You can not control what you do not own
With the news of the City Rail Link to cost an extra $1 billion and Council needing to pick up half of that extra cost (owing to the 50:50 agreement with Government that they will not budge on (an issue in itself)) the question of how do we fund it comes up.
That question of funding is to be presented before the Governing Body of Auckland Council tomorrow (Thursday) with a series of options. The CRL funding report can be seen here.
By the looks of the report Auckland Transport is up on the blocks with its City Centre car parking buildings to have their fate decided. Three options were presented for the parking buildings, they are:
- outright sale
- partnership with a developer,
- a long-term concession arrangement
By the looks of Councillors’ reactions across social media it seems the ‘Outright sale’ is what the Officers are pushing no doubt with the support of the Mayor and Chair of the Finance Committee. This would yield a price apparently of $100m even though the Downtown Parking building would have a value of near $100m on its own.
This was from Councillor Christine Fletcher:
Viv Beck understands what Auckland needs. CRL is the most important project for NZ at this time and must be progressed, but I am very angry the report given to councillors for Thursday’s vote on the funding shortfall does not include other options. Simply flogging off carparks that the legacy Auckland City Council have carefully safeguarded is very short term and limited thinking. There are numerous other assets that could be considered. Where is the contestability we expect in good decision making? Also where is the leadership that demands government to meet their obligations for Auckland?
The Herald article Cr Fletcher was talking about was this one (note: behind Paywall): Viv Beck: Dolphins, carparks and other shemozzles as Auckland Council drops balls
A concession would mean a private operator running the buildings while Auckland Transport still keeps them – and more specifically earning revenue (SkyCity did this arrangement for I believe $345m for its building recently), while partnering with a developer should mean (although probably not given how Panuku uses this term in Transform Manukau) that the car parking sites are held but also developed as well. Outright sale = that – an asset sale.
Noting how the Councillors are commenting and judging by Council’s history the outright sale of the Auckland Transport car parking buildings for a paltry $100m (remember the Downtown building is worth that alone) is the option being pushed for.
If this becomes the case it demonstrates that Auckland Council has learned very little in its ‘obsession’ of selling off revenue generating assets at low-ball prices rather than using its assets to enable quality urban developments and diversify the revenue and asset base. Remember once the revenue making asset is gone the revenue is gone and the controls over future urban development are equally gone.
What Council should be doing is hurrying up in getting Transit Orientated Developments around the CRL Stations and the three AT City Centre Parking buildings so that:
- Quality urban development and amenities are provided especially in the City Centre
- Diversify the revenue stream away from rates (there is a reason Tokyo has a Farebox Recovery of 113% to our hopeless 47%)
- Diversify asset base which can be leveraged for debt for CAPEX like the CRL
I do seriously wonder if Auckland understands the Transit Orientated Development concept that is well known in Japan and Europe. We have had some attempts at it like New Lynn but missed it entirely with the Manukau Bus Station and it seems with the City Rail Link.
It comes down to we are not marrying our Physical Geographies with our Human Geographies. Time and time again I will see institutes and consultancies go LOOK AT THIS WONDERFUL TRANSIT LINE, IT WILL MOVE THIS MANY PEOPLE AND (may) ALLOW THIS TO HAPPEN.
Ironically the second half of that statement was left out. If you want to know what that second half is then ask yourself this: How does this transit line build communities?
Building the transit line and stations like the City Rail Link is only half the job, building the communities to exploit the full potential of the new transit line and stations is the second half of said job. And with the CRL we are not doing that second half – building communities and amenities via Transit Orientated Developments through leveraging existing and future Council assets – mainly the CRL stations and the AT parking buildings!
You can not control what you do not own. You can not leverage with also what you do not own (unless you are Parliament) so selling off assets rather than leveraging them removes your full capability to build those communities and amenities while diversifying that revenue stream and asset base.
In other words some good old fashioned public works!
One thought on “Are (Low Ball) Asset Sales Hindering our Desire Quality Urban Environments? A City Rail Link Funding Saga”
Totally agreed. Selling assets below its value is irresponsible and shortsighted.
In New Zealand very few people understands Transit Oriented Development. I would suggest the politicians and senior management to go to Toyko / Hongkong / Europe and learn about it.
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