Oh Christchurch

By Eric Crampton 17/04/2013

It didn’t have to be like this.

784 days after the February 22, 2011 earthquake. There’s a draft plan for downtown, but nothing’s yet certain except for that the CCDU and CERA are pursuing compulsory acquisition for some land where they think they’re likely to build a convention centre and stadium. We don’t know when access to downtown’s Cathedral Square will be restored, we don’t know whether Town Hall (a performing arts venue) will be restored, rebuilt, or scrapped; what an Arts Precinct will look like will depend on what happens with Town Hall, and continued uncertainty about the Arts Precinct is messing things up for those wanting there to rebuild. We don’t know when they’ll finalise the city plans for downtown living zones. We don’t know whether land acquired by compulsory acquisition will be used for public purpose or flipped at a profit by some later government. We do know that a reasonable burden is being borne by those having land taken by compulsory acquisition.

We have a great big mess of interconnected problems. The root of most of them is a fundamental lack of respect for individual property rights. Why do we have a housing crisis? People can’t do innovative things to increase housing supply. Why do we have downtown property owners deciding to cut their losses and escape? Because the planners are giving us the worst of all worlds: a determination to pursue a central plan and cast aside the plans that individual property owners might have, but a seeming inability to just set the darned thing so that individual property owners can re-optimise and get building. There are good arguments to be had about whether it’s better to have a fixed city plan with a designed vision for the city or whether we should let the city’s vision emerge more organically from the decentralised projects each owner might seek to undertake. I prefer the latter. But surely either of those has to be better than putting town on hold for this long while deciding just what the perfect city plan might be.

It’s tragic that most people don’t understand the term “leave well enough alone”. “Well enough” isn’t a compound adverb describing how thoroughly one ought to leave something along, it’s a compound noun saying that if things are good enough, we shouldn’t screw with it. Read it as “Leave alone that which is ‘well-enough’.” It’s the better English translation of laissez-faire. We’ve made the quest for the best city plan the enemy of getting anything done.

Let’s recap a bit.

January 2011 it was pretty clear that there were already substantial zoning rents built into Christchurch property prices.

March 2011: Businessmen with critical records behind the red zone cordon were still barred access. But if your wedding dress was on the other side of the line, you could likely convince a policeman to let you through. All kinds of other nonsense around the cordon. .

We could see that heritage rules were working in opposition to earthquake preparedness and that we needed to fix things if we wanted to keep and strengthen our best heritage amenities. There’s now a pretty good chance we’ll lose the old Trinity Congregational Church entirely, and the intransigence of the heritage board after the September 2010 quakes is largely to blame. I do appreciate how Council is simply putting up $1m towards the restoration for anybody who is willing to do it – it’s an amenity that seems worth it. I wish that we could have protected it three years ago by paying the providers of heritage amenities for their provision rather than making it really hard for them to do any earthquake strengthening.

April 2011: Central government and Hon Gerry Brownlee get more power over the earthquake rebuild. I’d hoped he’d use his powers for good and help us to get an IKEA. But it looked like a high variance play: an appointed Czar might sweep aside the regs that were holding things back, or might impose a central plan heavy on expropriation. Meanwhile, the Greens push for an earthquake levy; optimal tax policy dictates instead a mix of spending cuts and future tax increases.

May 2011: We start hearing suggestions that Council sell assets to pay for reconstruction. There’s an economic case for it, especially where some of those assets weren’t great candidates for public ownership to begin with.

July 2011 we start seeing problems where the insurer says a property can be repaired and so will pay out based only on the repair cost, but the government declares that you can’t rebuild on that land. This is the kind of thing where either Council or central government should have funded a test case or sought a declaratory judgement. We still don’t know what a high court appeal would say about it.

August 2011: the first cut City Plan comes out. It’s vaporware.

September 2011: I get more worried about downtown. RBNZ starts pushing back its expectations of when things might start happening in Christchurch. They then expected rebuilding of severely damaged properties might start happening mid-2012. The downtown demolition job remains unfinished as of April 2013.

October 2011: Downtown developers (rightly) start getting stroppy about Council’s planning approach. RBNZ reveals what it was up to during the quakes and their preparations in case things go badly in a Wellington quake.

November 2011: Bomber Bradbury says that the Libertarianz paid political ad highlighting bureaucratic and regulatory failure in Christchurch was “intellectually skanky”. Clearly he doesn’t live here.

February 2012: Council is still very slow in approving new subdivisions outside of town; too many veto points for getting things done. We also start seeing how the combination of lax building codes, heritage regs against building strengthening, and the abolition of liability under ACC caused substantial problems; I suggest liability insurance might be appropriate.

March 2012: Outside of downtown, away from the bureaucrats, Christchurch is coming back.

April 2012: Rental prices are soaring; demands for price controls. Central government throws out the Council city plan, promises a new and feasible one. I’d hoped that the new agency would take a light touch on eminent domain and that it might fund some declaratory judgments on insurance issues. Alas. At least the light rail scheme hasn’t resurfaced. Bill Kaye-Blake reckons Christchurch is screwed. Too much focus on shiny stadium dreams, too little attention to helping folks wade through insurance messes. The housing shortage gets messy; bureaucratic failure abounds.

May 2012: CERA head Roger Sutton demonstrates a surprising lack of familiarity with zoning issues. I had hoped that CERA’s job was to have been sorting out the tangled bureaucratic mess facing homeowners. Yeah, no. More pressure for Council to sell assets; I worry they might sell things like the Port to buy things like stadiums. Meanwhile, people who aren’t owners of the downtown Anglican cathedral start protesting that it be rebuilt; its owners, the Anglican Church, seemed less than keen. I suggested they try Kickstarter to show us whether the notional demand was effective demand. None of that’s yet sorted out as of April 2013.

June 2012: consents and planning are still stuck in pre-quake mode: the grey men had to make sure that the wheelchair ramps for a new temporary bar had a 1:12 slope rather than a 1:10 and that the handrails were just right. In the midst of a housing shortage, Christchurch is exporting houses from condemned sections; our zoning rules ensure that they can’t really be used in-town. And Christchurch City only approved 1271 new dwelling units from April 2011 through April 2012.

Meanwhile, John Fountain figures out a ridiculously simple move to start easing Christchurch’s housing shortage: allow people to build flats inside their existing homes. City Council zoning rules don’t allow it if the flat has a kitchen, though they make provision for flats of this sort under rules ensuring that few people will really do it. The only explanation I have ever heard as to why Council wants to ban this simple way of easing the housing shortage is that they’re scared that the area around the University will turn into student flats of the Dunedin type. If that’s the case, they could have banned it in the area around the University, or they could have considered that it just might also be important that we get some cheap student flats if we want to keep having a University.

Gerry Brownlee claims there’s no housing crisis in Christchurch. I suggested he’s missing what’s going on at the bottom end of the market. Ahem.

I suggested scrapping plans for a big expensive convention centre and instead have Council coordinate with the big hotels for a smaller facility linked directly to the hotels. Regime uncertainty gets worse with warnings about forced acquisition for the new city plan.

July 2012: We get the new city plan. I didn’t know then, and I think that nobody knows now, just how any of the proposed anchor projects are to be funded. EQC makes it harder to avoid using their preferred project manager. Pressure for a broader national push to relax land use planning builds; I point out that it’s also good earthquake-preparedness.

August 2012: Seamus notes that the anchor projects in the city plan might not pass a normal cost-benefit analysis but could help anchor expectations around a good rather than a bad new equilibrium in a multiple-equilibrium world. I wondered whether the expensive stadium plan was a poison pill. We started getting hints about what the anchor projects might cost. As of April 2013, CCDU is getting tenders for a convention centre but I’m not sure they’ve sorted out who will pay for it; they’re saying construction on a stadium might start in 2015. We don’t know what’s going on with Town Hall.

December 2012: It’s looking like insurers are deliberately dragging their feet so that policy holders take lowballed indemnity payments. We still haven’t had reasonable test cases. EQC is pushing everybody to their preferred contractor. Gerry Brownlee scales back a proposed insurance advocacy service, reckoning that it isn’t much needed. The service was supposed to help people figure out when their homes might possibly be repaired. Turns out Brownlee was right – we didn’t need the advocacy service. We just needed EQC to leak the big spreadsheet containing all the details on most of the repair jobs and for somebody to stick it up on the internet so that folks could find out where their claims stood.

And remember how the convention centre was an anchor project in the big central plan of July 2012? December they’re shortlisting developers for the convention centre while hiring somebody to make a business case for it. Also, you probably can’t finance the big shiny stadium on bake-sales.

January 2013: Christchurch Council’s record on building consents remains full of fail.

February 2013: Continued regime uncertainty. That shiny city plan from July 2012? Yeah, we don’t really know what’s going on with that. And it’s starting to matter for those with properties zoned into one of the special precincts. The Insurance Council says that it’s not their fault that 70% of major claims have yet to be dealt with; I’m not so sure. Insurance here feels more and more like a scam.

March 2013: Regime uncertainty continues.

It’s mid-April 2013, 784 days after the earthquake. My builder is still squabbling with EQC about the quote to get the job done at our house. AMI/SR has yet to come to our house to assess our out-of-scope claims. SCIRT is just about done with what I think is the fourth tear-up-and-rebuild on our street; they all blur into a single two-year-long project interspersed with a few two-month stretches where the street is in one piece. The barricades around downtown block off less than they did two years ago, but they’re still there.

The CCDU decided that some downtown areas had to have a minimum project size; property owners now are scrapping with each other trying to accumulate titles to get to the minimum size rather than building on the land they own. The planners’ grand visions may be nice, but they’re driving out the investors who should be rebuilding town.

Contrary to Gerry Brownlee’s claims of there being no housing shortage in Christchurch, we see a 60% drop in affordable rentals relative to pre-quake baseline. Now some of this will just be an artifact of the baseline chosen for affordable rentals, and Auckland remains more expensive. But as of last month, the price of the median 2-bedroom rental in Christchurch was $365 per week and the price at the 25th percentile was $300. And Christchurch Council still effectively bans building self-contained flats in houses – removing that ban remains the single simplest and cheapest thing they could do to increase low-end supply.

The University has hemorrhaged students as housing is expensive and town is rather less attractive than it once was. It will not be easy for the University to recover until Christchurch is a place that students again want to live; costs of student housing have to come down into line with the amenities here provided, or the amenities have to improve. Neither of those are easy given the current Christchurch bureaucratic regime.

Winter is coming.

0 Responses to “Oh Christchurch”

  • I say take the Google approach – do what needs to be done (demolition, rebuilding, etc) and worry about the legalities/red-tape later. It’s starting (er, continuing) to get ridiculous.

  • A lot of folks tried that. And a lot of them got stomped on by our lovely Council officials.

    Immediately after the quakes there was a bit more leeway. Pop-up coffee shops in garages, consenting worries came later. Things started getting really stupid when Smash Palace was trying to get going.

    Council is still enforcing heritage districts in parts of Lyttelton where all the heritage buildings are gone; they say they can’t do anything to change it ’till the community master plan is done, and they won’t have time to get to that until 2015.

    Pure idiocy.