Christchurch housing : ‘If you build the right thing, buyers will still come’

Will they ? How many, how far ?
(if there’s nothing more than service sector jobs available)….

Hmm. In their early contributions to What if? Dunedin, Lee Vandervis and Christchurch Driver [CD] each had the measure of the post-quake new build housing market in Christchurch. Cycling boom and bust, with odd and unexplained connections and financing.

—

Link received.
Sat, 4 Mar 2017 at 12:31 p.m.

T H E ● P R E S S

Christchurch’s rental market is oversupplied and freshly-built terraced houses are sitting empty and unsold in the suburbs. How did the city with the real estate market decimated by the earthquakes get here?

According to the Ministry of Business, Innovation and Employment (MBIE), the average rent in Christchurch is falling for the first time since records started in 1993.

### Stuff.co.nz Last updated 18:11, March 3 2017
Christchurch’s housing paradox – the downside of a building boom
By Michael Wright – The Press
Last month, Mike Blackburn bought a house. He and his wife looked at about 40 properties before settling on one. As they traipsed through the preceding 39, a pattern emerged. “Every second house we looked at was empty,” he said. “That’s just a telling figure. Where have all these people gone?” The significance of what he saw wasn’t lost: Christchurch, the city once desperately short of houses after thousands of them were wrecked by earthquakes, had a lot more accommodation than it used to.

Blackburn is a management consultant, specialising in construction clients. When small or medium-sized operators are struggling, they go to someone like him for advice on how to get through. As part of his work, he gets the raw consenting data from the Christchurch City Council each month – location, builder, value, type of consent (earthquake or business as usual), intended use – to build a picture of the marketplace. He saw a clear vision. “There was a major rush, mostly by the group home builders, to build a lot of houses really quickly,” he said. “What’s happened is now everyone who’s needed a house has pretty much got one and they’re still building them. They’re building them flat out . . . all these development companies are month after month submitting 20-30 consents each for essentially spec housing.” The numbers have tapered off of late. The council peaked in 2014 at more than 3200 consents issued – about 270 a month – before drifting back down to just over 2100 last year. 2017 is already tracking below that. As Blackburn sees it, though, the damage has already been done. “There will be a correction. The number of buildings and the total number of dwellings being built will fall off really rapidly. It’ll go below that business as usual level, because we’ve got a major oversupply at the moment. Potentially that effect could run on for the building sector in Canterbury for the next two, maybe three years.”

….Anecdotally, rental properties are in such abundance landlords are dropping prices and offering incentives to secure tenants. This week, Stuff reported on swathes of empty multi-unit houses languishing in suburban subdivisions. “[We] certainly won’t be building any more of those,” construction boss Mike Greer said at the time. Then there is the data. Compare Government valuer QV’s latest monthly average house values for each region against last February and Christchurch does not do well. QV measures the city in six disparate parts and they all appear in the bottom 11 spots for value increase [three of the other five are the Selwyn, Waimakariri and Ashburton districts]. Rises in the Christchurch zones range from 0.7 per cent [east] to 3.9 per cent [southwest], which barely registers against most of the rest of the country; basking in double-digit growth all the way up to an eye-watering 29.5 per cent jump in the Queenstown-Lakes district [average house value $1,039,434].

Market forces were …. promoting even more building. The Reserve Bank’s loan-to-value ratio (LVR) restrictions on banks lending to home buyers exempted new builds. A home buyer generally needed a 20 per cent deposit, but a home builder could get finance with much less. Christchurch, in the middle of an insurance-driven building bonanza, didn’t need that kind of encouragement.

“People have gone, in my mind, somewhat berserk in building new, to try and fill that [housing] void,” Canterbury Registered Master Builders president Ivan Stanicich said. “Some of the bigger building companies in Christchurch grew exponentially, hired more and more people and that was only ever going to be for about a three-year sweep. Now we’re seeing the reverse of that where building companies are actively downsizing. That’s well known in our industry. Nobody wants to shout that from the rooftops, because it’s not a positive business outlook, but it’s quite understandable. If you don’t, any gains you’ve made through the building boom, they’re just going to be lost in your overheads.”

Property manager Tony Brazier saw the problem coming. In October 2014 he penned a column in The Press warning of the dangers of over-building. “The housing rebuild must be carefully monitored so we do not end up over-supplied,” he wrote. “This phenomenal house building pace should alert us to the fact that, whereas in the past it takes only a few builders struggling to sell their new-builds to signal an end to the cycle, this time could be different. It may take large contractors not being able to sell whole subdivisions before the message gets through.”

….How did it come to this? The first answer is earthquake insurance money finally caught up with, and overtook, the market. As Stanicich said – builders going berserk trying to fill the housing void. In the meantime, claims were settled and damaged stock repaired. An unforeseen element of this was the brisk trade in as-is, where-is houses – earthquake casualties that were uninsurable but livable. Landlords snapped them up and, in a stressed rental market, had no problem finding tenants. The by-product was Christchurch’s housing stock ended up not quite as depleted as first thought.
Read more + Charts

Recent Press articles:
Christchurch’s terraced homes struggling to sell as housing market levels
Christchurch landlords lower rents due to ‘oversupply’ of properties
Cash and rent-free offers fail to lure tenants as Christchurch housing….
City’s rental crisis ‘at breaking point’

****

█ Thoughts immediately turn to Dunedin City Council and DCHL’s commitment as of 1 August 2016 to the new Delta ‘joint venture’ (including the Noble types) at Yaldhurst. After all the legal stoush, will properties sell ?

[Gurglars] Hoarding at Yaldhurst subdivision, 14 February 2017

[Christchurch Driver] Yaldhurst subdivision, 13 February 2016

[Christchurch Driver] Yaldhurst subdivision, 21 January 2016

[villagelife.co.nz]

[realestate.co.nz] Yaldhurst Village Mortgagee Tender, 15 December 2015

****

BACK WHEN (2014), Mike Greer Homes NZ ramped up production to rehouse people in post-quake Christchurch, it was a genuine and concerted effort:

Where there was bare land a year ago, a factory now stands ready to reshape the residential construction industry.

### Stuff.co.nz Last updated 05:00, November 22 2014
House factory ready to roll
By Alan Wood – The Press
As Mike Greer and Bill Gee watch the emergence of their “high volume” residential panels factory, they have no concern they will contribute to an oversupply of new homes. The $14 million industrial factory development includes $5m plus of specialist German machinery to be used to rapidly construct the panels for residential homes. Greer, “a chippie by trade”, is optimistic about the Rolleston-based factory’s place in a Canterbury and Auckland building boom. “This is fantastic for the residential construction industry. No-one in New Zealand has ever seen anything like this,” he says of the joint venture company Concision, which he and Gee own. Asked about any slowdown in the Canterbury rebuild and residential market, Greer says he has hundreds of pre-sold homes he is yet to make a start on.
Is there any danger of an overbuild by builders in the region?
“Well wouldn’t that be good. Everyone is complaining about housing affordability. The only way to fix that is supply,” Greer responds. He says there are signs interest rates have stabilised and may even come down. From April 1, a Government subsidy on first home buyers of new homes in Canterbury will be introduced. A buyer could get up to $20,000 towards a $450,000 home. “So that’s really going to stimulate things at that end of the market,” Greer says. The Reserve Bank was also signalling that eventually . . . it will remove loan to value ratio restrictions that have made it more difficult for first home buyers to get loans.
Read more

—

Related Posts and Comments:
● 17.2.17 Gurglars visits the Delta/Noble JV subdivision at Yaldhurst
● 11.3.16 Delta peripheral #EpicFail : Stonewood Homes and ancient Delta….
● 10.3.16 Noble Subdivision next on the shopping list !!! You couldn’t….
6.3.16 Delta #EpicFail —Noble Subdivision : Tea & Taxing Questions
6.3.16 Delta #EpicFail —Nobel Subdivision : A Neighbour responds
5.3.16 Delta #EpicFail —Noble Subdivision —Epic Fraud
4.3.16 Delta —Noble Subdivision #EpicStorm Heading OUR WAY
4.3.16 Delta #EpicFail Noble Subdivision : Councillors know NOTHING
2.3.16 Delta #EpicFail Noble Subdivision : A Dog, or a RAVING YAPPER?….
1.3.16 Delta #EpicFail… —The Little Finance Company that did (Delta).
29.2.16 Delta #EpicFail Noble Subdivision : NBR interested in bidders
28.2.16 Delta #EpicFail Noble… If I were a rich man / Delta Director
27.2.16 Delta #EpicFail Noble Subdivision Consent : Strictly Optional
27.2.16 Delta #NUCLEAR EpicFail —Noble Subdivision : Incompetent…
25.2.16 Delta #EpicFail: Mayor Cull —Forced Sale Fundamentals 101
24.2.16 Delta #EpicFail —Noble Subdivision : Cameron, Crombie & McKenzie
23.2.16 DCC: DCHL half year result to 31 December 2015
19.2.16 Delta: Update on Yaldhurst subdivision debt recovery
15.2.16 Delta / DCHL not broadcasting position on subdivision mortgagee tender
30.1.16 DCC Rates: LOCAL CONTEXT not Stats —Delta and Hippopotamuses
29.1.16 Delta #EpicFail —Yaldhurst Subdivision ● Some forensics
21.1.16 Delta #EpicFail —Yaldhurst Subdivision
21.1.16 DCC LTAP 2016/17 budget discussion #ultrahelpfulhints
19.1.15 Housing affordability in this country is “just hopeless” –Hugh Pavletich
10.1.16 Infrastructure ‘open to facile misinterpretation’…. or local ignore
15.12.15 Noble property subdivision aka Yaldhurst Village | Mortgagee Tender
21.9.15 DCC: Not shite (?) hitting the fan but DVL
20.7.15 Noble property subdivision —DELTA #LGOIMA
● 1.4.15 Christchurch subdivisions: Heat gone?
24.3.15 Noble property subdivision —DELTA
23.3.15 Noble property subdivision: “Denials suggest that we have not learned.”
17.3.15 DCC —Delta, Jacks Point Luggate II…. Noble property subdivision

● 14.5.14 (via DCC website) Larsen Report February 2012
A recent governance review of the Dunedin City Council companies was conducted by Warren Larsen.

● 20.3.14 Delta: Report from Office of the Auditor-General
Inquiry into property investments by Delta Utility Services Limited at Luggate and Jacks Point

█ For more, enter the term *delta* in the search box at right.

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Posted by Elizabeth Kerr

This post is offered in the public interest.

‘Low inflation’ v House price inflation

[Japan Times]

### NZ Herald Online 12:00 PM Tuesday Oct 18, 2016
Economy
No inflation? So why doesn’t it feel like it?
By Liam Dann – NZ Herald business editor at large
If yesterday’s Consumer Price Index, showing just 0.2 per cent inflation in the past year didn’t match your experience of rising prices, fear not, there is a new set of data that could offer a more realistic reflection of Kiwi household costs. The CPI for the year to September came in slightly higher than the predictions of most economists but still takes the economy dangerously close to deflation – a phenomenon where falling price expectations start to suppress economic growth. […] Meanwhile, the Household Living-costs Price Index (HLPI) gets much less attention from economists but has been designed over the past three years to reflect the fact that real world inflation varies greatly depending on your household wealth and expenditure, Matt Haigh [Statistics NZ consumer prices manager] said. It offers data for specific sub-sections of New Zealand such as beneficiaries, Maori, superannuitants, five different income groupings and five expenditure groups. In doing so it captures inequalities of price inflation which the CPI does not. So for example rent, which was up 3.4 per cent for the year in Auckland, is factored into the CPI with a weighting of 10 per cent. But, said Haigh, in reality for many renters it is likely to be more like 40 per cent of total expenditure. That weighting is more accurately reflected in the HLPI – especially in the lower income groups.
Read more

█ On November 8 Statistics New Zealand will provide its first live quarterly update for the HLPI data, with details for the year to September, and it should provide more insight for those looking at inflation from a social or political perspective. Backdated HLPI data for the year to September 2015 is already available on the Statistics NZ website.

****

Deflationary cycle web [World Cycles Institute]

For many New Zealanders the low inflation story doesn’t stack up with daily experience. That’s because one of the largest costs we face in life, house price inflation, continues to rise more than anything else.

### NZ Herald Online 6:41 AM Tuesday Oct 18, 2016
Liam Dann: Inflation now at dangerously low level
OPINION Inflation data due today is tipped to show the economy skating dangerously close to deflation. Economists’ forecasts for the September quarter Consumer Price Index have inflation falling in the past three months and now only just above zero on an annualised basis. Most economists are picking it will come in at 0.1 or 0.2 per cent for the year to September 30 – down from 0.4 per cent in the year to June 30. The fall is expected to be driven by lower transport costs as oil slumped again in the quarter while housing costs are likely to be the largest rising category. Persistently low inflation is considered one of just a few dark spots in another otherwise rosy economic picture, although it is consistent with a number of other economies right now.
Read more

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Posted by Elizabeth Kerr

This post is offered in the public interest.

NZ Economy —if you’re not Treasury

Either an interest rate hike or rising unemployment, together with falling migration, would spell “the end of the party”….
Due to the Reserve Bank putting restrictions on lending and other measures, the underlying economy was in good shape to withstand “a shock”. –Dominick Stephens, Westpac Chief Economist

### radionz.co.nz Fri, 10 June 2016
Nine to Noon with Kathryn Ryan
The risks of rising household debt
9:08 AM. NZ household debt has reached half a trillion dollars. That’s $100,000 of housing and personal debt for every man, woman and child. Nine to Noon speaks to Westpac Chief Economist, Dominick Stephens and Massey University’s Dr Jeff Stangl about the risks that poses to the economy. Link
Audio | Download: Ogg MP3 (30′19″)

****

### radionz.co.nz Sat, 11 Jun 2016 at 12:15 pm
RNZ News
Tough times coming as debt soars, warns economist
Record high household debt levels are not sustainable, warns a leading bank economist. At half a trillion dollars, housing and personal debt has hit 162 percent of the average household’s annual disposable income – higher than levels before the global financial crisis.
Westpac Chief Economist Dominick Stephens told Nine to Noon the decline in dairy prices was hurting the regions, but the downturn following the end of the Canterbury rebuild would be more severe than most people were prepared for. The rebuild played a huge role in the “rock star economy” between 2012 and 2014, with the international reinsurance industry dropping $20 billion on New Zealand and the government pumping in another $10b. As that money dried up, some business owners could find their businesses were not as robust as they thought, Mr Stephens said. What was less certain was when the “borrow and spend” dynamic – fed by skyrocketing houseprices – would come to an end.
Read more

Harry’s View 19 Jan 2016 [scmp.com]

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Posted by Elizabeth Kerr

Dunedin median house prices down

Link received Thu, 5 Feb 2015 at 9:18 a.m.
Comment: “Median property prices down in Dunedin and other centres just as Local Government New Zealand (LGNZ) are making plans to grab a bigger slice of your pie.”

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### interest.co.nz February 5, 2015 – 07:00am
Property
Want to see what movement in the NZ median house price excluding Auckland would look like? All is revealed here
By Gareth Vaughan
We all know that if you took the Auckland housing market out of New Zealand the overall housing market picture would look very different. Would the Reserve Bank have ever felt the need to introduce restrictions on banks’ low equity residential mortgage lending without Auckland? Very unlikely. And would the likes of Brian Gaynor be raising eyebrows with warnings that house prices could fall by up to 25% if it wasn’t for the Auckland market? Nope.

Just how big a driver Auckland is on national house prices is made clear in the table below.

Table: interest.co.nz

Based on Real Estate Institute of New Zealand (REINZ) data, Auckland’s median house price rose $238,000, or 54%, in the six years from December 2008 to December 2014. Over the same time period the national median price rose $121,500, or 37%. But the national median price excluding Auckland rose just $50,000, or 17.5%.

Figures for the 2014 calendar year are perhaps even more stark. The REINZ Auckland median price was up $78,000, or 13%, last year to $678,000. The national median rose $23,000, or 5.4%, to $450,000. And the New Zealand median price excluding Auckland rose just $3,500, or 1%, last year to $335,000.

So if you take Auckland out of the picture, where according to REINZ about 38% to 40% of national monthly sales are made, the national median price barely budged last year. No wonder many people outside the City of Sails get so grumpy about the Auckland housing market and the Reserve Bank’s high loan-to-value ratio restrictions.
Read more

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Related Post and Comments:
2.2.15 LGNZ run by Mad Rooster Yule, end of story

Tax Payers’ Union – Media Release
2.2.15 LGNZ Push For Local Income Taxes, Fuel Taxes and Regional GST

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Posted by Elizabeth Kerr

Unhappy, ruined #overpoweredbythugs

Received from Anonymous
Sat, 19 Jul 2014 at 10:11 a.m.

—

Posted by Elizabeth Kerr

DCC’s debt level — who do you believe?

Updated post 7.7.14

### ODT Sat, 5 July 2014 (page 34)
Opinion: Letters to the editor
Drastic action urged on DCC’s debt level
The recent Ratepayers Report on New Zealand councils’ relative financial performance makes for sobering reading for Dunedin’s 53,266 ratepayers. The Dunedin City Council’s debt per ratepayer of $15,093 is nearly the highest in New Zealand and is exceeded only by Auckland.
The DCC is amongst New Zealand’s worst-performing councils in terms of operating expenditure at $6885 per ratepayer, well ahead of the national average of $3175 per ratepayer. DCC employee expenditure per ratepayer is $1783, which is three times the national average.
It’s hard to believe Dunedin was once famous for thrift and living within its means. Mayor Cull and the new CEO Sue Bidrose must wake up and make some drastic cuts as soon as possible, given the DCC’s shocking performance compared to most other local authorities.
T. Stevens, Dunedin

[Dunedin City Council group chief financial officer Grant McKenzie replies: “The figures quoted by your correspondent are for the group position of councils and highlight the fact the Dunedin City Council has significant other assets (Aurora Energy Limited, Delta Limited, City Forest’s Limited and Taieri Gorge Railway Limited). The actual asset value for the group is in excess of $70,000 per ratepayer.
“For Dunedin, the average rates bill is $1750, which is the 13th-lowest of all the councils and reflects the benefits we receive from the wider DCC group.”]

—

I note Grant McKenzie leaves off mention of the stadium companies DVML and DVL, which are now part of DCHL, and the effect of their growing debt on the council’s overall position. And what of all misappropriation of funds and serious fraud at DCC, DVML and CST still to be revealed, you have to ask.

█ Ratepayers Report at http://www.ratepayersreport.co.nz/

Larry Mitchell’s opinion of DCC’s reply to T. Stevens would be interesting – further, it’s not like other councils don’t have their own companies or significant and strategic assets.

█ Then to blow everything out of Otago Harbour there’s DCC’s exposure to global markets through borrowing – see new comment by Rob Hamlin.

—

Related Post and Comments:
12.6.14 Fairfax Media [not ODT] initiative on Local Bodies

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Posted by Elizabeth Kerr

DCC, Dunedin City Treasury and 3 big banks [Interest Rate Swaps]

WHICH THREE BANKS, DCC ??????

Comments received.

Rob Hamlin
Submitted on 2013/12/17 at 3:02 pm

As some of you may recall I have been very interested in DCTL and its large gains and losses on interest rate swaps. The following article http://nz.finance.yahoo.com/news/comcom-issue-proceedings-against-asb-194400510.html describes today’s announcement by the Commerce Commission to investigate ANZ, ASB and Westpac for mis-selling interest rate swaps to farmers – causing massive losses to these borrowers.

My interest has been further piqued by the arrangement between DCTL and three ‘independent’ banks called a ‘secured multi-option note facility’ within which these swaps are sold to DCTL by said ‘independent’ banks. The ‘secured’ as I have mentioned previously involves an ‘on call’ capital commitment by DCC to DCTL that has been deliberately put in place to circumvent Section 62 of the Local Government Act, which specifically prohibits council guarantees to trading companies. At $850 million of capital (which the DCC does not have), this amounts to some $17,000 for every ratepayer in this city – and you are liable for it.

As I have mentioned before, the very large annual fluctuations in gains and losses reported by the DCC due to interest and currency derivative exposure indicates that the DCC, via its $850 million guarantee to DCTL, is very deep indeed into this particular festering pile of poo.

I have lodged an LGOIMA request with the DCC for the identity of the three banks who are in the ‘secured variable rate note facility’ swap fest with DCTL. However, my unofficial sources indicate that the membership may be between 67% and 100% in common with the three banks mentioned in the ‘Stuff” report on large-scale interest rate swap mis-selling – Time will tell. But might be an idea to find the hammer and your piggy bank.

****

Russell Garbutt
Submitted on 2013/12/17 at 4:13 pm

Rob, I simply cannot understand the role of the OAG in all of this. The OAG provides auditing services to the Dunedin City Council and is supposedly the watchdog that ensures things are all tickety-boo in City Hall. But as we have already seen in the Kaipara case that the OAG now says that it is terrible that all of this borrowing took place, but that THEY ARE NOT ACCOUNTABLE. Surely to goodness that they have seen the actions of the CFO of the DCC to subvent the point and purpose of Section 62 of the LGA. Equally puzzling is how they have not been warning of the ramifications of these infernal legalised Ponzi schemes as they have been described elsewhere.

I distinctly remember the sacked Athol Stephens explaining to me in his office that many of the financial dealings of the DCC were to avoid tax liabilities. Athol was both a Director of a Council Board and an employee of the Council as I recall at the time.

There is enough smell round this issue to warrant a lot of interest by the OAG and the mainstream media, but sadly it is just too plain in the case of the OAG that they really aren’t interested in pursuing anything that would show that they themselves have been slack and incompetent, nor are they interested in pursuing anything that involves them in any serious work.

In the case of the media, it’s all just too hard. TV simply isn’t capable and is more interested in turning news into entertainment, and the financial reporters in the papers can’t seem to get their heads round anything substantial.

A case of the fox inside the henhouse and another one on the outside, looking out for the farmer.

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Posted by Elizabeth Kerr

DCC putting up cover, walls paper thin [risk exposure VERY HIGH]

Don’t believe the garbage. The garbage was built by Dunedin City Council, Dunedin City Treasury Ltd, and Dunedin City Holdings Ltd. The City (again) is slapped by a wet Standard & Poor’s bus ticket.

It is not difficult to fathom that the situation with the City’s finances is far worse than at Kaipara District Council.

The Dunedin City mayor and councillors are mostly TOO STUPID to know any different than to grant applause – the Lunatics have taken over the Asylum, NOT the conservative and prudent management of the City’s finances.

Not one Lunatic City Councillor has any idea of the exact state of the City finances, of the exact type of financial instruments being used to ‘support’ +$623 MILLION of council consolidated debt, or of the exact risk exposure compounding by those instruments. The Lunatics actually believe as gospel truth Standard & Poor’s credit rating report (“stable”). Oh. My. God.

Lunatic Mayor and Councillors’ ability to apply powers of discovery, analysis and interpretation to the City’s financial instruments and the degree of risk exposure — with ultimate effect on Ratepayers and Residents — is a difference not unlike that of a nuclear scientist and a child rolling snow balls. RIP DCC. While the new apprentice CEO smiles.

Here are the white lies in writing:

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Dunedin City Council – Media Release

Improved Financial Rating Outlook for DCC
The Dunedin City Council’s consistent efforts to achieve its financial targets have been rewarded

This item was published on 09 Dec 2013.

In a Research Update released today, Standard and Poor’s (S & P) has revised the DCC’s outlook to stable, taking the organisation off a negative outlook. It confirmed an AA long-term and A-1+ short-term issuer credit ratings. Mayor of Dunedin Dave Cull says the announcement is great news.

“This is an acknowledgement of the continued hard work by elected members and staff to reduce operational spending and debt levels.”

In November 2012, S & P confirmed the DCC group credit rating at AA long term and A-1+ in the short term, but put Dunedin on a negative outlook. This was not a downgrade, but the agency made it clear the DCC needed to follow through with its tough financial targets. In its 2013 update, S & P states the outlook revision to stable reflects the DCC’s improved liquidity and budgetary performance.

“We expect these improvements to be sustained, allowing Dunedin to reduce its debt burden.”

The agency also considered the likelihood of significant adverse findings from the Auditor-General’s inquiry into Delta Utility Services Ltd (a DCC company) to be low.

“The ratings reflect our view of New Zealand’s predictable and supportive institutional framework, plus our very positive view of Dunedin’s financial management, and the council’s strong budgetary performance. The outlook revision reflects Dunedin’s improved liquidity and budgetary performance, which we expect to be sustained, allowing Dunedin to reduce its debt burden.”

The revised outlook was announced at today’s full Council meeting, where a vote of thanks to staff was recorded, amid applause. S & P is expected to release its full report in about a week.

Contact Mayor of Dunedin on 477 4000.

DCC Link

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Via ODT (and DCC Spooks):

DCC’s credit rating up
Dunedin city councillors burst into applause as it was confirmed yesterday international credit agency Standard and Poor’s had lifted its negative outlook for the Dunedin City Council. The news – delivered part-way through yesterday’s full council meeting – also left Mayor Dave Cull claiming vindication despite his critics.
http://www.odt.co.nz/news/dunedin/284751/dccs-credit-rating

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Related Post and (fresh) Comments:
3.12.13 LGNZ: OAG report on Kaipara

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Posted by Elizabeth Kerr

Reykjavik, Iceland: The strongest mirror [speculative apartments]

I missed it – the Otago Polytechnic press release of Thursday 21 March.

Icelandic Activist To Speak At Dunedin School Of Art
Iceland democracy activist and artist Hordur Torfason will be speaking at Otago Polytechnic’s Dunedin School of Art on Wednesday the 27th of March, as part of a series of nationwide talks on modern democracy. cont.

By chance, at morning coffee a friend mentioned the speaking event and offered a ride there. Well. Not one speaker, but two —good fortune doubled. All Dunedin residents should have downed tools, pots and pans to attend.

The two men from Iceland, Hordur Torfason and life partner Massimo Santanicchia, each delivered a session, with Santanicchia up first. They shared intriguing, calm, sensible statements about their lives and work, about the quality and countenance of human social interaction, within a gripping exposé of the capitalist drain and the peaceful revolution that occurred in their financially devastated homeland — with thoughts to urbanism, greed, discrimination, corruption, property speculation, sick governance, economic collapse, human rights, the lobby power of silence, noise and internet, and the Icelandic people’s hard-won solidarity for change.

A compelling two-hour glimpse at a nation losing and finding itself.

Iceland’s capital city, Reykjavik, is the strongest of mirrors held to Dunedin’s glaring errors of recent and pending ‘big’ construction, economic blunders, and forces of business and political corruption – in turn, Dunedin reflects our nation’s wider political and economic struggles.

[Dunedin, we’re not crippled yet… but New Zealand? Blind rhetoric.]

Proposed hotel and apartment building, Dunedin (ODT Online, 21 Dec 2012)

Derelict Reykjavik highrises

While on our photowalk today we passed these buildings on the sea front. I thought they were just another apartment building until I noticed that the balconies were fenced in by planks of wood held together loosely!
Donncha O Caoimh (9 March 2012)

—

Originally from Perugia, Italy, Massimo Santannichia graduated from the School of Architecture in Venice in 2000 and holds an MA from the Architectural Association, School of Architecture in London, and an MSc in Urban Studies from the London School of Economics. He has been working as an architect and urban designer in Italy, the UK and Iceland. Over the last decade he has come to know Reykjavik intimately. Essentially an outsider in the tightly knit Icelandic society he has survived the downturn by moving from the firm Arkitektur to a plethora of internationally connected activity – delivering courses at the Iceland Academy of Arts since 2004 and coordinating projects and workshops with organisations such as the International Peace and Cooperation Centre and the Architectural Association.

Santanicchia’s research interests include relations between the ecological, physical, social and economical aspects of cities. He has lectured extensively on the subject of sustainable cities and small scale urbanism in Zurich, Athens, Oslo, London, Venice, Riga and Reykjavik.

Santanicchia, second from right (AA Summer School promo for July 2013)

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The Production of Space: The lesson from Reykjavik

According to Santanicchia, small cities (less than 500,000 inhabitants) host fifty-two per cent of the world’s urban population, yet they are profoundly neglected in the urban studies field. His presentation at the School of Art focused on the small city of Reykjavik (118,326 inhabitants), investigating how the planning system is trying to build a new urban strategy away from the world city model which was adopted until the banking collapse of 2008.

Reykjavik, Iceland – vernacular housing (trekearth.com)

Commodifying the view…
In particular, Santanicchia noted Reykjavik’s receipt of its first ‘tall buildings’, a crop of extraordinarily bleak apartment developments set against the vernacular lowrise, 3-4 storeyed townscape, blocking existing residential views of the coastline – through to (now dead) speculative drive-to malls and commercial buildings [‘build it and they will come’] further problematised by the profound lack of public transport and infrastructural support to the (then) ‘new phase’ of development.

Throughout the commentary, the physical and moral contradictions were purposefully illustrated by well-selected slides, quotations, and use of statistics. Santanicchia’s creative and socio-political approach to what ails, and demonstrations of how to foster community investment in sustainable environment, is the busy-work of a contemporary intellectual with a warm humanity, grounded in the discipline of practical economics working for the public good.

He and students have won grants to set ‘in place’ temporal urban interventions that sample ways forward for the local community, utilising vacant and degraded public places; demonstrating creative re-design / re-forming of the opportunities lost to the blanket of capitalist-grey asphalt – making places that create “trust” between institutions and among people.

Reykjavik’s dislocated waterfront (‘reconnection’ project work)
[This work is very similar to that of Gapfiller in post-quake Christchurch.]

Copy of Santanicchia’s presentation slides and readings will be made available through Professor Leonie Schmidt (Head, Dunedin School of Art).

A few points he made along the way, from my notes:

● When “priority is given to economic development” …. the city becomes all about ‘building envelope’, ‘the city as a series of volumes’ (bulk and location) | “Management of the economy is not a city, is not urban planning.”

● In 2008, Iceland’s economy shrank 90%. The economy devalued by more than 100% in one week. 1000 people emigrated which kept unemployment low.

● “Big-fix” solutions don’t work in a small city.

● The DANGER of “one idea” …. “it is NOT a plurality”.

● “The WORST is what was built.” Flats and parking lots. No public transport. No sharing. 7000 apartments at Reykjavik are redundant. 2200 properties have been acquired by the banks.

● “The WORST neighbourhoods were created in the richest years.”

● The government didn’t protect the weakest. “The architecture failed because it placed itself at the service of political and economic interests with very little regard for social interests.”

● (Jane Jacobs, 1984): “The economic model doesn’t provide niches for people’s differing skills, interests and imaginations, it is not efficient.”

● (Aldo Rossi): “Building a city is a collective effort.” [empower the people]

● Post-crash, Iceland’s birthrate has increased and children are happier.

● “Trust is about participation.” Better institutions, social justice, equity and public/private relationships.

● Zurich: They used 4 hot air balloons to indicate the height and bulk of a proposed tower development, prior to public submissions being received on the proposal.

[In evidence, at Dunedin, applicant Betterways Advisory said it couldn’t afford to provide a height indicator at 41 Wharf St – all the cranes were in Christchurch (wrong), and where do you get balloons from anyway, it asked…. Mr Rodgers (Betterways), we know, took his mother-in-law ballooning in Germany recently. Perhaps he could’ve made a stopover in the Mackenzie Country on his way home.]

### architecturenow.co.nz 25 Mar 2013
Massimo Santanicchia visits New Zealand
By Stephen Olsen
Auckland’s Wynyard Quarter has won high praise from Reykjavik-based architect Massimo Santanicchia for the “observable scaffolding” it is providing for an area in transition.
Santannichia knows a thing or two about making waterfront spaces more accessible from sparking a design revival at the harbour’s edge of the world’s northernmost capital last year, within the context of an award-winning programme known as the Meanwhile projects.
Santanicchia has also been drawing audiences to hear his views on the ways in which Iceland’s largest city is embracing a more human scale of urbanism in the wake of the financial crash.
Read more

—

Hordur Torfason followed with a punchy impassioned delivery, spoken with a run of crowd scenes and peaceful protest images repeating behind him. Describing post-crash Reykjavik as a scene of ferment and healing, Torfason took us through specific mechanisms for the peaceful revolution that has worldwide and local application – hear that, Dunedin.

Shortly, Torfason will head to workshops in Cypress. The following interview (2011) covers the gist of his lecture.

A multi-talented individual, he told his story from the age of 21 (1966), of how he grew the personal confidence and expertise (“proving talent”) to lead the people of a city and a nation to overturn the Icelandic Government and jail the bankers. He said Parliament has almost lost ‘all respect amongst all Icelanders’. Nevertheless, there’s a bill in passage to make Iceland a Safe Haven for journalists, whistleblowers, international media – protected by law.

● He maintains the role of the artist is to criticise, that criticism is a form of love: “We have to use reason, cultural roots, feelings and the precious gifts of life – our creativity”, to ensure human rights aren’t undermined by economic growth and politics.

● “It’s about learning every week, every day, new sides of corruption,” he said. “Inequality is a tool for extortion, a way to maintain The System.”

● Inequality won’t be removed by conventional systems: “If you want to move a graveyard, don’t expect the inhabitants to help you.”

● “The internet has to be protected to dislodge the monster.”

● “One big party owns one big newspaper for Iceland.” According to that paper there was no crash.

● The key word is AWARENESS. The silence of government was upsetting to the people; it meant the people used silence as a mirror to the government and politicians, to protest their rights. The cohesiveness and cleverness of the protest, the silent revolution, achieved 100% success. “They the media won’t tell you [the rest of the world] about it.”

● “Stick together and use the internet.” Make Plan A, B, C, D, E. Protest by peaceful revolution v Arrogance.

● Just 25 people from around the world are responsible for the crash, and one of them was the leader of Iceland’s national bank.

Hordur Torfason by Juan Carlos Monedero (June 2011)

### grapevine.is August 4, 2011
You Cannot Put Rules On Love
An Interview With Hordur Torfason by Paul Fontaine

“I tell people, ‘I’m not demonstrating. I’m fighting for a better life.’ I think aloud, ask questions, seek answers. I knew there was corruption in this country. But I never thought in my wildest dreams that the banks would crash. We have been told lie after lie after lie, and people just accept them. They say ‘þetta reddast’ [‘it’ll all work out’], until it affects them personally, and then they come screaming.”

The 2008 economic collapse of Iceland would send Hordur’s life path in a whole new direction—one that would take him beyond the bounds of even his own country.
Read more

—

Posted by Elizabeth Kerr

Commissar Obamanation

Maurice Prendergast says:

I would like to share this very ‘solemn summary’ of the modus operandi of a charlatan and the curiously common characteristics to those exhibited by Farry and his fellow travellers.
This reminds me of the sales pitch used to hypnotise the people into believing that a ratepayer funded stadium would deliver salvation to the all. There are some real parallels – Barack Obama and Malcolm Farry seem to sing from the same song sheet.

—

Email received.

Subject: This belongs in the EMAIL HALL OF FAME
Date: Wed, 24 Oct 2012 23:56:44 -0400

How’s this for apocalyptic literature. This was written by a pastor’s wife in biblical prose as a commentary of current events. It is brilliant.

*****

And it came to pass in the Age of Insanity that the people of the land Called America, Having lost their morals, their initiative, and their Will to defend their liberties,
Chose as their Supreme Leader that Person known as “The One.”

He emerged from the vapours with a message that had no meaning;
But He Hypnotised the people telling them, “I am sent to save you.”
My lack of experience, my questionable ethics, my monstrous ego,
And my Association with evil doers are of no consequence.
I shall save you with hope and Change.
Go, therefore, and proclaim throughout the Land that he who preceded me
Is evil, that he has defiled the nation, and that all he has built must be destroyed.
And the people rejoiced, For even though they knew not what “The One” would do, he had promised that it was good; and they believed.
And “The One” said “We live in The greatest country in the world.
Help me change everything about it!”
And the people said, “Hallelujah! Change is good!”
Then He said, “We are going to tax the rich fat-cats.”
And the People said “Sock it to them!”
“And redistribute their wealth.”
And the people said, “Show us the money!”
And then he said, “Redistribution of wealth is good for everybody..”

And Joe the plumber asked, “Are you kidding me?
You’re going to Steal my money and give it to the deadbeats??”
And “The One” Ridiculed and taunted him, and Joe’s personal
Records were hacked and publicised.
One lone reporter asked, “Isn’t that Marxist policy?”
And she was banished from the kingdom.

Then a citizen asked, “With no foreign relations experience and having
Zero military experience or knowledge, how will you deal with Radical terrorists?”
And “The One” said, “Simple. I shall sit with them and talk with them and show them
How nice we really are; and they will forget that they ever wanted to kill us all!”
And the people said, “Hallelujah!! We are safe at last, and we can beat our weapons
Into free cars for the people!”

Then “The One” said “I shall give 95% of you lower taxes.”
And one, Lone voice said, “But 40% of us don’t pay ANY taxes.
“So “The One” Said, “Then I shall give you some of the taxes the fat-cats pay!”
And the people said, “Hallelujah! Show us the money!”
Then “The One” said, “I shall tax your Capital Gains when you sell your homes!”
And the people yawned and the slumping housing market collapsed.
And He said. “I shall mandate employer-funded health care for every worker
And raise the minimum wage. And I shall give every Person unlimited healthcare
And medicine and transportation to the Clinics.”
(And no Muslim shall pay for their share of healthcare.)
And the people said, “Give me some of that!”
Then he said, “I shall penalise employers who ship jobs overseas.”
And the people said, “Where’s my rebate cheque?”

Then “The One” said, “I shall bankrupt the coal industry and
Electricity rates will skyrocket!”
And the people said, “Coal is Dirty, coal is evil, no more coal!
But we don’t care for that part about higher electric rates.”
So “The One” said, Not to worry. If Your rebate isn’t enough to cover
your expenses, we shall bail you out.
Just sign up with the ACORN and your troubles are over!”
Then He said, “Illegal immigrants feel scorned and slighted.
Let’s Grant them amnesty, Social Security, free education, free lunches,
Free medical care, bilingual signs and guaranteed housing…”
And The people said, “Hallelujah!” and they made him king!

And so it came to pass that employers, facing spiraling costs and Ever-higher taxes,
raised their prices and laid off workers. Others Simply gave up and went out of business and the economy sank like unto a rock dropped from a cliff.
The banking industry was destroyed. Manufacturing slowed to a Crawl.
And more of the people were without a means of support.

Then “The One” said, “I am the “the One”- The Messiah – and I’m here To save you!
We shall just print more money so everyone will have enough!”
But our foreign trading partners said unto Him. “Wait a Minute. Your dollar is not worth a pile of camel dung! You will have to pay more…
And “The One” said, “Wait a minute. That is unfair!!”
And the world said, “Neither are these other idiotic programs you have embraced.
Lo, you have become a Socialist state and a second-rate power.
Now you shall play by our rules!”

And the people cried out, “Alas, alas!! What have we done?”
But yea, verily, it was too late.
The people set upon The One and spat upon him and stoned him,
and his name was dung. And the once mighty nation was no more;
and the once proud people were without sustenance or shelter or hope.
And the Change “The One” had given them was as like unto a poison
that had destroyed them and like a whirlwind that consumed all that they had built.

And the people beat their chests in despair and cried out in anguish,
“Give us back our nation and our pride and our hope!!”
But it was too late, and their homeland was no more.

—

Posted by Elizabeth Kerr

The End of The Golden Weather?

Received from Calvin Oaten

Are we coming to the end of the ‘Golden Weather’? I say this, not in the meteorological sense, but rather in the sense that perhaps our society and its economic construct might be on the verge of a catastrophic change. Why? Well it seems that many signposts are pointing to an approaching collapse of the present model of the economy as constructed. This requires constant growth in order to sustain an ever increasing social budget. That in turn requires full or near full employment, a buoyant consumer market and a consequent ever increasing supply of energy and raw materials. None of these are finite, neither in New Zealand nor the Planet. The current model has, in order to foster this growth, taken upon itself to ‘jazz up’ consumption by cultivating a culture of instant gratification, fueled by intensive marketing, planned obsolescence, and last but not least, very easy credit.

This easy credit has been promoted heavily by governments, local bodies, banks, retailers and all manner of financial institutions. This has brought about a dynamic shift in society’s attitude to debt. It has encouraged folk to spend beyond their immediate ability, to the point where their indebtedness is assuming dangerous proportions. This is manifested by ‘economic bubbles’ forming, none more so than our own housing market. The people in the industry, real estate companies, banks, financial institutions all rev up the market by convincing people that property is a great investment which will always hold its value. But we only have to look at Ireland, the UK, the USA, and lately Australia to see the lie of this claim. Property can always go down just as it can go up. Take a look at Japan. Its property bubble burst in 1989 and has never recovered. Off by as much as 70-80%.

The result of all this is a hugely indebted developed world, including NZ. What caused this to happen? It seems to date back to around 1971, when then President Nixon was experiencing difficulty in financing the Vietnam war. At that time printing of money was constricted with the dollar being pegged to what is known as the gold standard. This meant that the amount of currency in circulation was limited by how much gold was held by the federal government. By leaving the gold standard the federal treasury was free to set its own parameters and to print accordingly. That resulted in a vast increase in all paper currencies around the world with a burst of inflation throughout the 1970s and 1980s.

Historically, all monies eventually revert to the mean, and this has always been to a standard unit of value, GOLD. Throughout history, even before Roman times this has always prevailed. Trust in paper currencies sooner or later fail and there is a collapse.

We’ve seen it in modern times with Germany (in the 1920-30s), Argentina (several times), Greece, and very recently Iceland. The USA federal government has just breached its self-imposed debt ceiling of $16 trillion. If anyone wonders what $1 trillion represents, look at it as a time equivalent. Let’s say one was to repay $1 trillion at the rate of $1 per second. Working 24/7, 360 days per year it would take “32,000 YEARS”. So multiply that by 16 and it is easy to see that this debt will never be repaid. Worse, it is growing as we speak.

Those with the power are unbalancing the fairness factor.

This reckless attitude has permeated into the human psyche and we see evidence of it here in little old Dunedin. Our society has degenerated into a selfish me world. Those with the power are unbalancing the fairness factor.

Take remuneration for example, fewer and fewer people are taking a greater share of the economic cake, and are quite blatant about it. Wealth is flaunted while many are moving into poverty. Financial rewards are all out of line with production balance.

It is noticeable that many of the highest remunerated are drawing their rewards from the public’s purse, without so much as a blush. Here in Dunedin we have a local MP tabling a bill in Parliament seeking a minimum wage of $15 per hour. This, on a 40-hour week equates to $600 per week. It would be up from $13.50 per hour or $540 per week. This is being vigorously opposed by many. But on the other hand we see public servants and others receiving enormously higher rewards. We have seen several instances in the last few weeks.

The retiring CEO of the Otago Museum with a salary of $310,00 per annum (pa) or $5,961 per week (pw). The DVML CEO receives $250,000 pa or $4,807 pw. The council owned company Delta, where the CEO is paid $380,000 to $390,000 pa or $7,500 pw. 41 additional staff paid over $100,000 pa or $1923 pw. Our own DCC CEO is rewarded with between $340,000 and $360,000 pa or $6,730 pw. The Vice-chancellor of our University of Otago receiving over $500,000 pa or $10,000 pw. Our DCHL group of companies last year paid its 7 directors $725,444 for what would optimistically involve about four weeks equivalent work each. This is repeated up and down the country and if anyone thinks this is sustainable they have to be in “cloud cuckoo land”.

On our local public scene we have seen the city’s debt burgeon from $212.486 million as at 30 June 2005 to $602.008 million at 31 December 2011. We now know that this has considerably changed for the worse, since. The stadium is a financial disaster, in serious damage control, the Otago Settlers Museum is over $40 million, the Town Hall/Conference Centre is over $50 million, and we are looking at somewhere near $100 million for the Tahuna upgrade. No-one in office seems to either understand, or simply passes it off as someone else’s problem.

We elect these people to conserve and look after our treasure, and what happens? It just goes from bad to worse, with all manner of rascals leaching off us in different ways. If only someone in office had the intestinal fortitude to stand up and say, “enough, this has got to stop”. But sadly, it gets back to that culture I mentioned. “I’m OK Jack”, never mind anyone else.

Is all this sustainable? Ask yourself. We don’t know when the situation will break, but it is certain that it will. The whole developed world is awash with debt and frantically creating more by the day, in a desperate move to save the situation. But it is pretty simple, how can more debt solve a chronic debt malady? It is pretty much synonymous with supplying a chronic alcoholic with more whisky. We are in for very interesting times.

—

Posted by Elizabeth Kerr