FUNDING ON THE LINE: PUBLIC TRANSPORT FINANCING AND PROPERTY VALUE CAPTURE
This project, led by Associate Professor Matthew Burke, Professor Corrine Mulley and Professor Neil Sipe, with Assistant Professor Barbara Yen, Gui Lohmann and postdoctoral researcher Abraham Leung was funded through the Australian Research Council (LP150100078) with contributions from City of Gold Coast, Department of Transport and Main Roads (Qld), Transport for New South Wales and Queensland Airports Limited.
Infrastructure funding in Australia and internationally is becoming one of the key constraints to city growth, thus impacting their productivity and ability to compete for skilled workers in the global economy. Value capture and other alternative infrastructure funding mechanisms have been suggested as a means to bridging the funding gap for city infrastructure projects; however, this raises the question: “How do infrastructure projects create value, and how can this value be shared?”
This research develops property value capture schemes to provide alternative funding for public transport investment. Hedonic modelling using longitudinal geographic-weighted regression provides visual detail on the timing and spatial patterns of property value uplift from recent investments in rail, busways and ferries in Queensland and NSW. The first international survey of benefit-area schemes for value capture is conducted along with surveys of Australian stakeholders and discrete choice modelling to determine willingness-to-pay. This data is then used to develop an institutionally, legally and politically feasible scheme for implementation in Australia, focused on cases including a future extension to the Gold Coast light rail network.
This project aims to assist in the search for a major new source of funding for public transport investments within Australia and, doing so, to contribute to critical international debates and understanding of the best mechanisms for public transport planning and implementation. Ultimately, this enables greater and faster investment in public transport in Australian cities by assisting our Industry Partners, who are directly involved in transport planning and delivery, to fundamentally re-evaluate the most pertinent aspects of the property value capture issue.
The project directly responds to possibly the greatest challenge currently facing Australia’s transport planners – how to fund and finance new infrastructure. Infrastructure Australia (2012: v) has recommended that “Governments should utilise appropriate models to drive revenue from the broader benefits delivered by major infrastructure projects, such as value capture for transport infrastructure.”.
While a small portion of the increased property values that do occur will flow back over time to State and local government via rates, stamp duties and other taxes, attempts at capturing value to help finance infrastructure up-front are piece-meal and ad-hoc in Australia. It is important that they become systematic, based on appropriately rigorous evidence, and hence a reliable form of funding for critical transport infrastructure.
KEY INSIGHTS/ HIGHLIGHTS
Our study on Gold Coast light rail revealed the following
- Patronage gains were modest but within the target. Yet light rail not only offers better connectivity but also amenity improvements and congestion relief.
- The property value gains attributable to the Gold Coast light rail project (stage 1) from 1996 to 2016 of more than 30% are very significant.
- Property uplift from light rail occurred as soon as a solid commitment to construct was made
- Property uplift is not universal. Sites closest to the stations received some nuisance from the light rail and road corridor; sites further away obtain fewer advantages in travel time savings for passengers.
We also studied the value uplift effect of Brisbane’s Busway.
This project is still in progress. A community survey will be rolled out in early 2020.
This research project is an academic research exercise only, using hypothetical examples, routes and policy scenarios, that are not Tweed Shire or NSW Government policy.
This research should help state and local governments to better develop future business cases to encourage public transport investment and attract funding commitments from the Commonwealth.
The following publications were produced to date:
- Journal paper about the timing of value uplift for residential properties in Gold Coast light rail system (See also the related Conversation article)
- Journal paper about residential property value impacts of proximity to transport, comparing bus and rail
- Journal paper about the effects of different methods/datasets for estimation of property value uplift effects
- ITLS report commissioned by the project team summarising major national and international value capture frameworks
- A Brisbane busway study showing the property value uplift effects