Light rail project 'hugely disruptive' to central Auckland businesses - report

Artist impression of light rail on Queen Street, the construction of which will cause severe disruption to local businesses, a new report says. Photo / Supplied

A light rail proposal that includes a tunnel under Queen St is being described as impractical, hugely disruptive and "prohibitively expensive".

And the report by Portal Asset Management, a real estate management company, is questioning the value of light rail given how damaging the construction phase will be to retail businesses on Queen St and Dominion Rd.

But Transport Minister Phil Twyford said the Government is determined to learn the lessons of the City Rail Link (CRL) and minimise business disruption, no matter which proposal it eventually chooses.

Twyford did not mention compensation for business losses, but has ordered the NZ Transport Agency and NZ Infra, the two entities competing for the light rail project, to include in their proposals how they will address the impact on local businesses.

Light rail projects overseas have included a mechanism for compensation over business losses, but no such mechanism was originally included in the CRL project.

The report, written by Michael Urquhart for a property-owning client in central Auckland, said building light rail would be "extremely disruptive" to retail businesses in Queen St and Dominion Rd.

It comes as the Government considers the best option for light rail from the Auckland CBD to Māngere and on to the airport.

It is considering two bids - one from NZTA and one from NZ Infra, a joint venture between the New Zealand Super Fund and Canada's CDPQ Infra group.

Transport Minister Phil Twyford says the proposals for light rail have to include how disruption for local businesses will be managed. Photo / Leon Menzies

Urquhart's report said either plan would be commercially disruptive.

The NZTA plan, initially developed by Auckland Transport, was to lay down double-tracked light rail lines in Queen St.

"The street is 14m wide opposite Queens Arcade; double-tracked light rail would take up 8m, leaving only 6m for other purposes," the report said.

"Cars would be prohibited but servicing and emergency vehicles would continue to have access."

The NZ Infra proposal, which reportedly included a tunnel under Queen St, would likely be more disruptive but appealing to the Government because NZ Infra would finance it.

"This second proposal would be totally impractical, hugely disruptive for many years while being constructed and prohibitively expensive," the report said.

"I have no doubt that Government will come to that view, however, being a joint venture by the New Zealand Pension Fund and CDPQ, the costs would be off the government balance sheet."

The Government has said the NZ Infra proposal has been updated since reports that it included a tunnel under Queen St.

It is expected to make a decision in February, which will lead to a tender process and a firmer view of the rail route, budget and timeline.

Twyford said light rail construction would be managed in a way that minimised disruption.

"Until a partner and proposal is selected, and a route and design decided on, it is too early to know the level of disruption the construction of light rail would create.

"Once constructed it will also bring huge benefits to the businesses that surround it."

National's transport spokesman Chris Bishop says the Government has accomplished very little in its light rail efforts so far. Photo / Mark Mitchell

Twyford said the lessons of the CRL project had been learned, which had affected businesses to a point where the Government is now offering compensation where appropriate.

"Both NZTA and NZ Infra are required to outline in their proposals how they will engage with local stakeholders including businesses and business associations from the outset," Twyford said.

"This includes working with local businesses throughout the construction so they can address any concerns."

The National Party's transport spokesman, Chris Bishop, has criticised the Government, saying there is no business case, no costings, and no route map after more than two years into its term.

New Zealand First leader Winston Peters has also been told to be alert for potential cost blow outs, but said his source was not a minister, but someone in the transport sector.

Urquhart's report said it would hard to justify the expense of light rail, given the disruption and the cost blow-outs from similar projects in the Gold Coast and Sydney.

"The experience with establishment of light rail in Surfers Paradise was extremely disruptive to retail business. Many of them failed, others closed and relocated leaving retail spaces along formerly popular retail precincts empty to date."

He said light rail in downtown Sydney was a year behind the initial schedule and hundreds of millions of dollars over budget.

"There have been reports of shops along the rail corridor losing up to half of their usual turnover and laying off staff due to the disruption caused by the works.

"This pattern will inevitably repeat in Queen St should the light rail project proceed."