Living Rent:
The 10 Minute Community — The 30 Minute City
The Living Rent proposal is not just about building affordable high quality rental homes it is also about building better communities and building better towns and cities.
The question is what sort of communities are needed and where should they be located?
The answer is the communities need to be walkable and bikeable where residents can meet most of their day-to-day needs with a short 10 minute walk or bike ride. Mass transit stations should be nearby as should schools, childcare, retail shops, GP clinics, pharmacists, offices, sports grounds, nature reserves etc.
The communities need to be mixed income and mixed residential, commercial and social spaces supported by a multi-modal transport infrastructure.
Cities often having distinct neighbourhoods and communities such as described above but cities are not a collection of segregated neighbourhoods. The urban village model in the real world doesn’t exist.
Urban planning and transport history shows that commuting distance has defined the size and shape of cities. Research has shown that cities are more productive when workers can access a greater amount of employment and this effect starts to taper off after 20 minutes travel and diminishes to nothing by 60 minutes (evidence compiled in Cities as Labor Markets, Alain Bertaud, 2014 under the heading -The effective size of the labor market depends on travel speed and the spatial distribution of jobs).
The new communities needed to be integrated with spatial planning so that residents can ideally access the wider city amenities within about 30 minutes travel.
There is a thesis that only the automobile can provide competitive land markets.
roads and automobiles exponentially increased the amount of low value (rural) land that could be developed, and this destroyed the ability of the privileged incumbent landowners / landlords in the pre-automobile city to “gouge”
This report contends that this interpretation of history is incomplete.
The report agrees that automobiles can provide competitive land markets if rural land is accessible for house building without restriction. Yet it is the contention of report that alternative multi-modal transport and compact land use systems have provided a similar competitive result with arguably better social and environmental outcomes.
Location has always been very important to the success of social housing. This has been true since the earliest days of social housing provision in New Zealand.
The first government in New Zealand that attempted to build housing on a large scale was the Liberal government who enacted the 1905 Workers Dwelling Act. They attempted to build homes for workers on the outskirts of cities, in places like Petone. This 1905 housing initiative was unsuccessful. Only a few hundred of the planned 5000 houses were built. Chiefly because the housing was too expensive and located outside the limits of tram or train services meaning there was little demand from workers for the housing. A lack of affordable and fast transport meant workers could not access the Wellington city labour markets to pay for the housing.
Wellington as discussed earlier in the Living Rent: The Twelve Hour Home report is a city struggling to provide living rent housing. The government has one Kainga Ora housing scheme in Porirua (pink dot below) that hopefully improves this situation. This is a planned regeneration of Eastern Porirua which has the capability of building thousands of rebuilt state houses and thousands of affordable homes and market rate homes. Unfortunately as can be seen on the below map Porirua is not centrally located in the Greater Wellington city.
There would be more central sites available in the Wellington area to build new suburbs. As described in the report Can Wellington Transform Itself? which discusses a housing development possibility marked in blue in the map above.
Regardless of whether the specifics of the above Wellington locations are desirable or not, the importance of location should not be underestimated.
There are well established spatial economic models which show how private property space is allocated in cities. They indicate that taller buildings, with more floor space, housing a denser number of people will occur in the centre of cities because central locations have the fastest access to the greatest amount of desirable city amenities, making them attractive to a greater number of people. These models broadly match what is seen in the real world.
These models are simplistic descriptions of demand for private property space in a city. The model ignores the issue of how to create public right-of-ways, their nature -cars only or multi-modal and the issue of how to manage congested roads. The model also assumes there is no restriction on replacing lower capital value smaller and shorter buildings with higher value larger and taller buildings in response to increasing demand and increasing land prices.
The real world experience of New Zealand cities is it is difficult to create more ‘land’ by building floors on top of floors. For instance there is a lot of restrictions on say replacing a few neighbouring single level suburban houses with much larger and taller apartment buildings.
Understanding the nature of planning restrictions and how infrastructure is provided in cities is important for the provision of living rent housing.
Because of the importance of location, proponents of affordable community housing need to be aware of the wider debate about urban planning and spatial economic considerations. New Zealand is having a conversation about possible reforms in this space. Some of these discussions are discussed below under the following headings.
The market failure of private covenants
Housing researcher Kaye Saville-Smith has gathered evidence showing there is market failure in the delivery of lower value homes suitable for the lower income end of the housing continuum. Her research shows that when government gave capital funding support for house building this mitigated the market failure. Yet this support largely stopped in the 1990s and the market has not been able to respond to supply this missing market. This is shown in the below graphs.
New Zealand not only builds too few houses in response to demand. The composition of supply does not match demand. Since the 1990s the private sector have built few houses for the middle or lower end of the housing market.
There has been a market failure preventing the private sector from taking up the role of supplying low cost builds.
One of the mechanisms that restricts the building of lower priced homes is private covenants that the private sector imposes on new housing developments. Private developers often use land covenants to prevent ‘low-value’ multi-unit dwellings, rental housing, smaller houses, and so on, from being built. Even in cases where multi-unit buildings would have higher total capital value.
High land values shouldn’t prevent cheaper multi-unit dwellings from being built on small plots of land if collectively they have a high capital value. Removing or mitigating this market failure will provide benefits for the lower end of the housing continuum.
Rebalancing central and local government responsibility for infrastructure
Local and central government need to work together towards a common goal of improving housing supply.
New Zealand’s more sophisticated housing affordability advocates realise that it will take more than just requiring local government to remove unreasonable planning restrictions for housing supply to improve. What is required is for local government to want to remove unreasonable planning restrictions. The way to achieve this is by rebalancing the gains and losses from population growth between central and local government.
If this rebalancing does not occur, then central and local government will play a game of whack-a-mole. Central government will remove obstacles preventing more homes from being built and local government will find new reasons to stop homes from being built. This process will continue until local government sees new housing and new citizens being attracted to their city as a benefit not a liability.
Eric Crampton as the chief economist of the New Zealand Initiative has written about this local and central government imbalance. Saying, central government gets more income tax revenue when a city’s population expands; local government gets an infrastructure bill. Central government gets more Goods and Service Tax (GST) and company tax revenue when it allows more development; local government gets the complaints about tall buildings blocking views and faces the bill for trunk infrastructure upgrades.
For central government housing initiatives to succeed will require local government buy-in. This will be determined in large part by whether the housing initiatives facilitates the provision of good quality public amenities or whether it leaves these as a liability for local government.
The New Zealand Initiative advocate that local government’s opposition to house building could be improved by;
- Removing local government’s building consent liability i.e. its ‘last man standing’ joint liability for building defects like leaky homes.
- That new special purpose vehicles which can utilise targeted rates to pay off infrastructure bonds be allowed, so that new housing developments can pay their full infrastructure costs.
- The Initiative supports the proposed Infrastructure Funding and Financing Bill. Describing it as working in the following manner;
A developer wishing to turn a paddock into a subdivision could propose a new levy on the property on top of current rates. That levy would pay off, over time, the debt needed to fund the new infrastructure. Someone buying a property in the new subdivision would see the additional rate on the LIM and would weigh it in the same way that a person buying an apartment weighs the associated body corporate fees.
- The Initiative strongly recommends there be a mechanism allowing local government to share some of central government’s revenue gains from population growth, such as receiving the GST on local construction.
These are all sound recommendations and they match affordable housing building company’s complaints of the current regulatory system.
Central government investing in housing which indirectly funds infrastructure rather than directly investing in infrastructure itself or devolving down revenue generating power could be an acceptable method of rebalancing costs and benefits between local and central government.
As noted in the introduction investing in public housing can be viewed as indirectly funding of infrastructure, such as, new roads, rails and pipes. As once the houses are built property taxes (general rates and/or targeted rates) pays for the infrastructure provided. This indirect source of funding can substitute for direct government investment in infrastructure. Both direct and indirect funding are legitimate approaches for reducing the infrastructure deficit component of the housing crisis.
A well funded community housing sector capable of building thousands of new houses a year could be anchor investors for high amenity new suburbs and redevelopment of brownfield sites providing a significant percentage of the builds.
The described 10-minute community at the start of this report would be high amenity. In planning circles it is well known that successful higher density communities require higher amenities. For instance compact city spaces require a grid of streets and paths that use a higher percentage of land than cul-de-sac or loop urban forms typical of car-centric suburbs. A mass transit station and corridor would be required. As would community and recreational services. Access to nature would also be valuable.
Capital grants to the community housing sector could indirectly fund a good proportion of these public amenities whilst ensuring low income earners benefit from the amenities provided.
The continuum between the individual and society.
An important consideration for housing reforms to consider is finding the right balance between the individual and society. Reform should neither favour the individual, or the collective. One should not be more important than the other. Reform should strengthen them both.
This is difficult because Western thinking has a conceptual history favouring dualism -order vs mess, town vs country, libertarian vs communism, the environment vs the economy, left vs right…
New Zealand cities need to respect ‘both’ the individual and society rather than preferring ‘either or’. Many cities overseas have a better understanding of the ‘both’. For example, the secret reason why Tokyo has housing half the price of Auckland (and Wellington) may be related to the way the Japanese conceptually conceive order as being receptive to mess.
According to Metabolist architect Kisho Kurokawa; “the open structure, or receptivity, is a special feature of the Japanese city and one it shares with other Asian cities. This is why the Japanese are so tolerant of urban forms that the West would see as ‘irrational’ or ‘messy’.”
The ‘both’ of the individual and society can also be logically deduced from the ‘what’ and ‘why’ of cities. The ‘what’ of cities according to Edward Glaeser author of Triumph of the City is; “Cities are the absence of physical space between people and companies. They are proximity, density, closeness. They enable us to work and play together, and their success depends on the demand for physical connection”.
The ‘why’ on first thought appears to be freedom. People choose to move to urban environments, and they choose to stay. In Germany, the saying is Stadluft Macht Frei -Urban air makes you free. In England, workers were last prohibited from moving to improved conditions as far back as the Statute of Labourers in 1351. Article 13 in the UN Declaration of Human Rights states that “everyone has the right to freedom of movement and residence within the borders of each state”.
Yet the very attractiveness of cities also tracks back to their collective right to provide public goods. Cities have a network of public right of ways -transport corridors plus a plethora of other public infrastructures and services. These public services provide benefits to co-located people, so that people can benefit from accessing people, and they protect urban residents from disease, flooding, fire, crime and other untoward effects.
These public infrastructures are so valuable that legislation prioritises public works over private property rights. In New Zealand there is well established law, the Public Works Act giving local and central government the right to compulsory purchase private property at a fair price for the purpose of building public right of ways and services. The fact that the public allows this exception, whilst its general position is an intolerance to labour or capital being commandeered by the state, shows the importance of public infrastructure and the concept of the collective when it comes to the built environment.
Compulsory acquisition is an example where the power of the state has increased in a manner where both power for the state and society is enhance equally. The state can only utilise compulsory acquisition if it fairly compensates property owners and should the acquired land not be used for its intended public purpose it is returned to the original property owner. The public of course expect to benefit from the public works resulting from the compulsory acquisition. There are many ‘shackled state’ examples both in the housing and urbanism space and outside it.
In general, if the public perceives the state is utilising its powers to benefit itself not society then the public will find a way to further tighten the shackles. If society cannot shackle the state then over time the risk is it becomes a failed state. Alternatively if the shackles are too tight then the status quo cannot be reformed in response to the challenges of the day. Like a housing crisis or climate emergency. The corridor truly is narrow…
What are the implications for planning reform for this continuum between the individual and society?
The first task of urban planning should be defining the public right of ways and environmental spaces separate from private spaces. Spatial planning is needed before ‘facts on the ground’ makes this task difficult if not impossible.
Spatial planning needs to be aware of the difficulties of land assembly (contiguity -general description here) as this is the basis for spatial plannings high priority.
Acquiring public corridors after the fact in urban environments is difficult if not impossible. If it becomes necessary, it is hugely costly, an unnecessary expense that better planning could have avoided. In New Zealand the lack of allocated space for rapid transit on Auckland’s north-western motorway would be example of this sort of failure.
Minister’s Phil Twyford and David Parker have created an Urban Growth Agenda (UGA) with five interconnected areas of focus:
- infrastructure funding and financing -enabling a more responsive supply of infrastructure and appropriate cost allocation
- urban planning -to allow for cities to make room for growth, support quality built environments and enable strategic integrated planning
- spatial planning (initially focused on Auckland and the Auckland-Hamilton corridor) -to build a stronger partnership with local government as a means of developing integrated spatial planning
- transport pricing -to ensure the price of transport infrastructure promotes efficient use of the network
- Legislative reform -to ensure that regulatory, institutional and funding settings are collectively supporting UGA objectives.
The Urban Growth Agenda (UGA) could be improved upon by better defining the priorities of each constituent part in relationship to the other.
For instance, it makes sense to spatially plan roads and other transport networks (rail, mass transit, cycle and footpaths etc) before the use of that space is optimised with transport pricing. Also, it makes sense to integrate infrastructure funding and financing tools and urban planning approaches following the layout of the spatial plan to ensure private spaces can strongly respond to the public spatial infrastructures provided.
In New Zealand, Auckland and Wellington have good spatial plans with a Congestion Free Network for Auckland and a V shaped linear transport model whose tip is being extended from the city through to the airport with the Let’s Get Welly Moving initiative. Hamilton and Queenstown are also making good progress.
Christchurch which is New Zealand’s second largest city lacks an agreed upon spatial plan. It needs to catch up with Auckland and Wellington by completing a detailed spatial plan such as the suggested one above.
Every growing city or town should have a spatial plan. Even built environments without much population growth may need spatial plans to manage potential changes to their built environment, such as, disaster events like earthquakes creating red zones or climate change leading to sea level rises.
Successful spatial plans can be incredibly long lived, for instance, Copenhagen’s five finger model was developed in 1947 and is still guiding Copenhagen’s infrastructure decision’s today.
Although spatial planning should be the first priority in the Urban Growth Agenda, if spatial planning (or planning in general) were to control every decision within the built environment, in the way that five year plans came to define the Soviet Union, cities would lose the ability to evolve in response to changes in demand for different types of built environments.
Even more importantly if planning controlled every aspect of the built environment citizens would lose freedom of movement. The ability to relocate to towns and cities in response to improved conditions. Planning reform needs to ensure that spatial planning doesn’t swing the continuum too far towards collective decision making. Individuals and small community groups need the freedom to respond to spatial planning on their own terms.
Cities are attractive for many reasons. Whether it be for employment or trade reasons, or because they are a place where ideas are shared, or a place to find a partner, or a place to access specialised public or private services, or for some other reason why people collocating together is beneficial. This means that the Resource Management Act (RMA) when considering amenity ‘effects’ and ‘outcomes’ in an urban environment must consider that people co-locating with people is a positive. Planning reform for the urban environment cannot just focus on managing negative environmental effects because that would be a negation of the very nature of cities.
This ‘attractiveness’ has affected all cultures in New Zealand. Although at different times. The later urbanisation of Maori and Pacific Peoples may be the reason these groups having much lower home ownership rates, especially as house prices in relationship to income has increased rapidly in the last 30 years. Planning reform in New Zealand needs to ensure cities are inclusive and welcoming to Maori to respect the partnership of the Treaty of Waitangi. In general, towns and cities need to be inclusive to all newcomers and cultures. Planning reform should facilitate neighbours welcoming neighbours.
Many planning restrictions are for unreasonable reasons, such as, excluding the ‘wrong’ type of person or due to a moral panic about density. Other types of unreasonable planning restrictions include those where the benefits to society are less than the costs. For instance, it is hard to believe that viewshaft E10 in Auckland, which can only be viewed from a motorway, is more beneficial than the opportunity cost of the estimated $1.4bn worth of missing CBD homes and businesses that it creates.
It is also unreasonable to use planning rules when there is a better alternative for managing externality costs. For example, congested roads and crowded car parking could be managed by congestion road pricing and car parking metering, rather than by planning rules, such as, requiring private property owners supply a minimum number of car parking spaces. Japan, for instance, takes the first option by ensuring the externality costs of car parking and congestion are directed at the car owner not the home or business owner.
The implications for planning reform of reasonable versus unreasonable planning restriction issue is that some sort of technical mechanism like Auckland’s Unitary Plan Hearing Panel is needed to assess the cost/benefit of reasonable versus unreasonable planning restrictions.
Arguably it is the duty of the state to lower transaction costs for its citizens. In New Zealand the RMA has been utilised by local government to create district plans that mediate neighbourhood ‘nuisance’ effects, rather than leaving this issue for local neighbourly norms and the courts -the Law of Torts -to remedy. Much of the way the RMA is applied is not about managing ‘common’ urban resources or environmental considerations but about removing ‘nuisance’ complaints that might occur between individual property owners. Often these effects, such as setbacks and shade planes are issues that only affect a few neighbours not the wider collective.
There should be consideration of alternative lower transaction cost methods for managing nuisance issues so that urban neighbours can negotiate amongst themselves mutually beneficial outcomes for building more floor space that does not require the higher transaction costs of a full RMA process when the environmental effects do not impact on the wider commons and collective.
Resolving nuisance issues at the neighbour level to the mutual advantage of all concerned (whether they agree on more floorspace or to stick with the baseline district plan) should lead to more optimal outcomes than an external governance authority like a Hearing Panel making an arbitrary across-the-board decision for urban neighbourhoods.
Field studies on Coase law situations, such as, “In Order without Law (1991) by Robert C. Ellickson shows that the law is far less important than is generally thought. He demonstrates that people largely govern themselves by means of informal rules -social norms -that develop without the aid of a state or other central coordinator.
More recently Ellickson has written an academic article titled The Zoning Strait-Jacket: The Freezing of American Neighborhoods of Single-Family Houses which;
marshals a variety of evidence to prove that the zoning strait-jacket exists. It also discusses possible exceptions to it. The most plausible is proximity to a newly opened transit node, an event that may transform zoning outcomes, even in a neighborhood of houses. Building on the work of others, notably William Fischel, I explore the dynamics of local zoning politics. The goal is to develop an overarching theory that is consistent with the larger study’s three basic empirical findings: that suburbs in Greater Austin, Texas, are relatively pro-growth; that, even in Greater Austin, zoning policies freeze land uses in established neighborhoods of detached houses; and that the opening of a new transit node sometimes can loosen the zoning strait-jacket.
Pro housing activists, such as YimbyWiki have called a bottom up approach hyperlocalism which has the intent of unfreezing very small parts of suburbs, down at the level of neighbours, streets and blocks. Some of these hyperlocal concepts echo a more group approach to housing in a way that can also be seen in co-housing or papakainga housing. An article expanding on these themes can be read here Hyperlocalism may help rebuild suburbia.
Verbal discussions with London Yimby organiser John Myers have revealed that very small groups -as small as an individual property owner up to neighbours, streets and urban blocks are more favourable to relaxing rules on building more floor space because having this option directly benefits them.
Small groups of neighbours can better internalise the cost vs benefit considerations of the nuisance -whether it be loss of privacy, excessive shade, noise etc -versus the utility or financial benefits that could be made by building more floor space.
Mid-sized groups like wards and electorates are more negative towards relaxing planning rules because the direct benefits are highly localised, whilst the potential costs are not (and are easily exaggerated).
Another group -new residents who would benefit from more floor space are unidentifiable -so are not considered at the ward or electorate level. Potential new residents do not engage in RMA submission processes. Going forward if potential new residents consider an urban environment unwelcoming they simply go elsewhere. This missed opportunity is invisible. The effect on the potential residents who leave and on the city is never officially registered. Only folk stories like the Pied Piper of Hamelin hint at the cost of emigration.
For larger groups up to the country level having affordable, accessible and inclusive cities is an important policy objective. A meta policy that helps to fulfill many other nation-wide policies.
This means support for relaxing planning rules are highest at the individual and whole society levels and lowest for mid-sized groups. Ortalo-Magné and Prat (On the Political Economy of Urban Growth: Homeownership versus Affordability, American Economic Journal, 2014) postulated this U-shaped curve of the maximum politically achievable housing stock according to the size of jurisdiction that makes the decision on zoning.
It is this finding that supports some housing supply initiatives being centralised upwards to the national level and some devolved downwards to the very localised level.
In 2019 at the US Ostrom Workshop a change to New Zealand’s Resource Management Act in 2017 was extensively discussed. This change allowed a waiver of the setback rule by adjacent neighbours. This discussion can be seen in the Fixing Urban Planning with Ostrom draft paper written by John Myers. In practice, this waiver appears to be little used in New Zealand, but if it was further simplified to be an item placed on both neighbouring properties LIM reports, the lower transaction costs may help establish a worthwhile principle.
It is unusual for New Zealand conditions to be part of an international policy discussion group. This discussion regardless of the specific merits or otherwise of the waiver of setback rule provides a unique and independent perspective that could contribute towards housing reforms in New Zealand.
John Myers was on the BBC on the 26th of February 2020 where a simplified version of his proposal is presented.
Spatial planning as a means of correcting a failure in New Zealand’s urbanisation model should also be considered. I would suggest there is widespread agreement that Auckland should have built a mass transit network (Robbie’s Rail) decades ago to prevent the congestion and housing difficulties it is currently experiencing.
Dr Chris Harris the urban historian has thought deeply about this issue, which he expressed in articles such as, An urbanist looks at what went wrong in Auckland and how we might fix it and the academic paper -Lost City: Forgotten Plans for an Alternative Auckland.
There is widespread support in Auckland for correcting these motorway suburbia mistakes, and good progress has been made on the transport side of the equation with Britomart, electrification of tracks, Northern Busway, new rolling stock, commencement of the City Rail Link. These and various other projects will eventually create a congestion free mass transit network for Auckland.
In towns and cities outside of Auckland there also appears to be widespread public agreement, at least at the abstract level, that when New Zealand’s smaller towns and cities grow they should not repeat Auckland’s spatial planning mistakes.
For example a local voluntary advocacy organisation in Christchurch called -The Canterbury Housing and Transport Club (CHAT Club) -has undertaken a worked example an alternative Greater Christchurch spatial plan that integrates mass transit with housing which they called it MaRTI. This attempted to shift from the abstract to the tangible the public perception of alternative urbanism models for Christchurch that would avoid repeating Auckland’s mistakes. The executive summary of MaRTI is here, a debrief of the public engagement is here and a write up of why Christchurch needs MaRTI is here.
There is a chicken and egg problem for New Zealand incrementally moving towards an alternative urbanism model based around mass transit. Currently much of New Zealand’s suburbia lacks density to financially support mass transit. Yet, without mass transit, existing suburbia lacks the transport mechanism that would justify a good supply of quality higher density housing.
Leaving this conundrum unresolved creates spatial geometry issues. Mass transit alongside other multi-modal transport options would allow more movement using less space. Meaning more people can co-locate together, giving all the benefits that implies.
The solution to this conundrum could be planning reform whereby Kāinga Ora and NZTA engage together to deliver mass transit. Kāinga Ora is the government’s primary housing and urban development delivery arm, focusing on providing public housing, and initiating or undertaking urban development that require complex coordination tasks.
For a comprehensive review of Kainga Ora’s role in future urban developments there is an excellent video from the 2018 Building Nations Symposium.
Kāinga Ora will allow the government to quickly construct higher-density built environments in city/suburban locations where an economy-of-scale number of people can access mass transit. Kāinga Ora will develop crown owned land, brownfield land and greenfield land where a large enough block can be assembled to make master planning a new built environment worthwhile. Hobsonville Point a former airbase developed by HLC is an earlier example of this type of process. Although it was suboptimal because it lack mass transit. Its main alternative transport mode is a ferry which is relatively slow and infrequent.
Due to the difficulty in acquiring large scale blocks that can be master planned in already built up suburban environments it is likely that Kāinga Ora will operate in greenfields and brownfields only. A bottom-up process, such as hyperlocalism or liberalising planning rules (like when the Unitary Plan was implemented) is the more appropriate method for allowing change for New Zealand’s existing suburbs.
The theoretical underpinning of Kāinga Ora should be ‘positive planning’. Positive planning is where the government is an active planner and builder of compact urban environments. In contrast, negative planning imposes planning rules on the private sector in the hope of achieving the same outcome (if there are no unintended consequences –like leapfrog sprawl). Negative planning is how the RMA has been applied in New Zealand.
Prof Alan Evans a UK economist details in a chapter on positive planning how a city can achieve as low land prices as land development where there is no rural urban growth boundary whilst maintaining a compact city configuration. This contrasts with negative planning (such as New Zealand’s current RMA District Plans) which can only achieve compactness by imposing urban growth boundary rules which increase land prices. This approach and variations on it has been successfully implemented in a number of countries in Europe and Asia. (Economics and Land Use Planning, Alan W. Evans, 2004, P.176–180).
The implication for RMA reform of Kāinga Ora is that two models of urban planning will exist in New Zealand –positive and negative planning. This will require more tolerance and understanding to avoid the conflict that was seen between Panuku Auckland Council’s small scale positive planner and Auckland Council’s Planning Department when the Dominion Road development was rejected.
New Zealand has some other examples of movement towards positive planning. For instance, Queenstown has required private developers to give a percentage of the land that they develop for community housing development. This has been called inclusionary zoning –but that term usually refers to the private developer having to supply x percentage of affordable housing not supply x percentage of land. The way Queenstown applies inclusionary zoning is more akin to the concept of voluntary land readjustment, which Prof Evans categorises as a kind of positive planning. Voluntary land readjustment helps Japan pay for new rail suburbs as the linked worked example shows. There is also an article describing Japan’s urbanisation model here -land readjustment is the final point.
Supporting both bottom-up urban reform processes, such as, hyperlocalism and removing unreasonable planning restrictions and top-down processes, such as Kainga Ora and spatial planning, is not inconsistent. If you believe that urban reform should strengthen both society and the individual. The two processes can be complementary to each other.
The inequality, productivity and environmental narratives used to discuss urban planning reform
This report prefers the division of housing reform concerns into the following terms -inequality, productivity and environment for these reasons;
- Economics is the study of how society allocates resources. Therefore, economics and especially spatial economics can contribute to all three narratives, not just a ‘market’ narrative. Acknowledging this point ensures all academic schools of thought are considered.
- This narrative division is a logical breakdown of the urban reform issue. Productivity is concerned about the growth of the ‘pie’, inequality the fair division of the ‘pie’, and the environment is concerned about the sustainability of the ‘pie’.
- This narrative division matches the discourse of New Zealand’s main political parties. Labour -inequality, National -productivity and the Greens -environment. Of course, there are overlaps -with blue/greens, and red/greens and both Labour and National target centre voters who will care about all three issues. Note New Zealand First primarily focuses on the provinces although it does have some interests in urban reform. It is pro-rail and pro a nationalistic government interventionist approach, so probably pro spatial planning from those perspectives. Historically New Zealand First has taken an anti-immigrant stance, which could mean it is less interested in improving the process of ‘neighbours welcoming neighbours’.
- Loosely the narrative division matches some of the legislation considerations. Kainga Ora Act -inequality, NZTA cost/benefit business case approach -productivity, Carbon-Zero Act -environment
Economists supporting productivity, inequality and the environment
(non-exhaustive list)
Productivity
Alain Bertaud’s work on Cities as Labour Markets is important
Edward Glaeser work showing that house prices are most closely relate to supply factors, like the cost of building, is a very significant point, and his work has been reproduced in New Zealand by the previous government. Minister Twyford quoted these first two authors and the PwC Institute report extensively in his recent speech to the Government Economics Network 2019 Conference.
There are some housing and urbanism experts who pessimistically believe land supply is fixed (inelastic is the economics term) therefore it is demand factors, such as financing and taxation which determines housing affordability. There is a discussion on these two schools of thought here. The report Somewhere to Live: Exploring Solutions to the Housing Affordability Crisis in Aotearoa New Zealand in February 2020 tends towards this pessimistic view although it did support public housing supply initiatives.
There is a further report here discussing how successful cities need to understand how space in a city responds to some other supply and demand factors.
Enrico Moretti modelling of who benefits from productivity gains -landowners or workers, as being dependent upon whether a city has inelastic versus elastic housing supply is relevant.
The Causes and Economic Consequences of Rising Regional Housing Prices in New Zealand by Peter Nunns which modelled emigration from New Zealand due to high housing costs.
PwC Cities Institute report, Competitive Cities: A Decade of Shifting Fortunes, examines New Zealand cities from the perspective of income and cost of living. This report showed Auckland was the only city in Australasia to have experienced a significant drop in discretionary household incomes over the last decade. An average drop of some $5000 per household, at a time of sustained economic growth largely because of housing and transport costs. The same report showed Brisbane, comparable to Auckland in GDP growth rates experienced an increase in disposable household income of $20,000 over the same period.
Inequality
Shamubeel Eaqub the New Zealand economist who wrote Generation Rent with his wife revisits his policy prescription here. His recommendation that -“the game changer is the build-to-rent sector” -is consistent with the Living Rent reports. Shamubeel has reached the same conclusions as the Living Rent report that government build programme should include build-to-rent housing as there is insufficient demand to only build owner occupier homes.
In reality, 100,000 homes for ownership are simply too many; the people they want to help can’t afford to buy. KiwiBuild will need to be recast to build social houses, build-to-rent, and assisted ownership, with some daring experiments like long-term land leases (with rights of conversion to freehold).
Matthew Rognlie’s closer examination of the quantitative data in Thomas Piketty’s book Capital in the 21st Century shows that the long-term rise in capital income is mostly driven by housing.
James Gleeson a Housing Research and Analysis Manager at the Greater London Authority has some fascinating analysis comparing London with Tokyo. In particular finding that Tokyo’s greater productivity in using a given amount of land to build more houses more responsively meant house prices were lower even though land prices were higher.
James Gleeson also details the distributional consequences for the UK of rising land values and poor housing land-use productivity. The greatest increases in housing demand in recent decades have been the centres of large cities, responding to employment growth, to reductions in crime and improvements in other amenities, and to the stagnation in transport speeds. As a result, land and house prices have grown the quickest in the big city centres. James Gleeson concluded that suburbanisation in the past had tended to equalise wealth by opening up home ownership to a broad swathe of society, whereas re-urbanisation in the late 20th and early 21st centuries has tended to increase wealth inequality.
Environment
Donald Shoup a distinguished research professor of urban planning at UCLA, and a Georgist economist. His 2005 book The High Cost of Free Parking identifies the negative repercussions of off-street parking requirements and relies heavily on ‘Georgist’ insights about optimal land use and rent distribution. In 2015, the American Planning Association awarded Shoup the “National Planning Excellence Award for a Planning Pioneer”.
Donald Shoup believes Parking Reform Will Save the City by reversing the process by which cars dominated city planning.
At the dawn of the automobile age, suppose Henry Ford and John D. Rockefeller had asked how city planners could increase the demand for cars and gasoline. Consider three options. First, divide the city into separate zones (housing here, jobs there, shopping somewhere else) to create travel between the zones. Second, limit density to spread everything apart and further increase travel. Third, require ample off-street parking everywhere so cars will be the easiest and cheapest way to travel.
Donald Shoup doesn’t believe that Ford and Rockefeller conspired with city planners to create car centric urban environments but the results in cities in the US (and arguably New Zealand too) indicate that was the direction of travel for much of the last century and even today it is probably the dominant paradigm for most city plans in New Zealand.
Minister Julie Anne Genter with economists Peter Nunn and Stuart Donovan, collaborated to write the Auckland chapter of a book tiled Parking which examines parking policies in 12 cities on five continents.
Alain Bertaud in his new book ‘Order Without Design -How Markets Shape Cities’ on pages 199 and 200 connects the theory of car parking with congestion road pricing.
The Political Theory Narrative
There is an argument that the problem with under supplying housing is not economic but political. William Fischel has published a book titled the Homevoter Hypothesis arguing that local governments make land use decisions based on the views of the typical homeowner. Because a house is a large and illiquid investment, a “homevoter” (Fischel’s word for a home-owning voter) often focuses on reducing the risk of a decline in property values. As a result, homevoter-dominated local governments shun new residential development or commercial development near existing housing, because even if those developments aren’t going to reduce property values, why take the chance?Especially why risk allowing apartments or anything that might bring in poor people.
Peter Nunns empirical analysis of submission’s into Auckland Council’s Unitary Plan found there was a strong correlation with greater submission numbers from older and higher income people but homeowners were not correlated.
More subtly there is an argument that because changes in the built environment is in the space between the individual and society this meas no one entity is responsible for it. Change therefore requires the cooperation of multiple entities. For instance, quality medium density housing requires quality public transport. The Ministry of Housing and Urban Development needs to cooperate with the Ministry of Transport. Central government needs to cooperate with local government. Landowners with strategically located land that could be used for housing need to cooperate with an urban development authority to masterplan that space. And so on.
All the stakeholders need to be on the same page to progress change. New Zealand has found it difficult to get all these entities to share a common understanding and purpose.
In the 1971 documentary about progressive urban reforms for Wellington, John Roberts, Professor of Public Administration and later founder of Victoria University’s Institute of Policy Studies presciently explains why reforming New Zealand’s system of urbanisation is difficult to do.
“People are not progressive and they don’t like to disturb the status quo, because there’s too many interlocking agreements in it.” This pessimist viewpoint about interlocked agreements preventing effective reform has for many decades proven itself to be true in New Zealand. Somehow New Zealand needs to find the courage to escape this process. The value of urban theorists like Glaeser may in the end be more about their optimism for cities rather than their acumen in spatial economics.
