Elsewhere I have voiced some doubts about how commercially feasible development is calculated and if I have read the Council's latest report right, I think it tends to reinforce the argument that there is a big element of 'chasing your tail' in the way commercially feasible development is calculated.
The Auckland Unitary Plan went to great lengths to find sufficient commercially feasible development to meet estimated future needs. Luckily for the plan, the focus on commercially feasible development came part way through the plan development process. The zoning pattern advanced through the draft plan was 'pumped up' to provide the requisite 'feasible' capacity. There is nothing wrong with this, and the Independent Hearings Panel did a sterling job of uncovering capacity. What is interesting is whether starting the plan development process with the most recent assessment of what is commercially feasible development might have ended up with a somewhat different zoning pattern - something that may not have worked so well in the long term.These questions all came from reading the Auckland Council report: ‘Land covenants in Auckland and their effect on urban development’ (see Note 1). The report sparked a few thoughts about urban capacity, how it is measured and some of the implications if too much importance is placed on the modelling that goes into working out commercially feasible development.
To start the story, the National Policy Statement on Urban Development Capacity required the Council to report on capacity by 2017, and the Council did so in December 2017. The NPS has a big focus on ‘commercially feasible capacity’. There has to be enough commercially feasible capacity for 30 years growth.
The 2017 assessment said there was enough capacity in the short to medium term, but was a bit hazy on the detail about the outputs of Council's modelling of commercially feasible development, particularly the areas of the city where urban redevelopment is most feasible.
The December 2017 report was an update on modelling of capacity for the Auckland Unitary Plan Independent Hearings Panel process. There are some differences between the two sets of estimates, with a drop in commercially feasible development between the two assessments, not because of zoning changes but due to changing inputs around cost and other parameters, I think.
The ‘covenants’ report looked as the possible implications of restrictive private covenants on dwelling capacity (a topic that I am interested in, but that is for another day). What is interesting is that the covenants report uses data from the 2017 modelling exercise that sheds a bit more light on feasibility by AUP zone.
What sparked my thinking was that if the sole focus of capacity is to provide enough commercially feasible development (as required by the NPS), then the data in the covenants report suggests a different zoning pattern to that set out in the AUP (OP). The information in the report potentially shows up the folly of trying to ‘chase’ the market, especially over a long planning horizon.
The covenants report sets out the following land area (hectares) in each of the main residential zones used in the AUP and the number of land titles in each zone. I think the number of titles is close enough to the number of dwellings in the zone. You get the following figures.
Zone
|
Total area (ha)
|
Total titles
|
Titles per ha
|
Large lot
|
2,912
|
6,879
|
2.4
|
Single House
|
8,539
|
86,191
|
10.1
|
Mixed Housing Suburban
|
14,970
|
199,468
|
13.3
|
Mixed Housing Urban
|
7,531
|
100,687
|
13.4
|
Terrace Housing and
Apartment Buildings |
2,485
|
42,415
|
17.1
|
Total
|
36,437
|
435,640
|
12.0
|
The land areas in the different zones is very similar to the IHP's final capacity modelling report.
The pattern of ‘titles per hectare of zoned land’ seems logical, as you step up through the zones the density of development increases. The average of 12 titles per hectare across the five zones feels about right.
So you would think on the above numbers that adding more Terrace Housing and Apartment Building (THAB) zoning would be the way to add more dwelling capacity, if you needed to fit more dwellings into the existing urban area. You would also think that it was helpful that the AUP zoned so much land THAB despite the worries and protests over ‘intensive development’.
If we then look at plan enabled capacity provided by these zones (that is, the physical capacity available) , as set out in the covenants report, then the benefits of the THAB zone are apparent. The next table shows plan enabled capacity by zone. Plan enabled is additional dwellings.
Zone
|
Plan enabled
capacity (dwellings) |
Existing
titles |
Total
dwellings |
Dwellings
per ha |
Large lot
|
5,808
|
6,879
|
12,687
|
4.4
|
Single House
|
11,432
|
86,191
|
97,623
|
11.4
|
Mixed Housing Suburban
|
333,302
|
199,468
|
532,770
|
35.6
|
Mixed Housing Urban
|
258,992
|
100,687
|
359,679
|
47.8
|
Terrace Housing and
Apartment Buildings |
296,730
|
42,415
|
339,145
|
136.5
|
Total
|
906,264
|
435,640
|
1,341,904
|
36.8
|
The additional number of dwellings possible (plan enabled) is about the same as previous analysis, so all good.
The AUP residential zonings provide physical space for 900,000 more dwellings. The THAB zone makes a decent contribution to this total - 33%. There is room for 296,730 extra dwellings in this zone.
If those almost 300,000 dwellings in the THAB zone were not possible, then something else would have had to ‘give’. Based on the density of dwellings possible in the different zones, then to house this number of dwellings, you would need the following amount of land.
Zone option
|
Enabled Capacity
dwellings per ha of land |
Area (ha) need to
accommodate 296,730 dwellings |
Large lot
|
2.0
|
148,774 ha
|
Single House
|
1.3
|
221,639 ha
|
Mixed Housing Suburban
|
22.3
|
13,327 ha
|
Mixed Housing Urban
|
34.4
|
8,628 ha
|
Terrace Housing and
Apartment Buildings |
119.4
|
2,485 ha
|
These are absurdly big numbers. If we just took the Mixed Housing Urban (MHU) as the next most likely zone, should land not be zoned THAB, then the Plan would have had to find another 6,143 hectares to zone as MHU (8,628 ha less the 2,485 ha zoned THAB). The 6,143 ha needed could be greenfields, much less Single House Zone (bye bye heritage suburbs) or more suburban areas subject to three storey development.
Thank goodness for the THAB, you might think.
But…...
If we then look at commercial feasible development, then a different picture emerges. Less THAB could mean more capacity. How is that possible?
The table below sets out the number of dwellings enabled by the plan and the number of dwellings that are considered to be commercially feasible, based on the 2017 report (and as reported in the covenants report).
Zone
|
Plan enabled dwelling
capacity |
Commercially feasible
capacity |
% feasible
|
Large lot
|
5,808
|
1,672
|
29%
|
Single House
|
11,432
|
3,250
|
28%
|
Mixed Housing Suburban
|
333,302
|
55,770
|
17%
|
Mixed Housing Urban
|
258,992
|
41,313
|
16%
|
Terrace Housing and
Apartment Buildings |
296,730
|
9,505
|
3%
|
Total
|
906,264
|
111,510
|
12%
|
Across the urban residential zones, 12% of the plan enabled capacity is ‘feasible’. The percentage of enabled feasible capacity varies across the zones, from 27 to 28% in the low density zones, 15 to 16% in the medium density, but only 3% in the THAB. Only 3% ?
So of the big whack of capacity that is provided by the THAB zone, only a small proportion is currently 'feasible’.
If we look at the number of feasible dwellings per hectare of land zoned, then the most ‘productive’ zone is the MHU zone. For every hectare of land zoned MHU, 5.4 dwellings are feasible. But for every hectare of land zoned THAB, there is only 3.8 feasible dwellings.
Zone
|
Commercial feasible
dwelling capacity |
Feasible dwellings
per ha |
Large lot
|
1,672
|
0.574
|
Single House
|
3,250
|
0.381
|
Mixed Housing Suburban
|
55,770
|
3.725
|
Mixed Housing Urban
|
41,313
|
5.486
|
Terrace Housing and
Apartment Buildings |
9,505
|
3.825
|
Total
|
111,510.0
|
3.060
|
If the land that was zoned THAB (all 2,485 hectares) was zoned MHU instead, then total commercially feasible capacity would go up, not down!
| Zoning |
Terrace Housing and
Apartment Buildings |
Mixed Housing
Urban |
Mixed Housing
Suburban |
Feasible dwellings
per ha |
3.825
|
5.486
|
3.725
|
Total feasible dwellings
on 2,485 ha |
9,505
|
13,632
|
9,258
|
Is this sensible long term planning? Don't we need to reserve some space for (well designed) 4 to 6 storey apartments around train stations, town centres (and in my book), around larger open spaces?
Go back a step to the IHP modelling, and the opposite was true. The modelling suggested on a feasible dwellings per ha basis, THAB was the best way to go. Below is a table that appeared in my blog of 10 December 2016.
Zone
|
Plan enabled capacity
|
Estimated feasible
capacity |
Proportion capacity
"feasible" |
Single House
|
34,445
|
11,259
|
33%
|
Mixed Housing Suburban
|
312,627
|
50,966
|
16%
|
Mixed Housing Urban
|
297,834
|
53,750
|
18%
|
Terrace Housing and
Apartment Building |
325,648
|
45,929
|
14%
|
There are some differences in estimated plan enabled and commercially feasible development between the figures in the above table and the same figures in the covenants report, but not too much difference, apart from the THAB zone, where the number of commercially feasible developments has plummeted. From 14% in the IHP report to 3% in 2017.
If we look at feasible dwellings per hectare of land zoned, then in the IHP report the numbers were as follows
Zone
|
Area (ha)
|
Feasible dwellings
per ha |
Single House
|
8,761
|
1.29
|
Mixed Housing Suburban
|
12,497
|
4.08
|
Mixed Housing Urban
|
8,211
|
6.55
|
Terrace Housing and
Apartment Building |
2,384
|
19.27
|
On the above figures, more THAB means less MHU and more Single House Zone, for example, if capacity is the name of the game.
Models are allowed to change. That is not the problem.
The point is, what do you plan for? If you were doing the AUP now, would you have MHU everywhere and not much THAB?
The above analysis may have some flaws to it. It may be that not much is commercially feasible on the land that is zoned THAB no matter what the zoning is, so just changing the zoning may make no difference. Maybe nobody wants to live an apartment - is that what the analysis of feasibility is now telling us? It is possible that if some different land was zoned THAB (like around the coast and inner suburbs) then commercially feasible numbers could be off the wall.
But why the difference between the IHP assessment and the latest assessment as to what is commercially feasible in the THAB zone? My own guess is that land values have adjusted to the new zoning, and are now hovering around the 'not feasible' mark, where they should be. Perhaps the moral of the story is the modelling approach used is OK before rezoning, but not much use after rezoning?
And what about the LRT that the region and the government wants to build? Does the feasibility testing take that into account?
Note 1: Land Covenants in Auckland and Their Effect on Urban Development. Craig Fredrickson July 2018. Auckland Council Technical Report 2018/013
