This is part of an ongoing series on the politics and economics of zoning reform. Previous posts have argued that the benefits of enabling urban development generally outweigh the costs, but that local government political dynamics may serve as a barrier to achieving those benefits. As a result, any plausible reform programme must account for political and institutional dynamics, which can either speed or stall change.
As I wrote a few weeks back, California has ended up in a mess on housing due to the unintended consequences of 1970s-era legislation that made it harder to get new housing approved (and easier for neighbours to object) and reduced the financial incentives that local government have for approving development. This has led to rising prices and housing affordability problems.
As an example of how hard it can be to consent new developments, especially in existing urban areas, take a look at this article from SFist:
Developers initially intending to turn a Mission District auto shop into 20 units of housing have backed away from that plan following a ruling by the city that the building has historical significance. Curbed reports that likely because of that determination, and the resulting requirement that any alteration to the 20,400-square-foot auto shop at 3140 16th Street retain said significance, Texas-based developer Mx3’s plans to demolish the building are no longer viable and the company will instead look to build a two-story restaurant.
Mx3 wouldn’t confirm, but a community meeting notice obtained by the publication lists the proposed building as having exactly zero housing units.
Here’s the building in question. As auto body shops go, it’s nice, but is it nice enough to justify a two-year consenting process that ultimately resulted in nothing being built?
California’s housing affordability crisis is made up of tens of thousands of similar stories. Developments that could have gone ahead, providing people with housing, but which instead got mired in interminable consenting processes and endless rounds of public notification and objections. I’m all for public input on plans – it’s legitimate to have a say on how your city will evolve – but at a certain level this becomes insane.
Earlier in the year, California Governor Jerry Brown proposed legislation to try and modestly reform California’s system for consenting new housing development. In effect, the present system doesn’t allow ‘by-right’ development – you have to apply to the city for a permit to build even if the development complies with the zoning code. Brown had suggested creating an exception for developments that comply with the zoning code and provide a certain amount of ‘affordable’ units.
The measure challenged the primacy of local control over housing, inflamed powerful entrenched interests and was eyed warily by the very groups representing those the plan was supposed to help.
Because of the resistance, Brown’s effort became so unpopular in the state Capitol that not one of 120 lawmakers was willing to publicly stand behind it. After weeks of little action, the plan died a quiet death last month, never having received a vote in the Legislature.
The truly astounding thing was that the opposition to the bill was led by the groups that would have the most to gain from enabling more infill and redevelopment in cities:
Their beef? Brown’s plan would have allowed qualifying projects to avoid additional review under the California Environmental Quality Act, known as CEQA, the state’s chief environmental law governing development.
The 1970 law has helped preserve the state’s environment, but has also been sharply criticized by many including Brown, who contends its restrictions can strangle development and that it’s abused by labor unions and others to leverage labor-friendly hiring rules and other perks.
Ordinarily, you’d think that construction unions would benefit from enabling more construction in the midst of a housing crisis, while environmental groups should appreciate the fact that more medium-density development can help to curb urban sprawl. But not in California!
The most perverse element was the opposition from low-income tenants groups:
Aimee Inglis, the acting director for Tenants Together, a statewide advocacy organization for renters, said the governor’s proposal wasn’t going to improve renters’ lives. The more acute crisis isn’t the housing shortage, Inglis said, but rather land speculation and other forces driving poor residents from their communities.
Brown’s plan would have made it easier for developers to tear down existing housing to build new homes. Even if that new construction created more units for low-income residents, it still would have displaced those who have lived in neighborhoods for a long time, Inglis said. Beyond that, she said, removing some local approval would have cut renters from debates over where housing should go and what it should look like.
“We support affordable housing,” Inglis said. “But it’s not important enough right now for us to give up all this other power.”
I’ve put the last sentence in bold because it nicely explains why it is so difficult to reform California’s zoning and planning system. Essentially, the current system is badly broken, and the outcomes for housing affordability and social equity are terrible. But it’s also a system that gives many people leverage, in the form of multiple opportunities to object to development, propose referendums to carve out more for themselves, or partially insulate themselves from the adverse consequences of housing unaffordability (eg rent control).
While reforming the system would lead to better outcomes, the first step requires many of those people to give up their power to oppose or direct outcomes for development. That feels risky, and people don’t want to do it.
This tells us two important things about how to approach zoning reform in other places:
First, reform is easier if there are fewer ‘veto points’ for new development to start with. Opportunities to oppose give people power, and they will be reluctant to give it up later on, even if it turns out that there are unintended negative consequences. This doesn’t mean forsaking environmental reviews or notification to neighbours, but it does mean that it’s important to think carefully about how processes will work in practice.
Second, the politics of zoning reform tends to dominate over the economics. In other words, it’s not enough to prove that the outcome from reform would be better for society as a whole. Rather, it’s necessary to provide people with some certainty that they will be better off as a result of giving up power. Unfortunately, this often resembles ‘buying off’ politically powerful groups, which isn’t really that desirable.
This is a guest post from Brendon Harre in Christchurch. It addresses an issue that’s near and dear to Transportblog: How do we better enable positive change in the built environment?
Solving the housing crisis in New Zealand will require many reforms and much effort. Some of the needed reforms will face opposition and will be difficult to implement. There will be tension between the national concern about improving housing supply versus some local interests in retaining the status quo.
I want to focus on one particular easy to implement policy option, which I think could successfully navigate this political dynamic. The essence of the proposed reform is to establish a nationwide intensification right for situations where neighbours agree. A right to reciprocal intensification will create a new urbanist tool for New Zealand, allowing a better housing intensification supply response, so that people can build in parts of our towns and cities where people want to live.
The first step would be to agree as a country on a height limit that all property owners could construct up to as a right. I would suggest three stories would be reasonable, as this is a similar scale to natural features like trees.
The ‘Six Sisters’, John Street, Ponsonby
Local areas through zoning provisions would still retain existing setback and shade planes rules that determine how far buildings must be constructed from site boundaries. For instance, a shade plane is an angle going inwards, which building height and bulk cannot exceed. It is taken from a certain height directly above the section boundary -2.5 metres in the below diagram. These rules also limit the size of buildings – and hence reduce the number of dwellings that can be built on a given site.
The second step, which is the main thrust of my proposal, is that New Zealand should adopt a system where neighbours can reciprocally agree to drop the shade plane and set back restrictions along their common border. This reciprocal intensification right could be implemented as a national policy statement under the RMA, which local authorities would then be obligated to implement. So in the above diagrams, if there was a section to the north or south and if the two property owners agree, then they would both have the right to build up to their adjoining boundary – utilising the appropriate building code for firewalls etc. If other adjoining neighbours disagreed, then on those boundaries the standard setback and shade plane rules would apply.
Of course there would be many property owners who wouldn’t want their neighbour to build right up to their boundary. But some would see the advantage in co-operating, so they have the option of adding a granny flat or redeveloping their entire site. Making this reciprocal intensification right a choice eliminates the major criticism of up-zoning. Being, up-zoning dictates an exchange of a neighbour’s access to sun, views and privacy for the opportunity to intensify. Some property owners believe they will be worse off if this exchange is codified into the zoning map.
If reciprocal intensification rights were spread across a large enough area, then this would give the opportunity for a lot of intensification – in the form of duplexes if two neighbours agree and European style terrace housing if many neighbours agree. There are 1.8M private dwellings in New Zealand – if just 1% of those properties were intensified from one dwelling to three per site over, say, ten years, that would net an additional 36,000 new homes. I am not sure if 1% and one house intensifying into three are reasonable expectations, but it shows that even with modest assumptions this proposed policy reform could have an impact on the housing market.
The main benefits of a right to reciprocal intensification are:
It decreases transaction costs for site assembly. The national policy statement would mean no resource consent or property purchase would be required to develop sites more comprehensively. Currently to achieve site assembly, either neighbours would have to go through a complex and uncertain RMA process or a property developer would need to buy up the neighbouring sections.
It encourages a more desirable urban form as it gives property owners the ability to build across their property frontage so that new housing faces the street. Currently our zoning rules encourage infill housing that goes down the length of the property.
It gives greater housing supply options for building types with construction costs per square metre comparable to standalone housing. Small apartment buildings tend to be cheaper to build compared to high rise apartments because they can be built as 3-story walk-up units. There is no need for an expensive concrete elevator core, mechanical ventilation, sprinkler systems, underground parking and expensive structural engineering.
It allows housing supply to respond to locational demand.
It allows housing supply to respond to housing size demand. There is evidence of an under supply of 1–2 bedroom homes in the property market: The largest increase in household groups are singles and couples, yet very few one or two bedroom homes are being built.
I believe reciprocal intensification will be driven by both supply – in terms of its ability to lower the cost of infill and redevelopment – and demand. Demand will come from urban areas with high amenities – like proximity to employment, easy public and private transport access, markets/shops, entertainment and desirable natural environments like beaches, parks and forest.
In Auckland not all high amenity areas have been up-zoned by the new Unitary Plan. So for the city most suffering from New Zealand’s housing crisis there is an opportunity for reciprocal property right supply to increase housing supply in places where there is a demand for it. Density maps of Auckland indicate that outside of the city centre there is a sudden drop-off to a flat density gradient, unlike similar sized and geographically constrained cities –such as Stockholm. Economic theory indicates density should gradually decline with what is labelled the ‘missing middle’ housing.
Reciprocal intensification rights will not by itself be enough to enable all of the development we need. Other intensification restrictions such as minimum section sizes, minimum car parking requirements, site coverage rules, viewing shaft restrictions, heritage restrictions, secondary kitchens, etc may be as or more significant in the way they restrict the supply of housing intensification options and should also be reviewed by affordable housing policy makers.
However, I think reciprocal intensification rights would be a less controversial first step to intensification compared to widespread up-zoning, which results in some property owners who oppose intensification to fight such measures. These local interest groups which may only represent a minority of locals obstruct reasonable efforts to address restrictions on housing supply.
I believe New Zealand should give greater weighting to the national concern about affordable housing supply compared to the minority local interest in retaining the status quo. It has been my goal with this reciprocal intensification proposal to create a fair and appropriate first step to address this imbalance.
There are some architectural slides from a US city that transformed traditional standalone housing suburbs into suburbs of duplexes and terraces by reducing allowable section sizes to a little over 100sqm and by not having side yard setback and shade plane restrictions. The end result is quite pleasing.
There is an article and podcast of an academic economic discussion of the wider costs to the economy that unaffordable housing imposes, how the various restrictions on house building contribute to this and some possible remedies, H/T Facebook group Market Urbanism.
This is the second post in an ongoing series on the politics and economic of zoning reform. The first part looked at the costs, benefits, and distributional impacts of reforming urban planning rules to enable more development. This part takes a more specific look at the most recent reform to Auckland’s planning system: the Unitary Plan.
Now that the hearings are over, the submitters have been heard, and the politicians have voted, it’s worth asking: What have we gotten from the Unitary Plan? Does it take us in a useful direction, and to what degree?
In order to give a coherent answer to this question, I’m going to have to simplify matters. The UP does a lot to regulate development and local environmental issues – addressing everything from air quality to zoning for factors. But it has the strongest effects are on the city’s housing market. The UP shapes how much housing can be built, where it can be built, and how easy it is to get permission to build it.
Consequently, I’m going to focus on the impact of the Unitary Plan on people’s ability to build more homes in the city. Zoning capacity isn’t the only thing that matters, but it’s important. Cities that have “downzoned” severely, like Los Angeles in the 1970s and 80s, typically experience rising housing prices, while cities that “upzone” significantly, like Tokyo in the 1990s, tend to have an easier time keeping prices under control.
The great down-zoning of LA (Morrow, 2013)
In order to estimate the UP’s impact on Auckland’s capacity to build more homes, I’m going to draw upon “capacity for growth” modelling produced by Auckland Council and subsequently updated throughout the hearings process. As changes to the modelling methodology make a like-for-like comparison a bit difficult, I’m going to have to piece together the overall results.
The 2012 Capacity for Growth Study estimated the number of homes that could be built under the legacy zoning rules that were put in place prior to Auckland Council amalgamation. The modellers estimated a measure of “plan-enabled capacity” – i.e. the total quantity of housing that could be built within the city if everyone (re)developed their site to the maximum permitted under the zoning rules.
This is obviously an implausible scenario, as many people won’t choose to redevelop, at least for a while. So the results are best thought of as a theoretical upper bound rather than a realistic estimate of what would happen in practice. As we’ll see, this was addressed in subsequent modelling undertaken during the hearings.
With that caveat in mind, the modellers found that the legacy zoning rules allowed between 250,000 and 345,000 additional dwellings to be built in Auckland. The lower number reflects the maximum capacity for infill development, while the higher number reflects the maximum capacity for redeveloping residential sites.
The 2013 Capacity for Growth Study used the same methodology to assess the version of the UP that was notified by Auckland Council after consultation on the plan. This showed that the notified UP had only made incremental increases to infill and redevelopment capacity within the city.
The modellers found that the legacy zoning rules allowed between 258,000 and 417,000 additional dwellings to be built in Auckland. The lower number reflects infill capacity, while the higher figure reflects redevelopment capacity. However, it also noted future greenfield areas with capacity for around 90,000 additional dwellings.
Taking the greenfield areas into account, the notified UP would have delivered a 39-47% increase in capacity for housing, relative to the legacy zoning. That difference is shown in the following diagram. Essentially, the Unitary Plan as originally conceived would have been at most an incremental improvement.
Things get a bit more complex when comparing between the notified UP and the final version of the UP that was recommended by the Independent Hearings Panel and approved (with minor tweaks) by Auckland Council. The modelling methodology changed in the course of the hearings, with the focus shifting from “plan-enabled” capacity to “commercially feasible” capacity. In effect, a new model was built to filter out sites that wouldn’t be profitable to develop.
You can see that in the following chart. The commercially feasible capacity enabled by the notified UP is 213,000 additional dwellings – only 42% of the full plan-enabled capacity.
The key thing in this chart is the change between the notified UP and the final UP. Feasible capacity has increased from 213,000 to 422,000 dwellings, or a 98% increase. Most of the increase in capacity comes from within existing residential zones, thanks to rezoning and changes to zoning rules to allow people to build more dwellings on the same amount of land.
So if we squint a bit, we can put these estimates together to get a rough picture of the overall outcome:
The notified UP increased plan-enabled capacity by 39-47% relative to the legacy plans
The final UP increased feasible capacity by 98% relative to the notified UP
This implies that the final UP has increased the zoning envelope by around 175-190%, relative to the legacy plans (i.e. 1.98*1.39 to 1.98*1.47).
Equivalently, if we assume that only around 42% of the plan-enabled capacity under the legacy zoning plans would be commercially feasible (a similar ratio to the notified UP), we can put together the following chart:
Is this sufficient? Time will tell. Getting housing, transport, and place-making right for Auckland doesn’t end with a planning rulebook. But the final UP is undoubtedly a large step away from the broken status quo.
As this is a series on the economics and politics of zoning reform, I want to close with a few simple observations that arise from the quantitative analysis in this post.
The incremental changes observed between the legacy plans and the notified UP reflect the outcome of a political process. Council put out a draft plan for consultation, and then pulled back a lot of the changes in response to criticism.
The considerably larger changes between the notified UP and the final UP arose from a technical process – the independent hearings.
Although the IHP recommended, councillors decided. The final UP was voted up by many of the same councillors who had pulled back to a more conservative position three years before.
This in turn raises two questions that I will revisit in future posts in this series. First, why did the political process deliver a more conservative outcome than the technical process? And second, what changed between 2013 and 2016 to obtain a different outcome from the council votes on the plan?
This is the first part in an open-ended series on the economics and politics of zoning reform. The Unitary Plan decision means that Auckland’s urban planning framework is set for the short to medium term – albeit with inevitable appeals and changes. But the issues we’ve been grappling with over the past few years – i.e. how, where, and why to adjust the rulebook – will keep coming back. A growing city must also be a continually changing city, and zoning decisions can either help or hinder that.
A good starting point for thinking about the economics and politics of zoning reform is to ask: What are the costs and benefits of allowing more housing to be developed? And how are these costs and benefits distributed?
First, the benefits of new housing primarily accrue to people who are newly entering the housing market. For instance, young people trying to buy or rent a home benefit from there being more homes, as it means they can get better housing or cheaper housing. Equivalently, restrictions on new housing development mainly impose costs on people who don’t already own homes. When the supply of housing is restricted, then they face a choice between paying more for housing that meets their needs, living in substandard or crowded housing, or leaving the city entirely.
Second, the costs – adverse effects – of new development are location- and context-dependent. The distributional impacts – who is affected? – can also vary quite a lot. For instance, a new subdivision on the city fringe probably wouldn’t shade anyone’s home or block its view, but it might worsen water quality or biodiversity. And, given the dysfunctional way we build new suburbs, it will definitely increase traffic congestion.
By contrast, redevelopment and infill within the city will tend to have fewer environmental impacts – it’s already a city! – but there are more neighbours who may be affected by the various nuisances associated with development, like having new buildings casting shade on adjacent properties or more people parking on “their” street. People don’t like change very much… but they can easily adjust to different “status quo” scenarios.
For instance, consider Ponsonby. It would all be horribly illegal under today’s zoning codes. Lot sizes too small, buildings too close to each other and taking up too much of the lot, no parking, etc, etc. If you tried to get houses like these consented today, especially in an existing suburb, you’d be refused in about three seconds flat. But because they’ve been there for decades, people see them as something that should be protected – present-day zoning code be damned!
Third, enabling housing development can allow cities to grow larger and in a more economically efficient pattern – leading to enhanced agglomeration economies. The benefits of increased productivity and greater consumer choice accrue broadly to most people in the city, or potentially even to the entire country. (Taxes paid in Auckland pay for retirements in Tauranga!)
Conversely, evidence from overseas cities suggests that restricting housing supply can result in large economic costs as a result of the misallocation of workers throughout space. For instance:
In the US, Chang-Tai Hsieh and Enrico Moretti found that high housing costs have discouraged people from getting jobs in high-productivity cities – in particular New York, San Francisco, and San Jose. If those cities had allowed more homes to be built over the past three decades – which would have entailed more intensive development – the US economy would now be 9.7% larger than it actually is, with commensurate gains in income.
In the Netherlands, Wouter Vermeulen and Jos van Ommeren found that housing supply, not productivity or availability of jobs, has driven cities’ growth. Rather than moving to locations with abundant high-income jobs, people move to places with more homes – again, with a cost to overall economic outcomes.
As Matt Yglesias observed, agglomeration economies benefit workers with different skills… provided that they can afford to locate in high-productivity cities:
…just as factories served as economic anchors for regions, today’s big industries produce broader local prosperity.
Here are some examples from the San Francisco area:
The problem is that for most residents of these places, the higher cost of living erodes the benefits of higher pay.
So how does all this add up? There are two answers. The first is that the benefits of urban development tend to outweigh the costs… provided that it isn’t happening in a totally dysfunctional way, like paving over the habits of endangered birds or building astonishingly unredeemable eyesores. In other words, the benefits for people who are getting housed, plus increased agglomeration economies, outweigh the costs from negative social or environmental impacts. So from the perspective of long-run social wellbeing, zoning that enables more development seems like a good idea.
The second answer is that the distributional impacts tend to determine the politics of zoning. As economist William Fischel observed, local governments tend to be dominated by “homevoters” who are mainly worried about risks to their property values and quality of life. In this context, the fact that enabling urban development mostly has benefits for new entrants to the housing market – i.e. young people and people moving into the city from elsewhere – is pretty important.
As economists like to say, the incentives facing local government voters aren’t well aligned with long-run social wellbeing. To current voters, zoning reform isn’t necessarily an appealing proposition. It appears to create uncertainty for their neighbourhood and property values, while principally benefitting other people.
This is a very understandable view for individuals to hold, but it’s not awesome for society as a whole. If cities and economies don’t change, they wither and die, creating vast human misery in the process. In order to prevent that from happening – i.e. to keep people from crowding into unsanitary accommodation or going homeless – we need to be willing to reform our zoning policies.
In the subsequent posts in this series, I’m going to take a look at what that might look like. In the first instance, I want to focus on the institutional arrangements that enable reform, considering issues like:
The trade-off between localised and centralised decision-making
The good and bad in New Zealand’s legislative framework
The role of analysis and evidence in planning decisions
The role of social norms in encouraging (or discouraging) people to plan for future generations.
As Toby Manhire observed, “the most remarkable thing is the response… on the whole it’s been incredibly positive”. Reasonable people could have reservations about aspects of the IHP’s recommendations, but most of the views I’ve seen recognise that the finished plan is a good step forward to solving the housing challenges the city faces.
Meanwhile, the UK has voted to Brexit the EU and a large share of Americans – possibly even a majority if we’re unlucky – are planning on voting for Trump. So New Zealand seems to be ahead of the curve on pragmatic problem-solving. Yay!
What’s the problem?
Housing is expensive in New Zealand, especially in Auckland, where median house prices have increased fivefold since the early 1990s (in nominal terms). Roughly half of this increase has occurred in the last four years, which is causing quite a bit of concern:
Although short-term dynamics can be mysterious, elasticity of housing supply is the main long-term driver of housing market outcomes in a growing city. The easier it is to build new dwellings in the right places in response to increased demand, the less upward pressure there will be on prices.
The empirical evidence suggests that housing supply in Auckland is slightly inelastic – somewhere in the range of 0.7 to 0.9. This isn’t horrible, but nor is it sufficient to get housing supply in balance with demand.
Severe geographic constraints – Auckland’s harbours and steep hillsides – appear to be an underlying driver of the city’s inelastic housing supply. In this context, settling for average urban planning policies means getting a limited supply of housing and high prices. Consequently, we have to make it much easier to use scarce land efficiently. That means reforming our approach to planning regulations. In the past, we adopted land-hungry policies like minimum parking requirements or severebuilding height limits without thinking through their ill effects. That has costs, and we need to do better.
Auckland is not the only city coping with high housing prices and a lack of supply – you see similar problems in places like London, New York, San Francisco, and Sydney. However, I would bet that New Zealand will do a better job sorting out its housing affordability issues than other places. In fact, I am betting on it! I’m renting in Auckland, which means that I bear all of the downside and none of the upside of spiraling housing prices.
There are three reasons for my optimism:
1. Our proven track record of policy reform
Let’s start with a pat on the back. Having lived in New Zealand, the United States, and Nigeria, I’d say that Kiwis are, by and large, pretty reasonable when it comes to public policy. We’re not very corrupt, which removes one major source of inefficiency. We generally recognise that as a small, distant trade-exposed country we can’t afford to do things inefficiently. And, due to New Zealand’s small size, there’s usually no need to over-complicate things.
Policymaking anywhere will always be subject to cognitive and professional biases – people screw things up, and sometimes it takes a while to sort it out – but New Zealanders don’t seem want totally irrational or insane policies. Unlike the US, say:
Possibly as a consequence, New Zealand has a record of reforming policies that aren’t working, either incrementally or in one go. The classic example of this is in trade policy. From the 1930s to the 1980s, the New Zealand government oversaw an extensive set of import controls. Te Ara describes this policy:
Faced with declining export returns and a foreign exchange crisis, a Labour-led government introduced foreign exchange controls and import licensing regulations in 1938. The regulations prohibited the import of any goods except under licence or where exempted.
Importers had to apply to government for both an import licence and the foreign exchange needed for purchases. The quota – the amount that could be imported with a licence – was set on the basis of imports the previous year.
Just as restrictions on the efficient use of land produce windfall gains for landowners while foisting large costs on renters and new home-buyers, import licensing created fortunes for some manufacturers while making most consumers worse off. As a consequence, after experimenting with some liberalisation of trade policy in the 1970s and 1980s, the remaining import controls were swept away in the late 1980s.
Recent changes in transport policy also demonstrate our ability to reform bad policies. Over the last decade, there have been some important, although undoubtedly incremental, moves to reform our inefficient monomodal urban transport system.
This is a big deal, but it’s hardly the only story in town. How about the fact that central and local governments are now coming to the party on urban cycleways? For the first time ever, significant investments are going towards one of New Zealand’s “missing modes”.
We now have an opportunity to take the same approach to urban planning – reform what isn’t working and get better outcomes.
2. The structure of our governments
The current structure of New Zealand’s governments makes it easier to implement reforms and make them stick. We have two key advantages in this area that offer a smoother path to policy reform.
First, New Zealand’s government has a unitary structure rather than a federal one. This means that most powers are concentrated in central government rather than distributed among multiple layers of government. Political centralisation certainly isn’t all good – in the past it’s often led to a perverse situation in which urban transport policy is being designed by rural politicians.
But in this case, it makes policy changes much easier. If central government were to, say, issue a National Policy Statement on urban development or rewrite sections of the Resource Management Act (which governs the development and implementation of urban planning rules), it would lead to changes in the way that local governments regulate. That option isn’t usually available in federal systems.
Because any proposal to liberalise planning rules inevitably creates controversy at local body election time, central government involvement can potentially assist in getting important changes over the line.
Second, the creation of the unified Auckland Council ensures that all growth tradeoffs – and the negative consequences of preventing growth – are internalised within a single council. Gone are the days when councils could simply refuse to zone for growth and assume that it would become someone else’s problem instead. Now a single council is responsible for sorting the region’s problems out.
You can see the results in the Unitary Plan – a document that’s not perfect (no plan is!) but which takes some important steps forward. For example, it removes MPRs from the centre zones, which are intended to accommodate a mix of business and residential uses, cuts back minimum lot sizes throughout much of the city, and creates some midrise residential zones.
Amalgamation does come at a potential cost to Tiebout competition, in which adjacent councils compete for growth. But I suspect that the benefits outweigh the drawbacks. As the San Francisco Bay Area shows, local government fragmentation doesn’t necessarily result in more housing supply – the Bay Area has 93 local governments but building permits have still been falling since the 1970s.
New Zealand’s unitary government structure and the creation of a consolidated Auckland Council create the potential for “virtuous cycles” in which local and central government egg each other on to improve urban planning regulations and processes. To date, this has led to things like the Special Housing Areas, which aims to ease consenting in selected areas, and the Unitary Plan hearings process, which is intended to review the plan and allow it to be implemented faster.
The hearings process, in particular, has encouraged Auckland Council to think carefully about its proposed zoning rules. For example, following instructions from the hearings panel, the council is considering rezoning some areas to enable more housing. This is an important step towards recovering from the ill effects of past down-zoning.
Lastly, housing affordability has hit the political radar at a national level. There is an increasing consensus that reforms to urban planning rules are a key part of the solution. The latest Productivity Commission report on using land for housing outlined some key policy changes, and politicians from several major parties have subsequently endorsed a number of these recommendations. For example:
In other words, there is likely to be cross-party support for sensible reforms to urban planning that build on the good work that’s already been done by central and local government.
Globally speaking, it’s somewhat unique – and fortuitous – to have so much attention placed on urban planning issues at both a local and central government level. For example, in the US, a few economists in the Obama administration are starting to talk about the drawbacks of overly restrictive planning regulations. But President Obama has very little ability to influence zoning in San Francisco or New York.
New Zealand is different. We are generally willing to reform policies that aren’t working for us, we’ve got government structures that can facilitate that reform, and our elected representatives are paying attention to the problems and potential solutions. Those seem like good reasons for optimism!
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:
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.
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.
Over the past week Transportblog has publishedseveralposts on the brouhaha (or is that kerfuffle?) about Auckland Council’s position on Unitary Plan rezoning.
However, we haven’t really taken a higher-altitude view on the issue. So here’s a quick summary.
The underlying issue is that Auckland’s home prices are really, really high, and rising rapidly. Rents are also rising faster than incomes. That’s great news for people who already own homes, but terrible for everyone who doesn’t.
The housing affordability crisis is particularly bad for young people and low-income households, who may be renting or trying to save up to buy a home. These people directly bear the costs of rising prices.
On Wednesday, Auckland Council voted against considering changes to zoning to enable more homes to be built in areas that are accessible to jobs, education, and transport.
The most likely outcome of this is that Auckland will continue to build too few homes and prices will continue rising. The social ills caused by that dynamic – poverty and unhealthy housing, crimped opportunities for young people, unsustainable levels of car-dependent sprawl, and high rates of outward migration among the young – will also continue.
Over the last week the Unitary Plan has blown up again as a political issue. As I wrote on Tuesday, some groups – most notably anti-housing supply lobby group Auckland 2040 and some councillors – have criticised the Council over its submission to the impending “rezoning hearings” on the Unitary Plan.
Council’s proposal is hardly radical with 78% of Auckland still limited to no more than two storeys and a further 17% limited to 3 storeys but it has enraged some people who see it as undemocratic.
The problem, opponents say, is that people don’t have an opportunity to submit on the rezoning:
Members of the Auckland 2040 community group accused the council of being “devious” and “hijacking the democratic process”, which several residents and ratepayers groups said would change the character of their suburbs.
Now, it’s certainly true that people who didn’t originally submit on the Unitary Plan won’t be able to make further submissions to the hearings process. However, most of the criticisms made by opponents of rezoning fall short of the mark.
In order to understand why, let’s take a look at the process to date.
What is the hearings process?
Many of the people criticising Council over its rezoning proposal seem to think that its rezoning proposal will automatically result in three-storey high-rise apartments near them. That’s not the case.
To understand why, it’s first important to understand the process that the Unitary Plan has followed/will take:
First, Council developed a draft Unitary Plan and asked for feedback from Aucklanders.
On the basis of this feedback, they downzoned a lot of the city and then “notified” the Unitary Plan, opening it up to formal submissions.
After notification, an Independent Hearings Panel was appointed by Council and Government to review the plan and hear submitters using a slightly streamlined process created by the government. That’s still ongoing and it’s the panels job to weigh up the submissions and evidence.
The Panel will complete its review in July and send a recommended, final version of the Plan back to Council.
Council will then have 20 days to take a vote on whether to adopt the Panel’s version or not. The parts they accept will come into effect, if they don’t agree on some areas then those will be subject to the normal environment court process, in other words regulatory uncertainty will continue
When the Unitary Plan is adopted, Auckland Council will be responsible for administering it, and reviewing and changing it from time to time.
But up until that point, Council is in the same position as all other submitters on the plan: It can submit evidence and proposed rules and zoning maps to the hearings panel, and have those weighed up against proposals put forward by other submitters.
As I’ve pointed out before the panel could reject the council’s evidence and zoning changes outright. Alternatively they could decide they don’t go far enough and beef the zoning up further.
That’s an important point that is being lost in the discussion – the Panel, not Council, is responsible for weighing up the evidence and making decisions.
How far can the hearings panel go?
The Panel haven’t issued any final decisions yet – they seem to be holding off until they’ve heard all the evidence. But they have issued some “interim guidance” intended to give submitters an idea of what they expect from the Unitary Plan.
For example, their interim guidance on volcanic viewshafts, which Stu took a look at last year, basically told the Council to go back and do more analysis to show that viewshafts were actually a good idea. Similarly, the Panel’s interim guidance on rezoning indicates that they are expecting to make some changes to enable more housing supply and reduce the burden of restrictive zoning:
(4) The Hearings Panel must make recommendations on any provision included in the proposed plan under clause 4(5) or (6) of Schedule 1 of the RMA (which relates to designations and heritage orders), as applied by section 123.
(5) However, the Hearings Panel—
(a) is not limited to making recommendations only within the scope of the submissions made on the proposed plan; and
(b) may make recommendations on any other matters relating to the proposed plan identified by the Panel or any other person during the Hearing.
In other words, if they decided that it would be best to rezone all of Auckland for midrise apartment blocks, they could recommend that. They probably won’t, but they could.
What is “out of scope” for the hearings?
One of the key piliars of criticism that has emerged has come from the council proposing “out of scope” changes to zoning that weren’t requested by submitters. The council called changes they made where there hadn’t been specific piece of evidence about an exact property “out of scope”. However, it’s not clear that the changes actually are “out of scope” as several submitters have requested broad rezoning to improve housing choice and affordability.
A full list of submission points is available here. Two helpful commenters – Matthew W and Frank McRae – pointed us towards some specific submissions that asked for rezoning, e.g.:
5478-57 Generation Zero Not Supplied RPS Urban growth B2.1 Providing for growth in a quality compact urban form Upzone across the urban area where this supports the Regional Policy Statement aims of intensifying near centres and in areas accessible to high quality public transport.
The non-profit community housing provider CORT has submitted asking for significantly more upzoning to enable more affordable housing (submission point 4381).
Specifically they have asked for:
– a significant reduction to the extent of the single house zone.
– increase the extent of the mixed housing urban zone to 70% of residential areas
– increase the extent of the THAB zone to 10% of residential areas
The new zealand property council has also submitted requesting greater density generally.
In other words, it’s not clear that anything that Council proposed is actually “out of scope”. In fact, arbitrarily refusing to consider rezoning in some areas would be unfair to submitters like Generation Zero, CORT, and the Government who are requesting broad rezoning. They have a democratic right to be heard.
The Unitary Plan is under review by an Independent Hearings Panel, who will issue their recommendations in July.
The fact that Auckland Council has put in a submission that suggests rezoning some areas does not mean that it is going to happen – the Panel will decide.
The Panel has the ability to recommend quite broad changes to the Plan, including changes that were not specifically requested by submitters.
In any case, some submitters have asked for broad rezoning throughout the city – meaning that Auckland 2040’s claim that the Council’s proposal is “out of scope” is not true.
In this context, it’s best if people – Councillors included – stop panicking about the possibility of rezoning. It’s simply not appropriate to try to hijack an independent hearings process midway through. Doing so would run roughshod over the rights of the people who did submit on time and in good faith that their views would be heard.
Mayor Len Brown has called for an extraordinary meeting next Wednesday for the council to decide on their position. We will obviously be watching this with great interest.
Over the last 50 or 60 years, the United States, Australia, New Zealand, and a number of other countries have pursued a “roads first” approach to transport policy. There have been significant public investments in (generally un-tolled) roads, and relatively few investments in competing transport modes.
It’s hard to justify this approach based on preexisting travel patterns. Take Auckland as an example. According to Paul Mees [Transport for Suburbia, p. 21], in 1954 Auckland’s public transport network “accounted for 58 per cent of trips by motorized modes, private transport only 42 per cent. When walking and cycling, which were not surveyed, are taken into account, it is likely that fewer than a third of daily trips were by car.”
However, from this date onward roads – not public transport, and certainly not walking or cycling – have dominated transport spending. Spending on a new system of motorways and arterial roads was considerably higher than spending on other modes that carried more journeys. In other words, public spending to enable car travel did not respond to existing demand – it was intended to shape future demand. (And in doing so, change the shape of the city.)
Another potential justification for disproportionate spending on roads is that it’s just what people wanted. Cars were invented and then cheaply mass produced, people wanted to use them to travel everywhere, so transport agencies had to build more roads.
There is some truth to this. Cars are very convenient for many journeys. But it can also be convenient and cost-effectivenot to own a car. PT tends to be cheaper than driving to places where you have to pay for parking, and cycling is often quicker than driving, and more enjoyable if there are enough safe bike lanes.
But what, then, should we make of Houston, which lacks a zoning code but nonetheless has ended up with lots of driving, low public transport ridership, and a low-density urban footprint? Is Houston evidence that in the absence of planning regulations that distort people’s location choices, people will choose to live at a distance and drive to get around?
It turns out that Houston is not actually as unregulated as people make it out to be. While the city lacks a comprehensive zoning code that rigorously separates different uses, several other planning regulations (and similar measures) have distorted its urban form and transport choices. A 2005 article by law professor Michael Lewyn identifies four important ways in which planning has influenced transport outcomes in Houston:
Houston enforces a byzantine and quite restrictive set of minimum parking requirements (MPRs). As I discussed last year, these include a parking requirement for bars that defies all concepts of prudent regulation. These requirements make parking cheap, and walking to the shops hard.
While Houston doesn’t formally limit building height, it does establish a minimum lot size of 5000 sq ft (or around 460m2) throughout most of the city. This discourages PT, walking and cycling by increasing the distance between dwellings and discouraging space-efficient typologies like terraced houses and small apartment buildings.
Houston requires streets to be wide, blocks to be long, and buildings to be set back a considerable distance from arterial roads. All of these policies make it dangerous and unpleasant to walk there.
Lastly, new developments in Houston make extensive use of private covenants that restrict uses and building designs. These agreements often simulate zoning, with the result that Houston has similar levels of racial, income, and housing segregation to (zoned) Dallas. Houston has chosen to imbue private covenants with the force of public authority – the city will pay to enforce them even if the people subject to the covenant would rather not.
As a result of these policies, Houstonians cannot make free choices about where to live, where to work, and how to get around. Their decisions are strongly influenced by a suite of planning regulations that, as in many other cities, conspires against density and against non-car travel. Houston’s heavy use of the car is not a natural outcome, but one that has been engineered by policy.
Seen from this perspective, “roads first” transport policies seem less like an exercise in meeting demands, and more of a component of a large social engineering programme.
The results are not necessarily stellar. While the city is known for low house prices, Todd Litman points out that Houston is relatively unaffordable for its residents, compared with other large US cities, once transport expenditures are factored in:
Furthermore, Houston’s commuters experience more hours of delay in traffic than most other US cities. New York, on the other hand, looks pretty good. Although it is large and congested, many commuters choose to opt out and take the subway instead. In Houston, they lack that choice:
This month, my grandma moved into a retirement community. In some respects, it’s a significant change for her. After 95 years living in standalone houses, she will be moving into a small, sunny apartment. To do that, she’s had to downsize significantly – donating furniture, giving away belongings, and simply leaving some things behind. (The cycad that my parents gave her decades ago; the lemon tree that I’ve greedily harvested for years.)
Grandma’s new neighbourhood. Wish we built places like this for young people too.
But in other respects it’s not such a big step. She’s not moving far – only from Takapuna to Milford. Because there are retirement apartments sprinkled around Auckland, she is able to downsize and stay in the same community. (As John P’s excellent RCG/Transportblog development tracker highlights, there are many more such developments in the works.) That means that she can maintain all of her social ties and everyday habits – same church, same lunch groups, same healthcare facilities, and same proximity to family.
So I’m not worried about Grandma. But it’s making me wonder what’s in store for my parents, who are now in their early 60s.
They live, as they have done for most of the last two decades, on a large section on the edge of one of the San Francisco Bay Area’s many excellent regional parks. It gives them plenty of space to run a business and pursue their hobbies, like my mom’s wine-making and my dad’s shed Ponzi scheme. (He builds workshop space to house the lumber and tools that he will need to build more sheds.)
But it’s not exactly convenient if you can’t drive. (Or bicycle – they’re now spending more time on electric bikes.) Their house is at the top of a rather steep hill, the sidewalks are pretty patchy, and the nearest stores are three kilometres away. There is no bus service anywhere in the vicinity. Things are very spread out in the California suburbs.
While my parents are fit and vigorous, the fact is that at some point in the next two or three decades, they won’t be able to drive. At that point staying in place will no longer be an option. And if they don’t plan ahead, possibly by moving to a more accessible location before they absolutely need to, it could be a difficult change.
I suspect that they are not the only ones facing this dilemma. Many Baby Boomers will not be able to age in place. The post-war sprawl suburbs where they have spent their adult lives are not suitable for people who can’t drive.
There are three main problems with aging in a typical post-war suburb. Fortunately, all can be corrected or ameliorated – but doing so will require us to do some things differently.
The first is a transport problem: street networks and transport choices. As I highlighted in a post last year, designing neighbourhoods primarily for cars – with a hierarchy of cul-de-sacs, collector roads and arterials – don’t work for other transport modes. You can’t run efficient, usable bus services through these neighbourhoods, and it’s slow to walk anywhere. Furthermore, as shown the following image illustrates, changing that is hard due to the fact that you’d need to re-route street patterns:
A related issue is the quality of sidewalks, crosswalks, and other pedestrian infrastructure. In suburbs where most people drive, these tend to be in poor condition or simply non-existent. I have full use of my legs but still find this exasperating. I can only imagine how difficult it must be for people with limited mobility.
Poor transport choices often coincide with segregated land uses. Because older people tend to be less mobile, regardless of mode, their lives can be better when distances to retail and social destinations are short.
Unfortunately, a second issue that will face aging boomers is that post-war zoning codes have generally mandated rigid separation of residential and commercial use. Houses go in one place; shopping and work goes in another.
Here’s an illustration from Pakuranga and Howick in Auckland’s Unitary Plan. The bright pink areas are “centre” zones that allow both residential and retail. Most of the rest – the cream and orange colours – is exclusively residential. While the cream areas are undoubtedly nice beachfront property, people living in them will face constraints as they grow old.
However, this isn’t the only way to build a city. When I was visiting Paris in December, I was struck by the vibrancy of retail options on just about every block in the city. Due to the fact that Paris lacks single-use zoning, it’s possible to get most of life’s daily needs – groceries and company, in particular – met without walking more than 100 metres.
Typical Paris neighbourhood shops (Source: Wikipedia)
That leads on to a third issue for aging boomers: a lack of housing choices for young and old people alike. Post-war planning has embraced “exclusionary” zoning policies such as large minimum lot sizes or tight controls on multi-family dwellings. Unless these policies are unwound, they will have two negative impacts for aging boomers who are seeking to age in place:
A lack of neighbourhood density means that local retail and social facilities are not economically viable. Mount Eden, where I live, is a great example of how a mix of housing choices can enable vibrant local retail opportunities. The much-derided 1970s “sausage flats” mean that there is a sufficient critical mass of customers within walking distance. This creates positive spillovers for people living in the suburb’s standalone houses.
A lack of options for downsizing in place will force people to leave their communities as they age. Retirement homes alone are not a solution to this problem, as some people may prefer to move into a smaller dwelling before they need of aged car. A greater mix of apartments, terraced houses, and units are important for filling this gap in the market.
Comprehensively addressing these three challenges will obviously take a long time. The built environment is persistent, and as a result many of the places we built in decades past will continue to look and feel the same for a long while.
However, I would argue that people who are middle-aged today have a strong incentive to vote for change. Retrofitting the suburbs with better transport choices, more housing choices, and more social and economic opportunities will benefit people of all ages. But it is likely to be especially beneficial – and urgent – for people in their 50s, 60s and 70s who will soon face some hard choices about where to live. It will offer them the best chance of aging gracefully, rather than facing disruption in old age.
What do you think is important for a happy retirement?