Funding, rates, expenses and project deferrals have been all the talk with Auckland and Auckland Council since National won her third term of Government last Saturday night. While Council seems to be a bit slow in recognising its “Alternative Funding Package” (congestion charging, road pricing, and fuel taxes) is now dead in the water with both the City and Wellington we seem to have a few misdemeanour’s about targeted rates to fund the City Rail Link. I picked this up from the Herald yesterday:
‘Targeted rate’ looked at to plug $12b transport fund gap
5:00 AM Friday Sep 26, 2014. Bernard Orsman
Aucklanders could pay a new charge on top of rates to fund transport projects.
A “targeted rate” is one option being considered by an independent group looking at alternative funding measures to plug a $12 billion-plus transport funding gap over the next 30 years.
Evaluating road tolls and fuel-tax rises and traditional funding methods such as rate rises and targeted rates is the job of the group due to report to the council next month.
The Herald understands that the independent alternative transport funding group is leaning towards motorway tolls. It will also provide options for targeted rates and extra rates rises.
On Wednesday, Transport Minister Gerry Brownlee reiterated the Government’s pre-election position that there would be no regional fuel taxes or tolling of existing state highways in Auckland.
Auckland Council cannot introduce motorway tolls or a regional fuel tax without government approval.
The National-led Government changed the law in 2009. Acting Mayor Penny Hulse said the $2.4 billion city rail link had been included in a new 10-year budget and did not need a targeted rate.
Okay we seem to have a bit of confusion around the targeted rate issue here. The City Centre is already subject to a targeted rate of $20 million per year. Now I believe most of that goes towards amenities’ upgrades as well as the Downtown Framework to which via the targeted rate the City Centre will be contributing 42% of the $477m total of. Now that targeted rate could be diverted to the City Rail Link but that is for the Council and City Centre ratepayers to work out. So yes we already have targeted rates in place. Whether the targeted rate gets extended down a defined area along the rail corridors is yet to be seen. In any case it would be ineffective as people often come far and wide (especially with the outer stations) to use the rail network to head to a destination. However, I do realise I have called for a targeted rate for the Manurewa, Papakura and Franklin Local Boards to be levied to allow the Manukau South Link as well as Pukekohe Electrification to be built seeming if we wait on general funding the projects would be deferred to the never never. The difference being though is that the entire Local Board area would be charged not the a limited defined corridor as both Pukekohe Electrification and the Manukau South Link benefit the entire Local Board area, not just a set limited corridor area along the Southern Line.
Now as (current) Minister of Transport Gerry Brownlee has again stated; the Government will not support regional fuel taxes, tolling on existing roads, and other forms of road pricing like congestion charges. So why the Deputy Mayor and aspects of Council are pursuing this Alternative Funding package of tolls, fuel taxes and congestion charges I would like to know. The Government isn’t supporting it, the City does not want it if West Auckland going Blue (National) on the Party Vote last Saturday is any inclination to go by. But yet the Mayor, Deputy Mayor, and aspects of Council are going down this path rather than:
2) The Congestion Free Network is for now dead in the water for the most part with the Greens losing vote share even in Auckland herself. However, parts of it can be picked and run with depending on how the Spatial Priorities turn out in the LTP discussions currently under way
3) Sorry but the City Rail Link is now definitely off the table for next year. Your earliest start date is 2017 at the moment as National looks to her 4th Term which she is looking solid in getting all things considered this morning. Council will need to review her transport priorities as a result of this and prepare to bite a rather large lemon. That said there is a way to salvage aspects of the transport plans and is something I have stored away in the blog.
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Council must be ready to consider in the Long Term Plan deliberations to move the full start date (not including the Precinct Properties section) to most likely 2018 at the earliest (so it is pushed to the 2018 LTP) when National (in 2017) will most likely bring it forward (call it a hunch). Pushing the CRL back to 2018 as well as a new transport package might give the City a breather as well as calm it down over the LTP debate.
I have seen the 10 Spatial Priorities first mentioned by the Mayor’s presentation to the Council. Well if money and rates are the issue then the Spatial Priorities have presented Council will a nice framework to take the City forward and rationalise what capital we have that wont blow the bank nor the ratepayers wallet. Food for thought for Council and Government
Simply put the Council can not continue down this now mindless path of the City Rail Link all-go for 2016 when the Government and more of the City population will simply not support it. Especially when community projects that build community are deferred under the auspices of budget issues and to keep the CRL 2016 start date “on track.” Yep the City wants public transport and affordable housing (Auckland Wants Decent Public Transport AND Affordable Housing) but at such an absolute cost that we are looking down the barrel at? If so and as I have stated in the blog before there is no way I can support the City Rail Link at such a cost to the City, I could never forgive myself in passing the City on to my children in later years!
So will the Council change tact on its own or will it be “forced” to by the City. Hopefully not the latter but at current speed and course the Council is coming in for a rather sharp correction, and this does not include reaction yet to the very likelihood Council assets could be facing a rather large down valuing in November.
3 thoughts on “Targeted Rate for the City Rail Link?”
The Herald actually printed a letter from me this morning on this subject (it was slightly edited from the below):
Dear Editor,
It is an outrage that Auckland Council would consider “targeted rates” to try to cover transport funding shortfalls, but deliberately NOT use targeted rates to pay for the new CBD Rail Loop, as is stated in your article (by Bernard Orsman, 26 Sept).
It is a long-standing principle of urban economics, that by far the most capture of value of radial-form transport infrastructure whose overwhelming purpose is to ferry commuters to a CBD, is made by the owners of property in the CBD.
There is an authoritative scholarly book by Robert Fogelson entitled “Downtown, Its Rise and Fall”, that has a lengthy section on the history of CBD property owning vested interests attempting to maintain the primacy of their location at the expense of the region’s residents and businesses; commuter rail systems funded from taxes on “everybody else” being their favourite tactic.
There is absolutely no other infrastructure that is MORE appropriately funded by “special assessments” and “value capture”. It is an outrage that these things are so commonly used in the case of urban dispersion (development contributions and so on), and so seldom used to prevent wealth transfers to the already-wealthiest property owners in the nation.
Yours faithfully
Phil Hayward
etc etc
Here is one of my favourite quotes: from one of Colin Clark’s seminal books, “Regional and Urban Location” (1982) Page 231:
”….If rail and subway services to the centres of large cities were charged at full cost, including interest and depreciation, two consequences would follow. The employers of the lower paid service workers in the city would have to raise their wages, in some cases reduce the services offered, or move to suburban locations (for example, some of the retail businesses still carried on in city centres). Meanwhile the higher paid salaried and businessmen, who in most cases could not change their workplace, would have an incentive to move their residences closer to the centre (while at the same time having less incentive to reside close to railway or subway stations).
These movements would have their reflections in the price of urban land. They would reduce the demand for and the price of business land in the city centre, and of residential land in the outer susburbs, particularly land now high priced because of its proximity to railway stations. There would be countervailing movements raising the price of business land in the suburbs and of residential land nearer the city centre; but these would probably be of a lesser order of magnitude. In net effect, the subsidies on rail and subway suburban transport are subsidies to the owners of certain types of land – for which there is no social justification….”
I also want to point out that designing a city around Public Transport rather than a road network, is incompatible with housing affordability. It is a simple matter of the level of “economic rent” (Google it) that is extracted from households given the amount of land they are expected to out-bid each other for a share of. And you can’t enable functional coverage of any more than a small fraction of the land space, with PT as opposed to automobility. Automobility was regarded in the early part of the 20th century, as a providential answer to the vexatious question of economic rent for urban populations; Marxism and nationalisation of property was one answer that had had appeal to some people prior to technology solving the problem. The theoretical framework established by Robert Murray Haig in 1926 has never been rebutted and is regarded by those who know anything on the subject, as part of the canon of urban economics literature, along with its further development by Ratcliff, Alonso, Wingo and others since.
Unfortunately I have to agree too as without government support for an early start we are just punishing ourselves with lack of investment in areas that need funding now. However we do still need to ensure that the government is aware that we don’t want another opportunity to finally put in a city rail link to be lost. In the Papakura area there is stacks to get done now that really shouldn’t be deferred e.g. a Takanini Library, grade separation and other developments to support the growing population. We cannot afford to delay these projects now in the hope that the government will change its mind. In saying that it would be great if the government were to realise that revolving Auckland’s transport woes and reviving the city is a priority for the country. You only need to pick up a guide book like Lonely Planet and read the introduction to Auckland to see that there is much to do. Do we really want our largest city to continue to be described as grim and generic with a poor public transport system, lack of life and ill conceived architecture?
As a councillor I have to say that I agree with you Ben. Lets get on and get things that are doable completed without worrying overly about the CRL project right now.
Talking Southern Auckland 
The Herald actually printed a letter from me this morning on this subject (it was slightly edited from the below):
Dear Editor,
It is an outrage that Auckland Council would consider “targeted rates” to try to cover transport funding shortfalls, but deliberately NOT use targeted rates to pay for the new CBD Rail Loop, as is stated in your article (by Bernard Orsman, 26 Sept).
It is a long-standing principle of urban economics, that by far the most capture of value of radial-form transport infrastructure whose overwhelming purpose is to ferry commuters to a CBD, is made by the owners of property in the CBD.
There is an authoritative scholarly book by Robert Fogelson entitled “Downtown, Its Rise and Fall”, that has a lengthy section on the history of CBD property owning vested interests attempting to maintain the primacy of their location at the expense of the region’s residents and businesses; commuter rail systems funded from taxes on “everybody else” being their favourite tactic.
There is absolutely no other infrastructure that is MORE appropriately funded by “special assessments” and “value capture”. It is an outrage that these things are so commonly used in the case of urban dispersion (development contributions and so on), and so seldom used to prevent wealth transfers to the already-wealthiest property owners in the nation.
Yours faithfully
Phil Hayward
etc etc
Here is one of my favourite quotes: from one of Colin Clark’s seminal books, “Regional and Urban Location” (1982) Page 231:
”….If rail and subway services to the centres of large cities were charged at full cost, including interest and depreciation, two consequences would follow. The employers of the lower paid service workers in the city would have to raise their wages, in some cases reduce the services offered, or move to suburban locations (for example, some of the retail businesses still carried on in city centres). Meanwhile the higher paid salaried and businessmen, who in most cases could not change their workplace, would have an incentive to move their residences closer to the centre (while at the same time having less incentive to reside close to railway or subway stations).
These movements would have their reflections in the price of urban land. They would reduce the demand for and the price of business land in the city centre, and of residential land in the outer susburbs, particularly land now high priced because of its proximity to railway stations. There would be countervailing movements raising the price of business land in the suburbs and of residential land nearer the city centre; but these would probably be of a lesser order of magnitude. In net effect, the subsidies on rail and subway suburban transport are subsidies to the owners of certain types of land – for which there is no social justification….”
I also want to point out that designing a city around Public Transport rather than a road network, is incompatible with housing affordability. It is a simple matter of the level of “economic rent” (Google it) that is extracted from households given the amount of land they are expected to out-bid each other for a share of. And you can’t enable functional coverage of any more than a small fraction of the land space, with PT as opposed to automobility. Automobility was regarded in the early part of the 20th century, as a providential answer to the vexatious question of economic rent for urban populations; Marxism and nationalisation of property was one answer that had had appeal to some people prior to technology solving the problem. The theoretical framework established by Robert Murray Haig in 1926 has never been rebutted and is regarded by those who know anything on the subject, as part of the canon of urban economics literature, along with its further development by Ratcliff, Alonso, Wingo and others since.
Unfortunately I have to agree too as without government support for an early start we are just punishing ourselves with lack of investment in areas that need funding now. However we do still need to ensure that the government is aware that we don’t want another opportunity to finally put in a city rail link to be lost. In the Papakura area there is stacks to get done now that really shouldn’t be deferred e.g. a Takanini Library, grade separation and other developments to support the growing population. We cannot afford to delay these projects now in the hope that the government will change its mind. In saying that it would be great if the government were to realise that revolving Auckland’s transport woes and reviving the city is a priority for the country. You only need to pick up a guide book like Lonely Planet and read the introduction to Auckland to see that there is much to do. Do we really want our largest city to continue to be described as grim and generic with a poor public transport system, lack of life and ill conceived architecture?
As a councillor I have to say that I agree with you Ben. Lets get on and get things that are doable completed without worrying overly about the CRL project right now.