By Eric Crampton*
Without a time machine, we can't go back and revisit Christchurch Council's complete and utter failure after the September 2010 earthquake to ease up on land supply constraints so that the market could have responded after the February quakes by supplying places for people to live.
It is completely nuts that Christchurch property values are now above their pre-quake 2007 peak given the massive reduction in the amenity value of living in Christchurch; it reflects that demand wasn't cut by nearly as much as supply and that the combination of regulatory barriers to supply and real time-to-build problems have more people left homeless by the quakes who want houses than there are available houses in Christchurch.
What can we do in the interim, given the very real world constraints of:
- Very limited Council capacity;
- Very real infrastructure constraints that can put limits on extensive brownfield densification;
- Time to build even if we moved right now to whatever the perfect zoning rules might be?
John Fountain, my colleague here at Canterbury University, has been trying to help square the circle.
How? John has a house in Governor's Bay that's larger than he needs. He wants to build a flat into the house. But it is against Council regulations to put in a flat.
Christchurch Council has made it illegal for John, and people like him, to help to make more housing available quickly.
Yes I am shouting. More people should be shouting.
I'm surprised we haven't seen bricks going through planner windows. I'd certainly never condone such behaviour, but I'd understand.
Here's John, who's more typically Canadian in tone:
There are a few nice features of the new Christchurch City temporary accommodation scheme that permits the construction of an “accommodation unit”. An accommodation unit is "a structure of no more than 150m² in gross floor area for the purpose of providing temporary residential accommodation. The unit may include facilities normally associated with residential accommodation such as a kitchen, living area, bathroom, toilet and bedrooms. Accommodation unit may also include a campervan or caravan." There is a fast tracking system for getting pre construction advice and approval in 3 to 5 days – for free. Of course all building consents need to be in place…but this isn’t necessarily a big hurdle for a well designed and well constructed unit.
The problem is that "earthquake related" accommodation units are surrounded by a host of ancillary use constraints and regulations that strangle the (apparent) intentions behind the scheme …: eg whatever faciltiies are constructed must be temporary, one-storey, relocateable, used only for accommodation by and for households directly dislocated by the earthquake, and removed when their temporary need has dissipated or when CERA instructions say so or when CERA is disbanded four years away in April 2016.
John then slowly walks through how it's unlikely to be in any property owner's financial interest to build a flat into their existing property if it has to be pulled out four years later.
And, worse, the regulations require that the units accommodate specific persons who are earthquake-displaced. The thing about housing is that even if you accommodate somebody who isn't specifically earthquake-displaced, you're still making room for the displaced person to go where that newly accommodated person otherwise would have been.
The first big tick-box on the Council consenting check-list requires you to indicate whether your flat would accommodate somebody whose house was destroyed, who's displaced because of reconstruction, who's displaced because of land remediation, or who's displaced because of risks posed by adjacent structures. You can't use it to accommodate somebody who's moved into town to run a big construction crane even though building something to accommodate that guy frees up a space for an earthquake-affected person elsewhere.
So John reckons he could, for about $110k of his own money, put in a 70 square meter 2-bedroom unit at his place that would rent out for about $300 per week. That makes sense if he can pay off the investment over a term longer than 4 years, and if he doesn't have to pre-specify, before he even builds the freaking thing, who'd live there and guarantee it would be an earthquake-affected person.
It would be very easy for Council to ease up on the current draconian regulations to let people permanently build self-contained flats into their existing properties. These would be dispersed around the city; you wouldn't expect to have large effects on trunk infrastructure. Council wouldn't have to spend anything - just get out of the way. Here's John again:
So … what do we conclude: willing buyers , willing seller but the transactions that would help alleviate accommodation shortages for the next few years are effectively stymied by inadequate regulations. Multiply this 1000 fold and you’ll see why "temporary" inadequate approaches to zoning regulations – ones that don’t challenge the existing order – are a real bottleneck for dealing with rental accommodation shortages.
The plain fact is that the new temporary accommodation orders, while well intentioned, simply avoid the underlying regulatory problems that limit the development of small scale private investments that could do plenty to alleviate our city’s accommodation problems. It’s just old wine in a new wineskin – CERA and the city managers say we’ll facilitate something for you but then enclose it in a shrink wrap agreement that precludes it being used!
The temporary accommodation order itself would have been redundant had the zoning and development regulations been tweaked to permit residential activities to have secondary suites, as in Vancouver and many other Canadian municipalities – something that I am arguing in my other posts..
Here's John on how this kind of solution works in Vancouver. Here's more from John on secondary suites. Here's where John hit the kitchen "stumbling block" for developing a flat on his property.
Is there any plausible negative effect of allowing this kind of subdividing that outweighs the benefits?
Why does Christchurch Council make it illegal for my colleague to help ease Christchurch's very real housing shortage?
We have an earthquake-Czar who's supposed to be able to ride roughshod over Council stupidity to get things done. This is worth getting done. It would open up a pile of new rental properties that are currently in scarce supply, and it would do it faster than building new.
Every other city in the country should be looking hard at its existing set of regulations and weighing up just how much fragility they've built into their systems in case of sudden and devastating reductions in housing supply.
Update: See also John's post here that points to a City of Vancouver study on secondary suites.
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Eric Crampton teaches economics at the University of Canterbury. This item was first published on his blog, Offsetting Behaviour, and is used with permission.
20 Comments
Christchurch was a better place when there was a local council to deal with. These mega councils are out of tune. Too many planners - and staff trained to say "NO"!
After the upcoming Depression (Treasury told me on TV) 'reset' we should demand local body democracy - as practiced so well in the past.
I was raised in a rural part of Papanui. And the Paparoa County Council office was at the end of our road. They responded to local issues - and employed zero planners. The staff were all actually workers!
Lets get back to the future - fast
This is a very good point. Central government reforms of local government in 1989, 1996 and 2002 have led us to a point where the top priority in councils is now planning for the future and drawing up high quality financial plans. Councils can't even publish a draft financial plan without the big tick from Central Government. So now the doing is largely contracted out and happens at arms length
The lunacy inherent in the Nick Smith initiated review of local government is that there are no councils in the country who really act to advance the well-being of their community. They are too busy complying.
Yes it is. Making a use Non-Complying or Discretionary is the same as making it illegal for the majority of people who don't have the $10's of thousands to $100's of thousands plus 1 or 2 years required to go through public notification and environment court hearings with no certainty of getting consent. Only deep pocket developers & govt can go through this process.
Only Controlled or Restricted Discretionary resource consents are a realistic option for most people - can still cost $10's of thousands, but have more certainty of outcome.
Well I see discretionary and noncomplying acitivty applications getting approved very regularly without this great expense you imagine and without appeals and in way less time than you state.
Are you aware how few applications are notified (think around 5% last I looked) and of those notifed applications how few are appealed (think maybe 1-5%).
The fact remains that Crampton is incorrect is saying that this is illegal.
I was told by the duty planners at CCC in no uncertain terms (quite friendly though) that second dwellings - even if inside an dexisting dwelling and NOT requiring min land for a "dwelling" - would simply not be approved - not joust not notified or notified and not appealled. Also, the cost isn't trivial. Whereas getting a building consent is relatively small in terms of cost if one meets the requirements beforehand - no discretion .
Re illegal. If you do this - add a self contained unit into your housw w/o consent you are breaking the law.
Sure councils have discretion on whether to notify. However this discussion is about density and in these cases council's will almost always notify (or if you're lucky limited notify) to avoid risk. To avoid notification you need approval of everyone council considers affected, which with density is usually everyone. Most density applications I know of have been notified and in some cases declined (goodbye $50,000). I know of the occasional approved non-notified density application with affected persons approval, but all the expert reports required to get them didn't come cheap or quick.
The deposit alone for a notified or limited notified application in Auckland is $7665 so if you think anyone is going to get a density consent without spending in the 5 or 6 figures you're nuts. You'll need to pay balance of fees, your planner, traffic engineer, infrastructure report, designer to start with.
I'd love some examples of these sub $10,000, non-notified disc. and non-complying consents you regulary see get appoved. What TA?
Andrew. You're "right" and "wrong", at the same time - and a bit naive about what is "illegal".
A prohibitve cost of compliance with a complex bureaucratic regulation is what we're talking about here. You might find my bolg "I have seen the enemy and them is us " over on strategicecon.com helpful http://strategicecon.com/?p=145
Here is an excerpt:
"In a residential area, City and Banks Peninsula plans dictate that there can be only one “dwelling” on a piece of land that meets the minimum land area requirement. Otherwise a resource consent is necessary.....But what is a “dwelling” and what makes a “dwelling” primary or secondary? The answer is more bizarre than you can possibly imagine. A residential dwelling can in fact contain a second (or third or fourth or…) bedroom, bathroom, toilet, shower, games room, library/study, entertainment room, laundry (sometimes), living room, dining room , deck, garage space etc , indeed as many as one can afford or fit on the land, subject to building consent requirements. But a residential dwelling can have only one “kitchen”.
And what exactly is a kitchen? In the words of the planning documents a kitchen is an enclosed space with a sink, a bench top and cooking facilities. In practise, many living and games/entertainment rooms, studies as well as what are conventionally called kitchens, have built in benches, cupboards, sinks, refrigerators and “bar” or light eating type facilities. So, it really comes down to “cooking facilities”. And what is deemed to be a cooking facility in these days of portable , plug and play appliances: benchtop ovens, slow cookers, toasters, kettles, microwaves, blenders, sandwich makers, bread makers, electric frypans, etc.? I couldn’t get a definitive credible answer on this question from planners or legal experts. But …if you violate the law and have to “remove” a kitchen to comply with the city plan, operationally you only need to remove the fixed cooking facilities, the oven and the hobbs top.
The tail is wagging the dog here. The plain fact is that you can have as many or as few “primary” or “secondary” bathrooms, bedrooms, living areas, garages, toilets, showers, decks etc as you want. You can rent, share, or give away your bedroom, bathroom, toilet, games room, back yard, garage, …. to almost as many friends, family, co -workers , home-stayers, tourists, new immigrants, visitors of any gender, nationality , age or creed …. as you want (up to four paying visitors – but who is really counting?). But woe if you don’t want to cook for them and provide them with their own oven and hobbs top! In that one case, if you have a second fixed oven and a hobbs that , and only that, will turn your “house” from one dwelling in to two dwellings!"
In Auckland there is no kitchen rule (although council will swear there is they lie - the word 'kitchen' does not appear in Ithsmus Plan definitions). A household unit comes down to a maximum of 8 unrelated people living in the house. 8 people in a single house is legal. Split the identical house into 2 with 4 people living in each half and it's illegal (Non-Complying). The effects on environment/infrastructure are identical. The main difference is that one is affordable and one isn't.
Thanks for this piece of information bob. how can I contact you to discuss an editorial piece I am writing up about housing hsortages in Auckland and the possibilities of learning some lesson's from VAncouver's experience? You can contact me through the university of canterbur econ dept
The reason we have planning rules is because people want them (although one size doesn't fit all). I once lived in a house where the landlord next door squeezed a garage with a room on the back abutting my backyard. Predictably it became a party house, but that was my fault for not being rich enough to move away, perhaps.
Earthquake aside population growth is government policy and with population growth we have growing pains bourne by the existing population who might not have realised (for example) that Christchurch was really part of China.
The libertarian logic is demonstrated below and what it really means is that securing an ambient position on our crowded planet costs money (poor need not apply).
"During my visit to Houston there was much fuss about a high-rise apartment being build next to a very plush community of single family homes. The pro-zoning elite were using this as an argument for a comprehensive city plan complete with zoning and the usual host of regulations and controls.
However, people who buy into a neighbourhood controlled by a Homeowners’ Association know very well that the edge properties are vulnerable to such unexpected activities and hence sell at a considerable discount. Buyers pay their money and accept the risk."*
Houston – the well-planned City without a Plan
* I doubt anyone (execpt a blind man) accepts such a risk, they simply can't afford a better position but some people lack (ah) empathy.
No one is saying we don't need planning rules - just sensible ones that encourage housing typologies that are affordable and meet demand.
The flats metioned in this article could very well be within the same bulk rules that currently exist in the zone so the visual, shading, privacy effects etc are nil. The NZ fixation on 'household unit' in our plans is stupid. In Auckland an 8 bedroom, 6 car garage, 8 bathroom house is deemed to have the same effect on environment/infrastructure as a 1 bed 1 car house. Theoretically 2 dwellings may have half the people and half the effects of a single dwelling but from a planing perspective would be declined resource consent because of these lesser effects. It's nonsense and encourages big unaffordable houses.
The Res 1 zone in Auckland is there to protect the character of suburbs made up of villas. The associated rules do not allow the construction of a villa. This is how stupid our planning rules are and I bet Chch is similar.
jh
one swallow does not a summer make. Check out Vancouver, ALWAYS rated as one of the top most liveable cities in the world - and it is! (except for the damn winter rain - I can complain becaseu I grew up there!). I don't think Houston even gets a rating on liveability!
SO why Vancouver? Well check out my post http://strategicecon.com/?p=25 " Accommodation shortages i Christchurch - Lessons from Vancouver"
here's an excerpt to whet your appetite: "Monday’s editorial and recent Press articles and letters have identified the escalating problem of (un)affordable rental accommodation in Christchurch. However, I don’t share the Editor’s or Gerry Brownlee’s pessimism that central government can do nothing to help create a rapid solution.
Can you imagine adding thousands of new bedrooms, bathrooms, toilets, kitchens, living rooms and laundries to the useful rental stock of accommodation in Christchurch – all fully insured and easily financed – within the next year? I can. Simply follow the example of Vancouver, Canada. City planners there have embraced a wide range of initiatives to legalise and encourage secondary suite accommodation in residential areas to help meet the problem of unaffordable accommodation shortages in this beautiful, but expensive, city. City planners (or EQC commissioners) can do the same thing here in Christchurch with the stroke of the regulatory pen. Simply remove the existing stifling regulations on family flats and secondary suites in our City Plan (keeping all the other good building consent processes already in place)."
Welcome to the clueless City Council, folks.
There are no economists on staff, so natcherally, they are Economically clueless. A sampling:
- Failure to recognise the time value of money. So if that consent graces a CCC desk for an extra month or seven ('waiting for a response', of course, so the ball is in Your court and the penalty clock is paused) there's no realisation that overdraft or credit line fees accrue.
- Taxing development at an early stage, and treating their taxes as Revenue, whereas it's Debt to the eventual buyer. Diouble whammy: the aforementioned opportuniy cost adds to the effective tax by the time the eventual buyer hoves into sight, and that buyer then accrues debt to purchase the whole thing.
- As Eric notes here, failure to equate the useful life of assets with an equivalent amortisation period.
- Wealth destruction: recoverable property in red zones is binned rather than recycled: had dinner at a neighbour's just tonight and was regaled with yet another story of perfectly good consumer durables (restaurant crockery, fittings, heat pumps etc) destined for bins but (in the overall scheme of things, good! in this case) recycled into the black economy by being back-of-trucked.
This sort of gross cluelessness, incompetence and just plain old Waste needs a suitable epithet.
It was said of the Church prior to the Reformation that it had become simultaneously grasping, impoverished and extravagant.
Same thing for Christchurch City Council.....
What do you expect? No one is in charge.
It is a quirk of the constitution of local government that - unlike central government - there is no one person who runs the place and who can cut through the crap. Not withstanding the breathless interviews with them in the mainstream media, mayors have no executive power and are probably acting ultra vires every time they even offer an opinion publically. Only council committees can make real policy decisions.
So how does that play out? Broadly councils are very, very good at managing for the long run. The problem of course is that the people of Christchurch are in their second winter living in broken houses, still using portaloos in some places while they battle the obstructiveness of insurance companies, councils and government. They could not give a s--- about the long run. Any politician worth their salt would (i) get that and (ii) do something about it.
So what we have is Ecan steadfastly protecting their Natural Resources Regional Plan. Given that they sat on their hands for over a decade before finally publishing one you can understand their protectiveness. Under this plan owners cannot install woodburners in their freezing houses. The plan also tries to protect the northwest borders of the city to protect groundwater supplies to the existing (shrinking) city.
CCC wants to maintain its existing City Plan - which BTW must comply with eCan's Regional Plan. Making changes here are glacial. The culture of the place will be disconnected from reality and the top priority will be making sure no-one gets an 'unfair' advantage just because there has been an earthquake.
The airport company has been steadfastly opposing development from Rolleston to Kaiapoi to protect its interests. CCC, it's 100% owner, will hide behind the Companies Act to claim that it cannot force CIAL to give up its opposition.
God only knows what CERA can contribute to this mess but it is very clear that the current government wants to avoid both cost and getting its hands dirty with any pro-active measures.
Councils, by their constitution, cannot respond well to the unexpected and what we are seeing in Greater Christchurch is fairly predictably hamfisted.
Yes I could be accused of being a bit cynical :-)
I would suggest that leadership is exercised by individuals not committees. Only Gerry Brownlee has the constituted ability to lead through his ability to exercise more or less unilateral executive power via CERA. All the others can inspire, communicate and persuade but they cannot decide alone. And therefore it is unlikely they will cut through the crap.
What I was trying to say is that CCC, WDC, and SDC will struggle to be nimble in this situation simply because of the way they have to make decisions and implement them. I don't buy the 'incompetence' argument that some advance. The staff of these organisations are all rational actors who operate reasonably competently - it's just that they operate in a parallel universe.
Take a Hobbesian stand and ignore the dopey Council - just do what you want but do it in a way that can simply be removed later if you intend selling, so there will be no problems with the LIM. But why anyone would want to pay beyond 2007 $'s for property in Christchurch beggars belief! Masochism!
Ergophobia
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