If New Zealand is to crack the problems of unaffordable housing, government here must look seriously at how the better parts of America finance infrastructure, Eric Crampton argues

By Eric Crampton*

This seems about the worst possible month to be suggesting that anybody should try to emulate anything going on in America. The place seems to be going mad in ways no longer funny to laugh at from very far away.

So it’s a bit of a shame that the best lessons on infrastructure financing and affordable housing come from a few places in the United States that have really figured things out. If the exact same lessons had come from Canada, or the UK, or Estonia, Infrastructure New Zealand would have an easier time marketing its latest report.

If New Zealand is going to crack the problems of unaffordable housing, government here is going to have to look seriously at how the better parts of America finance infrastructure. Within the same country, you can find major urban areas like San Francisco that are as unaffordable as Auckland, others like Atlanta, or Houston, where housing remains very affordable – and plenty in-between.

In April, an Infrastructure New Zealand delegation visited Portland, Denver, Dallas-Fort Worth, Houston and San Francisco. Their report, “Enabling City Growth: Lessons from the USA”, was released last week.

America provides a wonderful policy laboratory for state-level and city-level innovation. Where fifty different states can each try different things, and cities within those states also can experiment, the rest of us can learn what works.

There are two kinds of affordable cities in America. The first are places where population has been declining. Houses can last for a long time after an industry has left, and so it is easy to live like a king in Detroit – with all that entails. Mediaeval kings could afford expansive estates but also needed strong security forces.

It’s the second kind of affordable city from which New Zealand really can learn – the cities that have managed to get things right when population grows.

When a city’s population grows, there are three potential outcomes – or a mix of those three. The city can grow upwards with increased density, it can grow outwards with more subdivisions, or it can see rising house prices. The best combination allows cities to grow both up and out, allowing for stable and affordable housing.

America has cities exemplifying all of these options.

And America’s growing but affordable cities are the ones that have got the incentives right. When Councils see population growth as a source of new revenue, and where the costs of new infrastructure can be apportioned correctly, Councils allow growth.

Infrastructure New Zealand points to the use of special tax districts and revenue bonds as key to unlocking better urban growth.

In addition to the guaranteed-by-ratepayers Council debt used in New Zealand, America finances urban growth through debt that is not guaranteed by general ratepayers. The latter ironically enables far more finance because it is free of interference by politicians.

Think about a council like Auckland or Hamilton, where debt-to-revenue limits of 250% are close to binding. Under those limits, a Council wanting to fund a new infrastructure project cannot borrow more than 2.5 times the annual revenue expected from the project. But Infrastructure lasts for decades.

Revenue bonds and special tax districts enable borrowing that is not guaranteed by the general ratings base and can then fall outside of the Council’s debt limit. American revenue bonds enable borrowing of five or six times the annual revenue associated with an infrastructure project.

When a developer wants to build a new subdivision or co-fund a mass transit project to service a new brownfield terraced housing development, the trunk infrastructure can be funded through levies on the future residents of the development to repay the revenue bond.

America has established a strong track record with revenue bonds. They can work where everyone expects that Councils will never bail out a bond that goes into default. In Florida during the Global Financial Crisis, some $4 billion in special district bonds defaulted yet not one government jurisdiction bailed them out nor suffered credit downgrades. If ratings agencies expect that revenue bond holders have moral or legal recourse to a council in the event of default, the bond is counted as the Council’s guaranteed debt. If there’s a sniff of this tipping the council over its tight debt-to-revenue limits, it will be blocked. Auckland’s Watercare suffers this fate.

When the infrastructure costs of growth mostly fall on new residents, rather than on the city as a whole, cities have fewer reasons to block growth. And where cities see a growing population as a growing revenue base for a better city, rather than as a burden, they start competing for residents.

Infrastructure New Zealand also correctly points out how restrictions on suburban growth drive up land prices for the city as a whole. Policies that dribble land out in phased releases encourage land banking. And the price of development at the city’s fringes are what constrain the price of housing in the inner suburbs. Fixing infrastructure financing and the incentives facing councils can allow cities to grow both up and out, restoring housing affordability.

The prior National government took the first tiny steps towards unlocking urban growth with central infrastructure funding vehicles to get infrastructure debt off of council books, but that cannot be a long term solution. Revenue bonds allow infrastructure to be rolled out when it’s needed, rather than having to wait until a decade-long crisis forces central government to act.

But it will take some work to get there.

I earlier wrote about how charge-over rates mean that Council debt is a lot like a mortgage on your house. If Council doesn’t meet its debt obligations, then a charge can be levied against your property to cover the bill – and your house sold, if need be. This gold-plated guarantee benefits lenders by reducing risk and borrowers by reducing interest costs. But it costs property owners – it is a bit like forcing them to guarantee other people’s kids’ mortgages. It exacerbates the insider/outsider problem and voters’ antipathy to growth.

Establishing the credibility to not guarantee project debts is difficult. Local government needs to change its self-defeating mindset around debt. By guaranteeing debt to lower borrowing costs, it paradoxically prevents borrowing. Not guaranteeing project debt may mean higher cost of borrowing, but it unblocks investment to projects that create value. It’s yet another example of Infrastructure NZ’s claim local government is biased to cost-minimising rather than value-maximising. Central government could consider banning local government from bailing out failed revenue bonds, if it wanted to help out.

We might also consider an even more localist turn. Instead of amalgamating cities into ever larger monopolies, why not reverse things while encouraging towns to cooperate in delivering shared services? If a failed revenue bond is small relative to a Council’s overall revenues in a large city, we might expect bailouts. Smaller councils would be less likely to be able to afford bailouts.

America is getting a lot of things wrong. But parts of America provide important lessons in improving housing affordability. It’s time we start applying those lessons here.


*Eric Crampton is chief economist at The New Zealand Initiative, which provides a fortnightly column for interest.co.nz.

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25 Comments

The thing to remember about America's unaffordable good places is they're usually less unaffordable than Auckland while offering so much more than Auckland ever will. Also, even as you move down the U.S.A.'s unaffordability scale, there is no diminishment of the many other advantages of life in America until you start getting near the bottom, at which point a house will cost you about as much as a kitset garden shed from Bunnings.

The property taxes would make Aucklanders cry where I live
Yes there’s great amenities but there’s also a heck of a lot of infrastructure in need of upgrading or replacing
Debt here is disturbing so don’t fall for the Trump illusion

But again, as Eric C is pointing out, there are choices. There are jurisdictions with lower property taxes. In an article titled "A Housing Whodunit", Leith Van Onselen ran an analysis of house prices against property taxes in US urban areas, and found no correlation. There were high-tax, high housing cost areas; high-tax, low housing cost areas; low-tax, high housing cost areas; and low-tax, low housing cost areas.

Generally property taxes in the US are higher than our rates, because they also pay for education, police, and other things that are handled by central government taxation here. But a majority of US citizens end up paying no Federal tax at all.

America is far from unique in having infrastructure needing upgrading or replacing. And when it comes to debt, the biggie is always mortgage debt. At least the USA has several dozen cities where this is the lowest of anywhere in the world.

Excellent, right on the nail, Malarkey.

A little bit of time on Real Estate sites reveals a lot. The median multiple doesn't tell the whole story. Our bottom end is non-existent. Something that costs the price of a Bunnings garden shed, in a median multiple 3 city in the USA, costs $400,000+ here. It is absurd, sickening, repugnant, what you get for your money.

And you are right on about Auckland - we suffer a kind of national and urban Walter Mitty syndrome, in a dreamworld thinking we are up there with London and Hong Kong (even in Wellington people think this way). You don't even need to look at house prices in the US heartland to "get real"; Lyon in France is more of a useful benchmark for Auckland. Even housing in Hamburg and Frankfurt and Berlin is heaps better value than Auckland.

A town near New York, like Plainfield NJ, is heaps cheaper than Huntly or Levin. The same goes for rural towns near Paris. Of course Paris central, like NY central, is expensive, but the economics of being in the centre of 14 to 22 million people is a little different to the economics of being in the centre of 1.5 million. It is inexcusible for like-for-like housing in Auckland to be as expensive as central NY or Paris.

Even the French Riviera is a little cheaper than Auckland. And for Pete's sake, who in their sound mind thinks Auckland is comparable to any of these examples?

I haven't mentioned any UK cities as good examples, because they have the urban planning we have copied, and they provide an object lesson in poisonous consequences decades on.

One big difference is that most of those cities have direct competition. If they get too expensive, people go elsewhere. Auckland only has competition from much smaller cities and Australia (which is also overpriced).

The Aussie cities cities around Aucklands level in terms of population are much cheaper. Auckland competes with melbourne in terms of prices - which has almost 5 million people

One problem demonstrated here and in the UK, is that planning groupthink affects all the Councils. In the USA, there are dozens of cities of all sizes from 100,000 population to 7 million population that are growing like the blazes, taking all the deferred growth from bigger cities (and smaller cities with housing affordability). The biggest and fastest-growing of these cities will quite possibly end up catching up to LA and Chicago.

The wiser urban economists in the UK have been pleading for years for at least some smaller cities to be enabled to grow rapidly and with affordable housing, so that they would represent a genuine escape valve for London. The UK has no escape valve for London and NZ has no escape valve for Auckland. ChCh or Wellington could adopt policies that would see them catch Auckland within a couple of decades if Auckland didn't liberalise in response to remain competitive.

New York, San Francisco and London had been centres of economic growth for generations before they began witnessing growing pains but Auckland barely sprouted in the global economic landscape as a minor regional hub and has already hit its peak.
Our problem is we have been trying to run before we could learn to walk, we have barely enough resources to look after the existing population but we still want to fling the gates open without a plan of action in mind. We are in a hurry to jump right to the end of the socioeconomic development curve.

There are 3 historical phases to consider.

1) Pre automobile - all growth involved greater and greater cramming of people. Manhattan had twice as many people with 1/10 the floor space, in 1900, to what it had in 1970. Cities like Dhaka and Lagos are the densest today; it is all about crowding rather than skyscrapers. Pretty much all "first world" cities were this crowded in 1900

2) Post automobile - most cities spread out dramatically, with their original core losing 50 to 90% of their population to the new suburbs. This is also when the most rapid growth of population of cities occurred, with the urbanising of rural populations and the emptying out of smaller towns. Also medical advances and sanitation increased life expectancy.

3) Regulatory chokes on automobile based growth and the appropriate funding of it

The alleged inability to continue growing always occurs at 3).

It doesn't matter if the city is London or Nottingham; or New York or Salinas. You can strangle growth, inflate house prices, and claim it is "because we have hit limits".

If we have a problem with "trying to run before we can walk", it is trying to "be" London or Hong Kong rather than Indianapolis or Nashville or Boise or Wichita. Have you bothered to read Eric's essay? The point is that infrastructure funding should be tied to the property taxes that will be paid by the residents of the new houses.

The alternative that we now have, is every future generation in NZ paying thousands of dollars too much per annum for housing. A fraction of this money could have been spent on infrastructure instead, and the rest would have been discretionary spending. We are digging ourselves into permanent recession by garnishing such a massive proportion of household budgets for all time; real economy-boosting spending ultimately doesn't come from anywhere other than "household spending on things of real value". Zero-sum spending; spending more dollars for "nothing"; economic rent; always crowds out the real thing.

‘The best combination allows cities to grow both up and out, allowing for stable and affordable housing.’

Yes the best combination does allow this, but this statement is interpreted differently depending on your starting ideology.

So for the Auckland City Council, they like the ‘up’ bit in this statement, and with the RUB they think they are allowing the ‘out’ bit.

But the RUB by does not allow what is correctly stated in this article ‘the price of development at the city’s fringes are what constrain the price of housing in the inner suburbs,' ie fringe land prices to reflect their true pre value added cost rural land value.

That is because the real ‘fringe’ under the RUB is not the RUB boundary as everyone thinks it is, but the last stage of infrastructure that the council allows to be drip feed out.

So while the councils will think it’s a great idea for infrastructure to developed with funds that are free from any liability to council, they still see themselves as the authority who dictate when and where these funds get to be spent. To councils this will be interpreted as being as to receive the same present revenue (development charges etc.) but no liability on subdivision infrastructure, which will allow them to liability up on transport infrastructure like rail.

Of the cities that infrastructure NZ visited, Auckland City Council will pick a ‘Portland’ type model, as the report’s author states:

‘Portland’s clear strength is integrated urban planning. Although some issues are evident at the interface with Vancouver and Washington, Portland has advanced a collaborative and attractive urban growth vision based on principles of economic prosperity, human and environmental health, equity and resilience. At the centre of the growth vision is a compact city with the majority of growth planned for centres and corridors within the City of Portland. A high emphasis is placed on complete neighbourhoods and good urban design. The plan appears to have achieved wide public-support and has made the Portland approach world renowned.’

Auckland would consider that they are already doing this or planning to do this, but their model in better because they also have used the word ‘well-being.’

But then the author goes on to highlight Portland’s weaknesses, which they seem to think are not linked to or might be caused by its so called ‘strengths’. As stated:

‘Despite the apparent success of Portland’s planning approach, the region is struggling to respond to growth. Housing supply is meeting just 60 per cent of demand, public transport patronage is falling and congestion is rapidly worsening. In one recent poll, homelessness, congestion, affordable housing and roads/ infrastructure were found to be the biggest residential concerns. Portland’s homelessness crisis is large and visible. Gentrification has become a significant public concern and has become associated with several light rail developments. Despite the emphasis on public transport, patronage has been slowly dropping for an extended period. Portland is stretched financially. Property taxes were tied to inflation in 1998 and additional charges can only be levied with a popular vote. It now has a maintenance funding gap so cannot sustain current levels of service, let alone expand schools.’

Auckland and Portland should be sister cities.

Every region will ' struggle to respond to growth'. That shouldn't be a surprise on a planet 5-6 billion overstocked due to the one-off injection of fossil energy.

But Portland is better placed to weather the downside. Not that it'll be pretty anywhere.

And the planet has never had a bigger collection of infrastructure - mostly fossil-fuel-based and delivered - all aging. As the M part of O&M starts to escalate, all will struggle. All will triage.

Those which can do food and water and waste locally, will be ahead.

Portland and Auckland can't weather the upside. Decentralized communities are better placed to do local food, water and waste.

Sounds like a very pessimistic view of the future...

Good analysis Dale
https://smartasset.com/taxes/oregon-property-tax-calculator#learn

Doesn’t Auckland still have bare land from Silverdale to Albany ?
They call part of it Dairy Flat & it’s got a freeway running through it
A friend of mine owns many acres on the Albany heights green belt with the same freeway running along the bottom of his hilltop boundary
There is very good land to develope still in Auckland
Why build a satellite town in Silverdale & not allow building houses between it and Albany ?
You can hardly call it urban sprawl when you already have had Hibiscus coast residents driving through Silverdale for decades to get to the freeway to get to their jobs in Albany & North Shore & the Auckland CBD etc. Land is there doing virtually nothing

Eric's main point is really the crux of this issue. What makes the US cities affordable, is a legal provision they call "Incorporation". It has existed since early US history. Instead of every part of the landmass being under the purvey of some local government with a planning department who decides if and when infrastructure is to be provided, when it comes to new urban developments, rural land and other legally-obtainable land in other uses is regarded as a kind of "Terra Nullius" as far as "local government planning" is concerned. So a developer simply "incorporates" a new legal municipal body that will raise the finance for the needed infrastructure in the bond markets, and then pay it back from property tax revenue.

The system is mature and efficient, and defaults are rare and controversial.

In the cities where there is an affordability problem, this "Incorporation" feature has been nullified by State or Regional centralisation of land use and / or infrastructure investment decisions. Ironically, the financial viability of "Incorporations" where they are still used within the context of new local prescriptive planning, is rendered very much more risky because of the monopoly land prices the developer must pay. This would be the cause of the infamous defaults in Florida post 2007.

By the way, a certain number of "years supply" of land inside a planners zone is a nonsense concept because only some small percentage of property is ever "for sale". If you want a true "years supply" of land, you need to start with the rate of sales turnover of properties of that kind that are within the "zone". As soon as you say "XYZ bunch of landowners has the next ten years supply of land for our urban growth", you are obliging developers to start crawling over broken glass and participating in Dutch Auctions to get the land they need to stay in business. Land prices always explode under these conditions, for obvious reasons; developers in median-multiple-3 cities really are buying land for $40,000 per hectare or less but no developer around Auckland would be getting it for less than $5,000,000 per hectare.

It is amazing how shallow assumptions can persist for so long as the basis of important government policy, in the face of disastrous outcomes, and the fact that the real-life mechanisms by which it all happens, are not rocket science.

Nicely said Phil. We may disagree on some transport matters but you certainly describe the nonsense of giving a few rural landowners huge pricing power by way of restrictive zoning well.

I am less convinced about rural land prices being the only anchor for an urban competitive land price curve (the curve from exurban fringe to city centre). I think zoning and urban development practices need to be such that competition is encouraged along the entire length of curve.

That way a city will get the most building of the highest quality at lowest prices both 'up and out' as Eric says and with the minimum of the third option -increases in house prices.

Something else very revealing, is Issi Romem's research essays - and I have placed comments on them.

https://www.buildzoom.com/blog/cities-expansion-slowing

https://www.buildzoom.com/blog/can-cities-compensate-for-curbing-sprawl-...

https://www.buildzoom.com/blog/paying-for-dirt-where-have-home-values-de...

The US cities that have allowed continued growth "out", in some cases also have more intensification and growth "up", than the cities like Portland and SF that think their plans for growth "up" are a perfect substitute. Obviously they are not. The market ends up distorted in ways that collapse the supply of everything. The city with elastic housing supply is providing 30 high-density units and 70 family homes, for the 7 high-density units and 3 family homes that the planning-prescribed city does after intending it to be 70 and 30.

I could do some long copy-and-pastes here, but those with the genuine curiosity and patience can look at the links. Those without the genuine curiosity and patience can at least accept the evidence.

Thankfully in NZ we have some economists in responsible positions who are objectively following this line of investigation. I don't know that there is anywhere else in the world where this is the case. There is hardly a more egregious example of total failure on the part of an entire profession. Economists today, virtually universally, know nothing of the good solid understanding of urban land markets, economic rent, the "supply of land", and their relationship with transport technology that even many non-economists had from 1900 to 1950.

Eric you do a great service to NZ by clarifying to us about the complexities of infrastructure finance. This is a conversation the country desperately needs to have. I believe if NZ can properly fix housing then many of our inequality and productivity problems will also be fixed.

I also saw this paper from the Infrastructure NZ, unfortunately too late to include it in my last weekend's Interest.co.nz on 'Why tax housing in a housing crisis paper'.

I have updated my paper to include my policy preference, which would be to look at Phoenix City which is an affordable expansive city -similar to Houston and Dallas etc. Since 2008 a comprehensive light rail system has been operational that was funded by a targeted revenue from a 0.5% increase in sales tax -this tax was implemented following a local referendum. I believe this referendum process creates the separation that informs the bond market that local governments will not (can not) bail out the public transport providing entity. This enforces commercial disciplines. The wider Phoenix metropolitan area in 2015 voted to expand the light rail network, as ridership and fare revenue has exceeded earlier estimates. So this system seems to have been effective.

Readers may be interested in my updated version of 'Why tax housing in a housing crisis paper' -some of the update followed feedback from readers -especially that it was too long and lacked clarity in some of its policy points.
https://medium.com/land-buildings-identity-and-values/why-tax-house-buil...

Phoenix has several things going for it. Not only a flat, disciplined land rent curve, but it is the ultimate in lack of intensity almost everywhere including the "city centre". Even compared to Houston, Dallas etc, Phoenix is so young that it hasn't even got "streetcar suburbs" let alone a legacy core. So they have amazing opportunities to put in infrastructure with minimal disruption and access costs, repurpose space that is under-utilised rather than already congested, and have relatively low rent-seeking sectors unlike cities where incumbents are trying to shore up their pre-eminence.

Phoenix would have a good chance of doing proper "articulated density" around the logical locations, while probably remaining logically low-density everywhere else.

Where I differ to you in intensification and transit-oriented development potential, is in the cut-off point of existing density above which it has too many chokes on true elasticity of supply; and in the logic of doing any density other than "articulated density". You know I regard Japan's institutional settings as optimum but that is a subject for another discussion thread in its own right.

The reason for better finance infrastructure is to provide easier access to money to build the physical infrastructure and as part of that I think the next level of discussion on physical infrastructure to to separate out the different types for further analysis.

The reason being is that different types of infrastructure have different limitations and impacts on housing affordability, especially depending on who is supplying the infrastructure.

For example wastewater is generally seen by council as one of the main limiting factors as to when, where, and how new developments can occur. This is because it is supplied by council (a bureaucracy), as a monopoly supplier and is from a centralized system, ie new infrastructure is extended from the last connection.

This makes council wasteful (no pun intended), slow to respond to demand, and also deliberately trying to limit demand where it does not suit their ideology, eg stopping urban expansion in favour of high density living. This results, in part, to the present poor quality but expensive housing we have at present.

Where as, due to new technology, a developer can supply waste water infrastructure as they go, onsite (not connected to council) and at a more affordable price.

I'm sure that most of the thinking on finance infrastructure is for it to available for public entities like council.

But for it to work as per those American cities that have truly affordable housing, it also needs to be openly available (to competitive providers) to all (public and private).

Very helpful, thanks Dale.

This issue really is an ideal example to sort out our ideological thinking about "markets" and their "failure".

Some people are saying "free markets have failed" but every example they give involves the absence of a free market, and restoration of a free market would actually be a solution.

We take for granted, that many products get better and better value for money as time goes on and yet we don't bother to think of this as evidence that a free market exists in the entire "supply chain" for those products, from raw resources to retailing.

But people on the "right" are guilty of ignorance and even of "bait and switch" tactics that we need to be wise to.

"Capitalism" is not synonymous with "free markets" and "Capitalists" - the people - even less so. "Free market" capitalism is something usually only advocated genuinely, by ideologues (like me) :-). Capitalists will always try and rig the system so the market is not free, always with the aid of politicians using some fig-leaf of respectable intervention in the market.

Privatisation, with which we have so much negative experience, is not synonymous with "free markets" either. Most privatisation has involved selling the SOE with an ongoing guarantee of monopoly power in the market. Politicians want to maximise the selling price of the "public asset". Then a few years later people are complaining about the evil Capitalists running down the assets and providing poor service. Deregulation and providing a real free market, would have made things genuinely competitive and efficient, but then the public asset SOE would have been worthless.

Even a semblance of "competition" is not always "a free market". The crucial factor is actually "freedom for new suppliers to enter the market". Markets actually behave quite differently as we are discovering with urban land, if there are 30,000 "competing site owners" but no more are allowed to enter the market; versus if there are 30,000 incumbents and a few thousand potential new entrants with no barriers to their entrance. There is a good paper that uses the term "Monopolistic Competition" to describe the crucial negative difference.

Then there is your example: local bodies. The fact that there are dozens of local bodies in NZ certainly has not produced anything like "market competition". But the US system literally allows de facto new local bodies to be formed in conjunction with additional land supply for urban economies. This has guaranteed competition.

Ironically history shows that it is possible for government-planned urban growth to create housing affordability; this was true in NZ for decades, and Canada, Australia and Western Europe. But this was because Councils and government departments had growing "out" as an objective, and they co-operated with developers who had opportunity to acquire low-cost rural land, without favouring any one developer or land owner.

But the potential diversity of approaches and introduction of new best practices, justifies the more market-led US approach even if there was any hope of changing the underlying attitude in government at all levels.

We are clueless about how to grow our urban areas.

To grow an urban area like Wellington or Christchurch requires the co-ordination of a regional council, several territorial authorities and NZTA. Each has their own priorities, views of how the world should be, patches to protect and petty jealousies. Growth has to occur within the legal constraints of the RMA, the Regional Plan, several district plans, the National Land Transport Plan, the Local Government Act, the Land Transport Act, the Health Act...etc etc etc

The nearest we have ever come to doing the job properly was in the days of the Ministry of Works and Development when we had one central agency that built both the main roads and many of the houses.

Before we can even start to fix this dysfunctional system we need to have one critical conversation about where the burden of the costs of growth should fall. We assume that it has to be on new development because it is fairer (not to mention much more politically acceptable). But it could just as easily be a general levy on the whole population.

The current Transport levy/rate in Auckland is just that and the imminent regional fuel tax which will replace that rate is the same. Hamilton also has some general levies in place (albeit minor ones).

Councils are unique in that they generally don't budget for an operating surplus except for the collection of depreciation. Lines companies - including Transpower - standardly budget to make a surplus and to build a war chest to fund future infrastructure upgrades. Airport and port companies do the same. Yet councils doggedly aim to only break even then have to struggle to raise capital to fund growth at a later date.

Before we start issuing infrastructure bonds how about a proper conversation on the pro's and con's of the different ways councils could raise more capital as they grow?

A suprisingly agreeable essay from NZI, not my usual opinion of their opinions...having nearly married into an American family in the early naughties I was regularly in awe of the business dynamic of that nation, I don't think I ever met an American who didn't know how to make a dollar work for them. Broadly speaking I still hold that opinion even after the gfc. On public infrastructure the yanks appear to be pretty handy at building it not so flash at maintaining it...gotta pay for the next cruise missile attack on Yemmen right? Our approach to infrastrucure is needlessly negative, agreed but it is too easily influenced by landowners who should be paying for all of it upfront themselves when developing subdivisions. Anything else is a ratepayer subsidy and distinctly uncapitalistic, in my view at least.

Everywhere has a problem with maintaining infrastructure. The crisis of housing affordability is at least partly driven by Councils "running out of money for maintenance" for the existing infrastructure.

By forcing developers to do intensification rather than greenfields, they can then gouge them for levies that are allegedly to "expand the infrastructure for the added population". In fact the infrastructure was clapped out and due for renewal anyway.

At the same time, one of the arguments we hear in favour of containment and intensification, is that "it more efficiently utilises existing infrastructure". This argument is made in extremely bad faith.

There was a big report on this a couple of years ago that concluded that it is not a "given" that there are savings on infrastructure if we intensify versus expanding on greenfields. Planning in the past has been very poor at providing for cost-effective capacity expansion; there are minimal designations on the land to enable easy access and to minimise disruption. And the policy of infill as it has been proceeding for the last 3 decades, has made this problem much worse. Auckland has become as dense as many European cities already, but it is horrendously inefficient density.

Believe it or not, Auckland has much less road and street space than European cities. It is such an outlier on the low side that it got several paras of discussion in a UN Report on a global database of cities on the subject of street space. Then all the townhouses and cottages we have already crammed in on backyards (there aren't any 1/4 acre sections left now) are now in the way and needing premature demolition if we are to leap to the next level of density desired by the planners.

In contrast, the US cities that are intensifying the fastest (see links in my comment above) are the ones that are still growing outwards, still have low land prices, and still have under-utilised land in places where CBD agglomerations and Transit Oriented Development are occurring. This represents multiple cost advantages; the land cost; the absence of site-owner gouging and holdout powers; ease of access to underground infrastructure; low land costs if acquisition is needed for infrastructure projects; and ease of site operations for all kinds of construction including apartment blocks.

Density tends to occur, market-led, in the right places. In contrast, the distorted cities have developers "just finding sites anywhere and everywhere".