Tomorrow Councillors will debate the feedback from submissions on the 2012-2022 Long Term Plan (LTP). There’s a lengthy agenda item on the LTP on the Council website, but even it doesn’t get into the details too much – detailed papers will supposedly be distributed separately, which means another mass of documents are likely to be uploaded onto the Council website in the next couple of days. The LTP is a really important plan as it effectively spells out the Council’s funding plans over the next 10 years, but most particularly in the first three (as new LTPs must be put together every three years). While there’s the opportunity each year to fine-tune an LTP by way of the annual plan, the LTP is where the meaty decisions are made.

And there’s not much more of a meaty issue at the moment than the City Rail Link. An NZ Herald article yesterday highlighted the importance of tomorrow’s meeting to the future of this project:

The $2.86 billion central rail loop remains the prime project in Mr Brown’s first 10-year budget, which faces a bumpy ride from councillors on Wednesday.

The day before Finance Minister Bill English unveils the Government’s Budget, Mr Brown and councillors will lock horns in the Auckland Town Hall over a $58 billion Super City budget.

Mr Brown said the council could not back off the need to invest in the future of the city and deal with major growth, but the budget had to be fair, just and prudent to the city’s 516,000 residential and business ratepayers.

Despite growing criticism towards the central rail loop, Mr Brown said it still had strong support.

The mayor’s determination for the 3.5km underground rail loop will be tested with a call by Citizens & Ratepayers and other right-leaning councillors to freeze funding on the project until it has Government backing.

The Government has serious reservations about the project.

Orakei councillor Cameron Brewer yesterday said it was crazy to spend $112 million in the coming financial year on land purchases for the rail loop when it had no funding certainty.

Mr Brown has put the Government down for half the cost of the project in the 10-year budget. Ratepayers are being asked to pay 14 per cent ($400 million) and alternative funding sources, such as tolls, the remaining 36 per cent or about $1 billion.

I get a bit annoyed when the Herald uses the phrase “growing criticism”, supposedly based off quite a few submissions to the LTP opposing the project because of its cost. If we’re going to attach “growing criticism” to the CRL then we should always attach “deeply unpopular” to the Puhoi-Wellsford holiday highway, based on submissions about that project.

That said, as this recent post pointed out, there’s a lot of uncertainty around the cost of the CRL and if I were a councillor I would absolutely want clarity on the matter. The price of the CRL seems to have edged up from $1.5 billion to $2 billion, then $2.4 billion and now, supposedly, $2.86 billion or even $2.94 billion – seemingly depending upon what day of the week it is. We know that the actual raw cost of the project (excluding contractors’ margins, design, contingency etc.) is under a billion dollars and has been peer reviewed on many occasions – so where on earth does the other $2 billion come from? We also know that Auckland Transport is looking at ways of reducing the project’s cost, where does that fit in the bigger and bigger numbers getting fed to the public all the time?

The most recent cost breakdown we’ve seen (emailed by Auckland Transport’s Wally Thomas to fellow blogger Patrick) suggests the project’s core cost remains at around $2 billion, with the extra money related to dollar inflation, extra trains and other additional infrastructure (which, I stress once again, is debatable whether it’s ‘part of the project’). Interesting to also see some potential savings of $166 million identified already: All that said, I think it’s time everyone took a big deep breath about the CRL project and actually looked at where the project is at, where it’s likely to get to in the next 3 years (the lifespan of the LTP), what money is actually needed during that time – and most particularly what money is needed over the next 12 months as next year’s Annual Plan offers the opportunity to revisit the issue. So let’s try to answer a few questions:

What money is needed in the next 12 months and where will that get the project?

According to the article above, around $112 million is proposed to be spent on the CRL during the 2012/2013 year – mostly on land purchasing but presumably also on consenting and detailed design. With the project’s route not yet even protected and no resource consents for its construction obtained, we’re certainly not starting construction in the next year. Money spent on property purchase should even be considered an investment, as surely once the project is completed that land will have increased in value (due to enhanced rail accessibility) and be prime for redevelopment.

To keep up with the proposed timeline for the project, by this time next year we will be well into securing the notice of requirement (route protection), resource consents and undertaking detailed design, as well as completing important property purchases for parts of the route not in a deep tunnel. What does that all mean? Well….

It means that this time next year we will have got this project further than ever before. Further than the 1920s scheme, the 1950s scheme or the 1970s scheme.

What does approving $112 million for next year NOT mean?

So let’s say I was a councillor worried about burdening ratepayers with a project that seems to be increasing in cost all the time, with no sign of commitment to the project yet from government. I would probably want to be sure that I wasn’t giving the absolute go ahead to the CRL’s construction at this time. Further work needs to be done to get the costs down, further work needs to be done to forge greater agreement between central and local government over its merits. Further work is needed to test public acceptance of the “alternative funding mechanisms” that will supposedly help contribute around $1 billion to the CRL’s construction cost.

Fortunately (for those such councillors), approving the $112 million next year does not mean the issue can’t be reanalysed in 12 months time to see where things are at on those matters. It seems pretty likely to me that the project’s cost will come down significantly, the consenting process and further detailed design will highlight ways in which the project can be further refined. Hopefully there’s also some good dialogue between council and government bureaucrats to resolve outstanding differences between business cases. In short, it seems like we’ll be in a much better position in a year’s time to really assess the long-term viability of the project than we are now – and the money we need to spend in the meanwhile is largely on land and therefore can be resold.

What happens if next year’s money is NOT approved?

Well this is why I call it “D-Day” for the City Rail Link project. If there is no money made available to progress land purchase then Auckland Transport’s ability to protect the route becomes severely compromised and effectively the CRL grinds to a halt: much as it has done so on so many occasions in the past. We go back to future scenarios with a rail system hitting capacity by the end of the decade, a city centre swamped with buses, an inherently inefficient rail system, more congestion on our roads, less ability to achieve the intensification outlined in the Auckland Plan, a less economically successful city.. the list goes on.

Clearly the project is not going to be “approved and funded” tomorrow. I suspect we’ll need to see a change of government for it to end up being actually funded – but that’s a debate for another day. So the council’s decisions tomorrow aren’t going to make the project happen, they’re not writing it a giant blank cheque. However, the council could certainly do the project’s future a lot of damage tomorrow – largely reacting to a bit of hysteria about the project’s costs that Auckland Transport should have dealt with a long time ago.

For now, we can just hope the councillors show some vision, don’t freak out, take a big deep breath and realise the money they’re actually approving is effectively an investment in some city centre land. I’ve got my fingers crossed.

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  1. Buying land in the middle of Auckland? It’ll never be cheaper than right now…

    I’d also like to add that without the CRL taking traffic off the roads our air is going to be (excuse the phrase) like breathing shit.

    I’m not prepared to live in that Auckland.

  2. Side- topic- are we on the new server yet?

    It’s slowwwwwwwwer than ever, and database disconnects still happening…

  3. The councillors better show on Wednesday that they’re not just a bunch of DFs (as they’re perceived by many to be) and vote to ok the $112 million. As has been highlighted, AT have done a piss poor job so far of explaining the costs and they’d better get that sorted tomorrow as they’re already advertising for a Design Manager for the CRL Project. Does AT want the CRL Project or not??

  4. Geoff, problems with the server migration mean we’re on the old one still, so yes the goods new is that it can still get better.

    As for the CRL if D-Day comes and goes with no funding, then it can be revisited next year and the year after that.
    Of course losing up to 2 years of time due to no funding is a silly mistake for the councillors to make.

    And even if the Council spent all the 112m as requested, there is little that couldn’t be reversed out by selling the purchased land, at a profit no doubt.
    Thus helping overcome some of the design and NOR related work that wouldn’t be recouped if the CRL was stopped in 12 months time.

    So Councillors, there is nothing to lose by going forward and in fact everything to gain.
    Heck, for some of you it may help your election chances next year if the CRL designation and land purchasing process is started.

    For those still on the fence, say yes, and then you can always argue after next years electrion that the “Previous administration” got locked into contracts you can’t back out of as an excuse to keep on. That excuse has been used more than once before by both left and right leaning councils all over Auckland.

    1. Greg – and others like Nick and Stu.

      I hear what you are saying – and do not give me idea in your second to last paragraph 😉 😛

      However could a PPP work?

      1. Are you suggesting a PPP for the CRL? If so I can’t see it working for the tunnel but there might be opportunities to use them to help with the funding for the stations i.e. how much would direct access to the Aotea station be worth to Skycity?

        1. Can’t see the land above the tunnel being part of a PPP and unless its near a station then theres no council bargaining chip.

          Mind you having said that, in Singapore many of the MRT stations have entries/exits all over the place (from half a block away in all directions) it seems, so if you took that model and allowed station access from all the nearby large buildings in return for granting rights to put the tunnel underneath, the council could save a pile of money.

          And if I recall one of the biggest costs for land purchases in the CRL is the need to buy and bowl/demo the Downtown centre (and good thing too), but if you recall Nick R’s idea recently about putting the CRL under Quay street so the track does a bend into Albert Street towards AOTEA then does the Downtown centre still need to be bought and bowled to make that option work? [DOn’t get me wrong that building can come down, but not at Councils expense unless it helps get the CRL built].

          Seems to me that the more you look the more savings can be made without compromising the end result. Any building owner who doesn’t want a piece of the action with regards station access is being very foolish as their next door landlord competitot will, and they and their tenants will lose out with foot traffic and easy access to the stations – think of station access as building improvement and any Landlord worth their salt will want in.

          If the council played it right, they could get a real bidding war going on who was to get access to the new stations, and thus reduce costs.
          Which I’m for to a point – don’t want some ugly outcome like the AOTEA Centre where every brick, corner and chair is sponsered by some corporate or other.

          As for SkyCity access – yeah maybe, if they’re still in the casino business in 202X when the CRL completes.
          As I see it theres a good chance their gaming tables, pokies and casino licenses may well have gone the way tobacco in NZ will have by then.

        2. The downtown building will have to be at least partially demolished regardless, there is no way of getting tracks through there without doing so and even Westfield want to redevelop the site and the last thing we saw was a wish for a monster tower on the site.
          I think that Aotea has the best chance of getting private sector funding as it is surrounded by businesses that would really benefit from the direct access, Skycity is obviously one but others would include the Crowne Plaza/Atrium on Elliot, what ever goes into that empty site next door, a tunnel under Wellesley St into what ever gets built in the carpark on the corner etc. If could be done as a one off charge or perhaps a better option would be an ongoing access fee that they pay with the money going towards paying off a loan for the thing.

          K Rd and Newton stations might be a little harder but that is where delaying them and waiting till there is the resources and developers ready to do things properly might be a good idea.

        3. same thing in Hong Kong, the MTR corp is one of the territory’s biggest property owner/developers with hugely valuable real estate on and around their stations. Lease income is one of their biggest revenue streams.

  5. Curiously today the NZHerald published an article:
    Auckland Transport’s board decided yesterday to include an investigation into electrifying rail to Pukekohe as a late addition to its 10-year programme, in response to public submissions.
    As much as I would like to see Puke electrified, I hope it doesn’t push out the CBD Link for another year.
    Estimated Puke Electrification costs are $115 and here we need $112 for the CBD Link! Looks like a problem to me.

  6. that is quite amusing seeing the Citrats moan about $112 million for the CBDRL, which can all be gained back due to property sale, and $115 million for Pukekohe electrification, which would be nice but very expensive for the much lower number of passengers.
    Would be a good idea on the long term however no rush when need money for CBDRL and bus improvements.

  7. Another thing to remember with the costs above, we have heard that AT is looking at the possibility of delaying a couple of the stations which could save up to $300m each. If so that could bring the costs for the tunnel and other network upgrades/extra trains down to about $1.6b.

    What is likely is that we end up seeing the same process as what happened with Waterview, that started out at around $1.5b then ballooned to about $3b as work got properly started on it only to come back down again as things got further along. In the end the tunnel is being constructed for $1.4b

    1. Yes but all the associated work on SH16 still makes completing the WRR add up to over 3bil. Then we all have to buy and run and park all those cars for it to be useable…. A cost that they dont calculate, unlike the vehicle, maintenance, and running costs for the rail system.

      1. It will actually be quite a bit more than $3b as I will show in a few days time but the point is the cost tunnels dramatically increased a around 2008 but then came down as the plans were refined further. I think we could be seeing the same thing start to happen with the CRL and I suspect there are possibly more savings to be had yet. The key is to allow the engineers to keep working on it to do that and not cut off all funding now.

  8. I worry about not building stations until later. Needs to be a full investigation of how much extra the stations will cost when they are built later. For example I imagine some underground work will still need to be done where the stations are to be built in future, as if this is not done they will be much more expensive to build later on.
    Also need to look at how much disruption would be caused by building the stations at a later date.
    I can see the scenario whereby CBDRL is very successful, and immediately people call for the 2 left out stations to be built. If this then means that the CBDRL will be disrupted will be very frustrating for all involved.
    However if removing these means we can get the headline cost down to a much less scary 1.5 billion will be easier to get political approval. I cant see how can get accurate costings without geotech drilling anyway, guess this can be done after land acquisition.

  9. When Melbourne’s CBD rail loop opened in 1981 only the cut-and-cover station (then called Museum) was open, and the 2 cavern stations (Parliament and Flagstaff) were boarded up and couldn’t be seen from the train.

    Melbourne’s 2 cavern stations have relatively narrow bores of about 7 m diameter for the platforms with connecting pedestrian tunnels. I believe the current design for Auckland’s 2 cavern stations are single large bores, large enough for 2 train tracks and a centre platform. There is little scope in this design to stage the construction. If the design were changed to something more like Melbourne’s, there would be scope to bore the platform tunnels when the rail tunnels are built, and finish the smaller connecting tunnels, and escalators as a separate project.

  10. I think the Herald article highlights the now essentially political nature of the CRL stoush. No informed stakeholder seriously questions it’s need, and the oppostion is purely now in terms of mis-information and flannel. Len Brown has hung his hat on the CRL – it was a core election promise (along with not selling assets) whilst the CitRats (the National party in an SUV) and the National government seem equally determined to both white ant a Labour aligned mayor and play to their support base in the roading and developers lobby groups. My guess is the council will approve the CRL, but the government will obstinately refuse to provide any funding or allow the SuperCity access to any method of raising extra money itself; the council will provide enough money to keep the project ticking along until 2014, when it seems likely a Labour/Green coalition will defeat National and the money will then be forthcoming from Wellington – if only as part of a coalition deal between Green and Red!

    1. Let’s hope. A bad decision today could spell gloom for years, even if the project won’t be going away totally, of course. Not this time.

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