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Auckland region/Tranz Rail negotiations

5 September 2000

Auckland region/Tranz Rail negotiations: work details and costs released

The Auckland Regional Council has released figures of estimated costs and details of the work involved to conclude negotiations with Tranz Rail Limited over access to its Auckland rail corridors. This is the first and essential step in what will be a billion dollar project for the region.

“The region is working hard to secure the most crucial aspect to Auckland’s passenger transport future,” says ARC Chief Executive Jo Brosnahan. “It is the public’s right to know what we are spending and how we are spending it.”

The costs relate to the extensive evaluations and details required to implement the complex Heads of Agreement signed by the region and Tranz Rail on 30 June 2000. The $65 million agreement will buy the region a 70-year lease over north and west Auckland rail corridors and rights to an Avondale-Southdown designation, and a $2.25m annual fee will buy a set number of daily “slots” on the North Island Main Trunk Line (the Auckland-Wellington line).

The total percentage of the region’s costs that each council will pay at the end of the day has been determined by an agreed formula.

So far the region has been invoiced $425,340 for legal advice relating to the negotiations. This has included legal due diligence work and legal issues relating to access to the rail corridors (including the setting up of an entity to own the lease, and tax and liability issues associated with each detail of the agreement). Legal advice is expected to continue to cost $100,000-$150,000 per month until the deal is concluded.

The estimated total cost of technical and consultant advice (not all of this work has been invoiced) to conclude the Heads of Agreement deal is $1,030,000. The technical work includes engineering due diligence; establishment of North Island Main Trunk Line maintenance and upgrading costs and definition of maintenance standards; valuation and review of the Avondale-Southdown corridor; a review of the safety of the current regime; the preparation of a funding application to Transfund; commercial advice; peer review of the western and isthmus corridor valuations; a report on the North Island Main Trunk Line stations; environmental and economic impacts; land use planning outcomes; and landscape and visual outcomes. The technical advice is expected to cost a further $200,000 per month until the deal is completed.

There have been no public relations or political consultants employed on behalf of the region in relation to this deal.

“There is an enormous amount of work required to determine all the details of the agreement. We are very aware of the costs, and are being prudent with public money,” said Mrs Brosnahan. “This is the biggest single project that the Auckland region has ever been involved with.”

“We are committed to taking a fully responsible and thorough approach to ensure that the agreement we come to with Tranz Rail is the best deal for the people of Auckland. This is essential if we are to establish the foundations on which to develop a long-term revolution in passenger transport that Auckland so desperately needs.”

“Building a Rapid Transit Network for passengers is a billion dollar project, and it will be in place for generations. It is crucial that we get the foundations right.”

“Traffic congestion is currently costing the Auckland (and national) economy $800 million to $1 billion each year – it would be irresponsible to do nothing.”

Working through the details of the Heads of Agreement has proved to be a lot more complex than at first thought. Currently, the region’s councils are reviewing the mid-September deadline dates. A decision on extended settlement dates will be made on 15 September.

“Politically, working through the deal is a very complicated process. We have to ensure that all seven territorial authorities and the ARC are kept informed and have input. To everyone’s credit, representatives from all councils have been working hard and constructively towards the completion of this deal, while vigorously defending and promoting their constituents’ concerns. The region is working strongly together.”

“The deal will be concluded only with the support of all of the region’s councils, and with central government understanding and support,” said Mrs Brosnahan.

- END -

For further information please call:

Jo Brosnahan, Chief Executive ph 366 2000 x 8227

Or Jo Mackay, community relations officer, ph 366 2000 x 8041

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