Australia: Key issues for over station developments.

Increasingly, governments and developers are looking to utilise airspace above rail corridors for development.

Such sites offer the opportunity to achieve city building and place making outcomes, hide unattractive infrastructure and provide returns to both governments and developers. However, the physical constraints of these sites often impose additional risks and costs which need to be recognised by all parties.

In this article we investigate some of the issues that arise in these types of projects.

TENURE CONSIDERATIONS

Typically, a developer will be seeking volumetric freehold title. This is usually easier to finance and more acceptable for end users - particularly if the project is intended to include residential apartments for individual sale.

However, in many cases, governments will only want to grant long term leases. This is because the government wants to retain flexibility as to the long-term use of the corridors.

In either case, it is likely that the developer's lot and the residual rail corridor lot or lots will be subject to a building management statement. The building management statement will include, for example, provisions establishing a management committee including representatives of the developer, government and the railway manager, and set out how, and at whose cost, shared infrastructure and facilities will be maintained.

The type of tenure that is made available affects the value that the government can obtain for the land and also impacts the type of development which is likely to be possible.

PUBLIC REALM

As part of city building initiatives, the government may be placing a priority on place making and the creation of public realm to be retained by the government or transferred to the developer subject to easements, covenants or other rights in favour of the public. Quality public realm can enhance the associated developments – but can be costly to build, activate and maintain. This needs to be recognised by governments.

CHOICE OF DELIVERY MODEL

The government will usually dictate the basic delivery model however governments may invite innovative proposals from the development sector.

The government preference will be dictated by:

  • its ambitions for the development site (including the type of proposed over site development – eg commercial or residential);
  • its appetite for active involvement in the development process;
  • the physical characteristics of the site;
  • place making objectives;
  • the results of any market sounding process; and
  • industry expectation and standards.

The types of delivery model are typically:

  • a sale contract delivery structure – although this would be more common for sites adjoining a rail corridor (not over a corridor);
  • PDA delivery structure - which gives the government more control over the site; or
  • Public/private partnerships - which are best suited to complex infrastructure projects where a more complicated procurement process is warranted.

RAIL ENVIRONMENT ISSUES

Developing above an operating rail corridor can be a new experience for developers and builders who are not fully aware of the justified requirements of railway managers.

These issues are exacerbated where the rail corridor is required for use 24/7 and where the rail corridor is used for goods (especially if used for dangerous goods).

Typically, the project documents would reflect:

  • technical requirements of government and the railway manager (including ensuring buildings are designed, and design documents are prepared, in accordance with CIVIL-SR-005 and similar technical requirements and standards);
  • limited certainty as to the railway manager's technical requirements until detailed design has been concluded;
  • higher levels of public liability and other insurance requirements;
  • strict regimes around track closures and track possessions including payment of costs (for example for additional staff and buses while tracks are closed and ensuring the developer is liable for costs associated with train delays);
  • supervision of works by a track protection officer or similar representative of the railway manager;
  • emergency management plans; and
  • requirement for notice before undertaking works that may threaten the railway.

These requirements may increase construction costs materially (eg collision protection of buildings and piers, track monitoring, craning requirements and crossing grade separation).

RAIL REGULATORY ISSUES

Over station developments must also comply with the National Rail Safety Law. It imposes obligations on persons:

  • undertaking railway operations, rail safety work or work involving rail infrastructure; and
  • at railway premises if the person is involved in railway operations, rail safety work or work involving rail infrastructure or if rail safety officer exercises enforcement powers.

There are also other regulatory requirements such as the provisions in the Transport Infrastructure Act 1994 (Qld).

BID ISSUES

It is important for the government and developers that there are clear criteria around the assessment of bids.

Governments will be looking at achieving value for money as well as other city building and place making outcomes. Governments need to recognise that if the government imposes development parameters (such as requiring development to be completed in a specified time frame and to contain particular product without reference to market conditions) the valuation of the airspace needs to reflect those conditions - as they are likely to deflate the value.

The government may also require certainty of activation of key features of the development and the delivery of returnable works. These may affect the amount that a developer is prepared to bid.

Governments should be aware that to the extent that risk is passed to the developer, it will be reflected in the amounts bid by the developer.

The government will also be looking for security arrangements in the form of a bank guarantee and parent company support for a special purpose vehicle.

Value uplift and revenue sharing may also be appropriate – but may be difficult to value.

TERMINATION ISSUES

Given the size and risk associated with projects of this size, typically:

  • there would be no hair triggers for termination;
  • there would be step-in rights for financiers;
  • government might also want the right to approve key construction contracts and to have step in rights;
  • material default should be subject to cure plans or prevention plans;
  • governments should have limited termination rights for committed stages of the project; and
  • sunk costs for public infrastructure or early stage works which are recovered by re-tender should be paid to the developer.

OTHER ISSUES

Stamp duty continues to be an area of concern (see Commissioner of State Revenue and Lend Lease Development Pty Ltd and others [2014] HCA 51).

The GST treatment of the transactions needs to be addressed early - particularly having regard to the attribution rules.

There also needs to be an appropriate regime for the ownership of intellectual property – particularly in the bid phase.

Over station developments provide real opportunities for governments, developers and the community. Governments need to be aware of the commercial drivers for developers and financiers.

Developers need to be aware of the government's reasonable expectations for value for money, certainty of delivery and community benefits.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Chambers Asia Pacific Awards 2016 Winner – Australia
Client Service Award
Employer of Choice for Gender Equality (WGEA)

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions