The Property Council is “vehemently opposed” to a special rates zone or levy to fund the new light rail line, ACT executive director Catherine Carter says.
The “value capture” options being considered amounted to “just another property tax in disguise”, she said, and would stress an already troubled property sector.
Ms Carter spoke at a lunch, where property investors questioned project director Emma Thomas and Capital Metro chairman John Fitzgerald on key aspects of the $600 million-plus project.
There was a keen level of interest in the project, which is expected to transform the rail corridor from Gungahlin to the city, but also the level of concern about the government’s approach to funding it.
Capital Metro is the largest infrastructure project ever contemplated by an ACT government, but an accurate costing has yet to be released, the project has yet to be budgeted, and the government is yet to decide on a funding model.
While more clarity was expected in the ACT budget on June 3, Chief Minister Katy Gallagher has made it clear that cabinet won’t make financial decisions about the project until the end of July.
Central to the government’s considerations to pay for the rail line is the concept of “value capture” which, in essence, is using an increase in land values in the corridor to raise money for the project.
The government has suggested a 25 per cent increase in home values in the corridor, and options are being modelled for levies and a special rating zone so it can “capture” some of that value.
It points to work by James McIntosh at Curtin University, who investigated value capture options for Perth transport, which found that homes in rail corridors (400-800 metres either side of the track), increased in value by 5 to 25 per cent per cent, and some commercial properties skyrocketed by more than 50 per cent.
In Brisbane, homes with good public transport were worth 22 per cent more than those in the worst public transport areas.
The McIntosh study points to a range of ways to raise money: a city-wide levy, or a levy on areas expected to benefit from the line (a betterment tax), special rating zones, a parking levy in the zone, a developer contribution, and a requirement for developers to provide open space or infrastructure that would otherwise fall to the government.
The government can also benefit by selling land and advertising space along the rail line, selling the rights to “air space” above rail stations and other space for shops around stations, and higher rents for government-owned property.
On the Gold Coast, ratepayers are charged a $100 transport levy in perpetuity.
But Ms Carter said Property Council members – which included big companies likely to build the rail project and those owning properties in the corridor – were strongly opposed to value capture.
“To tax again an already overtaxed sector in a property market downturn is not the right approach and would be strenuously resisted,” she said.
Value capture made assumptions about how much properties would increase in value, and taxed the property before the increase in value was realised, she said.
It also ignored the economic benefit that flowed to the government from investing in growth and funding it from its own balance sheet.
The property and construction sector was the second-largest employer in Canberra and already responsible for more than half the government’s tax revenue, Ms Carter said.
The McIntosh study points to some negatives of value capture. Not everyone benefits from the rail line, putting into doubt the fairness of a city-wide levy.
A levy and rating zone limited to the corridor come with the problems of how to estimate the actual value increase, the fact that while some properties rise in value others can take a hit if they’re too close to a rail line, and the danger of discouraging developers from investing in the zone.
The same problems arise with developer contributions, with the danger that developers will avoid the zone, or develop just outside it, and also resulting in less affordable rents in the area.
Ms Thomas and Mr Fitzgerald have been asked to address Wednesday’s lunch on the project timetable and delivery model, funding, implications for the Northbourne Avenue corridor – where the government is looking to sell and redevelop buildings – and lessons learnt from other projects.
Original article published at www.canberratimes.com.au by Kirsten Lawson, Chief Assembly Reporter for the Camberra Times, 20/5/2014