Capturing Value Uplift Benefiting from the Private Sector

Transcription

1 Capturing Value Uplift Benefiting from the Private Sector April 2013

2 Contents Understanding the wealth effect of Infrastructure Current Initiatives Transit Oriented Development

3 The Challenge: Move away from 80 s thinking 1980 s planning and infrastructure delivery for inner cities. Most investment, productivity and participation in inner ring Structural Change is underway 2020 s planning needs to focus on job takers, not job makers which requires a focus on: Access to Jobs Housing Costs Unlocking the middle ring Public Transport 3

4 RBA Expectations Macroplan 2020 Forecast

5 Australian Drivers to : Normalisation BUT: Driven by new factors : New Housing consumption and investment patterns both domestic and international 5

6 $'000 $'000 Real houses by distance from CBD in Dollars 1500 Sydney 1500 Melbourne Distance from CBD (km) Distance from CBD (km) Source: State of Australian Cities report,

7 $'000 $'000 Real houses by distance from CBD in Dollars 1500 Brisbane 1500 Perth Distance from CBD (km) Distance from CBD (km) Source: State of Australian Cities report,

8 The Infrastructure Wealth Gap Average Annual Wage and Salary Top Earning LGAs: Income Sydney Mosman Woollahra Hunters Hill - Woolwich Double Bay- Bellevue Hill Willoughby - Castle Cove - Northbridge Melbourne Brighton Toorak Albert Park Armadale Port Melbourne Brisbane Bulimba Fig Tree Pocket Brookfield - Kenmore Hills Kenmore Chapel Hill

9 Infrastructure Improves Competition 9

10 What are Wider Economic Benefits? 10

11 Wider Economic Impacts 11

12 The Mechanisms of Wider Economic Benefits 12

13 Using value capture to fund infrastructure The Victorian Government intends to actively pursue private contributions to infrastructure projects by allowing a degree of private sector value capture. Options will include Bundled level crossing removal Unsolicited private sector proposals Bundled school investment PPP s for urban renewal A range of major rail and infill projects 13

14 Economics on the Fringe 14

15 City Shaping Projects 15

16 Brisbane City Council s Draft New City Plan Key Facts and Figures: By 2031 Brisbane will need approximately 40% more homes than the city had in The Plan proposes concentrating development in and around transport hubs, including: The city centre and inner city Near employment precincts such as around universities and hospitals Around eight major shopping centres Along nine growth corridors based on, or near, railway lines, busways, and high-frequency bus routes 16

17 Draft Metropolitan Strategy for Sydney 17

18 Draft Metropolitan Strategy for Sydney Key Facts and Figures: The paper projects an additional 1.3 million people in Sydney by 2031, requiring 545,000 more dwellings and 625,000 more jobs. It expects the proportion of people aged 65+ to increase from 12% (2011) to 16% (2031). The strategy plans to increase the number of new house constructions in Sydney from 14,500 to 27,500 per annum, approximately 70% through infill of existing suburbs. 18

19 Melbourne s Proposed Southeast Airport 19

20 Economic Benefits of an Airport in Melbourne s Southeast Major infrastructure projects often have massive ongoing economic influence both within their region and in all those regions they affect. Indirect employment generation as a benefit of a major project creates further flow-on positives to growth Construction Output ($ million) Direct Impact (Development Cost): $5,000.0 Indirect Impact: $17,618.6 Area of Economic Impact $7,833.9 Remainder of Victoria $884.3 Remainder of Australia $8,900.5 Total Direct & Indirect Impact: $22,618.6 Source: ABS I-O Tables, MacroPlan Dimasi Annual Employment Generation Jobs (EFT) Direct Impact: 14,628 Indirect Impact: 55,459 Area of Economic Impact 24,243 Remainder of Victoria 3,435 Remainder of Australia 27,781 Total Direct & Indirect Impact: 70,087 Source: ABS I-O Tables, MacroPlan Dimasi 20

21 Melbourne Metro One Rail Upgrade Major capacity upgrade to the Melbourne rail network Train demand will more than double in Melbourne in the next 20 years. 21

22 Region of Benefit Planned East-West Link 22

23 The M80 Ring Road Upgrade A major upgrade costing $2.25bn The upgrade significantly increases the road s capacity. Congestion reductions will create far reaching economic benefits. 23

24 The Benefits of Good Urban Design Studies done by Macroplan, the UK (Cabe, 2012) and NZ (NZ Ministry for the Environment, 2005) associate the following benefits with well-planned urban design: Better public health Greater social cohesion Enhanced land values A more vibrant local economy Reduced congestion Improved agglomeration of knowledge capital Benefit/Cost Ratios of

25 Transit Oriented Development (TOD) A transport infrastructure upgrade that complements an existing precinct, improving access and creating wide economic benefits for the area Westfields and retail Mixed Office and Residential Civic Place Mixed use incl. Govt Buildings Church Street 25

26 TOD Hierarchy TYPE CBD (Economic Development and patronage) REGIONAL (Patronage) LOCAL (Behavioural) KEY OBJECTIVES EXAMPLES Jobs Existing: Sydney CBD ( QVB/Galleries) Melbourne CBD ( QV)/Melbourne Brisbane (Queen Str and Roma Str), Parramatta Proposed: Perth (Williams Street) Qld Maroochydore, Caloundra, Coomera Housing density Existing: and jobs Rouse Hill Regional Centre, Chatswood Homebush Proposed: Lifestyle (urban development live, play and work) Varsity Lakes Existing: Subiaco, St Mary s (Sydney) Proposed: Edmondson Park and Leppington 26

27 TOD Principles TOD Principles Economic Maximum leverage of private investment Max usage of PT usage per $ invested Max employment Minimise deliverability risk Environmental Change travel behaviour Maximise PT uses Max TOD effectiveness Max land use efficiency Social Create Sense of Place Create self-containment lifestyle Neighbourhood integration1 27

28 TOD Criteria Economic % land area for cars % private invest/total Delivery/staging Employ in TOD destination Jobs/m2 for employment Financial return Environmental % intermodal use Land use efficiency ratio % non vehicle trips Design/subtropical %use of PT Social Activity level Persons/vehicles Working & resident pop. Max walkable catchment Visitations level Level of 18/7 activity Housing diversity mix Vehicles/household 28

29 Gold Coast Rapid Transit The project is expected to reduce traffic congestion, shorten travel times, provide rapid access to key strategic locations, such as education and medical facilities, major retail centres, tourism precincts and business and employment areas 29

30 Springwood Busway Extension Improves access to major destinations, e.g.: Brisbane s Central Business District, Springwood, and the University of Queensland (via the Eastern Busway). 30

31 Unlocking The Value of TODs The DNA of unlocking the value of a TOD includes: Critical Mass to realise full potential Financial Viability Retail/commercial/high density residential/ POS Seamless Connectivity / Access Night time Economy /Passive Surveillance Public / Private Transport Integration Living Streets/ Multi-Cultural Focal Point Community, Governance Good pedestrian linkages Security and surveillance 31

32 Conclusion: Fisherman s Bend Example Fishermans Bend comprises 6,000,000 sqm of urban land immediately south of the Melbourne CBD. Building a light rail through the precinct is estimated to cost up to $200 million The average value per square metre in the precinct is $1,500. With a light rail, this value is estimated to increase to $3,000 per sqm over 20 years 32

33 Conclusion: Fisherman s Bend Example The increase in the value of land as a result of a light rail is $9bn over 20 years, which is of net present value equal to $2.3bn This implies that the benefit cost ratio of implementing a light rail in the Fisherman s Bend area is in excess of 10 to 1 33

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