The Tail Wagging the Dog

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What’s really preventing the adaptation-conversion of the (remaining)  existing stock of housing in Christchurch so that self contained  apartment style accommodation in prime residential neighborhoods in New Zealand can help fix the rental accommodation shortage? The sunday roast, that’s what! Well, also baked chippies and stir fried veggies on the hobbs top . Because having that oven (and associated hobbs) as a second oven/hobbs cooking unit  in one residence – indeed on one residential site – means that you would be deemed to have two dwellings on one residential site. A  regulatory no no!! It doesn’t matter that a normal residential site can have a house with second , third,  or..nth … bedrooms, ensuites, baths, showers, spas, dens, music rooms, entertainment rooms, living areas, closets, laundries, attics, dining rooms, basements, decks…the defining characteristic of a second dwelling is that second fixed “cooking facility” that turns a games room bar, sink,  bench top and cupboards into a “kitchen”.

How do I “know” this? At first I thought the stumbling block was the restrictive “family flat ” regulations (see my earlier post), but those regulations are so insanely anal (can I copyright that?) that they probably never were a binding constraint!  But after a  thorough reading and analysis of  the City and BP DIstrict Plan(s) – no mean feat in itself – and then, after  an iterative process, receiving information from City Planners in response to a very specific pragmatic question:  how does the current  residential zoning regulations and/or the “temporary accommodation” scheme apply to an attempt on the part of a private individual homeowner to supply, for rent, a decent self contained apartment in existing, green-zone area in Christchurch -” I have seen the enemy…and them is us”.  I will spare you the citations to chapter and verse: the gist of it  is that instead of simply having to get a building permit for safe and fire rated enclosure of an oven  and stove top and have the unit installed by a qualified tradesperson, as I would in any regular kitchen,  I actually have to make a full scale Resource Consent  application for a special “discretionary activity” to put a second dwelling on a single residential site (for which I in Governors Bay “need” 1000 sq m and you in Christchurch “need” 450 sq m) – all of which the duty planners tell me I or anyone else would be very unlikely to get under the current regulations . Hmm ,talk about the tail wagging the dog!

No wonder the simplest approach to flexible secondary suite style housing policies in Canada defines the problem away by simple regulatory reform: permitting a second self contained living  area inside an existing residence in a residential zone – no questions asked – more or less, with some exceptions about parking –  except that all self contained living areas, primary or secondary,  comply  with the building codes of the time and the residence owner pays required taxes, rates and utilities!!

New Temporary Accommodation Policies for Christchurch : old wine, new wineskins

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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. Consider the financial incentives induced by these regulations:

I estimate the cost of putting a 70 sq metre modern two bedroom “accommodation unit” below my garage out in my home in Governors Bay at around $110k with a separate access drive.  I wouldn’t  have any trouble at all complying with ALL of the requirements spelled out in the  check sheet P033 . We  have a large site with well established trees, unbelievable view , the street is quiet, the school is nearby, we’re in the green zone, ….I could go on and on but the long and short of it is we live in a beautiful place.

However, I do not have any specific persons in mind who might be displaced from their homes who I would be able to accommodate – a requirement to comply with the new regulatory policy. Instead I am thinking of temporary (long or short term) rental for people/ families who actually are displaced or for workers who would be employed in the rebuild of the city or Lyttleton Harbour. The current regulations and their implementation prevent me from doing this becasue how am I to verify whether any particular long or short term tenant is actually displaced from their home by the earthquake. And why do I care? For example with rising rents and expiring leases many people/families will be “displaced” and need places to rent – after all there IS a housing shortage! But these people wouldn’t qualify. Moreover, workers, their partners, their families wouldn’t qualify under these rules either!!

I reckon demand would be pretty strong though, given the shortage of decent rentals in good places in Christchurch:  say $300 a week for a furnished modern warm self contained accommodation unit. That’s not  a bad rate of return on a $100k investment – except for the fact that it wouldn’t last for any longer than 4 years becasue of the “parameters” of the temporary residential housing policy.  Why  would I ever invest $110k knowing that in 4 years I’d have to remove the “temporary accommodation”?

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..

 

Regulatory reform for housing and the NZ Productivity Commission report

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I just scanned through the NZ productivity Commission’s report (check out the media release and or download the report here) . It’s 343 pages, and clearly has some useful material on reforming zoning planning laws and regulations. Ditto for the City Consultant’s report to CHRANZ (here)  which contains a wealth of survey style information on the demand side of housing markets in NZ.

But  the authors of neither document  seem to be  aware of  decades of policy  research on affordable housing in Canadian municipalities like metro Vancouver and Toronto, where both rental and home ownership costs have rapidly become beyond the reach of even middle income individuals and families  (I did a search on the pdfs for the NZ documents for terms like Canada, Vancouver, secondary suite, family flat, granny flat…and came up with 0 hits!!).  How on earth did our NZ based researchers missed  Canadian style   “Smart Growth” strategies that cultivate an active  secondary suite market? A shame really…but we’ll change things!! The economic and public policy common sense of secondary suite policies of Vancouver and related metropolitan municipalities is overwhelming – especially to those who believe that regulatory reform at the municipal level is needed, and needed badly, to address growing affordability problems in  Auckland and now (for a different reason) my home, Christchurch.

John

Auckland’s post-war housing policy: Did we (ever) follow Canada , permitting secondary suites?

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Here is an open letter to anyone with knowledge of New Zealand’s regulatory policy on self contained accommodation units in residential “zones”. I’ve asked Lisa Truttman over at her interesting  timespanner site to help me out here….but heck, I’ll accept information from anyone in the know!!

I have both a personal and a professional  interest in this topic: personal because I live in Christchurch (Lyttleton Harbour actually) and there is a critically serious accommodation shortage here that will only escalate over the next decade as the rebuild of Christchurch begins (when it ever does begin!!) , and professional,  because I am an academic economist at the University of Canterbury beginning some research into the effects  of regulations at municipal levels on serious accommodation shortages and the associated unaffordable rents and house prices  (think Auckland ). You’ll see from my recent posts that I have been exploring how regulatory reform in Canada on secondary suite policy  has changed the residential landscape there – for the better, for tenants, owners, and municipal councils.

Here is my question: I  would like to find out what special measures – especially at local levels – have been  taken in New Zealand urban areas (esp Auckland, possibly other main centers) during the post-war period in times of housing shortages . I am particularly interested in local community initiatives to help returning servicemen/women and their families obtain housing, either rental or ownership, in the main urban areas in New Zealand.  I don’t mean in State provided housing or  in purpose built camps/comppunds, but  in options for self contained accommodation  provided by existing residents in the areas where returning servicemen and their families would have wanted to live – ie in proximity to good  transport,  schools, parks, shopping and other services – but found both rents or house prices  in these places unaffordable. An archivist at the  Alexander Turnball  pointed me to a Dept of Housing booklet “Buy, Build or Rent: housing assistance for the ex-serviceman” (1946)  . This booklet mentions the existence of many initiatives at local community levels – but has no further information about them.

I suspect  there may have been some significant and interesting local community changes in regulatory policies that either actively encouraged or turned a blind eye to initiatives taken by existing residents to provide secondary suite type self contained accommodation …but am only guessing at this stage. By “secondary suites” I mean self contained accommodation units (could be as small as a studio size apartment these days, or more substantial 2 or 3 bedroom units with separate living areas, bedrooms, kitchen facilities, toilet/shower, etc) , internal  to or external to an existing dwelling- eg  renovations of an existing house/garage/sleepout  to create a second  self contained accommodation unit  . In NZ and OZ these go by the name “granny flats “, but of course their tenants, or owners, could be anyone but granny herself!

Did we in NZ ever follow Canada in this regard? For example,  in Canada, returning servicemen after WW2 were provided with subsides and loans, as well as special tenement style housing as they were in New Zealand, but also existing homeowners in local communities were permitted and encouraged to develop secondary suite type accommodation for returning war vets .  For example in Vancouver the City managers of the time actively encouraged these sorts of secondary suites for the first ten years after WW2 ended , but then in a succession of by-laws in the late 1950′s rescinded these permissions. In the 1990′s a policy u-turn occurred,   especially in the greater metropolitan regions of Vancouver or Toronto where house  prices and rents became out of reach for even those on middle class or higher  incomes. [ [ I grew up in one such war vet tenement compound in Vancouver where the qualification for entry was to be a returning war vet  with at least three  kids to qualify - I think that may have been the "reason" my brother Michael was born in 1949 actually !] ]. In fact the BC provincial government has even put out a guide for municipalities seeking to implement a secondary suite policy (http://www.housing.gov.bc.ca/pub/secondary_suites.pdf) and CMHC  is a strong advocate of permissive  policies towards secondary suites as part of a portfolio of solutions to housing unaffordability problems in urban areas  http://www.cmhc-schl.gc.ca/en/co/renoho/refash/refash_040.cfm

The problem is I’m not sure where to start to look for such information. I found only a short  reference in Bush’s  Decently and in Order (1972, p 289) in his discussion of end-of-war accommodation crises in Auckland…but that’s all:

“Towards. the end of the War the problem worsened: the Council concentrated more and  more of its resources· on housing, “desperate” being increasingly supplanted by “critical’.’ in official terminology. At Dr McElroy’s ·suggestion, the standing Housing Committee was reconstituted in April 1944: the Mayor, John Allum, emphasized that the provision of more housing accommodation was second only in importance to winning the war. The Council’s major contribution towards ameliorating the situation, was of course, the transit camps converted from American army establishments. But they belong more properly to the post-war era and will be considered in a later chapter. Otherwise, the policy was “a combination of rehabilitation of existing houses and strict enforcement of the zoning scheme and by-laws.” Nevertheless, a number of the latter relating to building were revised or relaxed to facilitate the renovation of existing dwellings. In July 1945 regulations concerning fire-proofing and the sharing of amenities were eased.” (p 289, emphasis added)

My guess is that as a Commonwealth country NZ might have followed Canada in this after WW2….but it’s only a conjecture. And we certainly haven’t followed changing Canadian policy in the last decade!

Thanks for any help you can provide.

John

What’s in a name?: Secondary suites, Granny flats, Family flats, Garden suites

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Self contained living units of the sort we are thinking about have many different names: secondary suites, granny flats, family flats, garden suites, coach houses, etc. In truth, the term “secondary suite” doesn’t appear in our City’s district Plan . Instead, the kinds of living unit we are discussing is called a  “family flat” in this definition from the Christchurch City Plan:

“self contained living accommodation, whether contained within a residential unit or located separately to a residential unit on the same site, which is occupied by family member(s) who are dependant (sic)  in some way on the household living in that residential unit; and which is encumbered by an appropriate legal instrument which ensures that the use of the family flat is limited to dependant family members of the household living in the residential unit”.Volume 3 Definitions: Family Flat; emphasis added

The highlighted bold words are fine. We’re talking simple functionality here – “self contained living accommodation”  located on the same site of a residential dwelling which itself is a self contained living accommodation. The  living accommodation can be inside the residential dwelling, attached to it, or separate from it – eg as a  stand-alone  building or perhaps part of or attached to a garage or other stand alone building on the site.

But the remainder of this  “definition” – indeed even the simple adjective “family” in the name “family flat”  is far from innocuous.  Two important regulatory constraints on residential living are embodied: one a social and conventional l constraint ,  the other an intrusive and costly legal restraint aiding in the enforcement of the social constraint.

What kind of a constraint is this? Should we even care?. Well, I think so. Would you accept this kind of restriction on your own residential unit? I doubt it.

For a single residential  unit on a site  there is no restriction whatsoever on who may use the living arrangements for that unit. Who in fact does live in residential units in New Zealand these days? Well almost anyone and everyone one if our census is to be believed: old, young; rich, poor; healthy , sick; religious or atheist; educated or being educated; married ,  in a civil union or single….basically any and every way you might want to slice the demographic cake. Do you have to be “family” to live in a residence? No way! Ditto for tenure arrangements.  Owners might live in the residential unit , but as often as not they don’t, and renters use and occupy a residence. Think of a group of professionals or students  or workers or stay-at-home mums or dads or …. all of the above… We’d simply call most of those arrangements… a flat – and be done with it. Restricting “flats” in a primary residence to be used only by family would be rightly regarded as an unjustifiable intrusion on home owners and home renters rights and privleges.

So why do we even think of tolerating it for secondary suites – ie self contained living accommodation internal to or external to a residence?

This is a good question. Hold it in (only) your mind for a moment, savor it, let it roll around. But don’t think for a moment that the sensible answer lies in some intellectual rationale about preserving neighborhood values or standards in primarily residential areas.  That sort of reply to a question like – why do we have such and such by-law? – is (also) typically a smoke-screen to cover up an intricate thicket of self-interested and often  excessively conservative behaviors that brought the by-law into existence and keep it in existence in spite of pressure for change. It may well be that there are “impacts” on residential neighborhood quality from many kinds of typically residential activities, flats secondary suites or otherwise . But typically with a controversial by-law there are at least several self interested groups in action: those wanting a change, those opposing a change, and those “civil servants” wanting to keep control of the regulatory bureaucracy and political processes that are part of local body governance.
As a famous Roman judge is alleged to have asked: Cui bono? (to whose benefit?) (see Wikipedia) “The famous Lucius Cassius, whom the Roman people used to regard as a very honest and wise judge, was in the habit of asking, time and again, ‘To whose benefit?’”

 

I’ve been reading sections of Graham Bush’s fascinating book Decently and in Order (1971)  on the history of local government in  Auckland . Did you know that up until the mid 1930′s playing tennis and using children’s playgrounds on a Sunday were forbidden? that bathing suits were required to be neck to knee? that a motion came before the City Council to have a bronze statue of a discuss thrower in the domain “fig-leafed” (it failed to pass)? I mention these as a reminder of how recently social conservatism and prudery ruled the local body governance roost. But even removing the obvious conservative influences, zoning laws and regulations create a playing field for other forms of strategic self  interest to emerge.  Consider this slightly cynical viewpoint:  when self contained living accommodation is restricted to to immediate dependent family members, the restriction needs to be seen not just for what it includes (what decent person  wouldn’t want to help out their dependant children or grandparents  – hmmm, i can think of some…) but for what it excludes: all the “undesrieables” to those who are already established inside a specific residential area , whoever they might be – students, immigrants, working classes, …. The family flat restriction becomes a blank template for incumbents  to fill in the demographic they don’t want in their area of town. Of course they couldn’t get a policy like that enforced on existing residences on site, the primary dwelling  – but woe to any “additional” intensification of land use!!

The history of the U-turn in Canadian provincial  and local government policies towards secondary suite type self contained accommodation in established residential areas will provide  deep insights into the forces for and the forces against.   I’ll be synthesizing and commenting on that in an upcoming blog. But a point worth remembering is that the changes in Canada have come in urban areas

  • where house prices have made both ownership and rental unaffordable to large numbers of the middle class population (not just the poor) ,
  • where green spaces and historical characteristics of residential areas are highly valued and urban sprawl and high rise proliferation  isn’t
  • where diverse and thriving communities of people living, shopping, working, playing, all close to and interconnected to decent public transport networks (i e reduce reliance on cars, increase cycling and walking alternatives in pleasant and safe environments)
  • permit continuity   of living through time for  all ages – from pre school kids to teens  within walking distance of  local schools to older adults and seniors being able to “age in place” , in familiar, friendly, pleasant environments for living shopping and relaxing

Current (Draconian) Christchurch Regulations on secondary suites

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This is just a quickie post to get down some basic information relevant to introducing secondary suites into Christchurch and Lyttleton Harbour (the latter being covered by the Banks Penninsula  – BP -District Plan – the former by the CCC Plan)

First, what I am calling “secondary suites”,  the CCC Plan and BP plan  calls “family flats”. There is a very helpful pamphlet published by the CCC “So you want to build a family flat” that sets out the ground rules.  There is also a “bond contract/agreement” , creating a legal obligation or “encumbrance” to be signed by anyone planning to create a family flat.  (These documents are also available at the City’s website.) But the long and short of it (the existing regulations) is :

  • a family flat/secondary suite can be inside an existing dwelling – perhaps from converting or developing (according to regular building codes) say internal rooms and living spaces into  “separate” living facilities -  or external to an existing residential dwelling – the cottage in the back yard , or a semi detached building.
  • the residential unit is only defined as a family flat/secondary suite if it contains a kitchen – bedrooms ,bathrooms,  laundries,  living rooms, games rooms, studies, garages,  and all other aspects of typical residential space for living  all seem to be fine
  • What’s a kitchen? A kitchen is not defined in the city plan – however the guidelines in the pamphlet  say that it a kitchen contains all three of a sink, a bench and “facilities that allow cooking equipment to be set up” – legal advice that I have had seems to think that since toasters, kettles, microwaves, refrigerators, and all kinds of portable plug-in appliances  are in widespread use throughout the city’s  residences and B&B’s , that cooking equipment here is most likely operationally defined as fixed cooking equipment such as an hobbs and/or oven with fixed specialized wiring (This makes sense since the draconian powers of remedy for the Council include charging you for “removing” the cooking equipment deemed to be in breach – hardly a problem for a plug-in appliance – but don’t quote me on that – even the legal advisor I discussed couldn’t tell me for sure!)
  • What “categories”  of people can live in the residence? Living (which I guess means using the kitchen cooking facilities – since everything else in relation to using residential space is more or less permitted !) is narrowly restricted to a “dependent family member”  . Note that this “user type restriction” differs from regulations for   B&B’s , Holiday home, and Homestay accommodation in Christchurch . These regulations permit , as an accepted  - “by-right”  - residential activity,  as many as 4 “paying” people in any type of standard residential living zone in the City  (how many nonpaying people??) . Such visitors guests … don’t have to be related by family connections in any way whatsoever – just as in the standard student or professional flatting arrangements where no family connection is required, or often desired. Whether or how these types of regulations on “acceptable people” are enforced or not is a complete unknown, since there is no registration requirement for either home stay or holiday home or B&B short stay or flatting type rental  accommodation, and even if there were who could verify/dispute a claim, easily? No one knows how much, or how little, of this private accommodation activity goes on in the City. If the experiences of other cities where accommodation is in short supply is any indication, it will be  a quantitatively significant  activity. For example more than half of all homes and more than 2/3 of all new homes in some well established residential areas of Vancouver engage in secondary suites accommodation service supply. Word “on the street” in Christchurch is that everyone who knows anyone at High School will have heard of the lucrative weekly income that comes form having students on short or long home stays.
  • a $5000 bond “without cash” must be formally posted, registered through a solicitor – at your expense –  for a hefty $400-500 transaction fee with the City, and the “agreement” between you and the City must have the consent of the institutions holding your mortgage! . In case of breach of the conditions for having a family flat this is a legally binding penalty  that the City can enforce; the “agreement” also includes rights for the City to monitor, inspect, and forcibly shut down any activities inspectors deem to be breaching the family flat agreement; it is an obligation that is attached to the property, not the person – so any prospective buyer will be taking on such a registered obligation. With these kinds of restrictions one can see why people or households  who would otherwise love to have a family flat (read second cooking facilities) , even for for family members, much less a secondary suite, for anyone else, paying or not, simply wouldn’t register it!!
  • 65 sq metres is a maximum size (for either an internal or an external unit)

It is worth mentioning  that the  provisions of the new temporary accommodation regulations  approved by Council and Cear define an accommodation unit much more liberally : “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.” But as you’ll see in an upcoming post – this attempt at non-regulatory reform is just old wine in new wineskins. What kind of policy advice are authorities receiving – and accepting – to make them  think this sort of regulation will encourage investment in accommodation units? Put the another way – as a statement answering the question  - there is no real interest in or commitment to providing incentives for small scale, privately initiated and funded, investment in accommodation units at all!!

JF

Changing regulations and by-laws to accommodate new forms of housing

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I just finished reading The Affordability and Choice Today Guide for Developers and Planners . The ACT acronym is a bit unfortunate for K iwis since we associated it with a centre right political party! However, what’s in a name the bard would say!!To avoid confusion for kiwis I’ll use A.C.T as the acronym for this program.

The leading idea for the entire   program  is to improve affordability and choice in housing (rental or ownership, or both) through regulatory reform. In this particular document (one of many published resources  on the website actprogram.com )  development standards (regulation) are tackled and a number of “alternatives”  suggested.

How relevant is this to the secondary suite debate here in New Zealand? It’s more about new building and larger scale inner city/suburban rennovation standards than conversions of existing household stock…but it begins to address the factors which planners in NZ will want to see addressed. But at a more general level,  besides discussing general and specific standard, it provides some wonderful case studies of communities in Canad that have implemented some alternatives to conventional regulation of housing development(s). Being able to observe something in practice helps overcome the general conservatism of city/municipal planners, and to some extent developers. The document rightly points out that most planning standards were determined in the 50′s (or earlier) when land was cheap, the w.a.s.p. nuclear family was a dominant cultural ideal , and environmental awareness was, well, low or non-existent! In many modern cities – take earthquake devastated Christchurch or   Auckland (rents land and housing prices skyrocketing…as per Vancouver and Toronto) – these “contextual” factors have all been turned upside down, completely. Multiculturalism, large and growing immigrant populations, expensive land, high rents, and a deep consciousness of environmental issues and amenities are the new context. And A.C.T asks (and begins to answer) sensible  questions about how to remove regulatory barriers to affordable housing in this changed environment.

The table of contents, which I have shamelessly copied over for you below, gives an idea of what specific topics this document addresses. But as important as the detail is here  – about parking , about water, about storm-water, about sewage etc etc – there is a general philosophy that recognizes that these alternatives have to sold: developers have to have incentives to embrace them, city planners have to be motivated to risk implementing them, and Everyman and Everywoman  have to be have incentives to try something new.

 

INTRODUCTION ……………………………………………………………………………….. 2
• About this guide
• What are alternative development standards?
• Benefits of alternative development standards
• Barriers and success strategies
BUILDING LOTS ……………………………………………………………………………….. 6
• Lot size
• Lot configuration
• Lot distribution
STREETS AND PARKING ……………………………………………………………….. 9
• Street layout
• Right-of-way dimensions
• Streetscape design
• Parking for single-family dwellings
• Parking for multiple-family and mixed-use developments
STORMWATER AND SERVICING …………………………………………………. 14
• Stormwater management
• Utilities and services
• Sewage treatment

RESOURCES …………………………………………………………………………………….. 18

Accommodation shortages in Christchurch – lessons from Vancouver

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This is a short article I  submitted to the Christchurch Press. The ideas in it derive from many useful background papers that explore how the City of Vancouver planners are using secondary suite development to help deal with the serious (un)affordability of accommodation in Vancouver. One report from  2009  a gold mine of useful information on both the history of and obstacles to the current permissive policy in Vancouver : click here to download the report , Secondary Suites Study jf ,

 

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).

 

A secondary suite is a self-contained dwelling unit that has been created “within” a larger principal dwelling. A unit typically shares the main dwelling’s yard, parking area, laundry, and storage space, but has its own kitchen, living area, bathroom and entrance. Generally, no ownership nor subdivision is permitted (although ownership solutions in the form of laneway houses, smaller self contained units or cottages in the back of a residential property, work well in Vancouver). Almost half of all new residential homes now contain one or more secondary suites, adding to the stock of tens of thousands of such suites in Vancouver.  High rise tenements in marginal regions that become tomorrow’s ghettos and today’s eyesores, are not wanted in Vancouver. But secondary suites in prime residential areas, like Kitsilano and Commercial Drive, are actively embraced.

 

Not so here in Christchurch. The current City Plan permits small family flats or secondary suites in residential areas, but only under extreme restrictions that effectively negate the viability of having extra self contained accommodation on a property. B&B’s are of course completely legal anywhere Christchurch, with a nominal restriction to no more than four guests, but no B&B is permitted to have a “kitchen” – the trinity of a stove/hobbs with a sink and benchtop. No one knows how many non-consented secondary suites or B&B’s with functioning kitchens that there are in Christchurch. But in the last two years they will all have been to put to VERY good use, illegally of course. To continue to make secondary suites persona non grata in post quake Christchurch with its’ serious accommodation shortages is bordering on the insane.

 

It’s really a matter of demand and supply. Give a solo parent or family with small kids, young single professionals, older retirees, or migrant trades persons and their families, a self contained two bedroom apartment attached to an existing, beautiful home in a pristine residential area close to schools, parks and restaurants/shops  - think Ilam, Merivale, Selwyn, Sydenham, Riccarton, Beckenham, Cashmere, Lyttleton, Governors Bay, Addington, St Albans , etc – and the demand soars. And from Vancouver’s experience, so does the supply.

 

Consider the logic. An established couple whose children have moved on, with a four bedroom home in Ilam, Sydenham or Lyttleton Harbour  could spend perhaps $20,000- $40,000 adding in separate kitchen, bathroom, laundry, and/or living space to their existing home. For $100k a small self-contained cottage could be built out the back on the quarter acre section. Their insurance company is happy to extend their existing policy to the new extension – completely the reverse of any other form of new residential construction in Christchurch. An unfurnished unit in a desirable area might be rented for between $200-$300 a week, more for a furnished unit. That’s between $10k and $15k return a year on a $30k investment! And of course that rental income stream and insurance on the underlying asset keeps the banks happy lending on such small scale projects.

 

To the scare mongers who would cry that such a change would lead to the destruction of local family residential neighborhoods, I can only say- visit Vancouver, year after year rated in the top 3 most desireble cities to live in in the world. Read the history of their debates about legalizing secondary suites. It took them 50 years to overcome established property owners objections. Maybe it will only take us two years and 10,000 earthquakes. The beauty and social diversity of the wide range of residential neighborhoods in Vancouver testifies to the power that a properly (less) regulated market in secondary suites has for helping to solve rent crises and accommodation shortages.

Ticket Scalping – a competitive fringe takes on the real price scalpers

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Why are private ticket resellers (“scalpers”) for the Warrior’s big game on Friday [ editors note - this was written for an NRL final couple of years ago - but the message is timeless] being vilified by disgruntled fans, uncritical media reporters, and Warriors’ management?

Let’s go back to demand and supply basics. Ticket reselling in an open competitive retail market situation like Trade-me is a good thing for fans, not a bad thing. Every resale of an event ticket on Trade me is to the mutual advantage of both the buyer and the seller. There is no coercion. There is no monopolistic price gouging. There are no back door dealings between mates or ostentatious corporate party packages at wildly inflated prices involved.

Lets suppose there were 10,000 additional tickets made publicly available for Friday’s big game, at typical Warriors game prices of $25 to $60 (half price for kids). At these relatively low prices there apparently was huge excess demand – thousands more people wanting to buy tickets than the number of seats available at Mt Smart stadium. Tickets got allocated in the first instance to whoever got through to Ticketek on the phone lines or over the internet….and then they get reallocated through a competitive trading process on Trade me.

Imagine that these 10,000 tickets could be resold on Trade-me for prices of say $300 each. That’s 10,000 happy kiwis. A fan who bought four tickets for himself and his family at $25 each can , after resale, watch the game with his family on the new flat screen television and Sky Sport subscription he can now afford with the extra $1100 cash he has in hand. And the fan who paid $300 for each of the four tickets gets to go to a game that he and his mates really wanted to (where “really” is measured by their willingness to shell out even more than $300 to watch this live performance rather than walk down to the local sports bar to watch the games). Everybody’s happy.

So who is complaining, and why? Fans who don’t get tickets at the open market price on Trade me? Well, that’s the way a competitive auction market works. If you can’t pay the going market price in a Trade-me auction you don’t get the goods – whether the goods are resold cars, resold houses, resold clothes or…resold event tickets. What about fans who paid $300 on Trade-me, got their ticket, but are bitter because they weren’t fast enough off the mark (or in the right “mates rates” loop) to get the first lot of tickets at $25 each direct from Ticketek or the Warriors. Well, any buyer would like to pay a low price rather than a higher price. The problem is that there were lots and lots of would be buyers at a $25 price, far too many for the 10,000 available seats. In economics speak we call that a shortage, an excess of demand over supply, at a price of $25. Prices rise to clear the market, making demand equal to supply at the going market price. So if you are willing to pay more than $300 to take in the excitement of the big game and you got a ticket at that price consider yourself lucky – there are other people who would gladly take your place.

The idea that a “real fan” would never sell a ticket for the live game for a higher price than he/she paid is rubbish. Fan’s differ greatly in their personal situation or willingness to pay to see live performances by the Warriors. Consider the thousands of season ticket holders who suffered through the first half of the Warriors season. Dad and the kids can go to the game live – or resell their 4 tickets for $1000. Would you begrudge them that choice? Does it make them any less of a fan because they prefer $1000 in the hand to watching the game live? Ditto for the local league club that has been gifted say 25 tickets to the game. Of course it’s great (for the select few club members) to watch the Warriors live – but 25x$250 is $6,250. That buys a lot of uniforms for the kids, ground maintenance and improvement, new locker rooms, transportation, etc. Sure it would be nice to have both ($6,250 to spend on the club AND some live tickets) but when the choice is there many sensible club managers would, for the good of the game and the glory of the Warriors, opt for the cash in hand.

I’d like to ask the Warriors CEO Wayne Scurrah in particular, and the shareholdrs and management for the Warriors and Mt Smart Stadium – to reconsider their views on ticket reselling. Moralistic stereotypes of resellers as “scalpers” just doesn’t cut it. Competitive re-trading markets do. I’m not questioning the contractual right of the stadium owner and event providers to trade the seats they provide under whatever terms – such as no reselling – they negotiate. But would you consider the idea that permitting and legitimizing ticket reselling could be both profitable for the sellers and preferable to fans?

Major sports team-owners (baseball, basketball, football) in the US have taken a different attitude towards online, direct reselling. The teams and leagues have given up trying (ineffectively) to crush the growing trade in direct reselling of event-tickets online, estimated at $US3 billion annually. Nowadays they either have their own on-line reselling sites (and take a fee for this service) or deal with brokers like StubHub, an online re-trading institution where fans resell their event-tickets and where sports teams refer their fans to in order to resell their tickets. ALL fans benefit , and the providing clubs benefit by getting a revenue slice they otherwise wouldn’t have from referalls or brokerage fees (see a nice op-ed opinion piece on this by Jeff Jacoby and also a recent NY time article ).

Fraud, not price gouging, is the biggest problem in event-ticket reselling. Large, reputable, online trading institutions, with their coterie of specialist resellers and verification methods, and publicly accessible and transparent open auction methods, actually solve both problems. For example, StubHub provides guarantees of ticket legitimacy, tickets being in adjacent blocks, and refunds for cancelled events as a component of its online services, for a fee. Online sites run by team and venue owners use electronic-swipe ticketing methods to record and register transfers as well as to guarantee legitmacy of resold tickets.

Once you look at the issue of reselling event tickets in this way it opens up some new ways of thinking about allocating event tickets in the first place. Why no auction off a sizeable number of tickets for every game in the first place? Indeed, if I were a shareholder in either the Warriors or Mt Smart, I’d be asking some hard questions about why this wasn’t done for the pricing of public tickets for the playoff games in the first place. If 10,000 tickets are sold between $25-$60 each, ie, for between $250K and $600K ,and they could have been sold for $300 each, ie for $3 million, who is accountable for the last $2.5 million in revenue?

It’s not good enough to trot out a generalisation that the whole idea is to make the game affordable for fans. Which fans?  At playoff time  there are too many fans for the available number of seats. Some get in for a low price but many more don’t get in at all.  Has the game been made affordable for those who lose out in the ticket rush? Even if the Warriors gave away 10,000 tickets for free to whoever they deemed worthy (past supporters, mates of past supporters, kids clubs, one ticket for every amateur  league player in Auckland), those particular ticket holders will be made better off by having the possibility of being able to resell their tickets in a competitive marketplace.

The key is that team-owners, stadium owners, fans and policy makers recognize and invest in the benefits of competitive secondary markets in event-tickets. Is that too much to ask?