Capturing the socio-economic benefits of optimising Urban renewal

Nicki Hutley, Director – Economic Advisory

Overview

!  What do we mean by Urban renewal?

!  Why might we pursue it, given costs and resistance?

!  How can economic, social, environmental and cultural benefits be fully captured?

!  Given the large sums of money – and other social costs -typically involved, governments have a duty of care to taxpayers to optimise outcomes.

What does urban renewal look like?

!  Large precincts, communities - Docklands, Green Square, Tonsley

!  Localised - Federation Square

!  Social integration - Redfern Waterloo

!  Business support - Renew Newcastle

!  Redevelopment of large urban spaces, typically involving demolition of structures and relocation of business and people.

!  Joint public and private partnerships deliver improved use of space and new infrastructure

!  Maximising resources

!  Improving density while maintaining green spaces

!  Productivity – consumer welfare and industry agglomeration

!  Reducing transport congestion

!  Housing Affordability and equitable access

!  Access to education, health and other services

!  Livability – lower crime, improved safety and Social cohesiveness

!  Economic activation, including tourism

!  Reversing decay/lack of investment

What ‘problem’ is renewal addressing?

Urban renewal is as much about economic levers as urban planning and societal needs

So cost benefit analysis is necessarily complex… but critical

House prices, deviation from historical trend (Q2, 2014)

Affordability

Source: IMF

Increase urban density

40% of Australians live in Sydney or Melbourne

… we have started on that journey

Source : ABS

Building Approvals, monthly, S.A., number

Houses

Concept mapping

Urban renewal intervention

Economic

Social/cultural

Environmental

Physical infrastructure

Community services and integration

Enabling economic growth

Trigeneration

Waste treatment

Underground cables

Energy efficiency of

buildings

Green space

Water recycling

Transport

Premature loss of housing,

industry, jobs Housing

affordability Employment opportunities

Urban activation

Maintenance Agglomeration

Heritage

Amenity, views

Social cohesion

Community facilities – education, day care,

health

Promote physical activity

Economic considerations

! Focus tends to be on obvious and immediate economic outcomes – capital expenditure, and value, retail and business activity

! Needs to be far broader than this and consider longer horizon an non-economic issues

! Capital expenditure may well have occurred in any event – is it net new?

!  Is precinct economic activity actually new, or just relocated?

! When does the investment take place – is it having a crowding out effect?

! What is the base case? ! There will be clear winners (and losers)

Environmental considerations

! Many environmental considerations are well understood and the methodologies required well developed, such as quality of air

! Current mispricing of water may distort options to recycle for example

! Valuing public open spaces is more challenging – especially prior to completion

! Absence of a carbon price makes valuing some investments problematic – EU carbon permit price artificially low

Social considerations

! Valuing social outcomes typically has required a more qualitative approach

! Potential outcomes from renewal such as improved access to health and education have direct and quantifiable benefits, although attribution can be problematic

! Concepts such as community connectedness and sense of security in the past have been considered too difficult

! The advent of Social Return on Investment now allows us to capture these more ‘fuzzy’ outcomes in a quantifiable way

Education and regeneration

!  In Victoria, there have been a number of school regeneration projects that have involved the broader community (Doveton, Broadmeadows, Yuille Park)

! While it is early days, the aims of these education precincts include:

"  Increased attendance at pre-schools and MCH centres

"  Increased retention to year 12 and post secondary attendance

"  Improves access to adult education and potential for increased parental workforce participation

"  Improved cognitive and social outcomes

"  Increased aspirations

! All but the last of these has direct, measurable outcomes.

! SROI allows us to quantify the aspiration

Housing

! Housing precinct regeneration has been shown to deliver numerous economic and social benefits

! From land value uplift, to reduced crime and improved health outcomes

" But NO evidence of increased employment for previously unemployed, low income cohorts

"  Loss of networks may actually reduce employment outcomes and certainly social outcomes for residents

! All of these issues need to be at least considered

" Millers Point – calls for more creative solutions

" Understanding the social costs means they can be better addressed

! Assess the distributional outcomes

Social networks and regeneration

! Urban renewal typically involves communities that are run down and therefore residents are lower income households with higher levels of social problems

! The Redfern Waterloo Plan, which ran for nearly a decade, provides myriad examples of improved social outcomes with minimal cost:

" Greater integration of existing NSW government services meant improved on the ground access to numerous social services

! SROI provides a powerful tool to capture the full range of outcomes including which will not all be captured in increased land values:

"  Increased aspiration

"  Increased sense of security

" Maintaining strong community networks

To recap

!  There are myriad reasons to invest in urban renewal projects

!  The potential benefits to the economy and society are large

!  But so are the potential direct and indirect costs

!  Careful mapping and quantifying of the full range of outcomes – both positive and negative – will allow planners and policy makers to adjust developments to ensure the final outcomes maximise the potential range of benefits to be captured at the lowest cost.

!  Benefits and costs to be mapped include economic, social and environmental outcomes

!  Previously difficult to capture outcomes can now be measured using SROI

!  Of course… we won’t quantify every aspect: optimise outcomes

Any questions

@nickihutley