RMA reform and urban planning

Need to put down some thoughts on the RMA reforms and urban planning. Comments on the first issues and options paper put out by the RMA review group need to be in by Monday 3 February.


Apparently the panel undertaking the comprehensive review of the Resource Management Act has identified the main issues to be addressed and options for reform. Their assessment of urban planning (which I must say reads more like a grab bag of issues MFE have collected over the years) is:

Urban areas are struggling to keep pace with population growth. 

Poorly managed urban growth has also led to increasing homelessness, worsening traffic congestion, increased environmental pollution, lack of transport choice and flattening productivity growth. 

I hope this is not the sum of the analysis of what is required for a fit for purpose planning and resource management system for urban areas as they progress into the heart of the 21st century. No contemplation as to what long term pressures urban communities will face mid-century as climate change takes hold, sea levels rise, artificial intelligence becomes prevalent, population ages and capital grows faster than incomes?

The above passage from the review group’s issues and options paper is similar to a speech Minister Twyford gave last year to to the Government Economics Network (GEN) 2019 Conference.

GEN was established in 2011 to promote the better use of economics in the public sector in New Zealand. "The network aims to cater to economists and non-economists through a range of events and training opportunities focused on using economics in policy advice'.

The following are the important paragraphs from his speech.

Over the last 2 decades our housing market has experienced an accumulation of demand pressures, mainly population growth but compounded by tax settings that have encouraged a generation of investors to see rental properties as a uniquely desirable asset class.

Add to those demand pressures, abundant cheap mortgage credit, particularly after the GFC [global financial crisis that began at the end of 2007], when quantitative easing & lower interest rates saw vast amounts of low-cost capital inflating asset bubbles all over the world.

Now if our land & housing markets were elastic, and able to respond to demand, we might have seen supply ramp up.

Unfortunately those markets don’t respond well to demand.

I think there are 3 main reasons for that. 

Restrictive planning rules stop the city expanding on the fringes, creating an artificial scarcity of land, and height & density rules stop the city growing up, effectively rationing floor space.

The second factor that stops our markets responding to demand is a broken system for financing infrastructure that delays or prevents developments going ahead.

The third factor is a construction industry with low productivity and dominated by small & medium enterprises, that finds it very difficult to scale up in response to demand.

The effect of these 3 things is that we have a more or less fixed supply of land & floorspace.

It is good to see reference to things like tax settings and credit availability. But does it all come down to a problem of fixed supply of land and floorspace?  So we could put up with inefficient tax settings and lots of cheap credit so long as there was flexibility over housing production?

Sounds a bit like so long as you exercise lots, doesn’t matter how much or what you eat, drink or smoke (and the faster you exercise, the more you can consume).

In one conception, there is a fixed supply of land. No more land is being created within 5kms of the city centre, for example. Planning is never a fast process. It needs to be forward looking and involve mediating many interests. So the criticisms of fixed supply and slow response always have a degree of truth to them, but these criticisms have limited analytical power to them. For example, housing consents in Auckland are now at an all time high (and house prices are going up again).

A broken system of financing infrastructure - apart, that is, from the $12 billion that the government has just found?

A focus on inadequate supply of housing and over coming NIMBYs tends to miss the underlying forces and pressures.

What if demand for housing as an asset is outstripping demand for housing as a place to live? In the industrial city of the 19th and 20th centuries, land was a factor of production. Along with labour and capital, keeping costs of land down was important. Come the 21st century and land is an asset, not a factor of production. Keeping asset prices high is now the objective of capital, while keeping wages low is much easier in a globalised world with rapid advancements in technology and weakly organised labour. How do urban areas respond to ever rising land values, but stagnating incomes?

How do we respond to the gentrification of inner suburbs - the best location for redevelopment and more intensive housing.  They do lend character and are the home to a bunch of foot loose knowledge workers who apparently are so important to our future prospects. Yet a bunch of other people get locked out due to the resulting prices. 

Mental health is a big issue these days. Plenty of evidence that people who live in urban areas are at greater risk of mental health problems. Plenty of studies that also say that people need access to green space, that a sense of equity, of being part of a neighbourhood and a sense of safety are all important to their mental health. Folk need some stability and certainty over their immediate environment.

What about ‘Nordic planning’? Being like the Danes or Swedes is supposed to be good for a country's economic health. What about their planning system? The BBC reported it this way in 2019:

“In the Nordics, there has long been an emphasis on people in urban life, and putting them at the centre,” explains David Pinder, a professor of urban studies at Roskilde University in Denmark. Planners have prioritised liveability, sustainability, mobility and citizens’ empowerment – ideals manifest in green parks, well-lit public spaces, strong transport networks and accessible local facilities for children and the elderly.

There’s also been emphasis on building more equal societies, he says, an aim accompanied by “a strong discipline of participation” which encourages decision-makers to think about diverse groups when planning new urban areas and include them directly in discussions.

Of course plenty of criticism that Nordic planning is struggling as much as other places with issues of housing and affordability, but you wonder if the emphasis on liveability and equality provides a better starting place to tackle the issues, than our fixation on supply.

But at a broader level, if urban areas are seen as a complex private-public partnership where a well functioning public realm is critical to many ‘private’ outcomes, while well designed development is critical to the quality of the public realm, then urban management becomes much more of a two-way ‘back and forth’, rather than just ‘good housekeeping’. It is also about how to shift around the deck chairs in response to a number of issues: "If things are going to be constrained over here, then how is development to be supported and encouraged over there?"

Easy to point out some problems, harder to think of solutions. Moreover, any possible framework for urban planning needs to work in a way that is compatible with wider resource management aspirations.

Here are a few thoughts from an urban planning point of view.

Separate environmental and urban planning acts? 

While attractive from a conceptual point of view this option is unlikely to be politically unacceptable:  The ‘bottomliners’ (those who support a stronger environmental bottomline approach) will be worried that a stand alone urban planning act will open the door for bottom lines to be undermined or over ridden. The urban expansionists will be worried that a separate environmental act will see bottomlines drawn all over the place without consideration of the impacts on land and development markets.

The issue of ‘bottomlines’ versus a ‘balanced approach’ seems to go back a long way. Under the old wise use and management of resources objective of the Town and Country Planning Act, the criticism was that environmental issues always got traded off for short term economic gains (“we will get onto the environment once we have sorted out a few housing and transport issues first”). The RMA tried to rectify this by splitting responsibility between regional and local councils  with regional councils being the environmental guardians while local councils got on and did stuff, within the limits set. That didn’t work very well. The regional councils were either seen to be too zealous (Auckland) or too weak (the rest) when it came to environmental protection. Neither criticism is really valid, but the point is that splitting responsibility added to debate, discussion and friction. The more recent move has been to put the two things together (Unitary Plans), place a time constraint on the process to force some decision making and give the job to someone who is impartial (Independent Hearings Panels). 

Putting things together and trying to speed things up may work if there is a clearer set of principles to work within. So this leads onto the question of should Part 5 of the RMA be reworked?

Re work Section 5 / Part 2 of the RMA to better reflect urban issues and outcomes? 

Many folk don’t like the idea of rewriting Part 2, as this will likely see years of litigation as to what it all means. Rather, just focus on speeding things up (its implementation of the RMA that is important, not the Act’s principles is the usual call), or alternatively adding a few more things into the pot by way of National Policy Statements.  But isn’t it time to have a good look at the different decision making involved in natural resource management versus managing urban environments.

The RMA reform issues and options paper suggests that greater recognition should  be given to the benefits of urban growth and development - that rather than see growth or change as a cost, see it as a benefit. This is a shift away from a managing negative spillovers type approach to more of a cost-benefit type approach. But it feels like a 'gaffer tape' response to a perceived problem - too much focus on the negative, so add some positive - rather than a comprehensive review. 

EDS take a similar approach. They suggest that Part 2 be re written to among other things, set out - subject to a clear statement of bottom lines -  that there needs to be greater recognition of the benefits of environmentally sustainable resource use (including considerations of good urban design). The benefits of environmentally sustainable social and economic development, including infrastructure, affordable housing, and a quality urban environment would need to be taken into account.

Not too sure if their suggestions go far enough.

Should the Act set out three sets of principles: one for the stewardship of natural resources, another for the management of urban resources and the third how these two outcomes should be integrated?

Here is one go:

The purpose of this Act is to promote the stewardship of natural resources and the management of physical (rural and urban) environments in an integrated and sustainable way.

For natural resources this means, where necessary, limiting their use, development, and enabling their protection in a way, or at a rate, which achieves the following: 

• Sustains the potential of natural resources (excluding minerals) to meet the reasonably foreseeable needs of future generations; 
• Takes into account the finite characteristics of non renewable resources ;
• Safeguards the life-supporting capacity of air, water, soil, and ecosystems including their enhancements and restoration where that capacity is degraded; and
• Avoids, remedys or mitigates any significant adverse effects of activities on the natural environment.

For physical (rural and urban ) environments this means managing the use, development, and protection of  activities and developments in these environments  in a way, or at a rate, which addresses and takes into account:

• Increasing opportunities and choices for peoples and communities to provide for the foreseeable  living, working,  social, cultural and recreational  needs;
• Maintaining and enhancing the quality of the public components of these environments;
• Promoting safe, inclusive and affordable communities;
• Ensuring efficient and equitable provision of infrastructure; 

while 

• promoting the stewardship of natural resources. 

Well ok, not brilliant, but I think it is time that we all had a go.

Putting it together 

Trying to find the right framework to put together in an integrated way the two arms of stewardship and co- management of urban environments is the tricky point.

I think one (unitary) plan for a region, or at least a group of related settlements and resources within a sub region is a good idea and should be mandated.  Taking a regional or at least sub regional view helps make trade offs between bottomlines and providing for activities.

Spatial plans are seen as one technique, but spatial plans are no more or less than any other type of plan. Thinking spatially certainly helps highlight tensions and trade offs to be made. However if the plan just becomes a long shopping list of aspirations, not a well resolved set of intentions, then that is not much help. Equally, not much use if infrastructure providers (including central government) don’t buy into the process. Government never really brought into the Auckland Plan.

What about time frames - how far to look out when making plans? This is a point raised by EDS, reflecting the point that rather than look long term, many pressures mean that planning often ends up reinforcing short term thinking.   The foreseeable needs of future generations is already in the Act, but something a bit meatier would help on both the protection and development side of the equation. The 100 year reference in the NZCPS to coastal hazards is helpful. The NPS-UDC has pushed out urban planning horizons to 30 years.

So a third set of principles. In achieving sustainable and integrated stewardship of natural resources and management of physical environments the following are relevant;

• Setting bottomlines needs to take into account the consequences for accommodating growth and development and may require adjustments to other settings so as to reduce flow on impacts
• Recognising that rural and urban environments constantly change and adapt and that it is managing the transitions that are critical, rather than achieving an end state
• Recognising the potential for use and development to restore and enhance natural heritage and improve social wellbeing;
• Taking a regional view of issues and responses
• Taking a long term view of effects and consequences 
• Ensuring that the benefits and costs of using and developing natural and physical resources are fairly shared between people and communities now and in the future.

Urban design and the RMA (4)

Urban design: the economic approach to defining effects

I'm on a one person mission to better define urban design effects under the RMA. So far I have:

1. discussed effects ratings and their purpose under the RMA
2. tried to develop an 'effects equation'
3. asked: is urban design normative or positive?

Now the obligatory economic rationale for intervention relating to urban design outcomes. Having some understanding of the rationale for intervention is obviously important in developing a framework for managing that intervention. Many people like the idea of some sort of 'market failure' as being the basis for intervention.

Commonly, the basic rationale for a degree of public control over buildings and development relates to managing negative externalities. This is where MfE's helpful report on the Value of Urban Design starts. There are negative externalities of poor design. These affect the public realm, as well as adjacent sites.

Negative externalities occur when production and/or consumption of goods (such as buildings) impose external costs on third parties outside of the market for which no appropriate compensation is paid. This causes social costs to exceed private costs. But we have to be very careful how we define these externalities. Is the effect of an ugly building beside a nice building a negative externality? Or is it just part of urban life?

Rather than being a negative thing, is urban design just about good things (including positive externalities), and by implication things where there maybe a financial incentive for designers and developers to add good things into their designs, in which case there is no need for public intervention?

If urban design is all just human behaviour, then won't people vote with their feet, avoiding areas that are poorly designed and flocking to areas and places that are well designed, and from  this process of selection,  their money and buying power. As such, is there an incentive for developers and businesses to promote good design?  By why so much bad design if there is so much value to be extracted by good design? Is it that people have a high tolerance of bad design?

The MfE report on urban design also mentioned inconsistent time preferences. Developers may have shorter time horizons (higher 'discount rates') than the community as a whole (e.g. short-term profit to developers versus long-term health benefits to society). This means that the market will tend to provide a level of urban design than is not socially optimal.

These points provide a helpful starting place. But somehow urban design is more complex than this. While concerns about poor quality design on a next door site driving down property values is a common basis for communities to call for urban design, to me the real issue relates to the importance urban design plays in supporting a functional public realm. The importance of the public realm to well functioning cities seems under recognised in most urban economic analysis. The public realm is not a tradeable good, it has a value but no price. It is not subject to the laws of demand and supply.

Many of the dis-benefits of poor design are less tangible social, environmental or well being impacts affecting a range of parties, over a long period of time. They tend to be second order effects (if there is such a term). Adverse effects of bad design are often  incremental and cumulative, they are not necessarily all obvious 'blots on the landscape'.

If we take Jayne Jacobs and her prescriptions in The Death and Life of Great American Cities as a starting point, then we have the following four basic ingredients to generate (in her words) urban vitality:

1. The district must serve more than one primary use, and preferably more than two.
2. Most street blocks must be short.
3. Buildings must be mingled in their age, condition, and required economic yield.
4. A dense concentration of people.

I think it is reasonable to say that the third and fourth conditions are enabled conditions, in that there are characteristics that need to be allowed for and encouraged. The third condition does not mean heritage protection, although that may be a component. I think what Jacobs  meant was that redevelopment should be an incremental, even scattered process, not a concentrated or cataclysmic process (as was much public urban regeneration schemes of the day). In contrast, short blocks and mixed uses are not necessarily elements that are always provided.

Jayne Jacobs did not stop with the four characteristics. She also (famously) referred to the need for ‘eyes on the street”.  To her, vital, safe streets had the following elements:

"First, there must be a clear demarcation between what is public space and what is private space. Public and private spaces cannot ooze into each other as they do typically in suburban settings or in projects.

Second, there must be eyes upon the street, eyes belonging to those we might call the natural proprietors of the street. The buildings on a street equipped to handle strangers and to insure the safety of both residents and strangers, must be oriented to the street. They cannot turn their backs or blank sides on it and leave it blind.

And third, the sidewalk must have users on it fairly continuously, both to add to the number of effective eyes on the street and to induce the people in buildings along the street to watch the sidewalks in sufficient numbers. Nobody enjoys sitting on a stoop or looking out a window at an empty street. Almost nobody does such a thing. Large numbers of people entertain themselves, off and on, by watching street activity.”

So I think we can translate these ingredients into the following core urban design elements:
1. The nature and extent of the public realm network
2. The range of activities that border that network (the density and mix of uses)
3. The quality of the public private interface of that network.

If we look at these ingredients in turn, then a somewhat more complex rationale emerges as to the reason for intervention.

Public network

The nature and extent of the public realm network is important to functioning of urban areas. Cities need lots of routes and linkages.  Short, interconnected street blocks help with walkability and access to public transport and local services. They promote health and well being through active transport. They generate street-based activity which helps with a sense of safety and 'connectedness' .

Jayne Jacob’s principle of short blocks is the common urban design principle of promoting connectivity and permeability. The UN-Habitat’s Global Urban Observatories Unit report on Streets as Public Spaces and Drivers of Urban Prosperity argues that streets should be counted as public space alongside leafy parks and landscaped plazas. Together, they should make up 45 to 50 percent of a city’s land area, with 30 to 35 percent of the area occupied by streets and 15 to 20 percent open space. “If less than 30 percent of the land of the city is dedicated to the street pattern, it’s a huge error,” Beside the economic value of streets on the land market, streets have an economic and social value related to productivity, infrastructure, quality of life and social inclusion.

The argument for intervention around the network is that as land increases in value, then there is a tendency for less of that land to be devoted to public space. In economic terms, this conception of the public realm could be thought of as an inferior good. A normal good is a good that is in greater demand as incomes rise. An inferior good sees the opposite outcome – demand shrinks as incomes rise. In a city, as incomes and land values rise, there is an incentive for development to provide less and less public space as this has a bigger and bigger cost. Furthermore, the value added by streets to the value of plots and buildings are not well factored in the land market. Neither real estate developers nor land owners are willing to appreciate the economic value of streets against its social value.

In this conception, the street should not be considered as an inferior good, rather the street should be considered as a normal economic good if not a superior good that should be allocated more share in the expansion of cities.

Mixed Uses

Diversity of activities along the main routes of the public network is crucial to urban outcomes. Here you might think that a removal of single use zonings would enable and allow for diversity of activities to flourish. There is no need to mount a case to intervene to support mixed uses and diversity of activities.  But why are mixed uses so rare in cities, especially the bits built post war?
Jacobs noted that diversity tended to destroy itself, particularly as one use becomes dominant and bids up rents to the point where other uses flee.  This results in a single-use office district, restaurant strip, etc. Density and diversity of activities can also be related to the diversity of the building stock. Mixed uses need a range of cheap and expensive premises that are big and small. Mixed uses also often take a while to get established. A catchment of people needs to be built up first, then the service-based activities start to flourish, but short term time horizons mean that developers may favour the residential phase.

One of Jacob’s cures for self destruction of diversity was to zone large areas for diversity. However this is not in the sense of requiring a set mix of activities. Rather it was first to zone for a diversity of building stock. This is in terms of building ages and building sizes.  She cites the example of a park having lower buildings on one side to let in sun, but also to offer a choice compared to taller buildings on other sides. This in turn creates opportunities for different types of mixed uses. Elsewhere she mentions the importance of having many old buildings to provide cheaper space for new activities to get established. She acknowledged that maintaining a diversity of building stock would require some sort of financial acknowledgement. Hence perhaps why the idea never took hold. It also requires some form of gradual process of redevelopment of an area, not a ‘catastrophic’ replacement of buildings (and hence her call for a mix of old and new buildings).

The other cure was to have lots of opportunities for mixed uses to locate in a city. If one neighbourhood sees a loss of diversity, then provided the displaced activities had somewhere else to go to, then the city as a whole does not see a negative effect.

Whether the self destruction of diversity provides a rationale for intervention is difficult to say. One study (The Impact of Mixed Land Use on Firms An empirical investigation on commercial property transactions, Francis Ostermeijer July 2016) suggests that in a rational market, one would expect that firms involved in mixed land use patterns are likely to relocate until the marginal benefits and costs of relocation are equal. This implies a degree of natural mixing. "In reality however, this rationality assumption may not hold. It is perhaps more likely that there will be a sub optimal provision of mixed land uses. Therefore, land use regulation may be warranted in order to encourage a balanced mix of uses in order to maximise the net social benefits from mixed land uses".

For example, from a developer and landowner’s perspective, horizontal mixed land uses are preferable to vertical mixed land uses. This may be because the positive externalities from a diverse composition of land uses on a street such as pedestrian safety, higher aggregate demand and a better distribution of demand may not outweigh the costs imposed on individual activities in a mixed use building due to concerns over less privacy, increased security risks, less prestige and greater uncertainty of leasing of space when in a vertical mixed use situation.

Another way to look at the issue of under supply of mixed uses is that they are a merit good. A merit good is a good where consumption of the good generates an external benefit to others, from which society gains, but that benefit is unlikely to be known or recognised at the point of consumption. Given that decisions to consume are driven by self-interest, it is unlikely that this external benefit will be taken into account when the consumer of a merit good evaluates its worth. As a result merit goods are often  relative to their wider benefit.

So maybe there is a rationale for seeking mixed uses. But is that rationale based on finding an incentive or some form of support for greater provision of mixed uses, rather than a sanction?

Quality of the public private interface

The public realm is more than just the network of public streets or areas of public open space. The public realm extends to the buildings, activities and private spaces that front onto these areas. The quality and functionality of public spaces is very dependent upon what fronts them; how buildings interact with public spaces. No amount of flash landscape design can lift a street or public space if it is surrounded by dull buildings.  The public realm can also be described as the spaces within a site that the public can access without having to ask permission, such as laneways. But it is the areas owned by the public which are critical to the social and economic success of cities. Nice buildings fronting a street or open space does not automatically mean that the road or open space will deliver benefits. People using the space generate the value.

The public realm of a city is a ‘public good’. Public goods are goods that have the following characteristics:

• Non-rivalry: This means that when a good is consumed, it doesn’t reduce the amount available for others.
• Non-excludability: This occurs when it is not possible to provide a good without it being possible for others to enjoy.

You can quibble if a road or open space is non rivalrous. At some point, one more person added to a street or open space may make that place overcrowded or congested. Technically a road or open space is a quasi public good.

The problem with public goods (quasi or not) is that they have a free rider problem. This means that it is not possible to prevent anyone from enjoying the good, once it has been provided. Normally this creates a problem of payment and overuse:  there is no incentive for people to pay for the good because they can consume it without paying for it. People can over consume public resources – the tragedy of the commons.

The public-private interface is a bit different. It is not about the over use of the public road or public space.  Rather there can be a natural tendency for private development to ‘sponge off’ a high quality public realm, rather than contribute to that realm.  For example, I will erect a larger fence across the front of my property to keep me safe and private, but I will still wander down the road in the evenings enjoying looking at the various front gardens and feeling safe because of the passive surveillance offered by all the housing which has windows to rooms that overlook the street.

Back  to effects rating

Back to the question of an effects rating. What does the above tell me about urban design and effects? That it is not straight forward? That is hardly a revelation.

The above provides a framework by which effects could be organised or grouped, but does it help with determining the magnitude or persistence of the effect? Is my effects equation up to the task? Perhaps not.

What the above does suggest is that rather than be some sort of  minor to major negative externality rating, any urban design rating framework needs to be more focused on the support or not for a well functioning public realm.