Published 25 November 2010
5 local, regional & national agencies have worked over the last couple of years to put together a case for the cbd rail loop in Auckland, but none had the clout to implement it.
Most of the work was done by ARTA, the regional transport authority taken over on 1 November by the new council-controlled organisation, Auckland Transport, working with KiwiRail, operator of the rail network. Backing them were the Auckland City Council, the Auckland Regional Council & the Auckland Regional Transport Committee.
What was missing was the detail of a business case, but yesterday the new mayor of the unitary Auckland Council, Len Brown, called a media conference to announce the arrival of that ingredient.
Mr Brown campaigned on the basis of getting the loop in place in 7 years. He argued that 2 other components of the rail network should follow hot on its heels – the airport-city link and the extension of the rail network north of the harbour bridge.
For the property industry, a key ingredient of the case is the last appendix to the report, the real estate market & financial analysis, in which cbd futures with & without the link are compared.
The report goes to the first business meeting of the Auckland Council’s transport committee this morning. Mr Brown wouldn’t get drawn yesterday into how the $2 billion project would be funded, and that element will be hidden from view at the committee meeting. Rail funding is in the meeting’s confidential agenda.
Early this year, ARTA produced a cost:benefit ratio of 1.3-1.6 for the loop. The completed report gives ratios of 1:1.1 at an 8% discount rate (the standard), 1:1.6 at a 6% discount rate and 1:2.4 at a 4% discount rate. The report says lower discount rates should be considered because the NZ Transport Agency uses lower rates in its modelling for the roads of national significance.
Including the net value added from increased cbd productivity, the cost: benefit ratio rose to 1:3.5 at an 8% discount rate and to 1:4.7 at a 6% discount rate.
The rail loop is the preferred option out of 3 considered. The other 2 were improvements in bus capacity at ground level and a central-area bus tunnel with 3 stations. A loop with 3 stations was presented to the various authorities in February: yesterday’s announcement put meat on that.
Mr Brown said the Britomart rail terminal’s capacity was the major constraint on the network and most inner-city bus routes would reach capacity within the next decade: “Within 2 years, most of the useable train paths in & out of Britomart will be in use, providing virtually no room to add future services. This comes as road congestion intensifies and Auckland’s population continues to grow. Without the link, the cbd would require twin or triple bus lanes in both directions on most road corridors.”
He said the loop would stimulate additional cbd employment growth and be the catalyst for higher-density development at suburban stations: “It is the most critical element in transforming Auckland.”
The route & siting of the 3 new stations have been set. Transport committee chairman, and former Auckland Regional Council chairman, Mike Lee, said the next steps were protection of the route and issuing of notices of requirement.
The tunnel would run between Britomart & Mt Eden, going along under Albert St for the first stage to an Aotea station between Victoria & Wellesley Sts, heading around to a station at Karangahape Rd & Pitt St, then going under Spaghetti Junction to a Newton station at the intersection of Symonds St & Khyber Pass Rd.
The report said the 3 station locations were under public roads, optimising redevelopment & growth opportunities for economic productivity & patronage: “the least number of curves, which means lower costs for the tunnel boring machine, and better operational speed for trains, thus reducing operational costs. An estimated 44,500 people work within 500m of the proposed Aotea Station site, while the Karangahape Rd & Symonds St sites both have about 7000 people working within a 500m radius.”
KiwiRail and Auckland Transport (ARTA) commissioned the APB&B group of consultants, comprising AECOM, Parsons Brinckerhoff, Beca and Hassell, to undertake the study. It was peer-reviewed by PricewaterhouseCoopers.
The report says 400,000m² of new office construction in the cbd could be supported over the next 30 years without a rail loop, but with it the figure rises to 780,000m². On top of that, the extra 64,000m² of retail space in the cbd could be almost doubled to 112,000m². Without the loop, 21,000 more cbd homes could be supported, but that figure would rise to 31,000 with the loop in place. The biggest change would come in the provision of hotel rooms, rising from 1161 to 4684.
The report says the office analysis has relied on 2 inputs, one from the Auckland City Council and the other from the regional council’s regional land transport strategy. On the with-loop projections the cbd’s office space would increase to just under 2 million m² by 2041, retail space to 254,000m², and there would be 38,000 inner-city residents.
To test the impact of the rail link on values of land & buildings, the project team analysed 3 hypothetical development prototypes – a major office building near the new Aotea Station, a mid-market hotel in a secondary location and a mixed-use (office over retail) building on the cbd fringe.
“The results of the financial analysis show that, even with a moderate increase in density & market rent rates facilitated by the cbd rail link, the landowners reap substantial gains from this public investment. If developed, the developer &/or building owner also gains substantial value.”
Assessing the prototypes 10 years away, when the loop should be completed, the report says the office building should have a 36% premium with the link in place (a residual land value of $6203/m² compared to $4576 without the loop). The hotel would have a 45% premium ($3812 versus $2631) and the fringe mixed-use site would have a 62% premium ($658 versus $405).
Link: CBD rail link report
Earlier stories:
1 June 2010: Sprawl winning despite MUL, growth-centre planning lags
19 May 2010: Government announces 3-year support for rail turnaround
21 December 2009: Airport company says work on public transport links must speed up
8 July 2009: ARC maps out land use scenarios
3 July 2009: 5 scenarios in ARC land use study – 4 compact, one sprawl
18 March 2009: Government cans local fuel taxes, adds a national one
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Attribution: Auckland Transport, mayoral conference, story written by Bob Dey for the Bob Dey Property Report.
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