City with a billion dollar view

ABSTRACT

The growth and intensification of many urban areas has meant city governments increasingly face pressure to limit development to preserve iconic city views. This is frequently achieved through ‘viewshafts’ or ‘sight lines’ that regulate development height across vast urban landscapes. While prevalent in many planning rule books, these policies are rarely subjected to rigorous economic appraisal, despite the large costs they can impose on local areas. We use a regression discontinuity to evaluate one such policy in Auckland, New Zealand which bifurcates the central business district (CBD). We find that the net cost of the policy to the local area is NZ$1.366 billion, or 16% of private land value in the CBD. At the margin, the constraint reduces land values by 40%. While removing these policies is not always easy or necessarily desirable, there may be value in optimization. One theoretical viewshaft alignment could reduce the net cost by 43%.

GRAPHICAL ABSTRACT

KEYWORDS:

• View protection
• land regulation
• spatial analysis
• real estate markets
• urbanization

Acknowledgments

We thank the editor, Estiban Rossi-Hansberg, Andrew Colgan, Chris Parker and Peter Nunns for comments and suggestions. This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors.

The views expressed in this paper are those of the authors and do not necessarily reflect those of the World Bank, PwC or Princeton University.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 The National Trust for Historic Preservation in the United States gives a thorough documentation of such policies highlighting U.S. cities Annapolis, Austin, Georgetown, Princeton, Sacremento and Seattle

2 The Auckland isthmus is the inner city area defined by the land between the Waitemata and Manukau harbors

3 Auckland also uses a policy known as Height Sensitive Areas which imposes height restrictions around the base of a volcanic cone. While these also target volcanic view protection, these restrictions fall outside the scope of this paper.

4 According to the Proposed Unitary Plan, passed by Auckland Council in August 2016

5 The Auckland CBD is defined as the central city area within the State Highway system.

6 For further information see the Auckland Council GIS viewer, available here

7 The inclusion of CENTER means a distance to viewshaft variable was omitted because of multicollinearity

8 We use Auckland's 135 Albert Street building to approximate land requirements for a building to pierce the viewshaft

9 This approach requires only that rules are applied uniformly across the study area. Within the zoning designation, height restrictions vary at a granular level, governed by height control planes, incentives that encourage the preservation of street sunlight or existing outlooks for nearby sites, floor to area ratios, and other planning rules (Nunns, 2016). We are able to overlook these variations because they do not change on either side of the discontinuity line.

10 AREA and OWNERS reach significance at 800 meters. While it was left out of the modeling results presented, their inclusion does not alter the core results of any specification

11 As a robustness check to this result, and to ensure that the use of linear models is not overstating the impact of high land values, we rerun these models using log land values per square meter and find that the results hold.

12 As per guidance from the New Zealand Treaury as at 2018