Capturing the value Parramatta Light Rail Theo Psychogios, Partner, Deloitte Access Economics 8 June 2016

The heart of the matter Value capture is not new, but is re-emerging as the way forward for prioritising Australia’s growing infrastructure backlog within a tight competition for public funds Concept means different things to different people as it represents a range of funding mechanisms Links those who contribute to whose best positioned to benefit, thereby ‘optimising’ the supply of network infrastructure Viewed by landholders as a contribution towards joint value creation – not a payment system Vital land-use, amenity and sustainability role for local government in maximising value creation on projects Through collaborative value creation, can be led by communities or local government, rather than ‘top down’ state or federal government solutions.

The value creation framework Densification Rezoning Proximity to Infrastructure

Before Parramatta Light Rail Parramatta, located 26 km from the Sydney CBD, is planned to be the city’s “second CBD” and is critical to catalyse sustainable economic growth across broader Western Sydney Light rail was chosen by the NSW Government support Parramatta achieve “second CBD” status – with multiple routes into the Parramatta city centre yet to be determined The Olympic Corridor (between Parramatta and Homebush), lying on valuable lands running alongside the Parramatta River, has been dominated by traditional heavy industrial uses in need of significant rejuvenation.

Towards a radial public transport network Parramatta Light Rail Towards a radial public transport network Parramatta

Parramatta Light Rail Billions of dollars of public and private investment is occurring in or around the corridor Business and community stakeholder groups within The Corridor support growth and development. Already nominated as a State Govt. Priority Growth Area, including the funding of two Priority Precincts. Currently 120,000 workers in the area and more than 10 million visitors to Olympic Park Precinct annually.

The Olympic Corridor The Olympic Corridor delivers on the government’s plan to establish a growth area between Parramatta and the Olympic Peninsula. Rezoning coupled with enabled infrastructure will serve as a key trigger to unlock future growth. Over 2,000 hectares in size including a diverse range of industries, communities, centres and institutions. Key Success Factors Few large land holders Council and land holder collective action Integrated lane use planning Present an uplift sharing model

Economic enablers in the corridor

Greater than the sum of its parts The value uplift

Private Sector Support Major land holders of the WestLine Partnership have expressed their support to fund enabling infrastructure based on density uplift incentives. Private sector approach has the flexibility to be applied at a targeted or general level and works by applying a rezoning assumption to the estimated land available for reuse. It is estimated that if all density uplift opportunities were exercised, voluntary contribution funding of between $1.6 billion to $2.9 billion could be generated.

Homebush Bay Bridge Model Changes to government’s DCP for Wentworth Point peninsula to allow increased height and density for landowners provided the basis for funding for the costs of the Homebush Bay Bridge Planning uplift was ‘determined on its merits’ by the Dept. Planning in the light of the increased transportation capacity enabled by the Bridge. Homebush Bay Bridge is expected to be delivered by the end of 2015

The steps to creating value Value Capture The steps to creating value 1. Stations Based on 16 stations between Camellia and Sydney Olympic Park, including a line in Rhodes. 2. Radius A radius ranging between 150m to 300m around each station is identified. 3. Area Under current condition and assuming approximately 50% of identified land is reserved for parks, utilities and services A net useable area of 1,468,695 sq. metres of uplift can be achieve. 4. FSR Apply an uplift to the identified useable area as part of a negotiated voluntary agreement. Uplift in FSR ranges from 0.5:1 – 4:1. 5. Rate Apply a rate to the uplift Rate ranges from $300 – $600 per sq. metres. 6. Funding Potential value created ranges between $545m - $1,090m.

Camellia – Sydney Olympic Park (incl. Rhodes) Value Capture The Station Radius Approach Indicative Uplift Stations Camellia – Sydney Olympic Park (incl. Rhodes) Radius (M) 150 – 400 Useable Area (sqm) 15,708 – 251,327 Uplift FSR (Extended x:1) 0.5 – 4 Rate per sqm for uplift FSR $300 – $600 Estimated Funds Per Station from Uplift $212.2m – $226.2m Total Potential Funds $545m – $1,090m The approach is based on a voluntary contribution mechanism from FSR uplifts around a transport orientated development, in this case based around light rail stations and a radius around those stations.

Camellia – Strathfield Value Capture The Corridor Approach Indicative Uplift Precincts Camellia – Strathfield Area for uplift (sqm) 422,480 – 1,791,751 Rate per sqm for uplift FSR $600 – $1100 Estimated Funds Per Precenct from Uplift $349m – $1,075m Total Potential Funds $1,627m – $2,859m Existing contributions would still apply to the currently zoned components of the lands in the corridor. The voluntary contribution applies to the additional square metres that are in the uplift amount.

The role of local government Three key points Ensure the success of densifying precincts through delivering greater neighbourhood amenity and sustainability Local Government’s role Text Value capture infrastructure projects can be community-led, putting local governments in a lead role in project inception, development and financing (compared with traditional infrastructure delivery) Local government has a unique role in driving greater and densification and rezoning in land-use planning, which is shown to be the biggest enablers of opportunities for value capture.

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