Why Colm McCarthy is wrong on zoning

One of the great innovations of the past few years has been the increasing availability of spatial data. User-friendly and freely accessible online interactive tools such as Myplan and AIRO provide easy access to a wide-range of mapped datasets and other resources to help inform policymaking, research and those commenting on matters of public interest. However, despite this, the problem of what Carol Weiss refers to as the ‘problem of little effect’ remains i.e. that a great deal of this evidence tends to sit on the shelf (or on the web) completely unnoticed and has, in fact, very limited impact on policy debates.

This is certainly true of Colm McCarthy’s most recent commentary on housing supply in Dublin. McCarthy’s long-standing thesis has been that the planning system (zoning) caused an artificial scarcity in the supply of development land for housing in and around Dublin throughout the Celtic Tiger, inflating a massive property bubble and simultaneously scattering new residential development to the four winds and far-flung corners of the Midlands and beyond. He further maintains that it is these same restrictive practices, with local authority planners and politicians unwilling to confront vested interests and local communities to zone more land, which is the root cause of the current lack of housing supply in Dublin. Instead, McCarthy argues, that the power to zone underutilised land should be removed from local authorities and centralised. (On this last point, he overlooks that zoning powers were de facto centralised with the introduction of the 2010 Planning Act.)

While this simple supply/demand thesis may, at first glance, appear convincing, it is undermined by one basic flaw. Throughout the Celtic Tiger period there was in fact an enormous surfeit of zoned residential land within Dublin and its environs. An audit carried out by the DoECLG in 2010 found that a total of 3,302 hectares of undeveloped residential zoned land existed within the four Dublin local authorities. Even with conservative residential densities of 35 units per hectare, this was sufficient for at least 115,000 new homes. Within the adjoining Greater Dublin Area (GDA) counties of Kildare, Meath and Wicklow there was a further 4,120 hectares. Most, if not all, of this land was initially zoned in the late 1990s and early 2000s and remained undeveloped throughout the Celtic Tiger period. For example, the 220 hectare Adamstown site in South Dublin was originally zoned in 2001 and was intended to provide 9,950 homes via a ‘fast-track’ planning scheme approved in 2003. Similarly, large greenfield tracts of land at Carrickmines, Clongriffin, Pelletstown, Phoenix Park Racecourse and Hansfield were all zoned well over a decade ago and remain undeveloped or only partially complete. The figures above are exclusive of the abundant supply of brownfield development land, infill sites and mixed-use zonings readily available throughout Dublin and which could potentially have provided for tens of thousands of additional new homes.

It is evident, therefore, that a deficiency in the availability of zoned land was not the cause of the extreme property price inflation in Dublin throughout the Celtic Tiger. Nor is it the cause of new housing undersupply today. The most recent 2014 residential land availability survey by the DoECLG shows that there are currently 2,654 hectares of ‘Stage 2’ zoned land available in Dublin i.e. lands which have been prioritised as potentially available for immediate development, much of it already benefiting from significant public investment in capital infrastructure and services. This is reported to be sufficient to provide approximately 117,000 new dwellings at modest densities i.e. an increase in the total number of dwellings in Dublin by one-quarter. In addition to being zoned and serviced, many of these sites currently also have extant planning permissions. In the remainder of the GDA there is enough land zoned for a further 95,000 dwellings, while zoned residential land nationally could currently accommodate approximately 415,000 units (The DoECLG have even gone to the trouble of mapping the precise location of each of these zoned land parcels). Despite the vast array of evidence to the contrary, it is therefore remarkable how the notion persists, particularly amongst leading economists, that an obstructive planning system is hindering the operation of the housing market and was, and remains, a chief cause of the undersupply of new dwellings to meet demand. For example, earlier this week in his evidence to the Banking Inquiry the former chief economist of the Central Bank, Tom O’Connell, submitted that: “the demand mania for property took off against the background of restrictive zoning which limited the supply of housing, the inevitable result was huge property price inflation”.

The extent of zoned land currently available in the Dublin metropolitan area for new housing

What this analysis also plainly overlooks is that the simple act of zoning land (colouring in a map) does not ipso facto result in an increased housing supply. Urban development is a complex and heavily capital intensive enterprise on both the supply-side (buildings, roads, sewers, schools etc) and on the demand-side (mortgages) and requires a functioning credit system, state intervention through public planning and a means to bring zoned land into production (i.e. to prevent speculative hoarding). While it may seem counter-intuitive to economists , it was in fact a massive oversupply of zoned land (Ireland had c.44,000 hectares of undeveloped zoned residential land at the end of the Celtic Tiger) that caused the rapid price inflation and poor spatial outcomes of the property bubble. Within Dublin, planning typically operated with a certain modicum of probity (albeit not without serious deficiencies), requiring that development on zoned land took place somewhat in tandem with physical and social infrastructure delivery. Outside Dublin local authorities generally had no such compunction, zoning land and permitting massive developments willy-nilly, including regularly on land with no zoning whatsoever. Facilitated by the shiny new radial motorway network and cheap credit, developers simply leapfrogged the suburbs and extensive hinterlands were turned into fields of gold leaving a disastrous economic, social, environmental and spatial legacy. Amongst the Dublin developer cartel, there were few complaints at the slow pace of real development as paper asset prices continued to soar. Ironically, had restrictive zoning measures actually been put in place and enforced in accordance with the National Spatial Strategy, it would have precipitated the early confrontation of the supply/demand/location problem – and history would have perhaps taken a different trajectory. Such problems  were of course foreseen by the Kenny Report as far back as 1974.

Strategic rail focussed housing land-banks available in Dublin  

The solutions to today’s housing supply issues are not to be found in simplistic calls for more zoning.  One of the curious outcomes of the relatively slower pace of development in Dublin during the Celtic Tiger is that we now have more than sufficient suitably zoned and serviced land available to meet current demand. The National Transport Authority, for example, has identified strategic locations where thousands of new homes could be sustainably delivered focussed along rail and light-rail corridors. In a number of cases rail stations have already been constructed in anticipation of future development. What is needed is a means of prioritisation and to bring this land into production. Earlier this year, the Department of Finance launched a public consultation on precisely this question. The current Housing and Urban Regeneration Bill 2015 proposes the introduction of a vacant site levy to disincentivise the underutilisation of brownfield land. What is now also urgently required is the introduction of a similar Site Value Tax (SVT) as a recurring annual charge on all undeveloped zoned land as recommended by the Commission of Taxation in 2009 and by the ‘Thornhill Report’ in 2012. The numerous compelling arguments commending the merits of a progressive SVT have been well rehearsed elsewhere and McCarthy, of-course, will be well familiar with same, having previously written the preface for a notable book on the subject. We need smart future-orientated solutions to make best-use of available resources to solve Dublin’s housing supply issues and not a return to failed past thinking and the exclusively supply-side logic of the Celtic Tiger.

Gavin Daly

gavin.daly@nuim.ie

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Placing neoliberalism: the rise and fall of Ireland’s Celtic Tiger

New paper by NIRSA folk at NUI Maynooth/QUB.

Placing neoliberalism: the rise and fall of Ireland’s Celtic Tiger, by Rob Kitchin, Cian O’Callaghan, Mark Boyle, Justin Gleeson and Karen Keaveney

Abstract.In this paper we provide an account of the property-led boom and bust which has brought Ireland to the point of bankruptcy. Our account details the pivotal role which neoliberal policy played in guiding the course of the country’s recent history, but also heightens awareness of the how the Irish case might, in turn, instruct and illuminate mappings and explanations of neoliberalism’s concrete histories and geographies. To this end, we begin by scrutinising the terms and conditions under which the Irish state might usefully be regarded as neoliberal. Attention is then given to uncovering the causes of the Irish property bubble, the housing oversupply it created, and the proposed solution to this oversupply. In the conclusion we draw attention to the contributions which our case study might make to the wider literature of critical human geographies of neoliberalism, forwarding three concepts which emerge from the Irish story which may have wider resonance, and might constitute a useful fleshing out of theoretical framings of concrete and particular neoliberalisms: path amplification, neoliberalism’s topologies and topographies, and accumulation by repossession.

Published in Environment and Planning A 44(6): 1302 – 1326

PDF: EPA Placing Neoliberalism 2012

 

It’s time to examine the Irish economic model not simply the economy

We are now long past the point at which the analysis of the present crisis in Ireland has to switch from focusing purely on the economy and the banking and property sectors to focus on the underlying Irish economic model.

To date, what has emerged in Ireland is analysis that tells a relatively straightforward story which runs thus.  Ireland’s economic peril is part of a global economic downturn caused by the creation of a sub-prime mortgage crisis in the US that triggered an international credit crunch leading to an international banking crisis.  This crisis has been exacerbated in Ireland by a switch from an export-led economy to a property-led economy in the early 2000s, with the banks competing to over-lend to developers as land and property prices spiralled ever upwards, with the government and financial regulators doing little to intervene in poor banking practices.  As the property bubble burst, the over-exposure of the banks became apparent and the resulting crisis led to a contraction in the wider economy with the drying up credit, markets and tax, leading to a huge hole in the public purse, rising unemployment, collapsing house prices, and so on.  In other words, the story is one of, on the one hand, an unfortunate trigger that was beyond Ireland’s control (the global crisis), and on the other, poor economic management.

 

Can an entrepreneurial growth agenda be sustained after the crash?

During the period of the Celtic Tiger, Ireland experienced an unprecedented level of growth and prosperity.  One of the most significant outcomes of this boom was the transformation of the built environment.  Housing estates sprouted up like weeds throughout the countryside, while cities and towns were increasingly characterised by the spectacle of speculation and spectacular transformations in the property sector.  The advocating of the creation of regional ‘Gateways’ and ‘hubs’ in the National Spatial Strategy (NSS) was central in driving a re-emphasis of Irish spatial policies on urban areas, with the major force being towards the development of a number of strong clusters of cities and towns to counterbalance the economic dominance of Dublin.  Within this system the imperative was on local authorities to produce development strategies that linked up with the ideals of the NSS, in order to draw down funding earmarked through the specifically formulated Gateway Initiative Fund.  Local authorities were therefore encouraged to plan in an ‘entrepreneurial’ manner; producing strategies that sought to guide development and investment, instead of planning acting as a controller and regulator of development.  Thus Irish towns and cities produced a series of plans that were concerned with growing their urban areas through investment in business, retail and residential spaces.  New developments of apartments, office blocks and shopping centres became a barometer of success indicating the growth in importance of different towns and cities.

In the larger cities, this often took the form of large-scale strategies to transform significant parcels of land.  Dublin was the first Irish city to play around with urban strategies of this ilk.  Docklands regeneration and the transformation of Temple Bar into a cultural or ‘creative’ quarter provided the basis of much of the new growth and investment in the city during the 1990s.  At the beginning of the 2000s similar strategies were launched in places like Cork and Limerick.  Like the plans for Dublin, those for Cork and Limerick were heavily dependent on private development sector investment, while still being reliant on central government to finance the upgrading of infrastructure that such projects required.  This is indicative of a general trend globally towards viewing cities as drivers of economic growth and as sites which compete with each other for investment.  Many critics have suggested the highly unequal geographies that such entrepreneurial urban policies create – both in terms of winner and loser cities, and winner and loser areas within cities.  Ireland has similarly been affected by these trends.  During Dublin’s property and investment boom existing working class populations were increasingly marginalised by new developments geared towards an influx of upwardly mobile middle class workers in the city’s emerging financial and knowledge industries.  More generally, the state’s support of the property industry pushed up average house prices to unsustainable and indefensible levels, which the now plummeting prices in this sector is testament to.

Following on from the recent recession, the assumptions that underpinned this model of urban and economic development have been fundamentally challenged.  Post Celtic Tiger Ireland is increasingly haunted by the spectre of an over-inflated property sector that fuelled the excesses of the boom.  The primacy of property development and speculation to the apparatus of the Irish economy, combined with irresponsible lending practices by banks and poor policy regulation in both sectors, has left a banking system bereft of credit, choking with ‘toxic’ debt, and a landscape charred with these aborted plans and failed spaces.  Within a context where capital funding has been removed and developer and investor confidence has plummeted, as banks balk under ‘toxic debt’ and flagrant corruption and the National Asset Management Agency has been established to resuscitate the bloated property industry, an urban ‘growth agenda’ no longer seems tenable.  Nevertheless, this rationale continues in the wake of recession.  Political and popular discussion is still concerned with getting the economy ‘performing’ again as opposed to dealing with social problems created by both the recession and the growing inequality of the boom that preceded it  Late bloomers like Limerick and Cork are now characterised by a silent echo where the spectacular growth plans used to resound, as mega-developments along the waterfront fully poised to proceed a year and a half ago are now conspicuous though the absence of any media fanfare surrounding them.  The entrepreneurial urban growth model was based on just that: the continuation of urban growth.  As the current moment suggests this was an unsustainable demand.  So far the state’s response to the crisis, in terms of recapitalising the banks and the establishment of NAMA has been an attempt to resuscitate this same system in its old form.  As we are now all feeling the sting of the over reliance on these type of policies, we should be questioning do we want a return to this boom-bust cycle, bearing in mind that the next recession will be just around the corner.  If not, then what are our alternatives for our cities and towns?  What priorities do we have and what development agendas do we now need to be pursuing?  The spatial impacts of the economic crisis warrants consideration, lest we fall into the trap of seeing the economy as ‘up in the air’ as opposed to written on the ground.

Cian O’Callaghan