Friday, August 3, 2012

Phil McDermott: Irresponsible inner city behaviour

The latest in urban design - new public spaces for the dispossessed
In my last blog I raised the question of whether purchasing land for a possible rail link through the city would reduce the attractiveness of the inner city living by laying waste to a corridor cutting through it – shades of the motorway madness of the 1950s and 60s.  I suggested that this will increase the anti-social behaviour after dark that so worries CBD residents and visitors.

So it was interesting to see in the New Zealand Herald today the concern over the use of vacant city sites as places of refuge for people deemed anti-social and particularly as sites for binge drinking.
These are, of course, informal public spaces, simply being used as such.  And with the purchase of 280 properties in the central city for construction works or sites for rail-related development in support of our “sometime-maybe-never?” underground rail link, we are creating more of the same.  This will no doubt make inner Auckland more liveable for the homeless, dispossessed, impoverished, and underemployed.  Paradoxically, we could claim from this that laying waste to inner city sites contributes to the vision of increasing inner city living.

Getting rail up and overrunning
By the way, the $240 million set aside for acquisition of 280 properties sounds just a little light.  I haven’t searched the records, but I suspect few of those properties would be valued at under $1million.  And what about the compensation for relocation and loss of revenue and goodwill among the  many businesses that currently occupy them, and of course the relocation costs of displaced households?  

To me it looks suspiciously like we have taken the first step down the budget blow-out track.  But then, that tends to be the way of big civic projects utilising public funds, which are almost inevitably subject to optimism bias and waste, partly resulting from confused accountability.

(On accountability, it is not quite clear whether the train driver is the Council, the Mayor, or Auckland Transport.  And any expectation that the Government should shoulder much of the cost or should legislate to tax motorists points to further potential confusion in accountability, in this case between central and local government.  This is particularly significant for a project destined to make  a big a hole in public finances).

Of course, many of the properties to be acquired will be sold once the link is completed.  But assuming that the holding costs are based on $240m expenditure, any over-run will boost them.

So will delays to the project as a result of unresolved funding problems, continuing economic uncertainty, and likely fiscal constraints.  These are likely outcomes: a Benefit Cost Ratio of 0.4 doesn’t justify going ahead, and the strategic benefits remain decidedly unclear. But that’s another story

Suffice to observe that like alcohol bingeing among people with too much time on their hands, it seems that playing the train game is a difficult habit for politicians and other enthusiasts to break.

Passing the bucks
Even if  we do get to spend all this hard earned (or borrowed) money down the track, over-optimistic passenger and revenue projections and pie in the sky proposals for station-based office and residential developments will mean under-recovery of capital and operating costs.  A BCR of 0.4 looks a bit optimistic. 

Of course, we can continue  to behave badly by excessive, wasteful spending  and leave someone else to clean up the mess.  In this case another generation will be left to foot the bill while today’s decision-makers slip – or slope -- off into retirement (most likely in suburbia or their coastal retreats).  How responsible is that?

Phil is a consultant in urban, economic and community development. He blogs at Cities Matter.

1 comment:

John Sinclair said...

It's just as well this $$ cost benefit criteria has not prevailed throughout history. If it had we would not have so many of what they would call 'fiscal follies', and our cities would be so much more boring.
Thank goodness this approach did not win the argument on the Victoria Park or Puhoi Tunnels!
Cost responsibility is important - but urban quality for people is too!