Havelock has run out of sections

Published HBT 18 July 2016

Recently the Hastings District Council arranged a “building industries forum on residential land supply”. It seemed mostly to be a PR exercise by council officers to mollify the concerns of the local building industry over the perceived shortage of building sites especially Havelock North. The council maintains there is no shortage, but nearly 100 industry representatives surely can’t be wrong. 

Residential land development is a long convoluted process made more difficult by the Heretaunga Plains Urban Development Strategy or HPUDS which attempts to control the erosion of productive land by urban development.  Because of the time it takes to get bare land to the stage of being available for housing, wise and timely planning is essential, and its clear council has scored an own goal by failing to take the industry’s views seriously when the issue was bought to Council’s Economic Development Committee over 18 months ago. 

The problems are two fold. Council predictions are based on past averages but the market is cyclical so when demand accelerates as is now happening, supply may be inadiquite. Additionally in Havelock North the odour coming from the mushroom farm has resulted in the Arataki Extension being put on hold though the problem has also been known about for a long time. 

One solution is to develop Brookvale Road but unfortunately there is currently no structure plan so it will be at least a couple of years before anything happens, assuming landowners are interested. A second area is to the south of Havelock North between Te Aute and Middle Roads is more promising but will also be subject to a delay of at least 12 months and probably longer. 

Effectively Havelock North has run out of sections and there are also delays in bring more sections to market in both Northwood and Lyndhurst.

Council seems to think if no building consent has been issued then an empty section is available for someone to buy, but this is quite wrong. It’s possible the section owner has purchased the block with the intention of building at some undefined time in the future. Alternatively an empty section could be part of a builders supply chain to ensure as work on each dwelling comes to an end construction can commence on the next dwelling. This means builders must have a continuing supply of subdivided and serviced residential land. Larger building companies may be committed to buying a significant number of sections even though it may be some time before they are all built on. The reality is an empty section can only be assumed to be available for sale if council approaches the owner and confirms its availability. 

Nor is it realistic to assume that if a handful of sections are unsold there are still sections available for everyone. We live in a market economy not some Eastern European controlled economy. Not every section will appeal to every buyer. Yet it is important there are enough sections so all buyers can be satisfied. 

It is essential there is a good supply of sections. Single dwelling residential construction is a hugely important economic driver here in Hawke’s Bay as elsewhere with many individuals and businesses involved. If council does not ensure enough land is available, and  in the right areas, then millions of dollars of privately funded spending will be denied to the local economy. Shortages will also result in less competition and both higher section prices and land banking is likely to occur. Conversely if a developer thinks prices will be stable because of adequate supply they will be keen to move their sections to market. 

Council seems concerned  it will be left owing the money it has borrowed for infrastructure if it does not collect the development contributions. This must have happened in parts of Flaxmere where council owned sections have been unsold for decades but record low interest rates at present minimises the risks. The proposed 260 sections in Howard St will require $3.3 million for infrastructure, and the interest on this money at say 5% is just $165 000 a year.  When compared to the $750 000 cost of the free Hastings CBD parking trials, or the million dollars already spent on Civic Square, neither of which has provided any economic benefit, the risk on residential development seems affordable.  

Hawke’s Bay is a great place to live but in terms of population we are nearly the slowest growing region in the country. One of the reasons for this is a lack of well paid permanent jobs.The Hastings District Council invests heavily in economic development so clearly believes it has an important role to play yet seems willing to permit a damaging shortage of residential sections to happen.

At last weeks Horticultural Field Days in Hastings BNZ economics guru Tony Alexander suggested Hawke’s Bay will not share in New Zealand’s rapidly growing economy. He also predicted the current housing boom would run out of steam by the end of next year, as interest rates started to increase again. It would be a great shame if lack of timely action on residential development by the HDC further impacted on our well being.  

Wrong parking strategy in Hastings

Published HBT 8 July 2016

The Hastings District Council has finalised its 2016/17 budget with a proposed rate increase of 3.1%  for RA1 the urban area, and 1.5% for the rural area RA2. 

The average increase could have been 0.5% higher had council not decided to raid the million dollar parking reserve instead of using rates to fund the $270 000 of lost revenue resulting from the third free parking trial. Councillors ignored the 80% of respondents to the Council’s Annual Plan survey and confirmed by 80% of those taking part in a focus group consultation who stated they wanted paid parking rather than a rates increase. A cynic might connect the reluctance to make a hard decision with the forthcoming local government elections. 

In theory at least, the parking experiment has not directly impacted on rates. The first trial from November 2015 to February 2016 resulted in $170 000 of lost revenue paid from the rating surplus, plus a further $109 000 for consultants from the parking reserve. The second trial from March to June 2016 differed from the first by reintroducing pay and display charges in council off-street carparks, suggesting perhaps that people may be willing to pay for their parking. The total cost for the three trials is approaching a massive three quarters of a million dollars. 

  

The consultants analysis following the first trial revealed whilst Hastings has experienced a significant improvement in business conditions, retail turnover had actually increased by more for those businesses operating outside of regular shopping hours, and also for those retailers offering free parking. Whilst welcomed by shoppers free parking made no difference to spending. This should not have been a surprise because Councillors were advised that a similar exercise in Rotorua had found no significant impact on either pedestrian counts or retail turnover.

Whilst free parking is very nice it is debatable whether a third trial was necessary. Additionally free parking has not been matched by a reduction in costs so the lost revenue has had to be met from elsewhere. Clearly in time either parking charges will have to be reintroduced, or rates increased to make up the shortfall, but either way the parking reserve will be depleted.

Whilst the total cost of the free parking trials is significant it is just one of the dream schemes council has come up with in recent years to rescue the CBD, all welcomed around the council table with glowing oratory and much enthusiasm. Many have simply vanished from sight or have failed to make any difference but not before gobbling up quite a lot money and great deal of staff time.  

• Over $4 million has been spent on street improvements and new parks. 
• In 2010 a $3.7 million scheme was hatched to remove the fountain and reconnect the two halves of Heretaunga St. 
• A proposal to inject two million dollars of ratepayer funds to encourage a chartered club merger was thwarted when the idea was rejected by the National Service Club. 
• A proposal for pedestrian access linking the 300 block to the Council’s Queens St car park was abandoned but not before costing a couple of hundred thousand dollars.
• The $12.5 million Civic Square or Tihei Heretaunga proposal is on hold but has already cost up to a million dollars. 
• The $5.0 million CBD hotel investment seems unlikely to proceed. 
• The proposed $10 million strengthening the Opera House is being partly justified by the promised boost to the CBD. 

The things that seem to have worked best are generally those with the least council investment. New office developments, the new Farmers store and the Kiwi Bank call centre have probably done more to boost the CBD than anything the council has done on its own. Sure Council was involved in the Kiwi Bank initiative but the money was mostly private as was the risk. 

There seems to be an unwillingness around the council table to understand basic issues. Firstly the population of Hawke’s Bay is expanding at near the slowest rate in the country. Secondly if we want Kmart and Mega Mall type developments, and it seems we do, then there will be fewer shoppers and less money for CBD retailing. This situation is likely to be further exacerbated by the imminent relocation of both Briscoes and Rebel Sports. Thirdly Internet or on-line buying will also continue eating into traditional retailing with an increasing share going to overseas suppliers. And lastly the continuing growth of Havelock North must also be dragging shoppers away from the Hastings CBD.

Providing free parking will have an on going cost of between $500 000 and $1 million a year. Rather than throwing more good money at bad ideas perhaps Council would be better to start spending these funds on shrinking the CBD by buying up then demolishing some of the buildings and using the freed up space to increase free parking, whilst at the same time reducing the cost of parking administration.