Here are my initial thoughts on the Resource Management (Enabling Housing Supply and other Amendments Bill) - 'the 3 X 3 Bill'.
At a city-wide level, Auckland is building more houses than population growth. Interest.co.nz report (note 1) that their latest analysis of housing supply and demand suggests the number of new homes being consented has been exceeding the demand for new housing created by population growth for at least the last three years.
Interest.co.nz also suggests that while a shortage of housing may have built up in some areas, particularly in Auckland, more than three years ago, historical shortfall between supply and demand is now likely to have been substantially diminished, if not wiped out.
Given current build rates, it might now be argued that the proposed Housing Supply Bill is about getting ready for the next housing crises, when supply again lags demand, rather than solving the current housing crises. That is, with the Bill in place there will be fewer barriers in the way of a faster supply response in the future, perhaps once the borders are open again and migrants arrive in large numbers again. But this future orientation means that there is time to:
• fully assess costs and benefits
• better define areas that can be ‘excluded’
• allow for a staged roll out
• better calibrate the proposed standards (the MDRS)
• explore alternative housing typologies.
Even if enough houses are now being built at the macro level and there is capacity to meet foreseeable needs, there is still an argument that within the city, there may be a miss match between supply and demand in various suburbs.
Analysis supporting the Bill notes that despite being in very high demand inner city suburbs have experienced a low level of development to date. Recent evidence in this area is strongest for Auckland. Work by the Auckland Council Chief Economist Unit has shown that inner-city suburbs like Herne Bay, St Mary’s Bay, Grey Lynn, Mount Eden, and Remuera have not had an increase in housing density compared to suburbs with lower land value. This indicates the AUP’s single house zone and other low-density zones in these high demand areas are constraining housing supply, choice, and affordability.
There are good reasons why capacity is constrained in inner suburbs. The slow rate of house building is a deliberate planning strategy.
The first reason is character. The inner city environment is an essential element of Auckland's built environment, which has been described as 'the most extensive range of timbered housing with its classical details and mouldings in the world'. Auckland’s inner city suburbs are distinctive and very important to the city’s sense of place.
The second reason is infrastructure capacity. Whether it be street capacity (with most roads only 20m wide), open spaces or combined stormwater and wastewater networks, inner city areas typically have infrastructure scaled to historical patterns and densities of growth. While much of this infrastructure is old and needs replacing the costs of this are very high. Examples in Auckland include:
• Retrofitting trams – $10 billion for one route.
• Central wastewater interceptor – $1.4 million.
The proposal for light rail running along (under) Dominion Road highlights the problems of providing additional transport capacity in the inner isthmus. There are limits to what additional capacity a bus-based system can provide. Road space is also needed for cyclists, more street trees and better facilities for pedestrians. The Dominion Road light rail ‘solution’ involves adding new capacity (going underground), not reallocating existing capacity. While it is good extra transport capacity is being added, it is a strategy that is unlikely to be replicated elsewhere due to the costs.
The central interceptor is designed to significantly reduce the major wet weather overflows in areas of central Auckland that have (and will continue to have) combined sewer and stormwater systems. Overflows currently occur at 122 locations within the central interceptor catchment area, in some cases on more than 100 occasions a year, with a combined annual modelled volume of discharge of 2,200,000 m3 of diluted wastewater to local streams, and then out to the Waitemata Harbour.
With the interceptor in place, while there is expected to be a significant reductions of the major wastewater overflows, overflows will still occur in the Meola Creek catchment as well as other overflows which discharge into the Motions and Whau catchments.
It is unclear what growth assumptions were made when the central interceptor was designed and upon which the predictions as to reduced overflows are based, but it would not be unexpected to find that the design assumed maintenance of the current densities found in inner suburbs due to the special character areas applying. It is very unlikely that it was assumed that all residential sites could have three dwellings on them.
While transport congestion can perhaps be tolerated, continuing to pollute harbour waters (even at a reduced rate) seems a desultory method of managing urban growth.
On this issue of infrastructure constraints, the Regulatory Impact Statement for the 3 X 3 Bill is very weak. The following is noted in relation to infrastructure costs:
Medium – infrastructure servicing is expensive but there is limited evidence on the infrastructure pressures which would be triggered by rezoning and subsequent uptake of development opportunities
Despite this lack of information, the Bill assumes that infrastructure can be addressed. This is a major assumption.
The regulatory impact statement makes no mention of the loss of older character areas. ‘Protection’ of these areas does create an exclusive living environment, but the stock of bungalows and villas is a finite resource.
Despite these concerns, if the inner suburbs are ‘the problem’ and are to be the location of much more housing, then the MDRS typology is the completely wrong typology to apply.
Urban Environments
The application of the three storey rule to all ‘urban environments’ is cumbersome. Urban environments in tier 1 areas cover a range of settlements, with places like Pokeno in the northern Waikato and Te Awamutu in Waipa both technically part of the Hamilton urban environment and therefore subject to the MDRS, as well as inner city Auckland and Wellington.
A more graduated response is needed for this range of settlements.
If the population of local authorities is plotted against the percentage of dwellings that are attached (as a proxy for housing density), then there is a steady rise in density as population increases.
Figure 1: Housing density versus population
For settlements of under 50,000 people, there is very little incentive to pursue more intensive development due to the limited spatial extent of the settlement. Most homes are in a short drive of central areas and amenities. There is limited transport disadvantage from living on the edge compared to the centre. This can be seen in land values which do not vary much between inner and outer areas.
A two unit-two storey standard is likely to be more than sufficient to match demand and urban conditions for these smaller settlements. This is even if the desire is to shift the red trend line in Figure 1 ‘north’. That is, encourage more compact forms of growth. A 20,000 person township doubling to a 40,000 person township is likely to see only a small increase in the number of attached dwellings.
Mid range city’s above 50,000 people start to show more variability in density. Some of this will be due to geographic factors, including the amount of land able to be built on. Even in these centres, a 3 storey / 3 unit standard is probably unwarranted across the whole of the urban environment. A split approach is more likely to fit the context, such as:
• Within 3km of the centre – 3 storeys and 3 units
• More than 3kms of the centre – 2 storeys and 2 units.
Three units in a two storey format (a '2 by 3 dwelling') sitting within a ‘garden suburb’ setting. Although not contemporary in design, the principle is valid.
Turning to the big cities, the 3 storey/3 unit model would be most appropriate for the middle ring of suburbs in the metropolitan centres of Auckland, Wellington and Christchurch, but even then some flexibility is warranted. The two outliers on the right hand side in Figure 1 are Wellington at the top and Christchurch at the bottom. The difference in the percentage of dwellings attached is likely to reflect the different geographic characteristics, with Christchurch located on a large flat plain and Wellington confined by large hills. Auckland is not included in the graph due to its size.
At the other end of the scale to the smaller settlements – such as inner city areas of the three major metros - the MDRS are not the correct typology to apply. In fact, in many cases the MDRS will lead to the under utilisation of scarce land resources. While there are options for Councils to provide more permissive standards than those set out in the MDRS, the building typologies appropriate for inner areas of large cities relate more to larger and taller apartments. These raise much different design issues to the building form that drives the MDRS.
Infrastructure capacity and costs
The qualifying matters are too limiting – in particular infrastructure capacity is not mentioned as a reason to hold back on applying the MDRS. This relates to three waters infrastructure in particular but also land hungry social infrastructure like educational facilities, open space and the like that will need to be expanded and upgraded.
The absence of infrastructure being a listed as qualifying matter in the NPS-UD may have been appropriate as the NPS-UD tried to concentrate redevelopment / intensification into defined areas, with the ability for infrastructure upgrades to be directed to these areas. The MDRS applies city wide. This makes the upgrading and replacement task much bigger.
In relation to infrastructure, the Housing Supply Bill appears to assume that either there is spare capacity in current networks that can be efficiently used to accommodate new brownfields development, or where there is insufficient capacity, councils will be able to redirect existing investment towards the intensification areas or develop new sources of funding to finance the required upgrades. To this end, the Housing Supply Bill amends RMA provisions relating to financial contributions as one possible funding tool, for example.
The regulatory impact statement that accompanied the NPS-UD noted that:
Local authorities will be most directly affected, as they are responsible for planning and providing public infrastructure. Some local authorities as infrastructure providers may face substantial financial costs, largely as a result of revealed demand, that will need to be funded and financed. These costs will then be passed onto others, be it through rates, development contributions or other mechanisms. There will also be opportunity costs associated with these financial costs.
In general, it is held that infrastructure costs tend to be higher for ‘greenfield’ developments on the urban fringe than for ‘infill’ or ‘brownfield’ development in existing urban areas. This reflects the assumption that existing urban areas often, but not always, have existing infrastructure with spare capacity with the ability for that infrastructure to be adapted or expanded to cope with additional growth. Having said that, intensification is also likely to increase demands on ‘land hungry’ infrastructure like open space and community facilities in areas subject to intensification, with the costs of retrofitting these types of activities being very high.
Higher density development can add further efficiencies / economies of scale to assist with upgrading and replacement of existing infrastructure. On the face of it, more brownfields development and less greenfields development should ‘save’ the community money in the long run.
However, others have noted that there is a U-shaped relationship between density and per-capita public spending, meaning that spending initially decreases and then increases again as density rises . This can be occasioned by the need to replace older infrastructure in established areas as density increases. While this infrastructure may need replacing at some stage, intensification can bring forward the timing of when replacement is needed.
Part of the challenge of investment in large scale brownfield infrastructure is therefore the accumulated costs of deferred maintenance over periods of decades where maintenance has been under funded. The timing of large payments to cover these costs during infrastructure upgrades may be affected by faster than expected brownfield development, but the costs themselves are not seen to be attributable to the intensification policy as they would also exist under the status quo.
But funding this replacement and/or upgrade can be complicated. Typically, councils borrow money (or raise equity) to pay for the up-front costs of infrastructure development, and then pay back lenders (or investors) from future user charges.
Many councils face debt limits that constrain their ability to borrow to fund infrastructure. Off-balance sheet financing vehicles like IFF arrangements increase costs and impose additional risks. If development occurs more slowly than expected, then financing costs will rise. This will in turn increase the per-user cost to provide infrastructure.
Councils ability to get users to pay is also constrained. Development contribution policies generally note that not all growth-related projects can be funded from development contributions. A development contribution can only be levied where it can be demonstrated that the effect of the development, either alone or in combination with other developments, is to require new or additional assets or assets of increased capacity, and as a consequence, council incurs capital expenditure to provide that infrastructure. This means that new development can only contribute a small proportion of costs of necessary upgrades, with the bulk of costs to be covered by existing ratepayers.
An appropriate funding mechanism will need to be in place in advance of the zoning changes. If not, the MDRS may just be an idea on paper, as no meaningful development could ensue.
The Housing Supply Bill should provide a mechanism for stage implementation of the MDRS so to allow for infrastructure upgrades to be identified, funded and rolled out. One technique would be to allow for deferment of the standards taking legal effect if the area within which they are applied is identified in Council’s Infrastructure Strategy as lacking capacity. The area could be ‘unlocked’ once appropriate commitments are made in the Council’s Long Term Plan.
Qualifying matters: Special Character
The requirement for a site by site assessment of ‘special character’ values to support exclusion of these areas from the MDRS is far too onerous. Auckland’s collection of villas and bungalows in inner city areas is a unique characteristic of the city. It is the largest collection of wooden villas and bungalows in the world. The benefit to the city’s character arises from the collective grouping, rather than individual buildings. The benefit is hard to measure.
Given that the Auckland Unitary Plan has recently made, through a public process, a series of trade offs such that many character areas can be retained while sufficient housing capacity is still provided to meet housing demands, it is not justified why these ‘trade offs’ need to be ‘re-justified’ through a much more administratively driven process. Where plans have recently been prepared, then these plan provisions should stand and not have to be fought over again.
Nevertheless, it is appropriate to consider what compensating measures can be taken to adjust density settings to accommodate lower density development close to central areas. This is the central point made by the regulatory impact analysis for the Bill; that in Auckland in particular density is now higher in the middle and outer suburbs than the inner suburbs. This creates costs (but reflects a substantial benefit in terms of character and amenity).
To keep the special character areas (they after all do provide choice – even if exclusive) while allowing more development in inner city areas requires a different urban typology to that advanced by the MDRS. In Auckland, we can already begin to see a pattern emerging of apartments on the ridgelines, with the bungalows and villas in the valleys and slopes. This is not a new idea. So rather than ‘upzone’ the villas and bungalows, I think we need to ‘up-zone’ the ridgelines.
It also shouldn’t be forgotten that we have a substantial central area population (in excess of 40,000 people) in part because of the constraints that apply to the immediate inner ring of suburbs. These people may not live in the special character suburbs, but they have access to the same environments, amenities, and services.
If the special character areas also mean that some demand for housing is 'displaced' to the next (middle) ring of suburbs, is that such a bad outcome? Doesnt that demand help create well-functioning neighbourhoods?
Suburban context
The MDRS are going to be (perhaps) most used in the middle ring of suburbs.
The medium density housing examples shown on the HUD website are all of larger sites, including sites with substantial frontages, yet we know most sites in the suburbs are only 16 to 20m wide and 30m to 35m deep or so – 500m2 to 700m2. These sites are not well suited to terrace type housing, low rise apartment buildings enabled by the MDRS.
Diagrams produced by MfE support this point. Both examples shown below occupy only about 25% of the site, when building coverage may be up to 50%, while height is less than the 11m possible for one of the schemes.
Yet, even with these ‘slimmed down’ examples, the issue of interfaces with adjacent sites (dwellings and outdoor areas) is clear. Replication of the same form of new 3 storey, side on buildings on adjoining sites will compound the issues; it does not remove the problems.
The following aerial shows a traditional NZ pattern of development with built form orientated to the street, with private back yards to the rear.
Garaging, off street parking is retrofitted.
In Europe this pattern of ‘perimeter block’ development is taken to another level, with 4 to 6 storey apartment buildings ringing the exterior face of a street block. No on-site car parking is provided, and apartments built up to the street edge. NZ’s experience is of a more modest type of perimeter form of development, with individual houses on narrow plots, with front yards for trees and gardens, as well as off-street parking pads.
In contrast to this well understood urban pattern, the MDRS enables a ‘side on’ form of development.
Across the road from the three villas is a more recent series of flats.
These are orientated with outlook to the neighbours property.
The building is not offensive. The aesthetics is not the issue. Rather this arrangement reduces privacy and increases overlooking. It reduces amenity. By allowing three storeys as of right, the extent of overlooking over adjacent sites is increased considerably.
The side on rows of units may be ok if they were on sloping sites where they could form more of a terrace type approach with units overlooking the roofs of the units down the hill.
Another important aspect not covered by the MDRS is lack of green elements. New Zealand has a strong attachment to ‘garden suburbs’. This does not mean low level housing and lots of lawns. Rather it is positioning dwellings so that trees and shrubs have some visual presence, both in terms of front yards, but also rear yards. Sizeable trees provide visual interest, they help to provide scale to 3 storey development and people react positively to green elements (they are known to reduce stress and improve mental health).
The Deco two to three storey apartment building shown below sits well in its environment. Height is orientated to the street (in this case a corner). A 5m wide front yard provides space for mature trees to be established. There is balance between built form and landscape.
In contrast to the above example, below is a more recent ‘3 unit’ development on a suburban site in the next suburb over from the Deco apartments. To fit the 3 units in, the front unit is about 2m off the street edge, with its outdoor living court between the house and the street. There is no room for any substantial landscape treatment. The road itself provides some space for trees, but like all roads, road space is under competition from buses, cars, bikes, pedestrians and in the future, parked cars.
I think the MDRS need to be reworked to better reflect key liveability criteria, while still allowing greater density. For example:
More bulk at the front, less at the rear;
• 8m plus 60 degrees for front 15m of a site, then drop back to 3m plus 45 degrees
• larger back yards (6m) – while still allowing more bulk to the front
Larger outlook spaces for primary living space, (6m by 4m) – reduced overlooking/privacy impacts through greater set back, incentivise orientation to street or rear yard
More green space / elements:
• front yard landscape requirement
• building coverage limited to 40% (not 50%), but corner sites could go up to 50%, while rear sites kept back at 30%
• general tree protection to be brought back in.
The last point – general tree protection – relates to previous changes to the RMA which removed the ability for district plans to control the removal of larger trees on private land. The building coverage allowed by the changes will substantially increase pressure to remove what large trees remain, but limited yard space means that few large trees are likely to be replanted. This change will fundamentally alter the amenity of residential areas.
Additional standards
It is not clear if the MDRS allows for additional controls / standards, for example:.
• Nothing about limiting high front fences and visual interactions with open space for example.
• Can ground floors be dominated by garages (probably)?
• What about riparian yards and costal yard set backs?
It would be helpful if the Bill specified that other forms of standards are valid (even if they are a form of building standard).
Provide scope for additional controls that either:
• Do not reduce density, but lead to better outcomes, such as low front fencing; control on extent of blank walls / garages facing street; noise insultation on busy roads; on-site stormwater management; or
• Protect specified natural features such as riparian margins and coastal yard set backs without needing to justify the use of these standards through specific analysis. Many of the pohutkawas along coastal edges will be 'protected' becuase of coastal yard set backs, for example.
Notes
1: https://www.interest.co.nz/property/112958/2021-looks-year-housing-supply-caught-demand-most-places-greg-ninness-reports
