(i) economic growth that are anticipated to be provided or reduced; and

(ii) employment that are anticipated to be provided or reduced; and

(b) if practicable, quantity the benefits and costs referred to in paragraph (a).

The task of complying with these requirements is not insignificant. A systematic approach will need to be taken in preparing s32 reports to ensure that they are compliant and address environmental, economic, social and cultural effects, including opportunities for economic growth and employment.”

Ever since the RMA amendments came into force I have pondered how they might impact on the proposed Unitary Plan, especially with regards to density controls? I have also been wondering how the strategic direction established in the Auckland Plan, which I think was developed under the auspices of the LGAAA, would be relevant to the Unitary Plan?

My interest was further piqued when councillors, such as Denise, dramatically reduced the level of intensification that could occur in metropolitan Auckland, since which time house prices have soared. The differences between the draft and the proposed Unitary Plans is highlighted in the map below. Areas of red show areas where down-zoning occurred, which includes most of the isthmus. These are the areas where property prices are high (and increasing), i.e. where market-driven intensification seems most likely to occur.

Down zoning

From this it seems fair to say that proposed Unitary Plan imposes tighter density controls. The question is whether these controls are supported by economic evidence that meets the requirements of the (amended) RMA? And, moreover, how apparent tensions between the strategic direction of the Auckland Plan and the approach adopted in the proposed Unitary Plan would play out in a hearing context?

The economic costs of density controls are relatively intuitive: They forgo and/or displace land use development. This means we get less of it, especially in higher In terms of the economic benefits of density controls, those who are opposing intensification, such as Denise, will need to present evidence to show that levels of density which are common-place elsewhere, e.g. cities in Australia and Europe, will cause significant harm to communities should they be replicated in Auckland.

I’m skeptical as to whether this evidence exists. Most of the research I’ve read, such as this review by UNSW for Queensland Health, finds no conclusive evidence that higher density development has negative impacts on well-being. In fact, there’s evidence it’s beneficial to many outcomes, such as childrens levels of physical activity and obesity rates. So much for the meme that children need a big backyard to stay fit and healthy!

In my experience living in Auckland and overseas, buildings of approximately 6 storeys seem to have relatively negligible negative impacts on well-being and/or amenity. The photos below illustrate two buildings from Amsterdam and Auckland, but I could have easily added many more photos of multi-storey buildings from Brisbane, Sydney, and Stockholm. While there are large differences in style, I find both buildings quite attractive (the first photo is used under license from myself; the second photo belongs to Ockham).

Amsterdam nightmare

_CM15340 crop-600-600-450-450-crop

For these reasons, I have been somewhat heartened to read the interim guidance on view shafts that was issued by the Commissioners who are overseeing the Unitary Plan hearings process. In this guidance the Commissioners note “the objectives, policies and rules in relation to viewshafts do not meet the s32 requirements of the Act” for several reasons, most notably “amendments were made to s32 in 2013 to require employment and economic growth opportunities (including lost opportunities) to be taken into account and these post-date many if not all of the legacy plans.” The Commissioners go on to note the “PAUP is the first substantive planning process to propose increased levels of intensification to achieve a quality compact city so it is appropriate that the viewshafts are now re-evaluated within that strategic context” and more importantly “… if it is possible to quantify those costs of the viewshaft provisions, then that would assist in decision …

I want to emphasise from the outset that I don’t have a strong view on the relative merits of view shafts. This post is less concerned with the nitty-gritty of viewshafts than it is with understanding how the 2013 RMA amendments and the Auckland Plan may impact on the Unitary Plan, most notably:

  • First, the presence of planning provisions in legacy plans is not strong evidence (in of itself) that those provisions should be retained in the Unitary Plan, mainly because the legacy plans pre-date both the 2013 amendments and the Auckland Plan. Hence, they have not been tested under the current legislative and strategic context.
  • Second, the Commissioners appear to consider that the strategic context provided by the (non-statutory) Auckland Plan, in addition to the Regional Policy Statement, is relevant to the provisions of the Unitary Plan, especially with regards to the development of a quality compact urban form.
  • Third, in light of the 2013 RMA amendments the Commissioners appear to place a higher expectation on economic analysis, especially where proposed provisions do not appear to align with the aforementioned strategic direction of the Auckland Plan.

The Commissioners thus seem to be attempting to strike a balance between strategic outcomes and economic analysis, and do not seem to be placing too much weight on legacy plans. This is heartening because, frankly, the legacy district plans contained many provisions that are of dubious value. Moreover, where provisions proposed in the Unitary Plan run contrary to the Council’s stated strategic direction, then there seems to be an expectation from the Commissioners that this misalignment is supported by robust economic analysis.

Of course, whether this preliminary guidance on view shafts is indicative of the Commissioners’ ultimate position and/or whether it apples to other topics, e.g. minimum parking requirements, is something that will only become clear in the fullness of time. In the meantime, I’d be interested in hearing your thoughts.

Professional and personal disclaimer: The views expressed in this post represent the theoretical and philosophical musings of a not quite defunct economist. This economist is not a planner nor is he a lawyer (so don’t expect to be able to sue me for much money). The views expressed herein should not be construed to represent the views of my colleagues, clients, friends, or pets. They do represent the views of my Mum, whom I love very much. Nor do they necessarily represent my own views in the future – at which point my views may have changed in response to further evidence and information. 

Blanket Heritage Check to be Removed?

Some fairly important news about the Unitary Plan has emerged in relation to the Pre-1944 demolition control the council wanted to implement. The control prevented all houses built before 1944 – that weren’t already covered under normal heritage provisions – from being demolished without any assessment of whether it needs heritage protection. Land owners would still be able to get consent however it is argued that by making it harder will prevent people from even trying. The control seemed to come about following regular complaints from heritage groups about anything old being demolished.

In interim guidance from the hearing panel released Wednesday it was announced that they are not convinced by the arguments put forward by council and some submitters on the need for the control. They say there is a lack of robust section 32 (s32) analysis and evidence and that the provision has not been assessed in the wider context of the strategy for a more compact and higher density city. They go further to say that it places unnecessary constraints and burdens on land owners who may want to develop their property.

They say they think that if the council want to change the way they protect a number of residential areas that they should go through a plan change to do so which would also require them to produce a robust section 32 analysis of the relative benefits and costs of the change. That would also enable more public participation on the issue. As an example they were concerned that large numbers of people who owned/lived in properties affected by the control didn’t submit on the Unitary Plan who were likely happy with the existing provisions.

The map below shows the scale of the control and as you can see it primarily affects the isthmus and east coast of the North Shore. It’s also worth noting that many properties in some of the gaps have more formal heritage protection.

Pre-1944 Building Control

Understandably heritage groups are upset saying the decision is a ‘mistake’ and a ‘bombshell’ however I’ve long thought the same way about proposing the control in the first place. The council have said in the past that they choose 1944 as the cut-off point as that’s a date they have good records from of what housing stock existed. To me the whole thing is just to arbitrary and clunky in its current form and even though the control wasn’t blanket protection its effect would have been to prevent most small scale development as land owners would be too put off by the requirements.

In addition to this while the heritage protection groups fight to keep anything and everything old, at the end of the day it’s generally not them who pay the price for the impact blanket rules like this have. If it prevents sensible development in the right locations it can affect the entire city and in particular young people who want a place to live that isn’t out on the suburban limits

When it comes to heritage I quite like this from reader Stephen Davis. If we really want to protect heritage should we require those in heritage areas to also ride around in a horse and cart.

Lastly I think it also opens up the opportunity for the council to have a wider discussion with the community about development and change. As we know Auckland Transport are considering installing Light Rail on the Isthmus right through some of the heaviest areas affected by the pre-1944 controls. One of the issues we’ve mentioned in the past is that while the light rail corridors are busy, we really need to leverage off such a project and enable more development to help make it successful. Perhaps this news is opportune time for the council to start having that discussion

LRT routes

Given this interim guidance it will be interesting to see just the panel say about other rules which can severely restrict development potential such as minimum parking requirements, minimum yard sizes, building setbacks, maximum site coverage and density controls.

Do parking minimums restrict competition?

During the Unitary Plan submissions process, a number of retailers and shopping centre owners took a pretty conservative stance on transport. They argued for maintaining parking minimums, replacing maximums with minimums in some areas, and so on. Some argued that cars would always be the main way of getting to shops, and this should be written into the Unitary Plan. I’ll tackle that in another post, but for now, let’s talk about parking minimums and competition.

Raising the barriers to entry?

Among their other faults, parking minimums can actually be quite anti-competitive. Looking at supermarkets, for example, reviews both here and in Australia have shown that the biggest “barrier to entry” for new competitors is the difficulty in acquiring suitable sites.

Parking minimums make it even harder to get sites which are large enough. If you want a 3,000 square metre supermarket, say, and the rules say you need to have 1 carpark per 25 square metres of space, then that’s 120 carparks you’ll need. Those will take up about 3,600 square metres, so overall you need to find a site which is 6,600 square metres in size and meets your other location criteria. Not an easy task. If not for the parking minimums, you might decide you’re happy with 60 parks instead, for example. That’d shave 1,800 square metres off the size of the site you’d need. That’s a hypothetical example, and you could make the same argument for department stores, hardware stores, shopping centres, or really any kind of retail development, large or small.

BOTANY

Botany Downs: a popular retail node, but very car-centric

The extra competition from removing parking minimums can mean lower prices at the shops, but it’s not just about that. It also means lower time and travel costs for consumers. If you live 10 km from the nearest supermarket, but then one opens up just 5 km away, you’re better off, even if the prices are the same.

Or making it easier for freeloaders?

Most of these submitters were concerned about freeloading, and they argued for minimums to remain to prevent this. The argument is that another developer could come along, build a store or shopping centre, and not provide enough carparks. Their shoppers would then overflow into other areas, parking in existing carparks on the street or (more relevantly) by existing stores. Those carparks would then become unavailable to the existing stores’ customers.

This is a “negative externality” in economics jargon, and it’s legitimate for retailers to be concerned about it. We’ve probably all been guilty of using one of those carparks when dashing to another store, the post office etc. But the argument is also one which can restrict competition. Parking minimums are often arbitrary – quite ridiculously so for taverns – and different retailers will have very different requirements based on their business model, location, availability of driving alternatives and so on. Generally, those retailers or shopping centres have a good idea of how many parks they will need, and should be free to provide as many or as few as they like, with the costs internalised (more jargon).

What’s the way forward?

The Unitary Plan has to find a balance between two sides. On the one hand, you have retailers who don’t want their carparks being used by freeloaders, with new competitors having an unfair advantage if they don’t have the same requirement to provide parking. On the other hand, parking minimums have their own problems – they can encourage undue reliance on cars, a larger-than-optimal amount of parking, more pressure on the road network, and so on. These are externalities too. Plus, as I’ve argued above, there’s the externality of reducing competition.

We need to be careful with whether we let the car-dependent business models of today to be enshrined into the future; retail should be free to adapt and change. It’s the nature of the beast. The Unitary Plan will last for ten years. A decade is a long time in retail, and the new shops that we build in the Unitary Plan’s lifetime will be around for much longer.