VALUE CAPTURE FUNDING AND INTEGRATED PLANNING

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1 THOUGHT LEADERSHIP BREAKFAST VALUE CAPTURE FUNDING AND INTEGRATED PLANNING PULLMAN HOTEL BRISBANE, QLD 4 DECEMBER 2013 Visions for Queen Street Wharf Draft Brisbane City Centre Master Plan 2013 Joe Langley Senior Executive Urban Planning jlangley@globalskm.com P: (02) / M:

2 Today s Topic Metropolitan, state and central governments are struggling to fund urban growth and infrastructure funding Global population growth is becoming more concentrated in cities, compounding funding shortfalls Integrated land use and transport planning generates a multiplier effect on infrastructure investment Parramatta Road, Sydney Unplanned water line break, Anywhere New funding options are needed which help public investment pay for itself

3 Agenda National and State Context Value Capture Funding What is it? Examples here and abroad Key Success Factors Obstacles and Opportunities Denver Union Station Redevelopment Panel Discussion Draft Brisbane City Master Plan 2013

4 National investigations into alternative funding PwC Property Council Report 2008 IFWG Infrastructure Finance and Funding Reform Report 2012 SA Economic Development Board Major Infrastructure Funding Alternatives July 2012 IA National Infrastructure Plan Report 2013 East Coast High Speed Rail Value Capture Study 2013 Business Council of Australia Infrastructure Funding and Financing November 2013

5 State Investigations into Alternative Funding WA Perth MAX Light Rail ($1.9Bn) Victoria DFT Grade Separation Project NSW WestConnex / Parramatta Rd Urban Renewal Project ($7Bn) South Australia Glenelg Light Rail Extension Qld Gold Coast Light Rail Brisbane Underground Bus and Train Project

6 Key Conclusions from Past Studies Productivity benefits arise from smart infrastructure investments No shortage of private capital to fill funding gaps Capture the value of infrastructure investments to fund backlog Adopt user pays, value capture and TIF models to close funding gaps Continued need for funding and financing reforms

7 Implications for Queensland Does Queensland s Infrastructure planning and charging framework review process allow sufficient scope to consider new funding models? Is sufficient attention being given to funding and financing in formulating the Draft Brisbane City Centre Master Plan 2013 and other planning and economic development initiatives? Do Queenslanders get a fair return on the public s investment in major infrastructure projects?

8 Value Capture Funding Model Focuses on incremental revenues Within a carefully selected improvement district Establishes nexus between public infrastructure investment, beneficiaries and revenue sources Revenue streams dedicated for 20 to 25 years Full revenue stream returned to original taxing authorities

9 What incremental revenues are captured? Property taxes / rates Sale of bonus gross floor area (GFA) Property transfer (stamp) duties Sale and / or lease of air rights Sale or lease of surplus development sites Parking levies Developer contributions Special rates or taxes within a defined improvement district Hotel taxes Retail sales taxes Millenium Park in Chicago was partially funded by value capture.

10 High Speed Rail Case Study Costs and Potential Revenues Sydney Central Station Urban Renewal (A$billon) After Before Low Scenario NPV = $4.94 billion

11 KEY SUCCESS FACTORS Develop a comprehensive long term plan Embrace genuine stakeholder consultation Carefully select the improvement district Create a shared vision Establish a clear and balanced governance framework Understand the risks and rewards Use incentives to attract private investment and better design Provide consistent and coordinated leadership Secure the ability to influence outcomes Build trust as a core value

12 OBSTACLES AND OPPORTUNITIES TO VALUE CAPTURE Institutional Resistance Value vs Cost of Renewal Gross Benefits vs Net Benefits Local Council Financial Capacity Use of Debt

13 DENVER UNION STATION REDEVELOPMENT DENVER, COLORADO USA

14 DENVER UNION STATION 2012 Circa 1900

15 DENVER UNION STATION REDEVELOPMENT Denver Union Station Project Authority Public - Private Organisation Diagram

16 DENVER UNION STATION REDEVELOPMENT Key Public Elements US $7 Billion over 20 years US$500M PPP Union Station Precinct Redevelopment 90km 197 km rail 29 km Bus Rapid Transit (BRT) 21,000 commuter car parking spaces Key Private Elements 50km Office 58,000m 2 Retail 11,565m 2 Residential 1,930 dwellings

17 DENVER UNION STATION REDEVELOPMENT Funding Repayment Federal and state grants - $109 M Loan repayments - $165 M / 5.6% Property sales - $37 M Federal loans - $300 M Value Capture (TIF) revenue - $135 M / yr for 30 yrs Loan guarantee City of Denver up to $8 M / yr

18 DENVER UNION STATION REDEVELOPMENT Development Status February 2014 (12 months before opening)

19 RECOMMENDATIONS 1. Commonwealth Government should Play stronger leadership role in the development of Australian cities Coordinate value capture research, funding and financing, procurement and implementation. 2. Commonwealth and state treasuries / agencies Implement market innovations and reforms support innovative funding initiatives 3. State treasuries Take proactive role in supporting financial and regulatory reforms 4. State and local agencies investigate application as part of metropolitan land use planning, transport planning and urban renewal programs.

20 FINAL THOUGHT Critical to successfully tackling the infrastructure deficit is for all stakeholders to recognise that productive infrastructure is an investment, not a cost. Infrastructure Finance and Funding Reform, April 2012

21 Panel Discussion Facilitator Joe Langley, Urban Planning & Development - SKM Panellists Graeme Krisanski, Project Manager, Light Rail Sunshine Coast Regional Council Chris Mills, General Manager, Economic Development Queensland Matthew Longland, Deputy Director General, Policy, Planning and Investment, TMR v