Michael Barnett: Let's aim high to fund city rail loop

Auckland Council has many levers it could pull, both for the CRL route stations and across the wider rail network, writes Michael Barnett. Photo / Sarah Ivey

Multi-storey commercial developments around proposed route could help council fund $2.6 billion project.

Two things stand out in arguments about how to fund Auckland's $2.6 billion City Rail Link, and other expensive new or upgraded infrastructure the city needs.

The first is that there is no way that rail user fares and subsidies will generate anywhere enough revenue to cover the capital cost of the project, let alone the ongoing costs of running the train service.

Secondly, expecting to get more money out of Auckland's 500,000 ratepayers to help pay for the City Rail Link (CRL) is hugely unfair and impractical. Ratepayers make up just a third of Aucklanders and most live nowhere near where the trains go and are unlikely to benefit directly.

Even if central government is eventually persuaded to stump up half the money, the idea that it would agree that the balance could come from options such as tolls on the already paid-for motorway network are problematic. The Government has made it clear that tolls are only an option on new roads.

So what to do? Let's start thinking creatively, as we have in other areas that have spawned such successes as the jetboat; Rex Bionics' skeletal frame to enable disabled people to walk; the Martin jetpack; the procession of world award-winning wines; accolades we receive about Air New Zealand; Auckland consistently placing in the top five of world cities for quality of life.

If we are to live up to our international reputation as innovative, creative and driven by ingenuity, what new thinking can we bring to build and run a successful, world-class passenger train service?

The answer could be staring at us: the Auckland Council-owned properties in central Auckland where the proposed CRL stations will be built, together with existing stations in Newmarket, Carlton Gore Rd, New Lynn, Panmure and elsewhere are ready-made platforms for potential high-rise, high-value station developments.

A 15-storey development built above the proposed CRL Aotea Station could be an attractive investment for large commercial enterprises (supermarket and retail shopping chains, etc) on lower floors, offices on middle floors and residential/hotel tenants on upper floors. That's a lot of potential revenue for the council.

To generate this income, Auckland Council has many levers it could pull, both for the CRL route stations and across the wider rail network.

In a sentence, the council's opportunity is to design a business plan to capitalise on the real estate development potential of its stations. Six or seven high-rise developments could yield more than enough to cover the cost of the railway investment needed.

But multiple-storey property developments could play other important roles. They would create a ready-made market of train users, in the form of residents living above and/or near stations, employees of new businesses around stations, and shoppers passing through stations, who generate fare box revenues.

And let's not forget the opportunity for improved station-area environments - the integration of stations with surrounding retail-shopping, restaurants and offices and other enriched land uses, all of which would boost land values and increase use of the trains.

Obviously, this kind of innovative development opportunity would need to be road-tested against what other cities are doing in this area. Work would need to be done to understand the scope for private sector interest in Auckland and overseas, and how the council's interest, risks and capability to understand and action the opportunity would be managed.

But I am clear in my own mind: it is not that we can't fund urban transformation projects like CRL, we can, but to do so we must overcome the tendency to think within our existing frameworks and options.

Auckland's population growth rate is double that of the rest of New Zealand. We owe it to ourselves and future generations to get solutions to our growth problems elevated from endless debate into firm action.

The ultimate benefit of CRL wouldn't be just in its contribution to solving transport issues, but in building for Aucklanders a modern city lifestyle and environment around our stations, an environment that enhances their lives and aspirations.

Michael Barnett is chief executive of the Auckland Chamber of Commerce.