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The Town Hall is our subscription commentary focusing on Auckland policy and political developments. Every month it provides an unique and invaluable briefing on what's happening in Auckland Council and in Wellington that is impacting on New Zealand's international city.

The May Town Hall

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May Town Hall sneak preview...

Showdown on Albert

Later in this edition we rummage through the theatre associated with the cost increases for the CRL and what that means for ownership of the city’s carparks. First though, and much more interesting, the unrest that has been festering away among lower Albert St business owners affected – so materially and, potentially, fatally – as the cut and cover construction on their doorsteps, which has dragged on, and on, looks set to boil over.

The business owners have been vocal in their frustration from the early days of the project, growing more agitated as the months passed. That rancour, however, has now been taken to a whole new level, with a formal cease and desist letter having been sent to City Rail Link Ltd (CRLL) by the Stamford Plaza Hotel in March, along with threats of legal action to achieve injunctive relief if necessary.

The hotel claims there had been an agreement that the works in question were to be completed by March of this year (within three years of construction commencing).The letter argued, instead, no end was in sight to the excessive dust, noise and vibration being caused, exacerbated by severely limited vehicle and pedestrian access.

Construction of the city centre aspects of the project have indeed been pushed out until November 2020.

While CRLL is now in discussion with the Stamford, the response coming from that entity, and from within the Council group is: there is no budget for compensation… end of story. Which is simply a statement of fact (the budget part, at least), relevant but not exactly the point.

The law in this area is not particularly clear, or well tested, coming down to an interaction between the Resource Management Act and the Public Works Act.

Having said that, it could well be in this case that it is a little bit more straightforward. AT’s ‘Social Impact and Business Disruption Delivery Work Plan’, submitted as part of the consents process for the works, stated that:

“AT will consider financial compensation claims on a case by case basis” (pg.29)

Crying poor, and ignoring affected parties, is hardly the same thing as considering claims as was the commitment made to the Commissioners who granted consents. CRLL may feel that such commitments, made before their time, don’t impact on them… but that would be flabbergasting.

The reality is, most months somewhere in the City, compensation will be paid, through some mechanism or other, to facilitate public works, with it being seen as a sensible, path of least resistance approach. The difference with the CRL… the sheer scale of the issues, and figures, potentially involved.

There is a more fundamental, first principles if you like, question at play here regarding how both the cost and value uplift associated with a major transformational project should be apportioned or captured, and to or by whom?

When it comes to this issue, both the Council and the Government appear to be guilty of attempting to play an entirely one-sided, self-serving hand.

There is a great deal of work going on within the public sector exploring mechanisms through which those who specifically benefit from the value created by a project (to an extent greater than the general public benefit) can be required to contribute to a greater share of its cost. In the lexicon of revenue policy, it’s called value capture or betterment.

Leaving aside how fraught coming up with practical mechanisms would actually be (a case we’ve argued often in the Town Hall), there is a strong theoretical case here.

Some businesses will benefit greatly from the CRL, or in fact any major transport project. Similarly, individual residential property owners, benefiting from improved transport access and services, are likely to enjoy increased valuations.

There’s absolutely no reason, in theory, why such owners shouldn’t contribute more to the project than those who will only ever enjoy the public good benefit component of the project. We remain convinced that our governments, whether local or central, will only ever be chasing their tails on this funding source, a distraction. But that’s another story, as chasing their tails seems to be exactly what they continue to have in mind.

If you accept there is a case for value capture contributions, and those in charge demonstrably do, you can’t, as the parties to the CRL are doing, at the same time reject the notion of recognizing the plight of those who are shouldering a great share of the costs of the project (i.e. suffering negative value impacts). If you try to, you run the risk of having suggestions of hypocrisy lobbed in your direction.

There will always be people and businesses who suffer a significantly greater cost from any major infrastructure development (disruption, loss of custom, even business failure). How this is recognised is an entirely appropriate question for public policy to grapple with, and one that cannot be treated any differently from betterment issues.

So, yes, there is no budget available for compensation. It’s worth remembering, of course, when those budgets were set, the timeframe, and disruption, wasn’t expected to blowout by 20 months, with the works taking more than 50% longer than planned. Regardless, if you look at this issue objectively, on the basis of what is fair and consistent, the lack of a budget is an excuse… not a reason.