Category Archives: Development

Shanty Towns Here We Come!

Auckland Council has totally failed at it’s job for the last 20 years (previously 7 councils).  They have strangled supply.  They have ramped up costs.  They have stopped many developments in their tracks – often after a great deal of money has been spent by the prospective developer.

And what is the result? Surprise, surprise, a housing shortage.

And the National government, has basically stood by and tinkered a little bit.  And kind of hoped the problem would go away.

But it hasn’t.

So what do we have now? 2 things.  Firstly an infrastructure loan facility of $1b and secondly, and comically, some ‘pop up’ houses.  Sigh.

So firstly we have an infrastructure loan facility for fast growing cities (they mean Auckland, but for some reason don’t like to lay the blame all at Auckland’s doorstep) so that they can borrow off of the government to do what they always used to do, but seems now can’t do, i.e. put in infrastructure so that developers can subdivide land and build houses.

This is a) A tiny amount of money and b) Auckland council wouldn’t need it if they hadn’t pissed away sooooo much money on stupid shit.  Sorry to be blunt, but that’s basically it.  They’ve spent and spent and spent, incurred a lot of debt, and now they can’t perform their mandated functions such as providing infrastructure.  They’re like a teenager who spent all their money on booze and now want their parents to give them petrol money so they can get to work/school/uni/tech.

And then secondly, we have Paula Bennett wanting to create some pop up houses.  Why? Because this issue is starting to hurt the government.  They’ve tinkered around for the last 7 years or so and tut tutted while the situation gets worse.  And of course, they’ve watched immigration levels get to +70,000 people per annum – which all governments like because it stimulates the economy.

But the situation is now undeniable.  We are damn short of houses in Auckland and when it comes to allowing the creation of more housing units, the council has been dragging it’s feet the whole time.

So what to do? Well some quick fixes apparently!  Nothing that will solve the long term problem, just some things that will say “We take this issue seriously”  Try to keep a straight face when reading that 🙂

You know what they need to do?  You really want to know?

The answer is: THEY JUST NEED TO GET THE FUCK OUT OF THE WAY AND LET THE PRIVATE SECTOR BUILD HOUSES!!!

Simple.  Costs the taxpayer and ratepayer nothing.  No risks either.  Just let developers and builders get on with the job and the situation would be resolved pronto.

Sadly I don’t see this happening in the near future.

Instead we’ll get some shanty towns for the poor people, and a loan to the poor council.

Is the GC the Answer?

Interesting Article: Here.

Why the Gold Coast is the answer to our soaring house prices

A former Reserve Bank chairman has called for the Government and Auckland Council to enact policies to deliberately “collapse” the city’s house prices by at least 40 per cent and intensify building along Tamaki Dr with Gold Coast-style towers.

 

I agree with some of the articles content but not all of it.  I still think the council just needs to get out of the way and let private developers build.

David Henderson in the News Again

David Henderson, long time IRD battler, who had a movie made about him which I have reviewed here on the movies page, is in the news again: Link

Some time ago Rodney Hide wrote about a situation where he was having to provide information to the Official Assignee about a friend.  They wouldn’t say who it was, or why they were investigating, only that they needed information and that he had to give it.  Which he found extraordinary, of course!

So today I see the story linked to above, and Hide’s friend is David Henderson (the Christchurch one) who has had troubles with his property development business since the GFC.

The Official Assignee is chasing him over a various matters.

Funny how I take David Henderson’s side in this fight – after bankrupting Michael Robert McDonald for non payment of his debts and seeing what a fraud he is.

It will be interesting to see how both these cases proceed through the courts.

Papakura

I have a small commercial/residential property in Papakura, Auckland.  I was just reflecting on how much is going on there right now:

1) There are 48 townhouses being built around 550m from the CBD.  19 in stage one, being done now.  Corner of Ray Small Drive and Elliot St.  Here’s a picture off of the signboard on the property.  Try and ignore the graffiti :
Elliot Mews

2) They are working on the old Warehouse site to turn it into a medical centre now:
The Warehouse
3) There’s a few apartment developments around the town you probably won’t be aware of:
  • These ones have just been completed and are very close to the subject property.  The guys who did these are doing more just down from the current property on the Great South Road, across the road from the Warehouse – in the medical centre building.  So the medical centre people are moving out and across the road to the Warehouse site.​

Stanley Building

  • There are 11 planned just up and across the road from my building, above the Post Office.  Resource consent granted, construction not started.:

138 Great South Road, Papakura

  • 12 are being built (Nearly finished) in Railway St West.  I don’t have a photo of these, but they’re of very good quality.  Approximately 1km from the centre of CBD.
  • I think there are 4 being built in Wood St.  But haven’t seen this, just been told by an agent.

So anyway, I was listening to something on the radio the other day about the revival of run-down towns in the US and the key they said, was to get people living there.  Then the rest would come e.g. restaurants, cafes, shops etc, people feel safer at night and so on.

 

So I think this may happen to Papakura, but it won’t happen overnight, might take a few years.

This is What Happens When You Let Planners Run Things

Stockholm, a lovely place to visit.  I wonder if Auckland Council planners go on holidays there?

The trouble is, housing-wise it’s a disaster.  Turns out you can’t rent a place there for love nor money and housing prices have gone up 300% in the last 13 years…

Here’s the article on it.  And here are a few choice bits:

First, the city wait list for a new apartment is now 15 years on average

Stockholm is today one of the few capitals in the world where you cannot simply move to and hope to find a rental. You either have to wait in Stockholm’s official housing line, which has about half a million people ahead of you, or you can wait in one of the co-op lines, which own 28% of rental properties. Yet, if you look to Sweden’s largest co-op, there are exactly zero apartments available in Greater Stockholm.

In the last 10 years, 35,000 rental properties have been converted to condos with the result that the black market for getting a rental property is $29,000 per room. To be clear, that means paying someone $29,000 just for the right to rent that room.

Either way, with construction moving at a slow pace, and at the highest cost in the EU—72% above the average—the people of Stockholm and those moving in have figured out that with little or no new supply, the only way to make it work might be to move in with somebody, not by choice but by necessity. This is what decades of too little construction have led to: a new Stockholm Syndrome.

We’d have this here if the National government wasn’t taking on the councils.

 

Christchurch City Council Aims to Improve Development by Banning It

So in Christchurch, after the earthquakes, many buildings had to be demolished.

And then new ones built.

But the people building them, are building them in the wrong places – according to the Christchurch City Council.

So the have to be STOPPED.   BANNED from building anywhere apart from the central city.

This is how councils think.  Regulate, control, ban, impose costs.  Even activities creating jobs, investment etc. – they still have to be CONTROLLED.

From Stuff:

Plan aims at Christchurch ‘s ‘beating heart’

 

LIZ MCDONALD

Last updated 05:00 24/03/2014

The Christchurch City Council wants to stem the haemorrhage of business from the central city by clamping down on commercial growth in the suburbs.

However, it could be another year until the changes takes effect. Central city landowners have welcomed the plan, but say it comes far too late.

The new rules are in the city’s draft district plan review, and would ban new office, retail and hospitality buildings in light industrial (business 4) zones.

This would halt construction in most parts of Addington, Lincoln Rd, Blenheim Rd and much of Moorhouse Ave, where new buildings have sprung up since the earthquakes. It would also affect many suburbs and land near the airport.

The plan, open for public feedback now, comes as developers complain of insufficient tenants to start rebuilding in the central city.

And then right at the end this bit:

Christchurch Mayor Lianne Dalziel said the council was interested in hearing from people about the draft plan.

“The idea is that we encourage commercial development in commercial areas.

“We do need a vibrant beating heart to our city,” she said

 

 

 

Councils Trying to Cause Alarm

Since the Local Government Act was brought in in 2002, councils have been able to charge for development contributions.  Auckland council didn’t bring in a development contribution on a new section until 2005.  And then it was $2500.

But then of course, councils got addicted to the crack cocaine like constant flow of development contributions money.  They loved it.  Turns out they could charge whatever they like for development contributions – and here’s the real kicker, they could spend it on anything they liked!

Now imagine having a stream of cash coming into your bank account on a daily basis.  And you get to set the level of cashflow (i.e. how much cash comes into your bank account), and you can just live up large with no accountability to anyone. Do you think you might spend some of this money unwisely?  Do you think once you get used to $x per day coming into your bank account, you might try for $2x?  or $3x?

It would be hard for anyone to be responsible with such a huge chunk of change coming in on a regular basis.  Remember that guy we wanted to hire because he’s a really good planner from England? No worries we have the dosh now.  Remember that stormwater pipe that needs fixing, no worries let’s do it, in fact let’s upgrade them all – far in excess of what needs doing but who cares?  Workload a bit heavy?  Employ a bunch of people, no worries, now that’s more manageable.

And so on.  We now pay around $25,000 in development contributions for a new section in Auckland plus the minimum $8000 for a water meter ‘infrastructure growth charge’ and so on.

So if you want to build a new house, you pay for a resource consent (they’ve drafted the District Plan in a way that makes it almost impossible to not require one of these), you then pay for the building consent, then your development contributions, maybe some reserve contributions, your water meter, electrical meter and other services development contributions and this all adds up to like $50k to $75k.  Which is one reason houses are really dear in Auckland.

Now, finally, after having been in office for over 5 years, the government is starting to do something about it:

 

Proposed fee changes spur rates alarm

By Isaac Davison

5:30 AM Tuesday Feb 4, 2014

Govt plan to curb charges for developers will force 8.5% rate rise by 2022 – council.

Housing Minister Nick Smith. Photo / APN

Housing Minister Nick Smith. Photo / APN

Auckland’s rates will rise 8.5 per cent in eight years and debt will jump by $480 million if government goes ahead with housing affordability proposals which limit how much Auckland Council can charge developers, council officials say.

But Housing Minister Nick Smith says local authorities will need to “make hard choices” about the number and scale of parks, libraries and swimming pools and other community facilities they wanted if they were committed to the goal of bringing down skyrocketing house prices.

A council committee will today discuss a draft submission on law changes which were designed to rein in development levies.

Councils charge developers when their projects required them to spend more money on infrastructure such as parks, libraries, footpaths, stormwater or sewerage.

The National-led Government said development contributions had risen more than any other component of housing costs, from an average of $3000 to $14,000 in the past 10 years.

Its law changes would narrow the charges councils could demand from developers. Auckland would not be able to levy for community infrastructure apart from public toilets, playgrounds and community halls.

While it could still charge for core infrastructure such as transport, water and sewerage, it would have to fund community facilities such as parks, sports grounds and libraries with alternative sources such as rates.

Auckland Council said in its draft submission that it had planned $480 million in new community infrastructure in the next 10 years, and this would be paid for with development contributions.

 

Now of course the councils are up in arms. Their steady supply of cash is being turned off.  So what do they do, they rail against it, try and alarm the public with press releases stating how much rates are going to have to go up should the development contributions tap be shut off.

When you have a huge income stream, and you’ve built up people and all sorts of events etc. that rely on that cash, then you go into withdrawal symptoms.  You start to shiver all over and panic.  How are you going to fund the 43 Matariki events we normally do!!!???  How are we going to ensure the number of school leavers with a decent qualification increases?

Well of course the answer is you downsize, you fire some people who were doing nothing useful anyway, you stop holding all sorts of useless events.  You fire half your planners and let people get on with the job of building houses.

But councils will be really reluctant to do any of this.  They feel things like the $30 million dollar artificial river for kayaking events at Manukau is a must, not a nicety.  They have their little fiefdoms which they don’t want to see go.

So what they’re saying is that since one huge cashflow tap has been turned off, they’ll just have to make the other one, rates, flow twice as fast.  Because they absolutely need the money!

But hopefully at some point, sanity will prevail and councils will learn to live without their huge lines of cash constantly flowing inwards.  But I think this will take a long time.

Wow Councils are Really Improving

A wee while ago, I did a story on how The Hutt City Council was removing development levies (euphemistically known as contributions)  for new industrial builds.  Well now Rotorua council have gone even further, they’re removing ALL development contributions!

From Bob Dey:

Rotorua council cans most development contributions

on Monday 16 December 2013 in Funding, Infrastructure, Land use, Sectors 0

Rotorua District Council has stopped collecting most development contributions and will scrap the policy as part of its 2014-15 annual plan process.

Rotorua mayor Steve Chadwick.

Rotorua mayor Steve Chadwick.

Mayor Steve Chadwick said last Tuesday Rotorua would be the first council to scrap the levies in their present form and was doing so to boost growth by removing a disincentive, and to align with legislation introduced on 4 November.

Under the Local Government Act 2002 Amendment Bill (No 3), the range of infrastructure that can be financed by development contributions will be clarified & narrowed. The bill also encourages greater private provision of infrastructure through the use of development agreements.

Mrs Chadwick said the council had collected only about half the forecast revenue from this levy in the last 4 years. For the balance of this financial year, it expects to forego $250,000 in revenue by ending the levy.

“Rotorua District Council is of the view that foregoing some revenue by ending development contributions will be more than compensated by the additional economic growth we would expect by creating a substantially more investment-friendly environment for our district.

“It’s a simple formula really. If we increase the number of businesses & residents in our district, then we have more people paying rates, and the cost of providing services to our community is shared over a larger population. That’s the goal we’re signalling in our draft Rotorua 2030 vision, and this is just one of a number of creative measures that will help get our local economy moving again.”

The council will continue to levy water & sewerage charges, but will remit other contributions with immediate effect. The new arrangement applies to building, resource & subdivision consent applications approved from 5 December. Development contributions invoiced earlier could be eligible for remission.

Mrs Chadwick said the levies on a typical new house could fall by 46%, or about $8000.

Links: Better local government
Improving development contributions

Attribution: Council release.

 

This is actually pretty astounding.  Councils are now starting to say what developers have been saying for over 5 years now.  Which is that development contributions increase the cost of housing and doing business and actually don’t bring in a lot of income for councils because people just stop developing.

And so by removing them, more development will happen and so more rates will be collected.

 

Judgement Against Fortlock Security Systems (2008) Ltd

Well 2 court cases in 2 weeks, and 2 wins.

These are the only times I’ve taken a party to court.  Normally I just say “To Hell with it!”, pay them the full amount and never use them again.

But with Fortlock Security, their service has been just so hopeless and they’ve refused to acknowledge it to the point of beligerance, I felt I had no choice.

So I now have judgement for the full amount of $2006.58.

Patrick Shields from Fortlock tried to get the court date shifted (adjourned to the new year) but failed in this and then didn’t show up at court.

The referee spoke to the guy I now have looking after the system (if anyone wants a reference for a good security systems technician, ask in the comments or email me) and was satisfied that parts had been replaced unnecessarily and that costs have been incurred by me unnecessarily.

So, like I say, be very careful in dealing with Fortlock Security Systems.

UPDATE: 19th December 2013: Well I have to congratulate Fortlock Security Systems because they have paid.  The money is in my bank account now, in full.  So although I wasn’t happy with the service and having to take them to court to get redress, I am happy to give credit where credit is due and say that they have paid promptly – as per the judgement issued.  So at least they have settled and this is all put to bed now.