Thirty-six kilometres south of Auckland’s CBD lies a golden opportunity. On the skirt fringe of the country’s largest population centre, where house prices have spiralled beyond reason and rising numbers of people go without homes, 5000 hectares of greenfields have been earmarked for future development.
Here, at the base of the Bombay Hills, the natural southern border for Auckland, developers are poised to build houses and apartments, commercial centres, schools and health facilities to serve a community the size of two Rotoruas, or 150,000 people.
But there is a problem.
Auckland Council says it can’t afford the $1 billion needed to provide essential infrastructure – roads, water, gas, electricity, train linkages and more to support this scale of development. A seven to 10-year investment programme would pump $600 million into transport projects and just under $500 million into stormwater, sewerage, parks and community facilities.
In October, the council opposed plan changes put forward by Kiwi Property, Oyster Capital and Fulton Hogan Land Development to rezone 330 hectares in Drury East from future urban zone (FUZ) to a mix of residential, business and open space zones – not because there is anything objectionable about their plans, but because there is no obvious funding solution for the infrastructure.
Growth has nudged ahead of the projected curve and the council has hit its debt ceiling. And while the central Government, through the $6.8 billion New Zealand Upgrade Programme, has committed to some strategic transport infrastructure, a lot more is needed.
It’s a problem that has piqued the interest of senior executives at Beca, the Kiwi-owned professional services consultancy that has been building Auckland for 100 years. Designing, planning and orchestrating infrastructure at scale and speed is what it does. And as Matt Wheeler, Business Director, Project Strategy and Delivery, points out, Beca already works with all of the major players in Drury.
“We can be the glue that holds a lot of these different angles together,” he says. “We can use our influence to make things happen. We are really passionate about Auckland being our home and setting it up for success. We want to help Drury realise its future potential.”
Population pressure
Like volcanic cones, Auckland City is ringed by future urban zones: 1000 hectares near Warkworth; 4000 hectares in Silverdale, Dairy Flat and Wainui; nearly 3000 hectares in Kumeu-Huapai, Whenuapai and Redhills. The difference with Drury, is that the pressure is on now.
“Auckland Council’s own figures have 720,000 additional people living here by 2050,” says Wheeler. “What that really means is that there are something like 400,000 new homes required to cover the growth in the next 30 years.
“The most volatile population projections have been in the south – Drury, Pukekohe, Takaanini; it is a huge band of growth and the most actively pursued development zone in Auckland. If we can’t figure it out in Drury, it’s going to undermine our ability to deliver these other growth areas as well.”
It’s not even like this growth is surprising – anyone who pays the slightest attention to the Super City knows it’s bulging at the seams. Roads are clogged, public transport is stretched, schools struggle to keep up with expanding rolls, and the average house now costs $1 million, up 16.3 percent in a year, according to the Real Estate Institute of New Zealand.
But the pace of growth has outpaced all predictions, which is worrying. “With 40 percent of the population and 38 percent of GDP, Auckland cannot be allowed to fail,” says Wheeler.
At an impasse
Stuart Bowden is a senior leader at Beca, which participates in the Supporting Growth Alliance (Auckland Transport, Waka Kotahi NZ Transport Agency and Auckland Council), tasked with delivering the transport networks needed to link the four urban growth areas in the next 30 years.
Aussie import Bowden says: “I am only four years into being a Kiwi but year on year, with 2020 maybe being the exception, it has felt like growth in Auckland has been exponential. It hasn’t been, of course, it’s been a steady rise fed mostly by immigration numbers – but that rise would never have been predicted 20 years ago.”
A particular focus for the Supporting Growth Alliance right now is an upgrade of Mill Road, a 21-kilometre corridor running down the eastern side of Drury into which the Government is funnelling $1.4 billion. But directly linked to transport is housing and all that comes with it, so for those on the Alliance there is a deep understanding of how serious the impact of population growth will be if facilities are not created to cope with new Aucklanders.
“There are myriad plans and strategies and documents that the Government put in place, knowing about the scale of growth this city is facing and yet here we are at this impasse of growth unable to be effectively managed,” says Bowden. “All of the structure that makes our societies work has to come in – you can’t just feed off the rest of the city.”
To this point: just over the hill from Drury, in Pokeno, the population has grown from a few hundred to more than 4,000 in less than 10 years, with thousands more expected. All these additional people are reliant on existing transport links and other social infrastructure, such as schools and healthcare facilities.
While 2020 naturally squeezed many sectors, there has been no downturn for residential property, especially in Auckland.
“We’re suffering from a lack of properties just as much as before 2020,” says Bowden. “The urgency remains, nothing has halted or wavered except for council funding options. The projection is that the council will remain in significant debt for five more years.
“It’s easy to criticise city edge growth,” he says. “All the big, ugly cities of the world have suffered from that. But these four growth areas have an intensification strategy. It’s been properly planned.”
Buying into New Zealand Inc
Milldale is a rapidly developing community north of Auckland, flanked by Dairy Flat and Silverdale, and just across the motorway from its sister project, Millwater, also managed by Fulton Hogan Land Development. The first residents moved in just before Christmas 2019, a mere seven months after the first section was sold. There will be more than 4500 homes here by 2030. A $20 million primary school is in the works with a high school to follow.
With the blessing of the Government, a Special Purpose Vehicle (SPV) was set up to forward fund Milldale’s infrastructure, with Fulton Hogan securing a loan from ACC, which will be paid back by the residents who buy Milldale sections in the form of levies, over 30 years.
Milldale has similar attributes to what is planned for Drury – a mix of affordable housing and aspirational four-bedders, leisure facilities and open space – and Beca, like many others, is keen to explore whether the funding structure used to pay for its water and roading network can work down South too.
Post-Milldale, the Infrastructure Funding and Finance Act 2020 passed, formalising a system for financing public infrastructure via the private sector, which is exactly the sort of investment that should appeal to funders with a low-risk and long-term return strategy, says Wheeler. “You are buying into core infrastructure for New Zealand Inc, which effectively has a guaranteed return.”
The idea of infrastructure being funded by the private sector is not new, nor are agreements for shared outcomes between public and private sectors. They are relatively common in other parts of the world, particularly in North America. Looking at those successful partnerships, developers and the council can see a potential solution for Drury, says Wheeler, but are struggling to find a way through the barriers. To that end, Beca is pulling together a land owners’ forum, to see if there is an appetite for working together.
A tough position
“We are very sympathetic to the situation the council finds itself in,” says Wheeler. “We respect the financial constraints of committing Long-term Plan funds (LTP) unless development contributions are locked in, as well as the political constraints of the infrastructure requirements to support growth.”
Well-intentioned attempts to manage urban growth can backfire. In Silverdale North, for example, developers were unable to build in certain areas until the Penlink transport corridor was complete. When that vital infrastructure was deferred, it caused headaches for all parties.
A more coordinated approach is required.
“We still observe a nationwide disconnect between spatial planning, structural planning and funding allocations,” says Wheeler. “A key recommendation made in the Randerson Report on Resource Management reform is that spatial plans would be prepared by a combination of councils, representatives of Government and iwi. Then [they would] create corresponding infrastructure implementation plans.
“It may be too late for Drury, however this fundamental change to planning and funding should alleviate many of the issues we see playing out in South Auckland right now.”
This is the latest of a series on Auckland issues in association with Beca, a foundation partner of Newsroom
