170 homes built in Special Housing Areas of 16,000 in pipeline, Brown says

Some 170 homes have been built in Special Housing Areas as a result of the Housing Accord between Auckland City and the government, Auckland mayor Len Brown says.

"Under the Special Housing Areas we know that of the sections created and the building consents given, which is around 1200, there have been 170 houses built as a consequence. And the reason why we know that is because we are actually holding much, much closer focus on those Special Housing Areas," the mayor told TVNZ's Q+A programme.

At the mid-way point, the Housing Accord applications have been lodged for more than 16,000 building consents.

When asked whether measures should be put in place to oblige developers to speed up construction the mayor said, “can you imagine? What can the Auckland Mayor do or the Auckland Council do to force a developer into actually developing ahead of the time in which their own market analysis tells them to develop? Auckland’s way forward is basically providing choice.. “

Mr Brown also told the programme the average cost of consent is around $33,000 per site.

The mayor wouldn’t be drawn on whether he would stand again.

RAW DATA: Q+A transcript: Auckland Mayor Len Brown

Watch the interview here

LEN We cannot calculate it.

SIMON You can’t calculate?

LEN No, it’s not. It’s a huge frustration to me, Simon, because I would like to know right down to the last number, and we could calculate to some extent off the Code Compliance Certificates given when the house is completed, but that is not correct in itself. So what we do know is that there is building supply. We know the amount of houses that are being built in and around the area anecdotally, but we can’t give you the precise number.

SIMON There’s a report that says there are just 20 being built. Doesn’t matter about the thousands of consents. Just 20 are being built.

LEN No. No, no, no.

SIMON You dismiss that?

LEN Absolutely. So, we know anecdotally, and so under the special housing areas we know that of the sections created and the building consents given, which is around 1200, there have been 170 houses built as a consequence. And the reason why we know that is because we are actually holding much, much closer focus on those special housing areas.

SIMON Okay. In terms of those special housing areas, we’ve seen a lot of consents, yes?

LEN Yep.

SIMON We’ve also seen in those 18 months prices rise about 20%. According to Phil Twyford, the developers are just sitting on them because it’s worth land banking. It’s not even worth building on them. So lots of consents but no actual houses. Prices up 20%. Nothing’s working.

LEN 84 Special Housing Areas have been created, and half of those are going through their consenting process right now. So, of course, when you give-

SIMON But it’s not keeping pace with demand, is it? I mean, prices are rising, demand is rising. Nothing is happening, really.

LEN The very least that we can do is ensure that the right platform is in place. And so, of course, if we’re not building the houses- So, the Council’s not building the houses. The ratepayers of Auckland don’t want us to build houses. Secondly, if the Government is sort of a part of the housing build process going on through state housing and all that sort of stuff, we are still not the suppliers. The very best we can do is put in place the platform to make sure the consents are given with pace. And so under the special housing areas, the consent has to be given within six months. Now, as against the old days, where it would be three, four, five years. That’s huge. With the 84 special housing areas, potentially 50,000 new homes coming through there. Now, we do know that even if we consented in six months’ time, it still takes about a year, on average, to get the first house built. So, for example, the first special housing area is Waimahia in Manurewa.

SIMON Well, Waimahia’s your outstanding success, but everywhere else, you’ve got developers sitting on land-banked property because it’s not worth going forward. They may as well just sit there and wait for the property values to rise and then sell. So consents are one thing, but we need completion. You actually need houses, and, as I say, you’re 20% advanced house prices over this period. Does the Government need to step in and do something else?

LEN Well, that’s for the Government to say. What we’ve done-

SIMON Do you want them to do something?

LEN I think that in terms of what we can have them do, we could say, look, go back to the good old days of the 1930s and the 1970s and build a lot of state houses. But at the end of the day, the Government has set its own priorities, and that is around private house build, so I’m not going to argue that.

SIMON In terms of those special housing areas where you’ve got the consents, what proportion of those fit the affordable housing criteria?

LEN So, the maximum amount that we would have under special housing areas would be 10% of the special housing areas. So of the 50,000, we want 5000 at least who are in that 30% of your gross income range.

SIMON That is 5000 over three years. 170 after 18 months. Is that adequate to address the demand?

LEN We know that the city is growing flat out. Over the last two years, 70,000 new people in Auckland, and that’s a city the size of Palmerston North. So the city’s growing very, very fast, and so we know that it’s going to be a challenge for us to keep up with demand because of the pace of the city.

SIMON Part of the problem we face with rising costs is compliance costs, the costs of consents. I mean, we see issues like the medical centre that’s spent $57,000 on fees and consultants for approval for seven new bike stands. These sorts of stories come up all the time. Some are apocryphal, I’m sure.

LEN Yeah, they are.

SIMON But is the Council actually contributing to the problem?

LEN We’ve got to balance off two things. So, when we’re building houses and we’re allowing for significant urban development of the city, as it is at the moment, there are costs relating to that. Water, wastewater, storm water, transportation costs, and you either try to sheet a balance of those home to the developer, or you make the ratepayers pay. And so we try and find that balance, and so the average costing, including connections from WaterCare, for example, is about $33,000 per site. So whether or not that’s apartment or a stand-alone home.

SIMON Figures I have say $60,000 per house. Up to $110,000 for an apartment.

LEN That’s not right. I mean, my figures are clearly $33,000 per site. That’s an average.

SIMON You’re just talking about per site, aren’t you? What about consents attached to the building process as well?

LEN That is it. That’s it.

SIMON Haven’t you got another problem too in that developers can make more money building expensive houses? They’re not incentivised, really, to offer the affordable houses.

LEN Well, if that was the argument, then we would see no apartment buildings being developed. In November, December last year, nearly 1000 building consents given. And of that number, 40% were apartments.

SIMON So you’re pushing intensification as the answer? The Unitary Plan style intensification as an answer to the problem?

LEN It’s a part of the answer.

SIMON Bill English says calls for intensification are about as popular as Ebola in Auckland.

LEN Yeah, well, I look forward to Bill coming to see us on occasions. (LAUGHS) And, look, the example I’ve given you - 40% of the consents through the back end of last year were for apartments. And those apartments are selling off the plans, not when they’ve been built. They’re selling off the plans. So the demand is there. It’s about the supply line, and we’re really now starting to see that supply line build. But just remember, Simon, what I said to you. It takes a year to get the first house or the apartment up even under a special housing area where you get your consent in six months. So, you know, we are putting everything in place to enable the private sector to get in there and build with pace, and that’s what they asked for-

SIMON You said they should be built in a year. We’re 18 months down the track. They’re not built. The consents are there. They don’t want to build because their profits lie in not building.

LEN And it’s taken a while-

SIMON How can we oblige the developers to get on with it? Once you fast-track the consents, can’t you put some measures in place to demand that they complete it?

LEN The Government could well regulate or legislate around-

SIMON So it’s the Government’s problem?

LEN (LAUGHS) Can you imagine? What can the Auckland Mayor do or the Auckland Council do to force a developer into actually developing ahead of the time in which their own market analysis tells them to develop? Auckland’s way forward is basically providing choice, and we’re going to see increasing height development in Auckland, and we’re seeing it right now. If you’re at a point where 40%, 50% of your consents are about apartments and court house development or duplex development, then you know that the city is changing, and that’s what will happen. But we’re not forcing that. We’re making choice available. So if you’re talking about the ability to develop in and around greenfields, we’re providing for that also under the new Unitary Plan.

SIMON So it’s a combination of everything. It’s up and out.

LEN Absolutely. It’s about choice.

SIMON Why don’t you relax the metropolitan urban limits, though? Then there is more supply, then the prices don’t necessarily get artificially forced up?

LEN Yeah, and to some extent, we have done that. Under the new Unitary Plan, we’ve got what’s called a Rural Urban Boundary in place, and it has a similar dynamic to the metropolitan urban limit, but it is a bit more flexible around growth-

SIMON So it basically says inside that line is the city, therefore prices are more expensive. Outside that line, it’s cheaper.

LEN Yeah. The further you go away from the city centre, no matter what’s going on in Auckland- If you go to Pokeno, if you go to Huntly, if you head up to Whangarei, you’ll find cheaper houses. If you want to commute out of those areas, that’s the case. But the closer in to the hub of the city, whether it’s New Lynn, whether it’s Takapuna, whether it’s in Newmarket, whether it’s in the city centre, the closer to the centre, the higher the prices. It’s the same for any city around the world.

SIMON Absolutely, but you can, to a degree, influence supply, and therefore you can influence the cost of land.

LEN And that’s exactly what we’re doing through the special housing area, and it’s exactly what’s going on under the Unitary Plan.

SIMON And prices are still inflating at a massive rate. Double-digit house-price growth.

LEN Because the city is growing flat out.

SIMON You say the city’s growing flat out, and that gives me a perfect opportunity to talk about something else - the port. The port has two conflicting demands, doesn’t it?

LEN Yes, it does.

SIMON One is financial. It’s the asset that returns money to Auckland and therefore helps keeps rates down. On the other side of it, it’s a wonderful asset to the city in terms of its sociability, its liveability, and it’s a tourist attraction. It’s out there absolutely looking gorgeous this morning. You own it, though. Why don’t you tell the port what you want it to do?

LEN Because the law is pretty clear on this, and that is that we cannot direct the port, pass resolutions or recommendations interfering in its operational mandate. The port-

SIMON So you own it, but you can’t interfere with it?

LEN The port runs its own business. That’s exactly right.

SIMON Don’t you find that frustrating?

LEN No, because I understand why those rules are in place, and I respect them. The rules are in place because that port channels 37% of the nation’s trade. It’s not just important to Auckland. It is critical to New Zealand’s economic wellbeing. If the port is not here in the future, if some time the port is not here, how do you actually provision a city of 2 million, 2.5 million from 250km away effectively? So there are a range-

SIMON Why 250km away?

LEN It would either be North Port or Tauranga.

SIMON Why not a new port?

LEN And that is also going to be a part of the consideration-

SIMON $5 billion or $6 billion. You can’t continue to grow this port, can you? Because otherwise you end up with a series of canals and docks out there eventually. The Ports of Auckland is saying we need this to be able to service the growing demand. That’s a continuing process. At some point, that has to stop. At some point, you have to look beyond that. Are we looking at another port? Why not, if not?

LEN So, the short-term issue of, okay, we’ve got port growth. And that’s great. So, the port is doing well financially and returning us something like 12% return per annum, and that’s fabulous. On the back of that are the issues of what is the port’s physical footprint within the harbour and how much that impacts on the harbour. But, secondly, for me, equally important, if not more important, is how does the port connect in in terms of getting produce, break bulk and containers off the port with pace?

SIMON Understood those factors-

LEN And so the issue here might be that the most important question here is when can we put a third rail line in to the inland port at Manukau to get as much as we possibly can off the port with as much pace as possible?

SIMON Where do you personally stand? Do you want the extensions? Or would you prefer to not see them?

LEN I’m with most Aucklanders. I know that there’s absolutely a limit that we have to draw around the port in terms of how far the port can go into the harbour.

SIMON Ports of Auckland’s Statement of Intent says any significant proposed capital expenditure impacting on the port’s footprint and its connection to Auckland will be discussed with the shareholder. You’re the shareholder. How did those discussions go?

LEN They did not.

SIMON They didn’t happen, did they?

LEN No, they did not.

SIMON So they failed in their mandate?

LEN They have certainly not been effective as I want them to be and as Aucklanders want them to be around communicating the drivers for port development, and that’s not a hard thing to do. They haven’t done this, really, effectively for 170 years.

SIMON So they haven’t been answering to their masters, effectively?

LEN They could have done a lot better, Simon.

SIMON A lot of these things have lead times. You want to see some results. They’re a couple of years down the track. That says there could be a new mayoralty with a new direction. Are you going to stand again?

LEN (LAUGHS) I’m not answering that question.

SIMON Why not?

LEN Look, because you can see what we’re doing at the moment every day-

SIMON But to see these things through- You talk about the passion of these long-term projects. To see them through, surely you need to stand again.

LEN That’s between me and the people and-

SIMON There are people in this room. We’re all part of the people. I’m asking on behalf of the people.

LEN And at some point-

SIMON The people want to know. Are you going to stand again?

LEN There’s no hurry. Normally when I’ve announced whether or not I will proceed, and I’ve run for four mayoralty campaigns now and won three of them, and I normally announce sort of the back end of the year before.