$300M LIGHT RAIL WINDFALL FOR LANDOWNERS
27 September 2016, Written by Nick Nichols
THE Gold Coast light rail network has boosted the value of properties within a short walking distance of a tram stop by $300 million, or almost quarter of the total $1.3 billion cost of the first stage of the project, says a university researcher.
While private landowners are the primary beneficiaries of this increase, the researcher estimates the state government and City of Gold Coast are also reaping around $11.8 million a year in extra revenue through higher land taxes and rates charges.
This is equal to the state and local governments capturing a 3.9 per cent return on the $300 million valuation boost in the first year of operation for the light rail.
However, Queensland University PhD candidate Cameron Murray who undertook the research suggests the state government could do better by eliminating exemptions for land taxes.
"That would automatically capture 17 to 26 per cent of the potential revenue from the value gains," he writes in an article published by The Conversation.
Murray undertook the research after finding a dearth of information on value capturing as a means of funding new infrastructure projects.
"Such mechanisms are now major topic of debate in Australian politics, yet there is almost no evidence in the literature of the size of land value gains from recent infrastructure projects in Australia," says Murray in his report.
After examining the movement of land values over 2015, and breaking down the data to those properties within 400 metres of a light rail station, Murray found land values along the Gold Coast light rail route jumped an average of 7.1 per cent more in 2015 than properties up to 2km from the light rail route.
The findings match research that shows gains of between 4.5 per cent and 8 per cent for Sydney properties located along new ferry terminals and heavy rail stations.
However, Murray also suggests his estimates for land value increases could be conservative, as increases could have occurred ahead of the completion of the light rail outside of the parameters of the study.
"This estimate can be used to inform the public policy discussion about capturing land value gains to fund transport infrastructure," says the report.
The research finds that the City of Gold Coast is scoring the lion's share of the revenue windfall, with $4.8 million in extra land rates charged to property owners and $4.5 million in revenue from the transport levy that was introduced in 2011.
The research estimates the state government reaped an extra $2.5 million in land taxes in 2015, although with exemptions removed that figure could have been as high as $3.9 million.
Based on the city council's $120 million contribution to the project, Gold Coast ratepayers are earning a 7.75 per cent gross return on the transport infrastructure investment.
Murray concludes that the data shows 'just how large the scope is for further transit funding mechanisms through direct charges of local beneciaries from the land value increases'.
"One of the primary beneciaries of public investment in new transport infrastructure are landowners in locations that obtain improved accessibility," writes Murray in his research paper.
"However, rarely do these beneciaries contribute to the funding of the infrastructure in proportion to the benets they accrue."
Murray notes that high rise developers in particular are benefitting from an easing of parking requirements for projects along the light rail route.
Author: Nick Nichols