The Reaction To My Presentation to the Auckland Development Committee [Updated with figures and links]

Also Council to consider setting up a new Council Controlled Organisation

 

And so yesterday I gave the abridged version of my presentation to the Auckland Development Committee. The main point I focused on was the land sale at Lot 59 in Manukau City Centre that was “authorised” by the Finance and Performance Committee being an error in judgement. The subsequent point that came off that was Auckland Council becoming an active property developer with its existing land holdings to which subsequent developments would give the Council an extra revenue stream through ground rents and leases to assist the much constrained Budget.

The abridged version of the presentation is below:

 

I altered the presentation slightly by starting off with the fare box recovery ratios some of our competing cities have. I read out the Asian cities that have a 100% or higher fare box recovery rate to demonstrate it is possible for mass transit systems to turn a profit. You can see the Fare box recovery ratios here: http://en.wikipedia.org/wiki/Farebox_recovery_ratio. The reason for rattling off the fare box ratios would become evident during question time after the presentation.

 

Reaction

According to observations by my peers at the table it seems I both delivered the presentation in a well researched and logical fashion while making Councillors especially Finance and Performance Chair Cr. Penny Webster somewhat quite uncomfortable around the Manukau land sale. The presentation using Miami and Australia as example demonstrated Councils using their land holdings and their development arms to facilitate developments in partnership with the private sector usually around a mass transit node such as a station. The Miami example shows the public authorities wanting a station but partnering up with private developers to build both the station as well as residential and commercial complexes over and around the new station. The Council gets a new station, a new urban complex, and a revenue stream from such a development. In Sydney they are preparing to build a second harbour rail tunnel with stations at either side. Developers and even universities are falling over themselves to get their developments near or over the stations and are willing to contribute to the cost of the tunnel project. Why for Sydney and Miami? Patronage that both a station gives making it attractive for a private sector or university holder to be there, as well as those developments attracting patronage that would feed into the stations making the new transit project viable.

This is what we need to do and are doing to a limited degree with Manukau and New Lynn (I mentioned others as future potential), and what we should be doing with the City Rail Link stations as an alternative to congestion and road pricing via the Mayor’s flawed Alternative Funding Package. This is where Councillor Cooper’s question would stem from around the fare box recovery ratios. By having a proper fare structure combined with good developments near or over stations you get the best of both worlds in quality urban development and increased mass transit patronage such as we see in Asia. The best of both worlds scenario ultimately creates an interdependence between the urban development and the mass transit system which is a win for a City. A city like Auckland who I reminded the Committee is a Beta class International City competing with other Beta and most of all the big Alpha class cities of the World (see: http://en.wikipedia.org/wiki/Global_city#GaWC_study  ). After a request from Councillor Wayne Walker I will go and find some economic figures around Sydney, Brisbane, and Miami’s public authority lead developments that I quoted in my presentation. I should have them back by the next Auckland Development Committee in November.

Update: Links to the Sydney and Miami examples

Sydney with the Second Rail Harbour Crossing and Jockeying for stations on the new line: Jockeying begins over new train stations for Sydney University or Waterloo via

Miami’s TOD Development: http://miami.curbed.com/archives/2014/09/23/miamicentral-will-have-a-1-million-square-foot-supertower.php …

 

Manukau’s Lot 59

As for Manukau and its land sale this is where it got a bit uncomfortable for the Councillors gauging by the reactions noted by others.

The land in question is in yellow (the blue is set aside for the Auckland Transport bus interchange unless Council pulls that in a review):

Source: Auckland Council
Source: Auckland Council

As I said to the Committee I quoted both Councillors Quax and Brewer around our lack of large parcels of commercial and industrial land (to which the Council said it would set about in securing in a previous Auckland Development Committee – last months in fact (yes the irony is coming)). These lack of large parcels of land make large-scale commercial, industrial, and higher density residential developments very expensive if not neigh impossible especially in sort after areas like Metropolitan Centres like Manukau City Centre. So what did the Finance and Performance Committee do? Sell off piece of Lot 59 above and created the very land fragment situation we are so hard trying to avoid.

While Councillor Filipaina of Manukau Ward (Councillor Anae was absent but already voted against the sale) has sort clarification around the sale itself with the Chief Financial Officer (who did not have the information on hand but was at the Finance and Performance Committee when the motion to allow the sale happen went through?) the main point made was Council is saying one thing with one hand and doing he opposite with the other.

Lot 59 is a very valuable piece of land located in a Metropolitan Centre specifically the Manukau City Centre. A large section of valuable land that could be used by the upcoming Council’s development arm (see further down for more) to development maybe something like this (as in the presentation yesterday):

Manukau Transport Interchange Development Alternative
Manukau Transport Interchange Development Alternative

And yes apparently the Committee were all paying attention to the screen yesterday.

Update: Some information on Lot 59 land area

Lot 59 in Manukau is around 17,425m2. I quoted the Miami Transit/Urban Development building 92,000m2 of floor space
Council is nuts to sell such a large land space off in a Metropolitan Centre. The Countdown in Manukau is around 6,500m2 as a comparison

100,000m2 of new commercial, civic, retail and residential space could be built on Lot 59. (Bus interchanges goes onto Putney Way)
That would be some serious revenue stream for Council AND some pressure relief on the shortages we have. 

My final comment was that in a perfect world the Council would pass a Rescinding Motion that would block the land sale process of Lot 59 in Manukau and that in light of the situation Council would not do this again with land in our Metropolitan Centres (while showing this graphic as the Council owns the land and car parks surrounding Westfield Mall Manukau):

Manukau Mall Station and the Manukau Metro Town Centre  Reference for the Sketch Up Pocket Park: http://land8.com/photo/athens-urban-park-exparking/next?context=user
Manukau Mall Station and the Manukau Metro Town Centre
Reference for the Sketch Up Pocket Park: http://land8.com/photo/athens-urban-park-exparking/next?context=user

 

Some extra reference graphics

 

After I gave the presentation and some questions by Councillors, it was stated a review on future land sales would be done especially if that land was in the City Centre or Metropolitan Centres. I was given a heads up on that there might be a slim possibility Council review the Manukau Land Sale as well. Whether they stop it and actually hold the land is yet to be seen.

 

New Council Controlled Organisation that would be the Council’s Development Arm

 

While I was giving the presentation yesterday I was unaware of this which was stated in the NZ Herald:

Plan afoot to lift city’s tatty areas

Council review suggests a body to bring new life to neglected suburbs
A new body to undertake urban regeneration of neglected suburbs such as Avondale, New Lynn and Otahuhu is being mooted by Auckland Council.

Chief executive Stephen Town yesterday confirmed whispers about an urban development council-controlled organisation to improve urban life.

If the new CCO gets the go-ahead from councillors, it will target three or four locations for urban regeneration.

No areas have been finalised, but suburbs such as Avondale, New Lynn and Otahuhu would be ideal candidates.

Mr Town said the council was saying: “What if we create a significant urban development authority that has a much clearer and strong mandate to stimulate regeneration in partnership with the private sector and potentially with Housing New Zealand … and iwi?”

He said the CCO would be a first for New Zealand, but the idea had been proven in growing Australian cities.

It is envisaged the new CCO would lead to a merger of Auckland Council Property Ltd – which manages the council’s surplus housing and land holdings – and Waterfront Auckland.

Mr Town said there was a realistic prospect of changes occurring between July and October next year.

A better city
• Plans being mooted for new council body to give urban development a boost in Auckland.
• Avondale, New Lynn and Otahuhu the kind of suburbs to benefit.
• Private sector, Housing New Zealand and iwi could be involved.
• Based on successful models in Australia.

———

Source: http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11343756 

 

It would have been nice to know about this on Wednesday as this new proposed development CCO could be the exact thing I was calling for yesterday in my presentation. That being if Council stops also selling its land first as that land would be the first target for the new development CCO to take on in future urban development. And yes the Australian examples mentioned by Bernard were the ones I mentioned yesterday as well…

Todd Niall from Radio NZ had this to say as well:

 

So in light of this how about Council go get that land back at Lot 59 in Manukau, SIT ON IT and see what the new Auckland Development CCO will do with it. For that matter stall the bus interchange design development as well for the same reasons…

I rather not have the City in the following situation owing to a premature move in a land sale that would come back to bite us in the near future as we lose a development AND revenue stream opportunity

Aptly called "The Village Idiot"
Aptly called “The Village Idiot”

 

5 thoughts on “The Reaction To My Presentation to the Auckland Development Committee [Updated with figures and links]

  1. Ben. in the long term, the fundamental reason that some Asian mass transit systems have such a good “farebox cost recovery rate” is twofold.

    Firstly, isn’t it true that the “costs” that the farebox has to cover, have already been offset by the real estate revenue?

    Secondly, if the government has retained ownership of the site, it has carte blanche re redevelopment and addition of extra stories and so on. Everywhere that private owners own the site, those private owners expectations of higher and higher rents as time goes on actually act as a brake on the kind of development that will be to the benefit of the mass transit system. The government or its subsidiary that integrates operation of the mass transit system with operation of the sites, can be motivated by BOTH the addition of floor space and hence payers of floor rent, AND the addition of more riders to the mass transit system. The private property owner has a different set of motivations entirely.

    In a city with high and volatile land values – always a legacy of fringe growth containment – the property investment market is more like the market for gold and bullion. The investor-speculator does not care anywhere near as much about actual use of the property (just as the investor in gold does not care about the gold plating industry, medical uses of gold, electrical industry uses, etc). What they care about is capital gains! And they don’t need to actually DO anything with their site.

    This is why London has an absolute crisis of lack of redevelopment today. I just read in the McKinsey Institute’s latest Global Report on Affordable Housing, that in London, 45 percent of land with permission to be developed remains idle. The UK’s waiting list for social housing has 1.8 million people on it; 98,000 new units were constructed in 2012; and 400,000 sites with development permission remain undeveloped!

    Auckland is on track to follow the UK’s cities in exactly the same WRONG ways!! I do not believe that the promoters of “mass transit oriented urban planning” in most parts of the world are both intelligent and sincere. If they were intelligent, they would understand that the success of mass transit systems depends on private sector site owners (or at the very least, traditional Anglo “property rights”) being kept out of the equation. If they understand this and still promote the status quo in mass transit planning, they are almost certainly corrupt tools of the vested interests in “value capture” at the sites favoured by the mass transit “investments”.

    The once-famous econometrist and land economist Colin Clark made the following argument in one of his last books, “Regional and Urban Location”, 1982.

    “…..If rail and subway services to the center of large cities were charged at full cost….two consequences would follow. The employers of the lower paid workers in the city center would have to raise their wages, reduce the level of service offered, or move to suburban locations……Meanwhile the higher paid……would have an incentive to move their residences closer to the center…… .

    “……These movements would have their reflection in the price of land…….In net effect, the subsidies on rail and subway transport are subsidies to the owners of certain types of land – for which there is no social justification……”

    The question is starting to be raised, about the social justice inherent in subsidies to subway systems such as Manhattan’s, disproportionately benefiting the highest income earning quartile. Ross Elliott from Brisbane, Australia, whose insight I greatly respect, has pointedly raised this question about Australian cities:

    http://www.macrobusiness.com.au/2013/05/no-the-cbd-is-not-the-driver-of-jobs-part-4/

    (There are links from that article, to all of Ross’s series of essays on the subject).

  2. Ben – As a former journalist who won awards for investigative reporting (1970s) and worked in the Press Gallery for nearly 2 decades, I enjoy & get considerable useful information from reading your reports – However, I am puzzled as to why the NZ Herald and other mass media are not following up on some of the critical issues you have raised lately?? – especially to do with Council’s performance in regard to South Auckland (Manukau), and the wasted opportunities to co-ordinate urban renewal on the scale and vision you are clearly showing is practical, exciting and progressive etc, etc….

    …. Any thoughts?? Do you agree?? Any suggestions on what might be done about this??

    Regards

    Tony Garnier

    1. Afternoon Tony

      I have edited your comment in removing contact details out from the public arena. I do have them stored else where though for future reference.

      In light of the Main Stream Media not following up on critical issues that I have both risen and presented (to Auckland Council) recently, it depends which outlet one is referring to.
      Stuff.co.nz via their suburban reporters have been quite good, so too is Todd Niall from Radio NZ who has admitted he does trawl the blog for story scoops. The Herald I dont bother with unless Anne Gibson has written a good piece, and with TV outlets is something else again. That said I have nudged Duncan Gardner on Radio Live a couple of times via Twitter and he does a pretty good job.

      As for the presentation I gave which had the Committee shifting uncomfortably in their seats; it is yet to be seen whether the Deputy Mayor will follow the review through on all future land sales in the Metropolitan Centres. As for the Manukau City Centre land sale which was the target of the presentation who knows what will happen knowing the Council. I dont hold much faith in Council doing something more productive that would foster better “Council’s performance in regard to South Auckland (Manukau), and the wasted opportunities to co-ordinate urban renewal on the scale and vision you are clearly showing is practical, exciting and progressive etc, etc….”

      If so… well things would be slightly different than they are now.

      Happy to discuss further via email view[dot]of[dot]auckland[at]gmail[dot]com

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