Capturing the value Parramatta Light Rail Theo Psychogios

Capturing the value Parramatta Light Rail Theo Psychogios, Partner, Deloitte Access Economics 8 June 2016 Deloitte Touche Tohmatsu © 2016 - Value capture: Capturing the value 1

The heart of the matter • Value capture is not new, but is re-emerging as the way forward for prioritising Australia’s growing infrastructure backlog within a tight competition for public funds • Concept means different things to different people as it represents a range of funding mechanisms • Links those who contribute to whose best positioned to benefit, thereby ‘optimising’ the supply of network infrastructure • Viewed by landholders as a contribution towards joint value creation – not a payment system • Vital land-use, amenity and sustainability role for local government in maximising value creation on projects • Through collaborative value creation, can be led by communities or local government, rather than ‘top down’ state or federal government solutions. Deloitte Touche Tohmatsu © 2016 - Value capture: Capturing the value 2

The value creation framework Densification Rezoning Proximity to Infrastructure Deloitte Touche Tohmatsu © 2016 - Value capture: Capturing the value 3

Before Parramatta Light Rail • Parramatta, located 26 km from the Sydney CBD, is planned to be the city’s “second CBD” and is critical to catalyse sustainable economic growth across broader Western Sydney • Light rail was chosen by the NSW Government support Parramatta achieve “second CBD” status – with multiple routes into the Parramatta city centre yet to be determined • The Olympic Corridor (between Parramatta and Homebush), lying on valuable lands running alongside the Parramatta River, has been dominated by traditional heavy industrial uses in need of significant rejuvenation. Deloitte Touche Tohmatsu © 2016 - Value capture: Capturing the value 4

Parramatta Light Rail Towards a radial public transport network Parramatta Deloitte Touche Tohmatsu © 2016 - Value capture: Capturing the value 5

Parramatta Light Rail • Billions of dollars of public and private investment is occurring in or around the corridor • Business and community stakeholder groups within The Corridor support growth and development. • Already nominated as a State Govt. Priority Growth Area, including the funding of two Priority Precincts. • Currently 120, 000 workers in the area and more than 10 million visitors to Olympic Park Precinct annually. Deloitte Touche Tohmatsu © 2016 - Value capture: Capturing the value 6

The Olympic Corridor • The Olympic Corridor delivers on the government’s plan to establish a growth area between Parramatta and the Olympic Peninsula. • Rezoning coupled with enabled infrastructure will serve as a key trigger to unlock future growth. • Over 2, 000 hectares in size including a diverse range of industries, communities, centres and institutions. Deloitte Touche Tohmatsu © 2016 - Value capture: Capturing the value 7

Economic enablers in the corridor Deloitte Touche Tohmatsu © 2016 - Value capture: Capturing the value 8

Greater than the sum of its parts The value uplift Deloitte Touche Tohmatsu © 2016 - Value capture: Capturing the value 9

Private Sector Support • Major land holders of the West. Line Partnership have expressed their support to fund enabling infrastructure based on density uplift incentives. • Private sector approach has the flexibility to be applied at a targeted or general level and works by applying a rezoning assumption to the estimated land available for reuse. • It is estimated that if all density uplift opportunities were exercised, voluntary contribution funding of between $1. 6 billion to $2. 9 billion could be generated.

Homebush Bay Bridge Model • Changes to government’s DCP for Wentworth Point peninsula to allow increased height and density for landowners provided the basis for funding for the costs of the Homebush Bay Bridge • Planning uplift was ‘determined on its merits’ by the Dept. Planning in the light of the increased transportation capacity enabled by the Bridge. • Homebush Bay Bridge is expected to be delivered by the end of 2015

Value Capture The steps to creating value 1. Stations 2. Radius 3. Area • Based on 16 stations between Camellia and Sydney Olympic Park, including a line in Rhodes. • A radius ranging between 150 m to 300 m around each station is identified. • Under current condition and assuming approximately 50% of identified land is reserved for parks, utilities and services • A net useable area of 1, 468, 695 sq. metres of uplift can be achieve. 4. FSR 5. Rate 6. Funding • Apply an uplift to the identified useable area as part of a negotiated voluntary agreement. • Uplift in FSR ranges from 0. 5: 1 – 4: 1. • Apply a rate to the uplift • Rate ranges from $300 – $600 per sq. metres. • Potential value created ranges between $545 m - $1, 090 m. Deloitte Touche Tohmatsu © 2016 - Value capture: Capturing the value 12

Value Capture The Station Radius Approach Indicative Uplift Stations Radius (M) Useable Area (sqm) Uplift FSR (Extended x: 1) Rate per sqm for uplift FSR Estimated Funds Per Station from Uplift Total Potential Funds Camellia – Sydney Olympic Park (incl. Rhodes) 150 – 400 15, 708 – 251, 327 0. 5 – 4 $300 – $600 $212. 2 m – $226. 2 m $545 m – $1, 090 m • The approach is based on a voluntary contribution mechanism from FSR uplifts around a transport orientated development, in this case based around light rail stations and a radius around those stations. Deloitte Touche Tohmatsu © 2016 - Value capture: Capturing the value 13

Value Capture The Corridor Approach Indicative Uplift Precincts Camellia – Strathfield Area for uplift (sqm) 422, 480 – 1, 791, 751 Rate per sqm for uplift FSR Estimated Funds Per Precenct from Uplift Total Potential Funds $600 – $1100 $349 m – $1, 075 m $1, 627 m – $2, 859 m • Existing contributions would still apply to the currently zoned components of the lands in the corridor. • The voluntary contribution applies to the additional square metres that are in the uplift amount. Deloitte Touche Tohmatsu © 2016 - Value capture: Capturing the value 14

The role of local government Three key points Ensure the success of densifying precincts through delivering greater neighbourhood amenity and sustainability T Local e Government’s x role t Value capture infrastructure projects can be community-led, putting local governments in a lead role in project inception, development and financing (compared with traditional infrastructure delivery) Deloitte Touche Tohmatsu © 2016 - Value capture: Capturing the value Local government has a unique role in driving greater and densification and rezoning in land-use planning, which is shown to be the biggest enablers of opportunities for value capture. 15

General information only This presentation contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively the “Deloitte Network”) is, by means of this presentation, rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this presentation. About Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www. deloitte. com/au/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte has in the region of 225, 000 professionals, all committed to becoming the standard of excellence. About Deloitte Australia In Australia, the member firm is the Australian partnership of Deloitte Touche Tohmatsu. As one of Australia’s leading professional services firms. Deloitte Touche Tohmatsu and its affiliates provide audit, tax, consulting, and financial advisory services through approximately 6, 000 people across the country. Focused on the creation of value and growth, and known as an employer of choice for innovative human resources programs, we are dedicated to helping our clients and our people excel. For more information, please visit our web site at www. deloitte. com. au. Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Touche Tohmatsu Limited © 2016 Deloitte Touche Tohmatsu