Auckland Redevelopment & America's Cup

So. We won the America's Cup and very quickly there needs to be discussion and agreement about how and where to host it. Part of this debate is where syndicates might be based, where visitors might stand, sit or go to view proceedings, where the actual racing might be held, and what sort of development is best.

Very quick off the mark have been statements that Hobson Wharf (or the Viaduct) be extended. Misinformed I think.

This aerial shows the waterfront area around Viaduct Harbour, which got redeveloped on the back of the America's Cup win in 1995. Top right is Princes Wharf which also got developed around the same time as Viaduct Harbour.

The shaded blue area is the area of Viaduct Harbour that was developed after America's Cup win 1995. (You can see a more precise planning map in this waterfront plan change posting.)  The mechanisms in place to plan and fund the Viaduct Harbour are of interest and relevance today. Back then an Identity called Infrastructure Auckland was set up. Among other things it owned the Port of Auckland Ltd, including a large chunk of Viaduct Harbour, and it had a big chunk of cash. A very careful plan change under Auckland City Council's control sought to balance a good mix of public open space, heritage retention, marine activities, residential development (the apartments down there came from this), and some space for America's Cup syndicates. (Some were located in other parts of the Auckland waterfront.). This redevelopment is of its time of course. Some of the open spaces were a bit pinched (like the pedestrian walk areas around the Viaduct Wharf. And others were grand but unsuccessful (eg Waitemata Plaza and Market Square). The idea that fishing industry could still locate inside the Viaduct Wharf area was quickly given short shrift by apartment residents grumpy about fish smells and fishy language early in the morning.

I won't go on about the Princes Wharf regeneration disaster here, as have at length elsewhere. For example here and here and here.

Stop Press (1/7/2017)  A reader has drawn my attention to discussion about the option of Viaduct being extended (an option which I didn't include in my original posting - so I've added it now.). That could be some variant of the yellow area extending beyond the structure which supports the Event Centre. It shares some of the problems that an extension to Hobson Wharf has: further reclamation of a very utilised piece of water space (think triathalons and dragon boat racing - events with very low environmental footprints); and problematic land transport access conflicting with Event Centre utilisation. It also suggests that Auckland's fishing fleet is a disposable industry - can be shifted at a planning whim. Auckland should not be treating that industry lightly - as it did when residents had it removed from the inner Viaduct. I think it is critical to the continuing success of Wynyard Quarter in particular that a good balance is struck between public amenity and open space; high quality architecture for commercial, accommodation and residential uses; protection of maritime heritage; support for fisheries and related cuisine; and of course provision for marine industry and sport.

 Hobson Wharf is shown by the yellow area in this aerial. The Maritime Museum is at its southern end. Princes Wharf is to the right. Most of the actual wharf area of Hobson Wharf is now taken up by the special museum building that holds boats associated with Sir Peter Blake's maritime history including an America's Cup wining boat.

Hobson Wharf extends to the left in the background. The glass fronted building sitting on the wharf is ther Sir Peter Blake Museum.

In my opinion, extending Hobson Wharf out into Waitemata Harbour beside Princes Wharf for Am Cup 2021 is inappropriate for a whole range of reasons. Recalling the objections to POAL's extension of Bledisloe Wharf - it would be hypocritical to fast track anything like that here. Yes - this might be a piled extension, but it would still alienate a very popular piece of waterspace. Secondly, I think that Auckland in particular (and many countries generally) find that reusing pier/wharf/jetty type structures when they become surplus to maritime requirements is very problematic. Look at the poor use Auckland is making of Queens Wharf for example. (You only have to look at Viaduct and Wynyard to see how much more useful and useable a piece of reclaimed land is - compared with a wharf structure). And thirdly, if America's Cup syndicates were loctaed on an extended Hobson Wharf their transport options would be terribly limited. This is a very constrained piece of coastline. With Quay Street and Hobson Street extension the main means of land access - and such traffic would have to navigate past Maritime Museum and Sir Peter Blake Museum etc. Perhaps there is a desire to rethink Sir Peter's Museum - if so - be public. But for all of the above reasons I think Hobson Wharf - or any combination of Hobson Wharf and Viaduct - should be rejected as an option.

The best option - in my opinion - is the end of Wynyard Quarter. Creative incorporation among the tanks is a great design solution. I agree with Mayor Goff's call for that area to be targetted by this regeneration opportunity, with the legacy being open space - probably complimented by some appropriate development. An empty open space will not be the best use of this opportunity - primarily because the best open spaces in these sorts of locations include some built edges both to shape the space, provide shelter and informal surveillance, and some amenity - be it ice-creams or coffee or playground equipment. It isn't necessary for syndicate development infrastructure to be permanent. These buildings can be relocateable. Viewing and gathering areas can be temporary too. The legacy of this sort of redevelopment can be useable and developeable waterfront land. There does not need to be talk of iconic structures. It will be enough that the event is located successfully in Auckland and Waitemata Harbour. And all syndicates will be adjacent to the marine suppliers and chandlery facilities that have remained and are locating in Wynyard Quarter. Much of that support infrastructure is there. As is the roading and pipe networks.

And as to the location of the racing itself, check out this race course posting I did after 2014....

Process and funding. It is worth reminding ourselves that early Am Cup developments, and the Rugby World Cup we just hosted were all "planned" by empowering legislation. Thus the lead planning agency was Central Government. That shouldn't happen here in 2021. But there is a problem the ready public cash that existed in 1995, and which has enabled such high quality urban regeneration in the Wynyard Quarter has been spent - and is no longer available as a funding option.

It should be recognised by all concerned that the main public financial beneficiary from an event like the America's Cup is NOT Auckland Council - it is Central Government (because of GST collected on all of the additional economic activities, because of increased economic activity - more employment - more taxes and so on). This is recognised in Australia. There, Federal and State Government funding is used to trigger and underpin urban regeneration projects. What Local Government can bring to the party is good planning, and some measure of private development as part of the whole package.

I think this particular project presents a political opportunity in an election year to set out mechanisms and expectations for Central Government involvement. It is a pity - thinking back to the Rugby World Cup - that the Labour Govt's offer of a $1 billion for a waterfront stadium wasn't taken up. Maybe that would have been the wrong thing to do. Now seems like the time for some sort of commitment from the Labour Party (say) to fund remediation works on Wynyard Quarter, and perhaps public works acquisition of key titles, in order to lay bare parts of the site for redevelopment. Auckland Council for its part would need - in my view to commit to an appropriate plan change for that part of Wynyard Quarter. The long term legacy would be redevelopment at least as good as what i there now - but with much more public open space. The short term opportunity would be a place to host Am Cup syndicates and viewing platforms.

Get foiling. Now's the time for 100% flytime.

No Room for Safe Cycling on Lake Road

There is room for fast lycra cycling on a modestly revamped Lake Road (between Deveonport and Takapuna - in Auckland). But there is neither room nor safety for safe cycling infrastructure needed for kids biking to school or casual commuter cycling.

I say this more in disappointment than because I'm grumpy. For a a few years now community groups have been working together and with Auckland Transport to come up with a reasonable plan to address the Lake Road congestion problem, and a plan that can accommodate some urban redevelopment and provide better urban transport amenity for the whole Devonport peninsula.

Throughout this process there have been calls from the old guard for a new arterial coastal road and route running parallel to Lake Road, built partly into Waitemata Harbour mangroves. Such a project would be very expensive and present huge consenting problems given its intrusion into the marine area, and its impact on perceived property rights. In my opinion its cost could not be justified in a cost benefit test - unless an immense amount of redevelopment was permitted within urban Devonport - development that would have a major impact on the heritage landscape that has evolved there over the past century and a half.

Options advanced by Auckland Transport are reported by Stuff here. And public opinions canvassed on video also by Stuff here (including mine).

When I reflect on my days chairing committees in local government (12 years worth), and remember my first leaflet (1998 - Lake Road needs to be fixed), I realise how hard it is to get the use of roads changed. Especially arterial roads. Advocates in the northern hemisphere talk about how easy it is - get some paint and change the markings - a suck it and see approach. But it doesn't come easy here.

The best example - in my opinion - of changed use of a roading corridor in Auckland's North Shore was Onewa Road. Long before I'd been elected, and before we had four city councils across Auckland, a Borough Council in Birkenhead decided that there should be a priority bus lane in Onewa Road. And they made it happen. Despite the opposition. That opposition continued unabated while I was a North Shore City Councillor - and it was spear-headed by the normally sensible Northcote Point Residents and Ratepayers grouping. They were openly hostile and made it very difficult for that buslane to be properly established as a T3.

Thanks to a majority of North Shore City Councillors remaining staunch, that T3 was put firmly in place and Auckland CBD bus commuters across Birkenhead and from Northcote enjoy a particularly reliable commuter bus service. This was enhanced when the Northern Busway was built.

At the time there would have been cyclists keen to have access to priority infrastructure. But that need was not on the radar during that period.

The same cannot be said for Lake Road in Devonport/Takapuna.

Applying the utilitarian principle of the greatest good for the greatest number, community groups working together agreed that T2 buslane infrastructure was the top priority for Lake Road enhancements. I agree with that assessment. But I am a strong supporter of cycling. On my watch in North Shore Local Government a cycling strategy was produced which did call for a cycle lane on Lake Road. Interesting in hindsight. A few years later that cyclelane was implemented. It was highly controversial at the time. It did increase the amount of cycling. But Lake Road was always perceived as dangerous by school-children parents, and by casual commuter cyclists.

Other cycling infrastructure developed in local streets parallel to Lake Road and along coastal paths both East and West of Lake Road (which runs North/South). More and more children and casual recreational cyclists are using that infrastructure for pleasure, to get to school, and to access various destinations on the pensinsula.

An enhanced version of that option was generally supported by community groups in Devonport, rather than a dedicated cyclelane in Lake Road - especially when the cost of providing a dedicated cyclelane PLUS a T2 bus lane is factored into the planning process.

I am sympathetic to the aims and objectives of the high speed lycra clad cycling lobby that enjoys the use of Lake Road in peletons and for their enjoyment. But those aims and objectives need to be weighed alongside greater good aims and objectives, and they need to be considered against available funds. Their energetic advocacy for a dedicated (and generally perceived as unsafe) cyclelane in Lake Road runs the risk of preventing the T2 project going ahead. That outcome might be favoured by high speed cyclists because it means the current cyclelane can remain in place. However it would also mean that a long-waited and socially necessary T2 improvement which would enable the establishment of reliable Devonport/Takapuna bus services - would be put off again.

The modestly priced option to improve the Lake Road corridor is necessary now. It will deliver a T2 buslane which will benefit many residents. It can be funded because it is modestly priced. Safe cycling infrastructure which benefits casual and school cycling can be developed away from the arterial Lake Road corridor.

That is the priority for Devonport and Takapuna. Auckland Transport needs to be supported by local politicians to do the best for the most residents. That includes long awaited T2 enabled bus services, and appropriate safe cycle infrastructure for the broad demographic of casual urban cyclists.  
  

On Auckland Chamber CEO On Watercare Sale

In the Herald, on the 20th June, under the headline: "Michael Barnett: Council Could Unblock Cash Flow", The CEO of the Auckland Chamber of Commerce suggests that Watercare should be privatised in some way, along with Ports of Auckland, to unleash capital to pay for growth. In this post, I paste Barnett's piece, and piece by piece, examine his suggestion:

Michael Barnett writes (and I respond)

"As an optimist, I have long believed that Auckland has the ingenuity and capability to solve most of the city's growth problems using its own resources.

It’s a happy place being an optimist, but my information is that “most of Auckland’s growth problems” are transport problems and these are at least 50% subsidised by Central Government and in the case of state highways 100%. Auckland has never had the capability of funding its growth.

So it has hardly been a surprise that the recent disclosure that Auckland Council is talking of selling the port company but retaining the land has been extended to a further question: Why not also sell Watercare?

Adding Watercare to the talk of selling the port company would provide the city with a $5 billion nest egg - more than enough to kick-start action on critically needed transport infrastructure. With assets of more than $8b and debts around $2b, a Watercare sell down has potential to generate a conservative $3-5b for Auckland Council.

Split the difference. Assume an investor would pay $4 billion for Watercare. Realistically they’d expect 7% earnings minimum or $300 million/annum. In the 2015/16 year, according to its Annual Report, Watercare generated $570 million. So at the Chamber's projected sale price, revenues available to Watercare would be halved – not factoring in here possible asset-stripping revenues that the investor might find.

The billion dollars a Ports of Auckland company sale could reap (with its land staying in Council ownership) plus Watercare's contribution would give Government the evidence it has been seeking, surely, that Council is looking seriously at what it has to do to fund its share of the city's huge infrastructure investment programme.

On how urgent and decisive Auckland Council can be in making such a decision, I suggest, depends on the pace of action to start a fast-track programme to sort Auckland's infrastructure problems.

At the end of the day, Auckland's destiny is in its own hands.

A joint sell down, would give Council a sizeable chunk of capital to bring to the table in setting up a special purpose partnership or (SPV) with central government to drive an accelerated programme to address Auckland's rapidly worsening transport crises.

In welcoming talk of a port company sell down, Prime Minister Bill English said he was pleased to see Council looking seriously at what it could do to fund its share of the city's infrastructure. Adding Watercare to the package would, I am sure, get the action response all Aucklanders are crying out for.

Lumping Watercare and the Port together into a package ignores the facts these two services are not like each other. It’s chalk and cheese. For a start most of what the port does could be re-located elsewhere (I’m not saying that should happen – just saying). But you can’t relocate Auckland’s water and wastewater services. Before we get too carried away here, let’s look at what Watercare says it does with the revenues it earns. Its 2015/16 report states where the $570 million revenues went: $77 million was debt servicing, $210 million operating exp, $216 million mainly depreciation (providing for planned future maintenance) – leaving a surplus of $67 million. Even if the debt was all cleared, that still only leaves a possible “profit” of $144 million – less than half what the Chamber’s investor would be happy with.

In last month's Budget, Finance Minister Steven Joyce clearly signalled the watching brief Government is keeping on the potential for further investment in the infrastructure for our growing economy by way of, as he put it, "greater use of partnerships between central and local government, and between government and the private sector."

I suggest both sell downs could be structured by way of a designer ownership process, with central government facilitating an outcome that keeps both in New Zealand ownership. Designer ownership might be the Government establishing a platform that enabled funds like ACC, NZ Super, iwi and New Zealand investors to invest.

Council would get a good price, and the sell down process can be done in a way that reinforces Council's continuing regulatory control of both assets and to ensure Aucklanders don't view it as sellout of our silverware.

This really is the rub. What would make Aucklanders feel that either of these sales was good for Auckland, and wasn’t selling the family silver? Put another way, what guarantees would there be, no matter how benevolent the new owner was, that service quality is maintained at the status quo at least, now and into the future. Or put another way, how might it be possible to get two pints of gold out of the single Watercare pint cup – a pint for the investor, and a pint to maintain the service.

At the end of the day, Auckland's destiny is in its own hands.

Watercare's latest Annual Report "our journey toward customer centricity" is neither optimistic nor pessimistic but it is sobering. Data provided by Watercare in Council's long term plan states that 2,200 kms of local wastewater network pipes are in average to poor condition - ie not good or very good - and 3,500 kms of local water network pipes are average to poor. Aucklanders understand the need to budget and provide for future maintenance. The Thames Water privatisation in London is sad example of private investor neglect.  

With Council and central government facilitating a SPV that delivers a designer ownership that secures each company's ownership firmly in New Zealand hands and under an independent board of control, Aucklanders would get the benefit of a win-win: First, we would have raised the funding required for a dramatically accelerated programme to reduce traffic congestion, boost public transport services and do key projects that have been sitting on Auckland's books in some cases for more than 20 years. The long-planned infrastructure 'catch-ups' could at last happen, and with smart investment we would give ourselves a chance of getting in front of the demand created by our population growth curve.

There is nothing but optimism behind this statement. If the last ten years have proved anything, that is private investor reluctance to invest in long term infrastructure. Why would that suddenly change with Watercare in private hands?

Second, a sale of both CCOs would give Council some debt-to-revenue freeboard by removing their capital requirements from Council's books, which I am advised could be as high as 25-30 per cent of Council's indebtedness.

Again, this is false economics. Yes, Watercare’s share of Council’s debt mountain would disappear, but Watercare’s own projections are that it would quickly rebuild to fund deferred maintenance and new growth infrastructure. And under private control any revenues would be prioritised to keep shareholders happy – not pipes in better than good condition.

Commercially, if both became listed companies (with Council possibly retaining a share holding), a market-led opportunity would be created for them to invest and expand without the constraint of impacting Council's books.

This sounds too good to be true. And one thing I have learned in Auckland. That is: if it sounds too good to be true, it’s almost certainly not true. Smells too much like golden geese and golden eggs. Watercare projects (Auckland Council Long-Term Plan 2015-2025) that the cost of wastewater treatment capex and opex will increase from $350 million/annum now, to $500 million in ten years. Water supply capex and opex will increase from $200 million/annum now to $350 million/annum over the same time.

Ports of Auckland would be released to grow to the scale it is likely to require to be a serious investment prospect to relocate, if and when the feasibility study on where that relocation might be to is completed.

We need only look at the success of Tauranga's port since it was partially privatised and listed some years ago. It has grown from a small provincial port to be NZ's largest, worth $2.2b, twice the value of Ports of Auckland.

Similarly, a commercialised Watercare would be better positioned to independently debt fund an accelerated and badly needed capital expenditure programme required to cope with Auckland's population and housing growth.

You can’t get two pints out of a one pint cup. Watercare is prevented from paying a dividend. Any surplus it generates today is ploughed back into debt reduction and borrowing to pay for growth and infrastructure maintenance. While revenues will increase, they don’t keep pace with increasing costs. There is no free lunch here.

A dramatically accelerated effort by Council and Government working together to address Auckland's critical transport issues is what we all want. Here's is a way to make it happen.