Hard News: Housing: the Feudal Model
99 Responses
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Ben Ross, who's not an idiot, is not entirely dismissing MUDs.
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As Ross describes it, MUDs look a bit like local governments ... without some of the regulation, but saddled with debt. (And the need for the development to cough up profits- some of the debt/bonds must be borrowing to give the developers a guaranteed profit?)
Here’s a break-down of how the MUD system works:
Utilities are installed and maintained by the companies (electricity, telephone etc) since they receive the revenue.
The developer has to install the roads.
Large subdivisions are allocated areas for parks and schools.
The developer installs the sewerage and water and gets it back from the Municipal Utility District.
MUD is a special-purpose district that provides public utilities (such as electricity, natural gas, sewage treatment, water, and waste collection/management) to the residents of that district.
MUDs are formed by a vote of the area, and represented by board of directors who are voted on by the local people.
The MUD borrows money via the bond market to pay for building (via the developer) and operating (via the MUD) these services. The MUD bonds are then repaid via taxes on the home owners of around 1% of the home values per year.
Schools are also built and funded via bonds and repaid via the same taxes on the homeowner. -
Is there really a need to replicate with looser regulations that which the council does itself?
Just seems like a PPP scheme in the making with the usual benefits for a select few whilst residents/ratepayers or taxpayers get to ultimately carry the burden of debt
I wish some of the great ideas for our future living came via those countries moving away from road and sprawl to more people centric models (up not out) - I shuddered when I read Texas
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Russell Brown, in reply to
Schools are also built and funded via bonds and repaid via the same taxes on the homeowner.
Hmmmm ...
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I’m not sure about the NZ Initiative. Each paper they have released seems to advocate policies that will benefit property developers. Not that there is anything wrong with that but sometimes it seems their arguments don’t stack up.
How much of a housing shortage is there in Auckland? There is more demand than supply but how much of that demand is from people buying second, third or fourth houses for investment purposes?
I believe if you want to be a landlord, your primary purpose is supplying a house for your tenants.
Couldn’t the housing situation be improved by just toughing up the Residential Tenancies Act? How about having a 180 day notice period? At the moment, a family can have kids in schools, roots in the community and be given just 42 days to clear out. With more people renting for longer terms, it’s probably time look at this Act. Strengthening this Act in favour of long term tenants may also make investors think twice thereby easing demand.
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I can see privatising pooh pipes in each suburb ending well for all concerned (except those with wells).
That developer is definitely going to be around when the excrement hits the everything.
They'd never just leave the MUDs drowning in debt and things they wished were mud, after the funds for sewerage were siphoned off to buy whatever it is real estate cowboys buy to assuage their guilt.
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Rob Stowell, in reply to
Schools are also built and funded via bonds and repaid via the same taxes on the homeowner.
Hmmmm …
That's Texas for ya. Can't see it going that far in the Waitakeres.
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Rob Stowell, in reply to
I’m not sure about the NZ Initiative.
Quite reliably neo-lib, with the occasional mild twist.
Formed in a merger between the Business Round Table (feudal capitalism :)) and The NZ Institute (milder; more liberal) it’s tempting to think of it as the BRT in drag. It’s a little more interesting, but (I reckon) far too prone to oracle like pronouncements, which it insists are based on 'The Evidence' with no comment or discussion. -
Having lived in Northern California with a local elected MUD I have to comment on how distorted the damn things become, ours was continuing to allow hookups to well connected developers long past the point where they had a reliable year on year water supply - it reached the point where they were restricting our showers so that the rich people over the hill living in a semi-desert environment could water their lawns and golf courses
Someone has to be able to say "no - if we hook you up we wont be able to supply every one else in dry years - so we wont" - and that someone has to represent the people who will go without, not the developers
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Moz, in reply to
and that someone has to represent the people who will go without, not the developers
This.
I've seen too many developer-controlled projects that are unpleasant-to-lethal to see any good in this idea. The simple situation where you buy an apartment and one condition of sale is handing your proxy on the owners committee to the developer leads to all sorts of problems, all stemming from the disconnect between the decision maker and the people who live with the decisions. From the developers point of view, of course, those two are the same and the setup works very well indeed. I think that should be legally forbidden, rather than extended to cover essential utilities over larger areas. Can you imagine the joy when you discover that you're required to pay a certain amount for electricity every year despite having an off-grid house using PV? Or, as Paul says, that the sewage system has been sold to a company that's now insolvent?
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Kumara Republic, in reply to
Just seems like a PPP scheme in the making with the usual benefits for a select few whilst residents/ratepayers or taxpayers get to ultimately carry the burden of debt
Four words: Sydney Cross City Tunnel.
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As much as I'm loath to consider any model that's obviously designed to promote sprawl, I believe that every city could do with a few Multi-User Dungeons.
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Chris Casey, in reply to
Hi Russell,
Recently, as a group of housing activists, we met with architects and Council to propose that University/Education State land, such as Mt Albert's Unitec, could be integral to a sustainable on-campus housing plan....up to 3000 units, within the Unitary Plan. Tamaki, MIT, Epsom Teachers and Massey Albany sites were also reviewed.
Here's an example of Melbourne's Monash's recent Uni residence.
http://melbournedesignawards.com.au/mda2012/entry_details.asp?ID=11050&Category_ID=4763
This was 2 years from design concept to completion, including all State/Council compliances.
We discussed the importance ( and lack) of student accommodation, in Auckland, but also nationally, as a factor in housing affordability and student debt. Residences were aimed at housing undergraduate, post graduate, international students , staff and visitors.
The modular/off site aspects of their design and build plans is a perfect fit for Unitec. It promotes student training/employment, post graduate, retail and business synergies and a connection to the community. It ticks the boxes as it reduces traffic flows, increasing cycleways and safe pedestrian access. It is energy- efficient and a revenue stream. It could also become a template for regional and/or papakainga development, based around polytechs and wananga. -
Bart Janssen, in reply to
Schools are also built and funded via bonds and repaid via the same taxes on the homeowner.
So while I was living in Tucson a bond for a local school failed because, well, most of the rich folks in the area were retired and didn't need a school since their kids had long since graduated.
The consequence of course was the children of poor folks took buses to overcrowded crap schools.
A model we want to emulate? yeah ... nah.
Oh and having lived in Texas for 13 months of my life that I will never ever get back can I just say unless you plan to do the exact opposite then looking to Texas for examples of how to do things ... anything ... is just plain stupid.
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Glenn Pearce, in reply to
The US model of funding schools from property taxes is flawed, large funding differences occur between wealthy and impoverished communities, between States and within States.
We don't want to go down that road.
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Matthew Poole, in reply to
Schools are also built and funded via bonds and repaid via the same taxes on the homeowner.
Who pays for the new fire station(s), at a million dollars a year for a single-appliance 24x7 paid station, on top of a million dollars to build it? Even a volunteer station has the same up-front cost and runs to several tens-of-thousands of dollars a year in training, maintenance and operation costs. The taxpayer will be wearing that, guaranteed. And the new police station(s). And, in a round-about way, the new ambulance station.
As for schools, fark. The new high school for Flat Bush cost $50m!Sprawl is hugely expensive, no matter how it's funded. I liked the proposal for its potential to focus the debate on the real financial costs of sprawl, but if those costs all get hidden behind debt that places the developer at no risk, maybe that's not actually going to happen.
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Matthew Poole, in reply to
How about having a 180 day notice period?
How about doing away with without-cause evictions entirely? And make it a criminal offence to use the “family reasons” excuse if the house is not then occupied by family of the landlord within a month of vacancy and for at least three months following. Not merely a civil wrong, but an actual crime.
Strengthening this Act in favour of long term tenants may also make investors think twice thereby easing demand.
Just strengthening it in favour of all tenants would be a good start. When you can be kicked out in three months' time, for no better reason that "I feel like it", there's little wonder renting holds so little appeal. That, and the iron fist of landlords to deny tenants any right to make a house their home.
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Matthew Poole, in reply to
The US model of funding schools from property taxes is flawed, large funding differences occur between wealthy and impoverished communities, between States and within States.
We don’t want to go down that road.
Depends who "we" is, doesn't it?
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Moz, in reply to
strengthening it in favour of all tenants would be a good start.
You know you said "Depends who "we" is, doesn't it?". Think about the damage to the priavte wealth of the Rt Hon. Nicky Wagner if residental rental property became a less lucrative investment? Just run down the list of MP's who own investment properties and try to guess which way they'd vote...
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Then you have people like the residents of Mangawhai Heads, who, I understand, object to a few thousand dollars per property in council borrowing and consequent rates to provide a modern sewage plant. (Whilst, of course, their million dollar beach houses are no doubt mortgaged to the hilt).
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Anything with Michael Bassett's name attached needs to be read in the context of neo-liberalism ad absurdum.
I'm not sure about the MUDs but the housing affordability crisis is real and being played out in many OECD cities including NYC, London, Sydney.
Land closer to the CBD is bloody expensive. The answer is medium-density dwellings but our district plan doesn't allow too much of it. The unitary plan opens up more but there's a major shift to be done in community mindset, builder skillset and council openness, in doing over existing suburbs.
Do we want Paris or Houston? I, for one, do not want Houston.
The recent presentation from Brent Toderian (http://www.toderianurbanworks.com/), a recently deposed Vancouver head of planning for the council (looks like he didn't toady to the developers enough), was insightful and addressed many of these issues.
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Furthermore, regarding a 'Housing Crisis' - as Tim Hazeldine pointed out a year or so ago in the NZ Herald, we're not witnessing people in the streets because they have no house. (I know, I know - there is overcrowding and some people have substandard housing but we've always had that).
Also, it's basically an Auckland problem (notwithstanding the exceptional circumstances of Chch).
What we do have is a shortage as we've been building fewer houses than we need - 3500 in Akl last year vs 10,000 needed (and roughly this for about 5 years), and the ones we do build are big, expensive and geared to profitability, not affordability. There is a fundamental market failure at play here - why build cheap housing when you can build expensive housing and make more money?
This is my site - http://www.buildingguide.co.nz
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Sacha, in reply to
Couldn’t the housing situation be improved by just toughing up the Residential Tenancies Act?
Secure tenancy is part of the Green Party’s housing policies. Hope that gets through post-election coalition negotiations.
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Sacha, in reply to
Quite reliably neo-lib
And boss Oliver Hartwich is a member of worldwide neolib boosters the Mont Pelerin Society and previously headed Australia's neolib CIS 'think'tank.
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Thing is though that of course “without cause” evictions do have a cause. The landlord may be planning to sell the house and wants to be able to list and sell it with vacant posession; the landlord may want to do substantial work on the house to upgrade it. Both of these could be added to the RTA as acceptable reasons to terminate a tenancy, so they’re less of an issue.
However, my assessment is that the more common reason for giving out 90 day notices is that for one reason or another the landlord finds the tenant a pain in the arse and doesn’t want the hassle of having to deal with them, and/or the tenant is doing things they’re not allowed to do under their tenancy agreement but which 14-day notices weren’t really designed to fix (e.g. keeping pets or smoking); or the tenant, while not actually behind in their rent, pays erratically and irregularly. Certainly some of these evictions should be prevented, but there would need to be some extra provisions to solve the pet and smoking and related problems.
Also, I haven’t seen much evidence that the 42 days notice provisions are abused by landlords. Yes, at present it’s just a civil wrong to say you’re moving family in and then not, but I’ve seen bugger all Tenancy Tribunal cases against former landlords who said they were moving family in and then didn’t. I’m not clear on how making it a criminal offence would solve a problem that doesn’t appear to be widespread anyway.
To me the substantial problems with the RTA and the TT process have much more to do with how poorly they protect tenants’ right to decent housing. There’s an excellent new paper at http://paperwalls.org/ detailing the steps tenants can take to have their home brought up to standard, but reading through it you can’t help feeling that their hypothetical tenant, “Mele”, would be excused for having a full nervous breakdown by the time she’d actually got her house sorted.
In broader terms, though, I think the two big problems are,
1. As Mark Graham identified above, there is a fundamental market failure happening: what new housing is being built is not the housing that’s most needed; and
2. There is a fundamental miss-match between New Zealander’s continuing aspiration to live in low-density housing but close to their places of work/school/play; and our national need to prevent urban sprawl/increase urban density. It’s a problem that can only be solved through culture change, and that takes time.
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