tag:blogger.com,1999:blog-2830084253401570472.post8094758722144589588..comments2024-03-28T09:22:36.967+13:00Comments on Offsetting Behaviour: How do you mitigate a problem like a NIMBY?Eric Cramptonhttp://www.blogger.com/profile/15831696523324469713noreply@blogger.comBlogger21125tag:blogger.com,1999:blog-2830084253401570472.post-9308072715541377242014-09-01T17:55:37.715+12:002014-09-01T17:55:37.715+12:00Actually I'm not sure on second thought whethe...Actually I'm not sure on second thought whether it makes sense for relief to transfer. It cannot transfer to other councils, presumably, (if not for technical constraints, then just straight political constraints of side payments to other rate payers) which in some cases is going to become pretty arbitrary e.g. Tauranga/Eastern Bay of Plenty. Seems to me simpler all round if relief is tied to a property. Sellers will be sure to let potential purchasers know.bennoreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-83427401182474508052014-09-01T17:38:30.210+12:002014-09-01T17:38:30.210+12:00Can't fault the principles you're putting ...Can't fault the principles you're putting forward, but it seems to me a different issue, and one that councils may not be able to solve, since price distortions will themselves be the product of NIMBYism and possibly effectively insurmountable for councils that appear vulnerable to pressure from upset homeowners. Getting the pricing right is consistent with this proposal.bennoreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-51598381218214290032014-09-01T11:27:20.347+12:002014-09-01T11:27:20.347+12:00My point is that there are financial costs (for sp...My point is that there are financial costs (for specific services) which have real cost impacts both up front and on an ongoing basis, and then there are also the shadow priced disamenities (light, noise, crowds, and whatever else), and you don't want to go financing transfer payments for non cashflow disamenities by mucking up the financial payments system. The tariff systems in those financial costs drive behaviour too, and those tariff systems should be designed to drive economically efficient decisions. <br /><br /><br />The other point is that getting the financial costs right may well drive down the NIMBY behaviour anyway. If I as a new developer am paying the financial impacts of (say) the increased traffic on my neighbours and the incremental costs for new traffic infrastructure, perhaps I'm less inclined to build there, and will build somewhere else with less traffic problems to begin with.Ryan Reynoldsnoreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-46121321716087845112014-08-31T16:08:31.986+12:002014-08-31T16:08:31.986+12:00In that case ignore my comments about payments cap...In that case ignore my comments about payments capitalising. They won't under this process (which is fine).bennoreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-60704755017905508512014-08-31T16:07:25.001+12:002014-08-31T16:07:25.001+12:005) But it seems that tax is being used for the...<i>5) But it seems that tax is being used for the wrong purpose. Tax is<br /> to fund the city operations, not as a means to allow developers and <br />NIMBYs to agree to a development.<br />6) If $X is appropriate to get <br />NIMBYs to agree to a development, then they should be paid that directly<br /> by the developer, and all taxes should be unaffected</i><br /><br />We can argue what the purpose of tax is and who should pay, but here's how levying developers to buy out neighbours in brownfields will play out: brownfields development will either stop if this is made a requirement, or if developers can choose not to pay, they won't. These outcomes are partly because of liquidity constraints, but mainly because the final product has to compete against existing housing, and against new housing built in greenfields. If developers pay, either nothing changes from status quo, or housing supply is made worse.<br /><br />The rating base is increased by this system over time, albeit with a lag. <br /><br />Local taxes can be justified as funding mechanism for at least two reasons. First, it is solving an externality problem, and externalities are the preserve of government: NIMBYs create inelastic housing supply, that spills over at a national level in volatile house prices, and greater demands on central govt for relief. Second, it is giving effect to a local govt policy of densification, and therefore an appropriate use of public funding.<br /><br /><br /><br />Don't get lost on the detail. This mechanism will be imperfect and cannot be made to price everything. I don't think that's the goal. It is an improvement if it buys a more liberal political equilibrium. We already have overs and unders (mostly unders).bennoreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-7113651279828114862014-08-31T01:32:58.181+12:002014-08-31T01:32:58.181+12:00A few thoughts: -
1) I doubt the assumption t...A few thoughts: -<br /><br />1) I doubt the assumption that the city contains too many households per dwelling, and that the reason they don’t move is the lack of dwellings.<br />2) More likely that new households will be formed by people not currently in the city<br />3) This implies population increase and additional costs for council, so total tax needs to increase<br />4) If tax doesn’t need to increase then there is some logic to payments etc. in an SRA.<br />5) But it seems that tax is being used for the wrong purpose. Tax is to fund the city operations, not as a means to allow developers and NIMBYs to agree to a development.<br />6) If $X is appropriate to get NIMBYs to agree to a development, then they should be paid that directly by the developer, and all taxes should be unaffected<br />7) Councils could create a regime to create SRAs, and apportion disamenties to households in those areas, but why include it within the tax system?<br />8) Creating a system that put an accurate value on the range of possible disamenities would be a massive challenge. Putting a value on it based on solely on distance from the development would be easy, but not fair.<br />9) Would there be recognition of the change in value of amenities included into the compensation.LindleySmithnoreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-76143704759081033122014-08-30T07:46:22.213+12:002014-08-30T07:46:22.213+12:00Could be hitched to Special Housing Areas. Althoug...Could be hitched to Special Housing Areas. Although they disappear in two years.bennoreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-1011589360211060002014-08-29T16:14:52.197+12:002014-08-29T16:14:52.197+12:00Ryan, perhaps I am missing your point, but Eric is...Ryan, perhaps I am missing your point, but Eric is proposing a discount targeted at reducing a single problem, which is the rational resistance of immediate (or close) neighbours of proposed development. Eric is not, as far he has said, proposing to reprice all services from first principles. This is reducing a political problem, with efficiency the byproduct.bennoreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-82157708830387085772014-08-29T15:49:57.940+12:002014-08-29T15:49:57.940+12:00I think the principle is fine, but there's a l...I think the principle is fine, but there's a lot of simplification going on here (you'll say that's necessary, but work with me). Contained within those 'services' are a wide range of different identifiable services which are provided by a mix of local, state and national entities, as well as the private market. I wouldn't smear them all together, but rather build a full cost reflective tariff mechanism for each one of those services from a bottom up and then if you wanted, offer an offset payment back for specific parties you want to compensate. <br /><br /><br />One of the reasons I say this is that each one of those services will have different cost drivers. Some will be volume dependent, others up front, others time, or other random (and probably unforeseeable) cost drivers from a top down charging system. Like rubbish collection for instance: specifically how does the addition of one jumbo apartment building influence the per capita cost of rubbish collection? It might be much cheaper than the per capita suburban unit cost - or more expensive for some unforeseen reason. Alternatively, perhaps the transport cost disamenities are huge in comparison (traffic is now a nightmare, and there's no viable way around it). Rather than using one top down simplified charging mechanism which may or may not accurately reflect a bundle of other specific factors, I think it's better to build up a set of charges from their specific components. <br /><br /><br />The other reason is that there's no such thing as an economically efficient expenditure from general revenues. There is a politically efficient expenditure - but that's different. Devolving the charges to different entities makes that politically motivated smudge more difficult. And then your disamenity refund payment is more transparent, at least then you know what it's paying for.Ryan Reynoldsnoreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-92230994897501793942014-08-29T09:20:47.570+12:002014-08-29T09:20:47.570+12:00If you can't unblock the political problem, yo...If you can't unblock the political problem, you have an economic problem.Eric Cramptonhttp://offsettingbehaviour.blogspot.com/noreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-23949715403490843362014-08-29T09:15:00.836+12:002014-08-29T09:15:00.836+12:00So the problem is a political one rather than an e...So the problem is a political one rather than an economic one? How often is that the case.Paul Walkernoreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-77747087265439860312014-08-29T08:59:58.663+12:002014-08-29T08:59:58.663+12:00Transitional gains trap. You lock in the returns f...Transitional gains trap. You lock in the returns from cheap, then yell as though there's a covenant. Since the political process responds to that, and since yelling is costless, people yell. Pay them for not yelling and things might change.Eric Cramptonhttp://offsettingbehaviour.blogspot.com/noreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-24060579302051819632014-08-29T08:50:48.428+12:002014-08-29T08:50:48.428+12:00One way of trialling it is to attach it to a new u...One way of trialling it is to attach it to a new upzoning such that, within the newly upzoned area, special ratings areas will apply for abatement where new construction happens.Eric Cramptonhttp://offsettingbehaviour.blogspot.com/noreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-48409471298546315252014-08-29T08:50:05.939+12:002014-08-29T08:50:05.939+12:00That's all really helpful. I plan on writing u...That's all really helpful. I plan on writing up a more substantial version of this, and all of this will feed in.Eric Cramptonhttp://offsettingbehaviour.blogspot.com/noreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-34191969770261529802014-08-29T08:48:27.787+12:002014-08-29T08:48:27.787+12:00But aren't the NIMBYs being compensated alread...But aren't the NIMBYs being compensated already? As I say over at TVHE<br /><br />"f having the covenant and thus no intensification is valuable then buying a housing without said covenant will cost you less than buying the same house with a covenant and thus is the price difference not compensation for the possibility of intensification?"Paul Walkernoreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-1878602266109732882014-08-29T08:24:06.956+12:002014-08-29T08:24:06.956+12:00Yes. The relief transfers. The full relief schedul...Yes. The relief transfers. The full relief schedule is part of the rating bill that the owner gets quarterly. Maybe along with any adjustments for new developments that are proposed in the neighbourhood as indication of the savings that then could obtain if only the owner decides not to object.Eric Cramptonhttp://offsettingbehaviour.blogspot.com/noreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-18890552514842554652014-08-29T07:58:12.050+12:002014-08-29T07:58:12.050+12:00What would happen when a house in the special rati...What would happen when a house in the special rating area is sold?is the rate relief transferrable?<br /><br />(You may have covered this, I'm speed reading on the bus!)Will Taylorhttp://www.tvhe.co.nz/noreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-36334379692532336492014-08-29T07:44:25.015+12:002014-08-29T07:44:25.015+12:00Speaking from experience, the majority of oppositi...Speaking from experience, the majority of opposition to development generally come from the well-off/ well-connected who can afford to take projects through hearings and to the Environment Court, some reductions in rates seems unlikely to appease these types of people. In terms of gaps, your proposal also essentially excludes those projects which would be fully notified (not just to adjacent properties) or when notified to adjacent properties and/ or special interest groups (e.g. Heritage NZ). These interest groups or members of the general public far removed from any development would not receive any incentive from allowing a development to proceed.Camnoreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-19146104030295965102014-08-29T07:39:14.645+12:002014-08-29T07:39:14.645+12:00Interesting idea Eric. I think many cities do some...Interesting idea Eric. I think many cities do something along these lines, but not using lowered taxes to get NIMBYs on board, but increased public amenities (e.g., greenspace or parks, wider sidewalks, etc.). In many instances they just force the developer to provide these in-kind; however, in Vancouver the city collects (in addition to development cost charges) a "Community Amenity Contribution". Although I have heard complaints that the CACs just go into the black box of general city revenues and there is no observable link between a CAC payment and increased provision of amenities in a particular neighbourhood.Joel Wnoreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-8108502331411235152014-08-29T07:24:01.198+12:002014-08-29T07:24:01.198+12:00That's my hope. The system I'm here descri...That's my hope. The system I'm here describing pays off the affected neighbours, making NIMBY opposition more expensive.Eric Cramptonhttp://offsettingbehaviour.blogspot.com/noreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-36842131215211828752014-08-29T07:22:06.604+12:002014-08-29T07:22:06.604+12:00I think just about any direct, visible monetary &q...I think just about any direct, visible monetary "cost" or "benefit" to more development would lead to a lot more development, almost regardless of how you set it up. It's just too easy to blanket-oppose everything new for nebulous reasons when there isn't an expense in your face for doing it.TheBrettnoreply@blogger.com