Lower the cost of land

Without using the Urban Development Act 2020 (UDA), it is not possible. UDA was introduced by then Building and Environment Minister Nick Smith to cut through all the red tape, the multiple agencies and departments making their own demands, all the while requiring extensive, expensive and time-delaying independent consultant reports to ward off liability if something went wrong.

UDA centralised authority into one agency… RMA plan, buy land, improvements including infrastructure, funding, construction. It was intended to address matters of national interest.

Unfortunately, by the time UDA came into effect, the 6th Labour Government held the reins of power. They rebranded the Urban Development Authority as Kainga Ora, created a mega-bureaucracy that shifted focus to state housing, which among other things required substantial tax funding because Kainga Ora got into the landlord business.

The UDA is law. The power is there. But instead of using the power of the tax dollar, government should use the power of permission.

Plan Before Land

Begin with a generic plan equivalent to a public plan change. In this one gets a good head start by using the Jacks Point Village part of the Queenstown Lakes District Plan. The MarkeTown generic adapted plan can be found here. 

Prototype Plan

 

Search for land that best fits the prototype with the least complications. Most likely it will be flat, low-quality rural land near a secondary arterial or a collector road. It will be zoned as rural and the total land to be acquired will be about 200 hectares. Most desirable would be an empty, well-drained paddock land, about 85 hectares in the middle, surrounded by a mix of open land with a tree and bush perimeter to mitigate cross-boundary conflicts.

No Capital Gain on Raw Land Cost after Subdivision

Developers realise significant capital gains by acquiring land at rural prices – say $40 million for 200 hectares, and then subdividing it into say 4,000 building sections, which are sold at market prices as much as $500,000 per section. Much of this cost is in the consenting and the actual infrastructure to prepare raw land to be sold as ready-to-build sections, but a significant capital gain is purely paper where the council changes permitted use of the land.

As a condition of using UDA, the private developer model is not used. UDA means the authority creates a MarketTown Development Company where the authority holds the shares in the company on behalf of the future section owners. Thus any capital gain that would be charged would be repaid to the shareholders – the future villagers. This makes no sense.

Instead, apply no capital gain to subdivision. If the land cost $40 million and was subdivided into 4,000 sections, the raw land cost applied to each section is $10,000.

Actual Cost of Subdivision Infrastructure & Prep.

Then to the raw land cost, add the cost of earthworks, roads, utilities, treatment plants, greenbelt development (motor pool, freight depot, sports fields, public gardens, parks and recreation, walk-to industrial park, etc), and all other development and document costs. It is also recommended adding a 30% margin that is treated as a capital investment fund owned by the MarketTown Operating Company owned by the shareholders (the townsfolk) so the town has a fund to manage its affairs).

It is estimated this will add $100,000 per section, or about $400 million in total for prepared sections ready to build.

Reduce the Cost of Roads

The urban core is car free. All cars and trucks stay in the motorpool. This means there is no on-street (nor off-street) parking. No truck or van delivery. No need for wide streets (other than to allow sunlight in to buildings) and no need for heavy roadbed construction to carry 30 tonne GMV vehicles.

No trucks in the urban core, instead small electric vehicles for specialist activity like rubbish collection. 

Heavy trucks rather than delivery vans arrive at the freight depot that serves as the interface with the outside. Mail and packages are offloaded onto small NEV (neighbourhood electric vehicles for the last 1KM delivery.

It is recommended streets be made of paverstone to allow uplift of the surface rather than demolition and repaving when access is required. In terms of utilities, it is recommended large utility tunnels are installed to future-proof so no tearing up streets to access utilities or upgrade technology (such as going from copper to fibre).

Lower the Cost of Financing

With 4,000 new homes requiring financing, it makes far more sense to establish a town-owned financial services provider (FSP) that packages all retail mortgages into securitised bonds sold on the wholesale market to pension, insurance and sovereign funds at lower interest rates that are passed on to the homeowner. The same sort of wholesale cost can be obtained for property insurance where the town-owned insurance broker can reinsure on the wholesale market.

Parallel Market Housing

Designate 20% of the homes as parallel market. This means the 80% carry the full load of land and improvement costs, where the town creates parallel markets for fixed- or lower-income people. If the average teacher can only pay $300,000 for their home, they will be sold a home at that price. When they go to sell it, they can ask any price, but only sell to another teacher. This creates a parallel market that is protected from gentrification.

Lower the cost of buildings

Building costs are impacted by

• Design
• Cost of consent including consultants
• Cost of labour including Licensed Building Practitioners
• Amount of labour to make the building
• Cost of materials including wastage
• Amount of materials used
• Lack of competition in NZBC approved materials

Building methods used in New Zealand are archaic, inefficient and not of the highest quality, yet are excessively expensive. The answer is to shift to 21st century systems that manufacture rather than construct, that use advanced systems that save on labour and materials. And to not reinvent, but look overseas.

On-site Temporary Factory

In Germany, consulting firms specialise in setting up factories that manufacture buildings. They estimate a temporary factory to manufacture 4,000 three-floor buildings will cost about $30 million, or $7,500 per building. Operating 24/7 they require a staff of 500 factory floor workers and 50 supervisors, and they produce 20 buildings per day. This means all 4,000 buildings can be manufactured and installed in a year.

The factory is located on site, in the Greenbelt, so all construction noise is instead manufacturing noise inside a container, thus not heard by neighbours. This also means the finished buildings are towed under 1 km to their foundation on private roads within the town – no use of public roads. The town is divided into 21 clusters… 20 villages plus a cosmopolitan town centre, with the first villages farthest from the factory so, once built, they are not disturbed by construction. When the village is complete, early settlers can move in.

For a period of a year or so, raw materials in their desist form will arrive at the factory. This reduces the amount of access road traffic. It also is recommended the project consider providing temporary on-site accomodation, especially if the factory workers cannot be hired from nearby communities.

Smart Design

Re-imagine Ltd’s Anthony Flannery has designed a housing system that aligns all utilities so floors fit together in a click-lock fashion. This saves money and time during assembly. FrameCad and other Kiwi companies lead the world in light-gauge steel framing that combines low cost, earthquake and corrosion resistance and less waste. On the inside, instead of cutting, shaping, taping, sanding and painting gib with all the wastage, modern lining systems offer a wide range of interior finishes.

Half a Good House: Not everyone can afford the house they will need in the future. Half-a-good-house leaves out the interior walls, but designs the floors and ceiling to accept standard clip in walls as the budget allows. One begins with what looks like a large loft with only a private bathroom. When the occupants decide they can afford to start a family, they begin to add rooms by click-wall. Unlike home improvement that produces a dusty, noisy mess for weeks or months, with click-walls, installers are in and out in a day.

Fashion Cladding: This idea came from the film industry where prospective founding villagers proposed a film-maker’s village. Treat each building like a film set. Have mounting bolts on the exterior that allows the wall to be “dressed” for the film. One week it’s a wild west setting, next week reclad as old London. In the 21st century, surface treatment that used to require a lifetime skilled tradesperson now can be done using 3D design and printing.

Why is this important? One of the criticisms of creating a MarketTown was the suggestion that its beauty and character evolved over centuries and cannot be achieved in a year. Research found this was wrong. It’s not how long?, but who?

When the person who makes decisions about surface treatment of a building is a developer, every question is decided financially. Spend more only if it means the building sells faster or higher. But when the decision-maker is the person who will live there, raise a family and even keep it in the home for multiple generations, they make aesthetic decisions, especially if they are affordable. They will add beautiful windows that are not the same as next door. They will choose their own best colour and surface treatment. They may add a balcony on the upper floor to sit outside and watch the street.

To achieve this, the surface design options must be varied, and the homes must be presold where the buyer is given a limited but broad set of design choices.

To illustrate, consider the towns of Windsor California and Cadaques, Spain. Windsor was built by a developer seeking to copy the retro look of an earlier time. But when it came to ordering the windows, he bought them all from the same supplier… cookie-cutter same. As a result, the buildings look fake.

In contrast, four buildings with almost the same scale in Cadaques have an authentic, beautiful visual amenity. The floor levels are varied, Different windows and doors with upper windows on different horizontal lines.

Examine the two photographs, and ask how Windsor could have been made to look like Cadaques. The developer of Windsor justified his selection of cookie-cutter windows on a financial basis, saying he would go broke not doing so. As it happened he went bankrupt anyway because no one wanted to lease the upper floors.

And as a footnote, note how in Windsor, the street belongs to cars. the people are jammed up on the footpath, living with the noise, sounds and smells of the passing cars and trucks. In Cadaques, the plaza in front is car free, thus enjoyed by the people.