Hyperlocalism Can Help
Hyperlocalism can be a tool that helps convert old suburbia into new liveable neighbourhoods
A generation or two ago the aspirational vision of a good life included -a detached house in the suburbs, a new car, dad working, mum at home, a garden, a quiet culdesac where the neighbourhood kids could play.
Back then inner-city living was not aspirational, but city houses were affordable and there was a variety of choices. Those on low incomes could find cheap boarding houses for instance. Transport for inner-city dwellers was likely to be loser cruiser buses, shanks pony (walking) or a pushbike.
Home ownership remains aspirational but the relative value of outer suburbs versus inner-city has reversed. Now the inner-city is the place to be. Walkable neighbourhoods close to amenities are labeled ‘liveable’ and are highly desired. Transport wise the aspirational trend is towards rapid transit, cycling on its own purpose built infrastructure and mobility as a service.
The difficulty many cities have is how to facilitate the conversion of old suburbia into affordable liveable neighbourhoods. Especially suburbia close to amenities or rapid transit services.
Higher density liveable neighbourhoods that I have examined in Hobsonville have five times the amount of housing compared to older suburban neighbourhoods. Given this fact and that Auckland has over 500,000 houses -mostly suburban housing -and it is estimated Auckland needs about 15,000 new houses a year to meet demand (and reduce the backlog of under supply). This means Auckland has well over a hundred years of housing supply from converting old suburbia into new liveable neighbourhoods i.e Auckland should have a superabundance of housing supply. I suspect other new world cities have similar opportunities.
Somehow though this supply is not eventuating, especially not affordably. Housing supply remains relatively inelastic and in times of growing demand, the response is escalating prices not increased house building (see supply and demand diagrams here which is based on The Economic Implications of Housing Supply by Edward Glaeser and Joseph Gyourko).
In Greater Christchurch, which is New Zealand’s second biggest city, most of the supply response since the devastating earthquakes of 2010 and 2011 has been building ‘old suburbia’ on the periphery of the city or further out around satellite towns. The saying housing affordability is about ‘driving until you qualify’ has certainly been true for Greater Christchurch.
Auckland has been better at constructing a greater proportion of houses within its built-up boundaries, but its supply response to New Zealand’s population shock (an increase of over 10% in less than a decade) has been very slow. Auckland is considered to be one of the least affordable housing cities relative to income in the developed world. Only now in 2018 are there signs that Auckland can build enough houses to accommodate its increasing population, but another demand shock could easily undermine this progress.
Intensification of existing housing areas is not a perfect substitute for greenfield growth with regard to price and quantity. There are more regulatory planning restrictions and market based impediments (site assembly issues) that affect intensification compared to greenfield sites. But these regulatory restrictions and market impediments could be reduced. This would improve the intensification supply response so that a greater proportion of housing supply can be affordably provided in liveable neighbourhoods.
It is this challenge that hyperlocalism is trying to address.
Controlling land-use at a more local level than local government, or shifting land-use powers to a more local level.
In recent years several people from around the world have independently developed related ideas that broadly fit into a concept that is referred to as hyperlocalism.
Reciprocal intensification is an idea that I developed in 2016 and is considered by the international YIMBY movement as a hyperlocal concept. My original idea was that neighbouring landowners could have the right to drop the recession plane and setback planning restrictions between their neighbouring properties if both parties agree.
The purpose of this proposal was to allow suburban neighbourhoods to increase their housing intensification potential in a way that was acceptable to existing landowners.
Reciprocal intensification has been partially legislated for in New Zealand. The Resource Law Amendment Act 2017 amongst other amendments allows a landowner to get their neighbour to sign off on their plans to build out to the boundary, which the council has to approve, regardless of what it says in the planning rulebook.
Unfortunately as the law is written, this doesn’t exactly provide for reciprocal intensification i.e. the neighbour has no guarantee that the original landowner will approve their plans at a later date. Although that could be addressed by employing a lawyer to place a covenant on the property titles that requires the owner of each property to approve their neighbour’s plans.
This law should be simplified. In particular, if neighbours agree to reciprocal intensification -it should be automatically lodged on both property titles -then one or both parties can delay utilising their build option. This adds to the attractiveness of the proposition -because two neighbours can agree it is a good idea even if one or both parties are not yet ready to build.
So far reciprocal intensification in New Zealand has not had much impact on house building. But if the law was further simplified as discussed so that transaction costs were reduced. And if the concept was publicly promoted, it could provide a popular pathway to building more housing in existing suburbs.
Originally I thought this could be a very good way to incrementally increase intensification housing supply in New Zealand. That like in the below picture of a French city block, street front adjoining properties could gradually add height and bulk.
There is some difficulties that can prevent this desirable form of intensification from happening though. An examination of the underlying principles of Reciprocal Intensification combined with New Zealand’s street and plot configurations exposes the difficulties and the opportunities.
Reasonable versus unreasonable planning restrictions
Many planning restrictions are for unreasonable reasons, such as, excluding the ‘wrong’ type of person or due to a moral panic about density.
Cities are defined as ‘places where there is an absence of space between people’. Many planning rules unreasonably interfere with this purpose. For instance -minimum plot sizes were increased (especially common in the US), multi-family dwellings and accessory dwelling units were excluded, unnecessary low height restrictions were imposed (much lower than tree height, street width etc), car parking minimums were prescribed, and so on.
One viewshaft planning restriction that provides a view of the Mt Eden volcano from a 800m section of motorway (where tollbooths used to be located) has made Auckland a ‘City With A Billion Dollar View’, according to a published paper by former Auckland Council chief-economist Geoff Cooper. This gives an indication of the high yet largely hidden cost of unreasonable planning rules.
Geoff Cooper reports that despite Auckland being perched between two harbours with expansive, glistening sea views, plentiful jobs and higher pay, that 75,000 Aucklanders since 2013 have left the city. The number of people leaving Auckland for other parts of New Zealand is now so large, it offsets all natural growth from Aucklanders having children. Auckland’s population growth now rests on the volatile net movement of New Zealanders migrating overseas (primarily to Australia) and foreigners arriving.
Geoff believes cities need an unwavering focus on competitiveness that prioritises housing choices in the places where people want to live. That improving transport infrastructure and continued optimisation of land use regulations are two powerful levers to strengthen the urban proposition.
Unreasonable planning rules are those where the benefits to society are less than the costs. For instance, it is hard to believe that viewshaft E10 is more beneficial than the opportunity cost of the missing CBD homes and businesses.
It is also unreasonable to use planning rules when there is a better alternative for managing particular externality costs. For example, congested roads and crowded public car parking could be managed by de-congestion road pricing and car parking metering, rather than by planning rules, such as, requiring private property owners to supply a minimum number of car parking spaces. Japan, for instance, essentially takes the first option of letting -‘prices do the planning’- to manage crowded streets.
Regarding removing car parking minimums, two Christchurch ‘price the car parks’ advocates recently wrote a good article and there is a video about Nottingham’s experience with pricing parking, which helpfully includes some of the political battles this involved and the positive economic outcomes. Consulting firm MR Cagney have also described giving policy reform advice that has enabled the removal of car parking minimums in parts of Auckland.
Unreasonable planning restrictions should be removed across the city. They inflict a huge productivity burden on the economy because in effect they create an entry tax on workers participating in city labour markets. They do this by making housing markets more inelastic to rising demand, which inflates prices and suppresses quantity supplied.
Housing prices and rents that inflate above building costs, in places where there are employment opportunities, is like a labour permit system where the permit price of entering a city-based labour market inflates faster than wages. This ‘permit’ costs workers and business billions if not trillions of dollars -far larger than any other cartel, monopoly or rort in the economy.
Even worse than the productivity costs, excessive housing costs increase inequality. The wider public are concerned about such housing issues, commonly discussing the problems of increased homelessness, generation rent and the housing crisis in general. Polling in New Zealand shows that housing is the number one public concern.
But there are reasonable planning restrictions that are difficult to remove. What about the landowner who bought a house on a suburban plot of land thinking they were protected from multi-floor buildings being built right up to their boundary? What about the genuine externality (nuisance) costs of losing privacy or sunlight?
In ‘spacious’ new world cities like Vancouver, Seattle, Auckland and Christchurch it will unacceptable to do a Japan and largely ignore these externality costs with a nationwide planning system that gives a blanket right to build. The cultural norm in many parts of the new world, which has been converted to legal principle, is that landowners have a right to be protected from their neighbours building such ‘nuisances’.
Externality loss versus developmental gain
My big insight came when I realised that externality loss could be balanced against developmental gain. Being able to build more floor area on a property adds value to the property. Landowners on a case by case basis may negotiate with their neighbours dropping some externality protections in exchange for being able to build more height and bulk. Note the externality protections that could be negotiated are those that do not spillover to the wider community. Boundary rules like recession planes and setback allowances are good examples of externality effects that do not spillover.
Unfortunately, the gains from two neighbours cooperating using Reciprocal Intensification may be less than the development gains that a larger plot assembly could achieve. This means Reciprocal Intensification is not the simple complete answer I once thought it was. Larger intensification at scale schemes in many situations could provide greater development gains with fewer externality costs. Assembling larger plots of land allows a bigger variety of ‘missing middle’ housing types to be built.
Whether the best development opportunity is provided by an individual plot intensifying, two neighbours cooperating or many neighbours working together, very much depends on street layout and the dimensions of the plots of land.
The problem of cadastral form -the dimensions of city blocks and their internal plot structure
This cadastral form creates ‘facts on the ground’ and a path dependency which is hard to escape. Low density autocentric culdesac and loop street suburbs can be very hard to reconfigure to become desirable liveable neighbourhoods.
In my New Zealand city -Christchurch, pre WW2 urban blocks tend to be something like 80–90m wide and 150m or more long i.e. the oblong grid.
In more recent decades the residential blocks are even larger and culdesac or loop shape in form.
This street form is not as ‘porous’ for walkers and cyclists as it could be.
Research has shown that to maximise commercial and public interactions there should be more than 100 intersections per square kilometer or one intersection about every 100m. Public transport to maximise its catchment area also needs this sort of street network configuration.
Ideally larger New Zealand residential blocks should be broken up with more through-lanes. Reciprocal intensification cannot provide these lanes but larger hyperlocal plot assembly schemes can provide this public benefit. Older cities like Tokyo, Amsterdam and London are fortunate in already having walkable street configurations.
In New Zealand individual property titles tend to be 13–20 m wide at the street front and 30–50m long, although newer plot sizes are getting smaller. These property title dimensions mean the housing development opportunity tends to be down the length of the section using a lot of space for driveways -rather than across the street front. Reciprocal intensification doesn’t really change that equation -although that was my intent.
It is possible that two or three side-by-side neighbours could use reciprocal intensification rules to cooperate with their backdoor neighbours to create a through laneway development, which would minimise space wasted on driveways and increase space available for green areas and housing. This is discussed in an article titled -Streetscaped laneways would be better than infill housing ‘sausage flats’. Local or central government should facilitate this process by offering to buy these laneways for the public good.
In my opinion, for most suburban areas in New Zealand, the best opportunity to maximise the developmental gain versus externality loss, would be to redevelop a whole block (or at least its greater part). I have a hyperlocal proposal whereby cooperation could occur at the block level titled -Can Great Design Help Solve the Housing Crisis?
Of course, all three hyperlocal concepts -Reciprocal Intensification, Streetscaped Laneways, Master Planned Blocks -could be facilitated and each could be the best development option on a case by case basis.
The major criticism of the Master Planned Block proposal seems to be many people think it is impractical that ten to thirty-plus neighbouring property owners could agree on a collective build project.
My first counter for that is only a relatively small percentage of existing houses need to agree to make a significant impact on housing supply. The vast majority (well over 99%) of suburbia in any given year will remain unaffected. Out of a thousand houses or city blocks only a few need to ‘opt in’ to make a significant difference to supply (remember there is over 500,000 houses in Auckland, something like 10,000+ residential blocks and a net four new ‘liveable’ homes can easily replace every one old suburban house).
My second counter is the original landowners would collectively receive a good payoff from working together. Because working together, in many situations, unlocks higher value intensification opportunities than individual property title intensification does.
My third counter is I think people underestimate how rewarding the process of rebuilding a residential block on the neighbourhoods own terms could be. There can be design ‘charrettes’ (intensive planning sessions) with the neighbourhood, master planners and other interested parties collaborating on the developmental vision. This provides a forum for ideas and offers the unique advantage of giving immediate feedback to the designers. More importantly, it allows everyone who participates to be a mutual author of the plan. This process can also use visual aides to properly illustrate what is being proposed. Compared to local council city planning rules this process could be much richer, more creative and more adaptive to local needs and circumstances.
My fourth counter is that most people are only considering the possibility of neighbours cooperating to build more housing in isolation. If hyperlocalism became commonly used, especially at the Master Planned Block level, there could be something like half-dozen or more specialised master planning building firms acting as conduits for the demand for more liveable neighbourhoods. They could explain and advertise to the suitable suburban areas the various intensification opportunities.
Other collective buying groups may also be interested in working with collective housing supplying groups. Bottom up groups, such as -Cohaus who are going through a consenting process in Auckland for a group build project at the moment. Maori groups with strong collective structures, such as PapaKainga housing groups might be interested in such schemes too.
Having an identifiable buying group that the neighbourhood can meet in person may help reduce fears of the ‘wrong type of people’ moving into the community. It could also help with financing because it removes the risk that the development will not sell at the targeted price. NB; the Cohaus group have a target price of $750,000 per household.
Potentially there could be a lot of competition to be master planners and missing middle house builders. Competition to build more housing should bring housing prices down towards their true build costs. Tokyo and other cities have proven it is possible for cities to build their way to affordable housing.
Extending the concept that demand could be an important factor in the success of hyperlocalism. If new rapid transit providers use a full or partial entrepreneurial rail model -a transit provider would have a huge interest in whether existing low density autocentric neighbourhoods are able to convert to desirable higher density urban environments.
A legal mechanism that lowered the transaction costs for groups of neighbours intensifying would be very attractive because finance for rapid transit in part can be based on the land use potential. Note this is a reversal of the current New Zealand transport budget methodology, which assumes no induced demand or land use changes and only estimates current journey numbers and time savings to determine whether transport schemes are worthy of funding or not.
Combining hyperlocalism with rapid transit could mimic some of the success Japanese private rail operators achieve. Urban planning firm -Gehl believe lessons from Japan of combining rapid transit with commercial opportunity may improve service delivery at a lower cost to governments.
Rob Mayo makes a good case for New Zealand learning from Japan’s rapid transit model in a paper titled -Turning passengers into shoppers — adopting a Japan-style public transport service model for Auckland. Transport service providers in Japan have since the 1980s, via non-fare revenue sources, been able to fund continuous improvement in services to meet / grow user demand and maintain overall service profitability. Rob makes the case that Japan’s transport model created an cultural ecosystem of convenience-oriented customer service providers, not just within transport infrastructure but also with department stores, shopping, entertainment and residential rental provision.
Japanese people enjoy the world’s most convenience-oriented lifestyle and the services provided on public transport networks in Japan are an integral part of that. From a very early stage, transport operators recognised the significance of revenue derived from providing lifestyle convenience-oriented services throughout their networks.
Over the years, frequent, quality public transport services to dense, mixed-use, pedestrian- friendly housing and commercial developments, have allowed cities in Japan to achieve high rates of public transport usage and given citizens the freedom to view car ownership as a lifestyle choice rather than a daily necessity. Such PT-integrated communities -dense, walkable, mixed-use centers with a “morning-to-night vibrancy”, have turned transport service riders into loyal customers for a variety of non-fare service offerings (and vice versa)…..
Related to this, local and central government politicians and the public service should realise they have a duty to get the best result from public spending on rapid transit. In other words they should be ensuring that in response to the taxpayer investing in rapid transit, as many as possible; houses are built, businesses start, customers are served and employment created. This is further discussed in a paper titled Do we need to think small to solve big problems like rising housing and transport costs?
So in conclusion hyperlocalism is a relatively simple idea. It is designed to work with existing landowners to increase the level of support in suburban areas for house building. I believe it has potential to be part of the housing and urbanisation reforms that are addressing New Zealand’s housing crisis.