Better Development Opportunities Do Present Themselves

This afternoon the Council Finance and Performance Committee will meet. One of the agenda items is to “authorise” Auckland Council Property Limited (ACPL) to sell off land in the Manukau area deemed surplus to core service requirements.

From the agenda paper (the full agenda is at the bottom of this post)

Disposal Recommendation Report

File No.: CP2014/20465

Purpose

1. This report seeks approval to sell two non-service council owned properties that Auckland Council Property Limited (“ACPL”) consider suitable for sale.

Executive summary

2. ACPL is required to identify properties from within council’s portfolio that may be suitable for potential sale to a combined value of $30 million by 30 June 2015.  ACPL and Auckland Council Property Department (“ACPD”) work collaboratively on a comprehensive review process to identify such properties.
3. Capital receipts from the sale of the surplus properties will contribute to all Auckland Plan outcomes by providing the council with an efficient use of capital and prioritisation of funds to achieve its activities and projects.
4. The two properties proposed for sale in this report have a cumulative rating value of $13 million and relate to the $30 million target.  These properties have been through the agreed consultative process including organisation wide internal officer consultation, local board and Iwi engagement.  The feedback has been supportive of the proposed disposal of the sites.
5. A detailed overview of the rationalisation process undertaken for these properties is outlined in the Comments, Local Board Views and Implications, and Maori Impact Statement sections of this report. Site specific detail, including information and feedback gathered through the rationalisation process, is contained herein under the respective property attachment.

Comments

6. ACPL and ACPD work collaboratively on a comprehensive review process to identify properties in the council portfolio that may be suitable to sell.  Once identified as a potential sale candidate ACPL takes the property through a multi stage engagement process.
7. The first phase of the process involves engagement with all council departments and relevant CCOs.  The engagement establishes whether a property is needed for a future funded project or whether it must be retained for some clear strategic purpose.  This is determined by an Expression of Interest (“EOI”) process whereby officers can request that all or part of a property is retained.  Alternatively officers may request that the property be encumbered or covenanted as part of the disposal process.  If the EOI sets out a robust financial analysis and evidence based rationale to retain the properties, then the EOI is endorsed.
8. If however the reasoning is more subjective a thorough business case is required.  An inter-disciplinary council and ACPL steering group comprised of senior managers, called the Property Review Steering Group (“PRSG”) meets on a monthly basis to assess the business cases.  The PRSG provides an opportunity for properties to be considered in a cohesive and integrated manner by relevant council departments and CCOs.
9. The Heritage Unit is invited prior to the EOI process to flag any sites of particular archaeological merit that need to be assessed further.  ACPL also engages with the Closed Landfills and Contaminated Land Response team prior to the EOI process commencing to ensure any possible contamination issues that may be associated with a property are identified.
10. The EOI process provides the Maori and Strategy Relations team the opportunity to flag any issue that is of particular relevance to Maori in connection with the potential disposal of a site.
11. Once a property has been cleared of any service requirements, ACPL then consults with Local Boards, Ward Councillors, Mana Whenua and the Independent Maori Statutory Board.
12. All sale recommendations must be approved by the ACPL Board before it makes the final recommendation to the Strategy and Finance Committee.

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So some land around Manukau is up on the blocks for sale.

Lets take a closer look starting with 20 Barrowcliffe Place

20 Barrowcliffe Place, Manukau property information

20 Barrowcliffe Place, Manukau

Property summary

1. The subject property is a large, vacant section that is proposed for residential development.  No funded service use has been identified for this site.  The Manurewa Local Board (MLB) and relevant Iwi have been consulted and do not oppose the proposed divestment and development of this site.  As this property is not required for current or future service requirements, we recommend that this site be sold.

Property information

2. The subject property is a five hectare, vacant site with a stormwater pond.  It has a desktop valuation of $7,000,000.  The Proposed Auckland Unitary Plan zone is Mixed Housing Suburban.
3. The subject property was acquired by the Manukau City Council in 1966 as part of a larger block of land for commercial and industrial development.  The surrounding land has been developed by the Crown and council for the Manukau city centre and supporting infrastructure.  This site is subject to a roading designation in respect of the south-western motorway.  This designation is in the process of being uplifted.
4. Part of this site has been identified for development as residential housing.  The remainder of the property is required for stormwater purposes and informal recreation.  Stormwater ponds are located along the boundary of Wiri Station Road and the south-western motorway.  A recreation area is to be developed alongside the Puhinui Stream on the southern boundary of the property.
5. A storm water modelling exercise by Harrison Grierson shows that this site is suitable for development.  Coffey Geotechnics were instructed to assess the geotechnical nature of the land.  No adverse conditions affecting development of the site were highlighted.  Potential issues with road noise at this site can be mitigated through master planning of the site and the installation of double glazing in residences.
6. ACPL and the Housing Project Office have been working with AECOM on a place management study, to formulate various options for the design and management of future development for the proposed residential development on this site.  This place management study is due to be completed in October.  As part of the place management study, market research will be undertaken to ascertain the needs of the community and the housing typologies that would add value to the area.  The proposed development will include housing typologies that will allow for affordable housing options and meet the demand of the market.  Initial research indicates that the development of this site would act as a catalyst to regenerate surrounding areas.

Consideration

Internal consultation

7. The rationalisation process was commenced in April 2014.  No alternative uses for this site were identified during this process.
8. The Heritage Unit was invited through the EOI process to raise any particular archaeological issues.  The Closed Landfills and Contaminated Land team are also asked to assess all properties prior to the EOI process commencing to ensure any possible contamination issues that may be associated with a property are identified.  Neither party has flagged any relevant issues.
9. The EOI process provided the Maori Strategy Relations team the opportunity to flag any issue that is of particular relevance to Maori.  No issues have been raised.

Local board views and implications

1. The MLB endorsed the proposed disposal of this site at its August business meeting, subject to the following:
2. a)      the board will be fully informed on the outcomes of the Place Management Study;
3. b)      an assessment of both road noise and traffic related air pollution will be carried out;
4. c)      any negative effects, as defined by the World Health Organisation, of both road noise and traffic related air pollution will be mitigated through master planning and the design of the residences;
5. d)      the design guidelines be upheld, including levels of intensification, impact of entry and egress, and the impacts on related infrastructure;
6. e)      the reserve and development contributions be used to fund infrastructure development, ie:  parks;
7. f)       the development ensure optimum water quality / stormwater discharge into the Manukau Harbour.
8. ACPL will ensure the development meets the requirements of the District Plan or Proposed Auckland Unitary Plan in regards to possible negative effects, water quality and Stormwater discharge.  The allocation of development contributions will be carried out by the relevant regulatory department of council.

…..

Technical Considerations

3. This site is not subject to offer back requirements under section 40 of the Public Works Act 1981.
4. This property is not one of the Council’s strategic assets to which the significance policy would apply.

ACPL’s independent commercial advice

5. The results of the rationalisation process to date indicate that this property is not required for current or future service requirements.  As such we recommend that this site be sold.  Should a resolution to divest this property be obtained, ACPL will continue to progress the proposed residential development of this site, ensuring both highest and best use of the site is achieved.  The proposed development of this site will be based on the needs of the community and will include affordable housing options.

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This area would have been perfect for some Terraced Housing and/or Apartments up to six stories as part of a Special Housing Area with it being so close to Manukau City Centre, Wiri industrial complex, and both road and public transport options. However, thanks to the meddling NIMBY Manurewa Local Board that particular area in green when from Terraced Housing and Apartment Zone to a low density Mixed Housing Suburban Zone which will replicate what is to the south of it in terms of housing.

So yes sell the land off and try and get it flipped into an SHA but try and get that area upzoned back to Terrace Housing and Apartments of up to six stories with it so close to a Metropolitan Centre AND heavy industrial complex.

I bet if it was the THAB zone and declared an SHA the site would be developed an tenanted quite quickly given its close proximity to amenities. The Auckland Design Manual covered good urban design practice to ensure that kind of an area is designed well.

31-33 Manukau Station Road, Manukau property information

This particular sale for me causes some issues in the fact Council is losing an opportunity here to leverage private and central government development on its (Council) land that is situated right next to a transport hub (if not on top of) and in the Manukau City Centre Metropolitan Centre Zone.

The agenda piece

31-33 Manukau Station Road, Manukau

Property summary

1. The subject property is comprised of three parts of 31-33 Manukau Station Road that are currently used for car parking.  The areas of this site that have been subject to rationalisation are proposed for residential and commercial development.  No funded service use has been identified for this site.  The Otara-Papatoetoe Local Board (OPLB) and relevant Iwi have been consulted and do not oppose the proposed disposal and development of this site.  As this property is not required for current or future service requirements, we recommend that this site be sold.

Property information

2. The subject property part of a 2.9381 hectare site.  Approximately 9767 m² of the entire site is subject to rationalisation.  Auckland Council’s Manukau civic building is located on this property, outside of the area subject to rationalisation.  The balance of the site is currently used for car parking.
3. The land value of the area subject to rationalisation is approximately $6.5 million.  The Proposed Auckland Unitary Plan zones are Metropolitan Centre, Manukau Rapid Transit Link overlying zone and Aircraft Noise Notification Area.  The site is subject to a Manukau Rapid Transit Link designation.
4. This site was acquired by the County of Manukau in 1963 for “an administration centre, reserves and general county purposes”.Planning and construction of the Manukau City Council administration centre was commenced in 1971 and completed in 1976.  The site was identified for partial transfer to non-service by the Portfolio Review Steering Group on 5 December 2013.
5. The entire property has been the subject of master planning, and has been identified for a transit orientated development.  The proposed development includes a bus terminal, railway station and commercial and residential development.  ACPL has been working on the proposed commercial and residential development, and the area subject to rationalisation is being rationalised to allow the commercial and residential portion of this development to progress.  The remainder of the property will continue to house Auckland Council’s Manukau civic building.

Consideration

Internal consultation

6. The rationalisation process was commenced in April 2014.  No alternative uses for this site were identified during this stage.
7. The Heritage Unit was invited through the EOI process to raise any particular archaeological issues.  The Closed Landfills and Contaminated Land team are also asked to assess all properties prior to the EOI process commencing to ensure any possible contamination issues that may be associated with a property are identified.  Neither party has flagged any relevant issues.
8. The EOI process provided the Maori Strategy Relations team the opportunity to flag any issue that is of particular relevance to Maori.  No issues have been raised.

Local board views and implications

9. The OPLB endorsed the proposed disposal of this site at its August business meeting.

Technical Considerations

1. This site is not subject to offer back requirements under section 40 of the Public Works Act 1981.
2. This property is not one of the Council’s strategic assets to which the significance policy would apply.

ACPL’s independent commercial advice

3. The results of the rationalisation process to date indicate that this property is not required for current or future service requirements.  As such we recommend that this site be sold.  Should a resolution to divest this property be obtained, ACPL will continue to progress the proposed residential and commercial development of this site in conjunction with Auckland Transport, and will select an appropriate development partner.

Seeming the flawed saw-tooth designed bus station is going ahead (a pity) the focus goes on what could be done with the land in yellow. Yes it can be developed as residential and commercial given that the area is a Metropolitan Centre. The large tract of yellow at the bottom would be PERFECT rather than using Hayman Park (thus shrinking it further) for the Te Papa North facility that Central Government wants to build as well. However, Council should NOT sell this land off but rather hold onto it and leverage private/central government development off it while still holding the land. Meaning Council is actively leasing the area out which would generate a greater rate of return than just the rateable valuable it would otherwise get from its annual rates collection.

Overseas including the USA Local Authorities through departments like Auckland Council Property Limited actively engage in property development as well as being a landlord. Usually through Public Private Partnerships the Local Authority’s property/development arm would own the land and even the building above but lease it back out to the private or central government sectors. Through this a Council can directly control what kind of development and activity occurs in the area while also pulling in a greater revenue stream for future investments than it would otherwise gain through standard land taxes (rates) on the land (or capital improvement in our case) itself.

Often such situations occur when mass transit is needing to be built. Given this particular area is to house the bus station such a PPP opportunity readily presents itself. An example of a situation can be seen here that I just picked up this morning:

Note: 1 million square feet is 92,903 square metres so that is a pretty large development.

Thus if I was the Finance and Performance Committee this afternoon I would NOT sell the Lot 59 land but rather investigate how we can pull off a PPP like Miami is about to do. And I am surprised this did not trigger the Council’s Significance Policy which means it goes to consultation with the wider public. The significance of the land and its potential is quite considerable – more than ACPL would point out.

An example of leveraged development if Council still owned the land and developed it via ACPL

Place making planning is important to get right. This is my own place making alternative ideas for the Manukau Super Metropolitan Centre

MIT Station – for comparison between a Standard Station and a Small Station (MIT is a Small Station)

Manukau Transport Interchange Development Alternative

Manukau MK 4 with street lighting 1 annotated

We need to think outside the square folks to leverage off private sector development on Council land to future pay for our investments. This is something Council is pretty lousy at at the moment. Maybe time for some new thinking over there.

Auckland Council Finance and Performance Committee Agenda