CBD Rail Link Business Case

CBD Rail Link Business Case

Executive Summary: CBD Link Business Case (Nov 2010) Background The CBD Rail Link will be the most significant improvement to Auckland s transport network since the opening of the Auckland Harbour Bridge. ARTA has been working with KiwiRail since 2009 with a view to designating the route in Auckland s District Plans. Following assessment of various CBD Rail Link route options and station locations, a preferred option was identified in early 2010 as shown in Figure 1. Figure 1: Preferred Option Route and Station Locations The preferred option was approved by ARTA and KiwiRail and endorsed by the Auckland Regional Council, the Auckland City Council and the Regional Transport Committee in early 2010. Since then work has focussed on completing the concept design for the preferred option, the business case to support the Notice of Requirement and preparing the Notice of Requirement (NoR) documentation. The concept design and draft business case have now been completed by a consortia of Aecom, Parsons Brinckerhoff and Beca (MPB&B). This Executive Summary summarises the draft CBD Link Business Case in terms of the following: Economic growth and development of the region and CBD The role of the transport system in enabling growth and development Consideration of alternatives Economic evaluation of the preferred CBD Link option

Growth and Development of Auckland and the CDB An economically prosperous Auckland is vital to the New Zealand economy. The Ministry of Economic Development states: OECD research shows that successful member countries have at least one strong international city. These cities drive national economic growth and compete for skilled workers, international and innovative companies, and high value economic activities. In New Zealand, Auckland is the only city that is positioned to take on the international city role... Despite transport issues, the city also appears to be benefiting from economies of scale. Recent evidence shows that Auckland has a productivity premium of around 50% higher than that outside Auckland. It is expected that over the next 30 years Auckland s population will grow by just under 1 million people 75% of New Zealand s expected population growth. The development of the CBD is key to providing the economic base to support this growth and to ensuring continued growth in productivity. Land use projections prepared as part of the 2010 Regional Land Transport Strategy show that usually resident population and employment within the CBD will increase by 80,00 people and 60,000 jobs respectively by 2041. Other forecasts indicate that these growth scenarios are conservative, particularly those for employment. Should they eventuate, then the rail patronage estimates and benefits will be higher than estimated in the Business Case. Role of the Transport System in Enabling Economic Growth Even with relatively high CBD population forecasts, the growth of the CBD will result in an increase of almost 50,000 person trips into the CBD each morning peak period a 65% increase over the 76,000 trips currently entering the CBD. In addition to this growth from trips from outside the CBD, given the increase in CBD resident population, the number of walk trips made within the CBD by residents is also anticipated to increase significantly. This increased demand imposes critical pressures on the current transport network serving the CBD. Without further investment to cope with this demand, the increased traffic will result in even more severe congestion with consequent unreliability and delays. The ability of private transport to meet this growth will be severely limited by the capacity of streets in the CBD, parking constraints and more demand from bus and pedestrian priority at signals. Public transport will be the primary mode to meet this demand as shown in Figure 2.

Consideration of Alternatives The business case includes a detailed consideration of alternative transport solutions to meet the future growth needs of the CBD. Three options were identified and developed as part of the analysis: On-surface bus capacity improvements A central area bus tunnel with 3 stations A CBD rail tunnel with 3 stations (CBD Rail Link) The CBD Rail Link was ranked highest for cost effectiveness and impact due to the projects ability to unlock the unused capacity that exists within the current rail network by providing relief from the Britomart Station s severe limitation on service frequency and growth for passenger services. The proposed CBD Rail Link is the best high-capacity transport option for meeting the increased future transport needs of Auckland CBD. The expected demand for travel into the CBD in 2041 by mode is shown in Figure 3. The dramatic increase in rail travel to the CBD due to the CBD link reduces congestion by reducing the number of cars on the road and also relieves the CBD of some of its bus congestion from the south east and west. It is important to note that while the number of people travelling by rail increases by a factor 6, there is still an increase of 14,400 trips by bus, primarily from the Northern Busway. Table 1 shows the anticipated future demand at the CBD Link stations during morning peak travel time of 7am to 9am. Station Total Passengers on Network Opening - 2021 2041 Total Passengers using station Total Passengers on Network Total Passengers using station Britomart (from Parnell) 10,000 5,300 17,700 9,000 Aotea 9,400 7,000 15,700 11,700 "K" Road 10,000 3,000 15,800 5,500 Newton 9,900 2,500 15,100 3,300 The busiest part of the network in the 2041 2-hour morning peak would be the eastern approach to Britomart, with around 17,700 passengers. Flows on the Rail Link itself are forecast to be around 15,700 passengers on either side of Aotea station and 16,200 passengers where it leaves the Western Line. Currently, around 5,300 people board and alight trains at Britomart station during the current morning peak and 4,900 people travel by train into Britomart from Parnell. The implications of this include the new station at Aotea is forecast to become the busiest station on the network, with almost 12,000 passengers every morning 2 hour peak compared to 9,000 at Britomart by 2041; the three new stations in total are forecast to have over 20,000 passengers every peak in 2041; annual rail patronage with the CBD Rail Link is forecast to reach almost 50 million by 2041, more than twice what it would be if the Link wasn t built; and the CBDRL will remove around 15 million car-kilometres from the network in 2041.

Economic Evaluation Standard transport appraisal, as prescribed by NZTA s Economic Evaluation Manual (EEM), was carried out on the CBD Rail Link and the results shown in Table 2 below. Table 2: Economic Evaluation Using Standard NZTA EEM Procedure Item Estimated Benefit 8% Discount Rate 6% Discount Rate 4% Discount Rate Capital Cost and Incremental O&M costs 1 -$1,330 -$1,440 -$1,538 Transport Benefits $1,319 $2,057 $3,277 Wider Economic Benefits (EEM) $185 $288 $459 Net Benefit (Cost) $173 $905 $2,197 Benefit Cost Ratio (BCR) 2 1.1 1.6 2.4 1 Full project over 30 years 2 Rounded to 1 decimal place as per NZTA EEM At the standard 8% discount rate, the project is comfortably over a BCR of 1. Lower discount rates are also modelled as the NZTA presently model all Roads of National Significance (RONS) at lower discount rates. It is considered appropriate to compare the CBD link against the RONS as they share similar objectives around enhancing productivity. The conventional BCR does not consider the considerable additional value of the project through improved land use, urban regeneration and transformation and economic development. This considerably enhances the BCR of the project as shown in Table 3 below. Table 3: Economic Evaluation Including Economic Transformation Benefits Item Estimated Benefit 8% Discount Rate 6% Discount Rate 4% Discount Rate Capital Cost and Incremental O&M costs less revenue 1 -$1,330 -$1,440 -$1,538 Transport Benefits $1,319 $2,057 $3,277 Net Value Added from CBD Increased Productivity $3,333 $4,720 $6,879 Net Benefit (Cost) $3,322 $5,337 $8,618 Benefit Cost Ratio (BCR) 2 3.5 4.7 6.6 The CBD Rail Link Business case was peer reviewed by PricewaterhouseCoopers (PwC) who are currently involved with the economics, finance and procurement options for the Preliminary Business Case for the Additional Waitemata Crossing for the NZTA. They have also just completed the Stage 2 Business Case this year for Wiri Prison and are experienced in working with Treasury s new Better Business Cases for Capital Proposals framework. The cost estimate for constructing the CBD Rail Link ranges between a mean 50 percentile cost of $1.99bn and $2.38bn at the 95 percentile. These costs include property costs of approximately $230m gross. The estimate, risk analysis and procurement options have been peer reviewed by an independent expert team experienced with advising the NZTA on the Waterview Connection project and recent Australian tunnel projects. The peer review has endorsed the estimate as appropriate for the delivery of the project.

Programming and Timing The consultant team preparing the draft business case have identified an initial programme to designate the CBD Rail Link alignment and stations and complete construction by 2021, as indicated in the Regional Land Transport Strategy. Under current funding, programming and resource consent regimes, the CBD link is scheduled to open in 2021. The programme has the potential to be bought forward should these constraints be negotiated earlier.