A legal challenge from a tiny group of pensioners is protesting a 100 apartment development on Dominion Rd that the council’s own development arm is trying to build. Sam Grover explains why this is not as cute as it might seem.
Last year, Auckland Council declined planning permission for a proposed development on Dominion Road. Panuku, the council-owned developer behind the project, appealed that decision, and it’s now headed for the Environment Court. Hopefully, council’s decision gets overturned. After all, you’d think that a five-storey, mixed use development providing 102 apartments on a major transport artery would be just the thing for a city groaning under the weight of a housing crisis.
Well, some people have other ideas. Specifically, these six people who live on Carrick Place, in a set of pensioner flats in a cul-de-sac behind the proposed development. The six, who told their story without any counter-argument on Morning Report on Monday, say the Panuku development shouldn’t go ahead. Some of their reasons are:
- Five storeys is too tall for their tastes
- Their flats won’t be an “oasis of calm” anymore
- The earthworks would be too noisy
These concerns aren’t completely invalid. Earthworks are noisy. Five storeys is taller than the low-lying retail and parking lot that is currently on the site. If this development goes ahead, some aspects of the neighbourhood are going to be different than they are now. The pensioners may not like these differences.
But I think they’ve made a bit of a mistake. I think they’ve forgotten to consider the fact that not building this development has costs as well. And these costs are higher than the costs of building the apartments. What’s more, these costs will be imposed on almost every person in Auckland – not just the people living around the development.
There’s not enough housing in Auckland. There’s really not enough housing in desirable areas like Dominion Road. I can’t imagine migration to Auckland is going to slow down any time soon, so every development that is slowed down or halted means less housing per person who wants housing, which means higher housing costs for everyone in Auckland.
These costs will be borne by the renters paying high rent. They’ll be borne by first home buyers with eye-watering mortgages. They’ll be borne by people stuck in traffic as those who would have lived on Dominion Road begrudgingly start living in, and commuting from, further-flung suburbs. Worst of all, they’ll be borne by those at the margins, who have been shut out of housing entirely, and are living in cold cars, tents and garages.
This cost is harder to quantify than the noise of a digger every day because it’s distributed across so many more people. This makes it harder to draw a straight line from (for example) your high rent and this specific development getting quashed. But the relationship is there – some portion of high rent in Newmarket is because of a lack of housing in Mt Eden. So demanding that a development be canned is essentially demanding a subsidy from everyone else in the city.
Subsidies on subsidies
One of the other gripes from the Dominion Road protestors was that they “deserved consideration” for living in the city and paying rates for so long. I had a little look at how Carrick Place works. Turns out, they are already receiving significant consideration.
Carrick Place is part of Auckland Council’s “own your own unit” scheme. It’s social housing for pensioners “of modest means”. Pensioners who qualify get to purchase a unit in Carrick Place for 50% of market value. They live in the property for as long as they need to, and when they move out, they sell it back to council, again for 50% of market value. Presumably, any capital gain in the meantime is theirs to keep.
This is a great deal, if you can get it. The RV of one of these units was $370k in 2014. In 2017, it had skyrocketed to $610,000. That means a pensioner in 2014 would get one of these places for 185k, then sell it in 2017 for $305k. That’s $120k. Tax free, of course.
Just like cancelling the proposed Panuku development, the own your own unit scheme has costs. Council could sell the land to a developer for a pretty significant profit, or it could rent the units to pensioners at a subsidised rate, and keep the future capital gains for itself. By not choosing to do either of those things, it is imposing a cost on everyone else in the city.
There’s nothing wrong with this cost. It sounds like a perfectly fine way to allow the elderly to downgrade to a smaller place, continue owning their home, and not have to move to a different neighbourhood.
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But it grates to hear these pensioners happily accept this subsidy with one hand, then use the other to pull the handbrake on a proposed development. In effect, they are saying “thanks for the subsidy for our housing, now give us a further subsidy to stop the area around it from ever changing.”
I assume this was an oversight. The pensioners seem pleasant enough, even charming in the radio segment. I’m sure they don’t want to make life a bit worse for everyone in Auckland. But by demanding this development be canned, that is exactly what they are doing.
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