Value Capture and Value Creation

- how to make VC work By

PeterNewmanProfessorofSustainabilityCUSP,Cur8nUniversity

Perth

• WhyVCishappening?• Howmuchisithappening?• Howtomakeithappen?

Why is VC happening?

•  Therearestrongpersonalandpubliceconomicreasons.• BuildingurbanrailwithTOD’smustinevitablyincreaselandvalueasthereisaglobalandlocalmarketforit.

New era emerging…

Thethirdinatrilogy….Ajourneyfromthe1970’stonow.

21st century…THE USA IS DRIVING LESS

Australian city car use peaked the same year…and keeps going down.

VKTperVehiclefelloffacliff….despitesubstan8aleconomicgrowth(40%higherthanUSinpasttwodecades).

Perhaps car use and economic growth are decoupling?

The causes of peak car …the economics of cities is changing towards ‘reurbanization and reorienting transport priorities.’

1.  Peakdensitydecline…ci8esarecomingbackinforeconomicreasons.

2.  Travel8mebenefitsnowmovingfromcarstorail….ci8esarehiXngtheMarcheXwall.

3.  Culturalchange….especiallywiththeMillenials4.  Urbanspaceefficienciesintheknowledge

economy….peopleneedface-to-facea]erall.

39.1%

35.4%

30.2%28.3% 29.2% 29.4%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

1960% 1970% 1980% 1990% 1995% 2005%

Urban

%Den

sity%(p

ersons%per%ha)%

Urban%Density%Trend%in%23%Ci@es%in%the%USA,%Australia,%Canada%and%Europe,%1960G2005%

Australianci8escomingbackin….

Density shapes the city’s car use…exponentially

You can save time…

Urban rail is now faster than traffic

Global growth now in rail …

•  82Chineseci8esbuildingmetrosandhighspeedrailbetweenci8esShanghai8mpassengers/day

•  51Indianci8esbuildingmetrosAnycityover1m.• Middleeastci8esbuildingrailforfirst8me

Public Transport

Private Vehicles

Bicycles

Americagoesforrail….espLRTnotbuses

UScapitalcostoftransit

USOpera8ngcostoftransit

Measure M in Los Angeles passed in November 2016 to build $140 billion of transit

OUTER AREAS DESPERATE FOR RAIL…Sydney

20

2.3–7.67.6–10.110.1–12.612.6–15.015.0–18.418.4–24.524.5–39.0

AnnualVehicleKmperHousehold,2004

Outersuburbsresidents,par8cularly

thoseawayfromraillines,drivemuchmorethaninnersuburbsresidents.

Year Route Km

1982 42km

1983 63km

1993 92km

2004 96km

2005 100km

2006 172km

Total 172km

54 kms within freeway median

5elec&onsextendedtherail…

Na&onalandglobalmodel…$17-22millperkm.Carrying8lanesoftraffic.

TOD’s-Re-urbaniza8on…EastPerth.

New urbanzation too – Joondalup 33 kms out…

Cockburn Central - Middle suburb TOD

Knowledge-citylightrail…

Greater Curtin wants to create a city in the suburbs using rail to create the spatial efficiency…

Reducing car dependence saves space ONE LANE - people per hr: Freeway 2,500 Busway 5000 LRT 10-20,000 Train 50,000

Theory of urban fabrics – three cities exist in all cities based on travel times.

Walking–2-4km,100/haTransit–5-50km,35-100/haAutomobile–10-80km,10-35/ha

TOD’sarerecrea8ngwalkingandtransitcityfabric

Walking and transit urban fabric have the highest efficiency at creating face-to-face interactions…

Thetop6mostwalkableci8esintheUShave38%higherGDP.

70%ofknowledgeeconomyworkersinBostonliveinwalkableareas.

Ed Glaiser and Richard Florida were

right…

TysonsCorner–fourTODsreplacinganEdgeCitycar-baseddevelopment

Originalconcept…

Decoupling mostly in the cities with rail investment, eg Washington DC and Portland

How much is VC happening?

PerthSouthernRail…130kphspeed,Carrying8lanesoftraffic.

The land value near rail stations on the Southern Rail increased by 42% in 5 years….thus beginning to create transit city fabric…. CUSP modeling shows that 60-80% of the funding could have been found from value capture. Opens the door to more private sector involvement

Sydney similar results… • Proper8eswithin400mofasta8onare4.5%higherinvalue.• Proper8eswithin100mfromMainRoadslose7.6%invalue.

Bangalore even more dramatic….

0%

5%

10%

15%

25%

30%

0.5km 1km 2km

11%

25%

8%

0km

Distancefrommetrorailsta&on

Prop

ertypric

eup

liR

Catchmentarea

-2%

0%

2%

4%

6%

5%

Before (-1year)

Opera8onal year

A]er (+1year)

Prop

ertyPric

eUpliR

Acrossthecity

Metrorailprojectstages

4.5%

-1.8%

1.8%

2012-2016

ThewholecityincreasedinvalueduetothenewMetro

Notjustshi]ingvalue

VC is happening…. So why is VC not being

embraced? Perhapswehaven’tworkedouthowtodoit?

How to make VC happen? Getrailoffwelfarenowthereisamarketforit….

1. Accessibility – must save time 2. Agglomeration – dense enough,

10,000 people and jobs 3. Amenity – TOD/POD/GOD – walkable and sustainable

ElementsofValueCrea8on

AllarecreatedthroughPARTNERSHIPS

The attractions of dense urbanism in walkable TOD’s….

Economicandsocialajrac8onsofwalkableurbandesign...

NewYorkCitytransforma8on

15/3/17 48

48

Creating amenity - WGV – multiple sustainability benefits – from NIMBY to PIMBY

Solar electric transport in all modes…Sydney’s new light rail – no catenary

Prime Minister

Uselandvalue.…

Pearl District LRT paid for entirely through land development….

From TFL to LFT….

How?

• Don’tdefinetheroutejustacorridor.• Callforexpressionsofinterestfromconsor8athatcanbuild,own,operateandfinancetherailprojectthroughlanddevelopment.DBFM

• Governmentneedtomanagetheprocurementtoenabletransitsystemintegra8onandlandassembly.

•  ThisistheJapanesesystem.

Stirling to Curtin Indicative Urban Rail Route Linking Perth and Peel @ 3.5 Million Activity Centres

S8rlingStrategicMetropolitanCentre

PerthCapitalCity

Bentley-Cur8nSpecialisedCentre

LINKING DESIGNATED ACTIVITY CENTRES

EastVictoriaParkSecondaryCentre

GlendaloughDistrictCentre

MountHawthornDistrictCentre

Activity Centre

Corridor

Pilot Urban Rail Route

BentleyTechnologyPrecinct

RiversideProject

S8rlingCityCentre

RiversideProject

CausewayPrecinctRedevelopment

CausewayInterchangeRedevelopment

TownCentreRedevelopment

BentleyTechnologyPrecinct

Cur8nCityMasterplan

AlbanyHighwayRedevelopment

ElizabethQuay

PerthCityLink

PerthCommijedandPlannedDevelopment

CharlesStreetRedevelopment(newproject)

ScarboroughBeachRoadUrbanDesignFramework

HerdsmanGlendaloughRedevelopment

Stirling to Curtin: Key Development Areas

S8rlingCityCentreRedevelopment

Results…

• Unlockslazylandassets•  Integrateslanduseandtransitasbothdependonfinance• Changesthepoli8csofredevelopmentascommuni8esgettheirrail•  Enablesprivatesectorexper8seinlanddevelopmenttodrivecityformandtransit–asithasmostlybeenthroughhistory.

58

WEST PALM BEACH (1 hour)

FORT LAUDERDALE (30 minutes)

DOWNTOWN MIAMI

ü  First private

passenger rail

service

ü  Designed to

serve tourists,

business

travelers and

Florida

residents

ü  Stations in key,

downtown

areas

ORLANDO (3 hours)

A NEW TRAVEL ALTERNATIVE FOR SOUTH FLORIDA

MIAMICENTRAL

+ INTEGRATION OF COMMUTER RAIL

FORT LAUDERDALE STATION

NeedsmorePODandGOD….

Every city wants to create the Polycentric City with TOD’s and urban rail…..