The Auckland Council and the government have locked horns over the council rejecting three greenfield Special Housing Area (SHA) developments in the North West of Auckland. At the heart of the matter is who should pay for the infrastructure needed to support the development. There is already a lot of pressure on existing infrastructure as well as council budgets and the council have (in my view) rightly chosen to focus on fixing or at least improving the existing transport network first. Increasing rates by the amount likely to be needed is almost certainly not going to impress existing ratepayers and nor is cutting much needed projects in other parts of the region.
Auckland deputy mayor Penny Hulse is defending the council’s decision to reject three special housing areas proposed for the city’s rural north-west under the Auckland Housing Accord.
The council maintains that before there is any further growth in the rural area the Government needs to commit to much-needed transport infrastructure.
The government-driven accord with the council is half-way through its three year life. It has the goal of accelerating home building and creating new residential sections.
The rejection of the three special housing areas is the first manifestation of growing tension between the accord partners over the burden on ratepayers of providing services to large rural housing developments.
Ms Hulse chairs the council’s development committee and told Morning Report that with the Government cool on council ideas such as motorway charges and a transport levy, it needs to help build projects such as a dedicated busway on the Northwestern motorway.
“It’s quite appropriate for us on council’s behalf to stand our corner and our ground for the people of Auckland,” she said. The refusal did not mean future growth would never be allowed.
The council have instead said they will focus on SHA’s in existing urban areas “which already have good levels of infrastructure service”.
In response Building and Housing Minister Nick Smith is threatening to override the council
“The Government also the power to create special housing areas without the approval of the Auckland Council, if they choose to overplay their cards and demands for money,” he said.
“The legislation makes plain that the Government’s strong preference is to work in co-operation with the Auckland Council, and to work on these issues together and those arrangements are still robust.
“If the Auckland Council overplays its card the legislation does make provision for the Government to approve SHAs without the approval of the Council.”
As reader Liam Winter pointed out on twitter, the legislation states that there needs to be confirmation that sufficient and appropriate infrastructure will be provided to the development.
Nick Smith is suggesting that Councils break his law. @nzherald @NZStuff @radionz @CampbellLiveNZ @TransportBlog pic.twitter.com/VbwuNVvA4S
— Liam Winter (@lwin027) May 5, 2015
Nick Smith also said
Dr Smith said the council could recoup infrastructure costs from the developers and once the houses were built $1 million of income is created for every 300 new ratepayers.
He said if the Government was to create special housing areas on it own, under the legislation it too could levy developers for the cost of infrastructure.
“Now I’ve got developers in Auckland who are willing to meet the cost of the infrastructure, who are wanting to get on and build their homes who feel frustrated with the Auckland Council that they won’t get on and deal with them, and that is why we’re going to continue to put the pressure on the Auckland Council.”
Auckland is already getting more than a third of the Government’s capital expenditure for transport infrastructure, but Dr Smith said the Government would consider spending more.
In some ways the government taking on the infrastructure burden and levying developers could be a good way for them to understand the pressures councils (and not just Auckland) are facing. Of course balancing that out is the thought that they would likely push for the cheapest and most auto dependant infrastructure they could.
As for developers willing to meet the costs – I wonder if that’s the full costs or just the ones directly inside their development. It’s an important distinction as developers have always been required to fund infrastructure inside their developments however it is up to the council to build the infrastructure leading to the development. To make matters worse development contributions only cover a small portion of the actual infrastructure costs. As an example the massive Mill Rd project in South Auckland is expected to cost up to $800 million yet there are only planned to be about 24,000 new dwellings in the area. The council’s draft development contributions policy states that in the South they can only collect about $3,500 for transport infrastructure. That means all up to build Mill Rd to support that growth existing ratepayers and taxpayers could end up subsidising the developments to the tune of around $30,000 per dwelling.
It’s that massive subsidy from ratepayers/taxpayers as to why the council is right oppose the government on this issue
Prior to this it also appeared the council were in a no-win situation. The government has long made it clear by their words and actions that they don’t like Len or the council. Further no matter what the council do the government have continued to shift the blame for housing to the council. By fighting back I guess the council see there is a more of a chance of getting a better outcome.
It seems to me that no one (other than the developers) will really benefit from this stouch. As such below are a couple of quick thought experiments as to the outcome.
- If the government do help to fund more infrastructure do they then open themselves up to more calls for assistance not just from Auckland but other regions too. In addition they have recently been focusing on trying to shore up their regional support following the Northland by-election. Giving Auckland more money won’t be too popular with the regions.
- If the council backs down other projects will need to be cut or rates increased to pay for the infrastructure. That’s not going to be popular with ratepayers.
- If the government overrides the council and also forces the council to pay for the infrastructure then not only would ratepayers probably be unhappy but it could affect the next local government election.
After the initial bluster from both sides it’s now likely we won’t hear too much more publicly with both sides likely to take their bickering behind closed doors. I just hope the council continue to have the courage to stand up to the government for what is right for Auckland.
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A likely scenario is that Smith overrides Council and declares the existing motorways in the area as quite enough infrastructure, thanks. The cost is spread across the increased delays and frustration for anyone who uses them, including existing residents. Govt will then try to spin that as Council’s fault. Or a right-wing Mayoral candidate will promise to fix it up somehow in excahnge for our votes.
Smith’s claims that developers already pay just shows how ridiculously uninformed or ideologically blinkered he is. I’d challenge any journalist to find one developer who is willing to stump up for a Northwestern busway as part of their SHA development. And to stop reprinting readily-checkable lies from politicians with a track record of them.
Actually I think they’ll fast track extending thy motorway to Kumeu. That road already has higher traffic volumes than the RoNS (bar Waterview). Doesn’t sort the 3 waters though. Place could get very smelly very quickly without connections
I meant Smith will regard the existing motorways as enough, without extension. Because that’s convenient for him. If it’s good enough for bustling Nelson ..
And yes, water etc is also an issue. The transport one seemed like a good focus because the public can easily see the impact if someone in Council/AT is smart enough to visualise it for them.
what this is the council are wanting more money as we have seen this year there threats all year is a worry .The government should just walk over the council as the super city seem to be one big power happy council
Walk over them like they did with Canterbury? I’d like to think Aucklanders would fight losing democracy very strongly
Democracy is stronger if Central government does over rule the Auckland Council. My MP in Upper Harbour represents 66,000 people. My Councillors (who live way up in Orewa) represent 51300 in Upper Harbour and 89800 in Hibiscus and whatever. Giving a total of 141,000 people. So I say Central Government is more accountable to the people than the Auckland Council is.
WTF? I can’t even parse what you’re saying properly.
But if you mean the council is just grabbing money?
No. It’s long been a MAJOR issue in South Auckland that developers are only required to mitigate LOCAL traffic issues.
That’s why Mill Road and most roads in the surrounding area are for example over 100% of rated capacity.
But hey, $30K per dwelling? You mean a mere 5% of the value of a typical Auckland house now?
Screw it, charge the developer the full cost.
While we’re at it, make the building rating a mandatory 6 star instead of 3 star for an additional 2%, and require a minimum 2kW solar install as well if that’s not part of the 6 star requirement.
If the government want to sprawl Auckland from Whangarei to Hamilton, then they should cough up the money for it. Nick Smith doesn’t have a clue about Auckland. Time for John Key to start opening his mouth. It is HIS bloody electorate!!
It won’t effect you anyway because you’re leaving
The Council needs to be very specific as to what Infrastructure is “insufficient” and how the developers/central government can remedy the problem. I would suggest electrification of the railway to Kumeu would be a good starting point.
Easier, more effective and probably cheaper too would be to get the NW busway built which also benefits those around Westgate, Massey and Te Atatu
That is what Council is asking for, isn’t it?
Fuel excise tax is increasing by 3c a litre in July. If only the funds were being spent on transport projects that Aucklanders actually want, instead of projects of no economic worth.
Such a shame the the Govt repealed the regional fuel tax legislation too. Would have been a reasonable funding avenue IMO.
And don’t forget extending diesel railcars to Huapai. Instant low cost partial solution no body has to wait 4, 5 or years for.
Akl Council need to force Akl Transport to use existing rail assets. At the sametime the busway can be constructed and ready to go in about 5 years time. Win/win for western commuters and communities.
+1
re Smith on “Developer contributions”:
“He said if the Government was to create special housing areas on it own, under the legislation it too could levy developers for the cost of infrastructure.”
Considering Smith already bellyaches long and hard about how much Developers Levies are (as per Council) and how they should be massively reduced (in his belief).
His insistence that He (and council) can fix the problem by raising “developer levies” is very much double-speak.
He can’t have it both ways – either developers pay their way or they don’t, if they do not really a problem, if they don’t then they don’t have a leg to stand on and Smith fighting for them in their corner doesn’t help build 1 more house anywhere, thats useful to help house any current residents. Let alone make a dent in the huge backlog of houses not built.
And on a similar vein, see the Property Investors Federation guy’s opion piece today (http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11444119) complaining that paying $12,000 to connect a property to the 3 waters “at the end of the property” is “outrageous”.
“Fundamental reasons include the charges that many councils inflict on new home builders, especially development contributions. These add tens of thousands of dollars before any peg is placed in the ground. In Auckland it costs an outrageous $12,000 just to connect a new home to the water mains at the end of the section.”
I think Watercare run on a cost-recovery basis only for the water Connections (all 3), so that $12K is simply the average cost of connecting up a property in Auckland to the system.
A small price to pay for the total land value (of many $100’s per m2 in Auckland) – and without it you have land unsuitable for housing and can really only be used for a park.
So that $12K is the enabler (like a resource consent) that allows all the value to be added to bare land. Without either you have nothing but grass.
Amortised over a $400m2 section, 12K adds what $30 per m2 to the “price” – of land that sells for well over 10-40 times that price once connected.
So quit the complaining developers and inverstors. Pay your fair share, take your lumps and live with it. Its a cost of doing business.
Pure bluff from the Government. They have no interest in taking over the Council on this. If they did it would expose how little they are doing to tackle the housing crisis and they would no longer have someone else to blame.
I tend to agree. Government have made it abundantly clear that they see Auckland’s housing problems as a matter of land supply – and nothing else. It would be a remarkable about-turn if they started getting directly involved in other aspects of the issue.
Why not a special rate ? The land is probably held by a small number of people keen for it to be developed, who would readily agree to such a rate. The special rate could kick in once houses are occupied, and form a revenue stream against which the Council could borrow for defined infrastructure investments such as the NW Busway. Such rates work well in Texas.
To create a Texan style MUD would require a law change – which would need to be initiated by the government. They have shown no interest in doing this
Regarding water connections, let’s take as an example the Mill Rd project in South Auckland which is expected to have about 24,000 new dwellings.
24,000 x $12,000 connection levy = $288,000,000 ie $288m.
Surely that’s a significant contribution towards Watercare costs, no? If it isn’t then there’s something seriously wrong with infrastructure costs. But then given the exorbitant cost of building, I wouldn’t be surprised.
Watercare have already done this in Riverhead/kumeu area. It’s aproxx a $15000 charge to connect in Riverhead.
As far as I know $12000 is the charge to connect within the metro area, Helensville $23000. Snells even more I believe.
It ain’t just fresh water, its waster water and storm water.
All 3 are provided by Watercare, and they all cost a lot of money to move around the place, and then dispose of properly once no longer needed.
For one thing they all need their own seperate sets of pipes – you don’t want to mix your fresh and waster water.
And putting stormwater down wasterwater pipes just causes more problems than it solves and requires expensive remedial work down the track so don’t even go there.
So $288m for Mill Road to get 3 waters to it sounds fair, after all once thats done, the value of the 24,000 “sections” there will be what?
Over 300K each so thats $8B of increased land “value” right there, now able to be built on and have its own stand alone house or whatever selling for double the land price.
Seems like a pretty good deal for the land owners/developers to me – buildable/sellable land worth at least $8B for an upfront cost of $288M?
And council will get a grand total of maybe $80m “a year” in rates, and all of that and more will be spent delivering the kinds of services that those people expect, stuff like well maintained roads & footpaths, libraries, community facilities, parks & reserves, street lighting, rubbish removal.
And any shortfall in what council spends there versus rates received we’ll all end up paying for as well as rates like this are not targetted to area of collection/spend.
“And putting stormwater down wasterwater pipes just causes more problems than it solves and requires expensive remedial work down the track so don’t even go there.”
That is exactly the issue the $1b Central connector is designed to solve. Waste water is expensive…
The central connector doesn’t solve that issue, it reduces it. We’ll still get sewerage flowing straight into the harbour during heavy rain, just not as often as it does now.
The Watercare development levy is expensive for greenfields developments like Mill Road, but cheap for inner city developments where they have to replace perfectly good water pipes with larger ones to meet the needs of increased population density. They also have to keep increasing the capacity of the Mangere Treatment plant for all the additional users.
Is It somehow more expensive to lay pipes in greenfield sites than brownfield? I’d suspect the opposite to be the case when you consider the numbers of users per pipe.
“Is It somehow more expensive to lay pipes in greenfield sites than brownfield? I’d suspect the opposite to be the case when you consider the numbers of users per pipe.”
Depends, in general greenfields either have nothing there already to hook up to, so the Greenfields site needs the 3 sets of pipes run back to the nearest sewer/water main/storm water mains. Which may not be adjacent to each other.
And each could be some distance away if the greenfields site is way away from anything else.
And distance costs – and costs big like $$$$ per km, so with this sort of stuff even 1 km down the road will add a lot of cost. And if the 3 waters are all going in 3 different directions, then what looks like a 1km “trench” becomes 3 x 1 km trenches heading in 3 directions = 3 times the cost.
Secondly, even if there is stuff nearby for the Greenfields to hook into, invariably it was sized just big enough for the last round of expansion only [maybe 20 years back].
Or the existing mains there are even older and simply can’t cope [more likely] – they’ll have to be upgraded (and in the case of say North Western area, significantly upgraded) to cope with the all the planned development.
For Brownfields, not so much, often there will be upgrades needed but they are often finite in size (e.g. we’re adding 200 more houses to this site but the rest of the area is already built up so we only have to fit 200 more connections in, not the 2000 you may need for Greenfields. And we don’t have to run pipes over Kms to get it from A to B (or get consent to do so – as the pipes are already there).
Electricity has the same problems too – but we don’t hear about Vector charging the big $, but they do, sometimes over $20K for a domestic connection.
In some cases, infrastructure in brownfields areas HAS been built with extra capacity. Or at least things like access shafts are already there, and you may have enough space to duplicate that pump station rather than having to buy a new property for a greenfields pump station etc… Even if only parts of the existing network has capacity left, saving 30% (as a random example) can be a major price difference.
On Greenfields, the effect is reverse. You may even have to consider adding capacity ABOVE what you will need in the short to mid-term, for long-term future-proofing, so in that same short to mid-term costs actually rise again.
I worked for Manukau Water for 12 years and I can assure it is HUGELY more expensive to replace pipes in an urban environment. For water pipes, you have to keep water supplied to all the houses while you install the new pipes, and while you change each connection to the new main. For Wastewater, the sewer pipes very often go through developed sections, and under houses and drive ways. There are problems accessing these pipes with heavy machinery, very upset owners, and high remediation costs to put the property back to the way it was before work began.
For green fields, access is no problem, they dig trenches, put in the pipes and fill in the trenches. No time constraints, no problem with keeping the water supplied and no gardens to replace. Access for heavy machinery is easy.
Infill housing mainly impacts the water supply as wastewater pipes are sized to prevent blockages, not the number of dwelling serviced. The pipes were installed with some additional capacity in mind, but there are many streets where the number of dwelling are more than twice the number of original sections, and water pipes cannot be too large as the water does not get replaced quickly enough and runs out of chlorine.
You mentioned the busway, but Auckland Council actually stated the issue yesterday as under:
“In addition the council was also grappling for funding for rail to that area…..
……What was needed to improve transport links from the west was a dedicated busway along the northwestern motorway, similar to the one on the northern motorway from the North Shore, and electric trains all the way to Huapai.”
And it was only last week that Auckland Council issued a press release in support of rail to Huapai:
http://www.scoop.co.nz/stories/AK1504/S00603/support-growing-for-western-connector-proposal.htm
Funding for the Western Connector may be a low cost and easy to implement compromise (between electric rail or no rail) established in any talks between central and local government in regards to getting the SHA’s back on track.
I see the ends of the electric network extended by Diesels until the passenger volume warrant the extension of the electrification of that line.
Hard to get passenger volume up without development. Hard to get development up without transport.
Someones gunna have to blink first.
I think this shows that government is clueless when it comes to solving the housing and transport issues for Auckland. To be fair these aren’t simple issues but when a government or a person is under stress they fall back to what they know. For the current government they like to blame the Auckland Council. Dr. Smith thinks that more housing on green fields is the answer to everything and the council refusing to pay vast sums of money in future costs isn’t an issue. I think any rational person can see that the government is out of ideas and, therefore, the best thing for them to do is get out of the way and allow for further devolution to the AK council.
“for further devolution to the AK council”
What further devolution – the super-city actually was a move AWAY from local control. Some got given to a more centralised Auckland power structure, but Central Govts hands are heavily on the levers of so many aspects, such as the creation of the CCOs (and the laws setting out what parts of Auckland Council the CCOs can essentially ignore, and what Central Govt mandates they HAVE to obey).
Then there’s the example of Canterbury and Christchurch specifically. Wellington politicians calling the shots on anything that counts, and elections either deferred until never-never, or local Council strongly reduced in power.
No, this government doesn’t believe in devolving any power. Quite the opposite.
I totally agree. The devolution in NZ is incredibly poor and we actually need power to come down to the local level but the central government just won’t allow it.
Good on the Council.
The government can threaten and pass laws as much as it likes, but this brings into focus the real issue: who is going to pay for the greenfield development?
If it isn’t Government, and the Council cant afford it… checkmate.
Great to see the Council standing up to these govt. bullies.
Hold on, so subsidising a road in an area with massive development scheduled to take place is bad, but subsidising a much more expensive rail tunnel in the central city that will benefit a smaller number of people is okay? This should really be called the “anti-car blog”.
The CRL will benefit anyone with the catchment to a rail station. A road out in Kumeu will serve a small number of people in comparison (think a single rail station catchment.
You think those roads will carry more people (people not vehicles) than the CRL? The CRL will lead to a massive chnage in how people get around Auckland. The majority of Aucklanders live within 3kms of a train station – a 10min bicycle or bus ride.
With the rejigging of the buses to feed into the trains, the CRL will carry a large number of people headed all over Auckland.
You either don’t understand what the CRL is or you still believe that cars are more important than people. Maybe you should look for an anti-people blog.
As far as I am aware, there already exist roads to Kumeu. If the council is complaining about “having” to fund road improvements, one has to ask, why? The council should be prioritising projects based on some version of CBR and based on its funding constraint. Its hard to see what exactly the councils issue is if it is transport. If it is about water and wastewater, fair enough but they havent been clear about that, and they could get on with it, and adjust development contributions as required.
“As far as I am aware, there already exist roads to Kumeu.” Yes, and it is clogged at 6.45am in the morning. Huge number of new houses out this way with no infrastructure improvement. The road to Kumeu is, I think, part of SH16 so not a Council responsibility? Also, very little in the way of public transport – no passenger trains even though there is a rail line. The bus takes so long – despite years of work upgrading every aspect of the NW motorway they’re not installing a busway. This is so short-sighted!
As for water, new subdivisions have storm water, mains water and mains sewerage of a sort (households have to provide a storage tank and grinder pump – at considerable expense AND still pay five figures for connection), but existing areas have no footpaths, narrow roads, no street lights, no storm water (and no plans to install storm water infrastructure). In Riverhead we wonder where all the development contributions have gone. We calculate at least $5m has been raised with new subdivisions so far. But no upgrade of infrastructure outside the new streets and nothing in existing streets where new houses are being built or moved on. Lots of new traffic is added to existing roads, which are not being improved – some roads have been horribly torn up with all the extra traffic and developers don’t have to pay to improve their carrying capacity.
I’ve often thought a better way to pay for development levies would be the true cost is paid upfront by govt to council, with an additional special rate is added to the property for 10 years to pay it all back with a little interest.
This way the council is not left out of pocket, developer don’t have to wear the development levy which as its a considerable risk does affect them severely, govt helps all concerned in the interest of the nation at large (the point of governments).
Its not going to help affordablilty but hey be honest development levies aren’t the reason house prices are high.
“Look what the Government did to Christchurch City Council post-earthquake.
If I were Nick Smith I’d be looking to shunt this lot sideways as well.”
Mike Hoskings -Smith should roll over the council http://www.nzherald.co.nz/opinion/news/article.cfm?c_id=466&objectid=11444341
This is what the ‘right’ believe. I hear it all the time.
That and “bubble, what bubble, there is no trouble here I was just horsing around when I pulled that waitresses hair”.
A more balanced article by David Hargreaves titled “If it believes its own words the Government should be prepared to take centralised control of Auckland housing development”
http://www.interest.co.nz/opinion/75347/if-it-believes-its-own-words-government-should-be-prepared-take-centralised-control
I have a few comments following the article on how a KiwiBuild style supply solution could help provide affordable housing, with some guesstimate figures for greenfield transit orientated developments.
Interesting article. I find it telling that the discussion over Auckland house prices is opening up a bit, with some commentators calling out demand-side factors (and the possibility of a bubble) a bit more loudly. But really, who knows what the hell is happening?
Peter we have unaffordable housing which we could fix/improve on if we tried harder. The rest of the details are a little hazy… Is it a bubble? Will it pop soon? What combination of supply and demand policy reforms would work best? Up or out? Or up and out? If we build affordable housing will it cause a housing market crash? Will the short term pain be worth the long term gain?
I have an opinion but am keeping an open mind.
How much of the housing crisis is about John Key’s denial?
Roads of National Significance are his version of Think Big and they haven’t worked. They have wasted money on the wrong type of transport infrastructure in the wrong places.
Auckland voters rejected the 1950s motorway sprawl housing supply response. He could have accepted that and worked with the Auckland Council to provide something more acceptable to Auckland voters. There are plenty of affordable housing supply responses models out there, look at Japan, Singapore, Germany ….
The issue is to admit there’s a crisis would then suggest the govt have failed to prevent it which is not a good look for the government. It also means they then have to implement measures to address it and that’s where it gets really tricky. To get house prices down to what some people say they need to be it would require wiping out massive house values for most existing home owners and that would be deeply unpopular which is probably part of the reason the government seem to favour sprawl, it happens without impacting land values for existing properties where demand will always be high e.g. city fringe.
The alternative is something like the kiwibuild style solution you mention above (which would need to focus a lot on intensification to get a wide range of prices in desirable locations) but that is a long term strategy that probably won’t be felt till well after whatever party implements it has left power That means they would still come under criticism even though they might be doing the right thing.
“Roads of National Significance are his version of Think Big and they haven’t worked”. How can you say they haven’t worked when none have been completed?
Victoria Park tunnel was a RoNS. Probably the one with the best BCR and seems to work.
There doesn’t seem to be a lot of post analysis on these hugely expensive projects. I guess if you start doing that with the ones you’ll get good results from you’ll also need to do it for the ones likely to show poor results.
I remember a post a while back where Matt L (?) looked at analysis from NZTA on how roading projects has stacked up against their projections.
It was very grim reading except where a PT component was included in the project. Of course, the major PT projects were exceeding all projections by a mile.
Have any of the RoNS been as ssuccessful as the northern busway?
RoNS are 7 years old so some evaluation is due.