The Napthine Government is inviting developers to submit proposals for the development of Federation Square East

There’s an election in Victoria in November so the dream of building over rail lines to extend Melbourne’s Federation Square to the east is back on the public agenda.

The Brumby Government trotted out a plan for Federation Square East just prior to the 2010 election and now the Napthine Government is following suit with its own proposals for the 3.3 Ha site (about the same area as Federation Square).

The Government doesn’t have a specific design it’s pushing; rather, it’s seeking ideas from developers. It says the precinct:

presents an exciting opportunity to create a vibrant, mixed use development with outstanding design in the middle of Melbourne… This city shaping development will revitalise the north bank of the Yarra River and better connect the central business district with Melbourne’s famous cultural, sporting and entertainment precincts.

The idea that the city can get an important civic enhancement paid for by developers might be attractive politically but it looks more like smoke and mirrors than a realistic project.

A key reason is because building over operating rail lines is very expensive. A recent estimate by Major Projects Victoria put just the cost of decking over the rail lines at Federation Square East at $335 million i.e. around $15,000 per square metre. (1)

There’s considerable uncertainty attached to any estimate of the cost of decking. Either construction would have to be limited to around four hours per night, or daytime rail operations across the metropolitan area would have to take a huge hit. (2)

Another reason is the development potential of the site is limited by the high public expectation of civic benefits and by planning constraints like the need to avoid excessive overshadowing of adjacent parkland and the river.

The expression of interest document on Major Projects Victoria’s web site recognises this; it says:

The preferred design outcome is to provide for a generally lower rise development commensurate with the human scale of Federation Square, with the inclusion of discrete, well-designed buildings of greater height in the appropriate locations. The built form Design Guidelines requires consistency with the urban scale of Federation Square.

So it would be very hard for developers to attract the intensity of  uses required to come within cooee of paying for the land, decking and construction of the buildings. It’s likely that any developer would also build-in a high premium for the risk associated with building over multiple operating rail lines.

None of that really matters to the Government though because this is a political stunt. The idea here is just to convey the impression of progress, vision and civic-mindedness in the lead-up to the 29 November election.

The expression of interest document gives the game away. There is, for example, no mention whatsoever of the key issue; how the developer might work with the rail operator to facilitate building the deck.

Just as astonishingly, there’s no acknowledgement that Federation Square car park, which occupies most of that part of the site unencumbered by rail lines, is important for the financial viability of Federation Square.

In fact the expression of interest document is effectively just a glossy media release (but see update 4/09/14); it doesn’t call for proposals at all. It only asks developers to show their experience, financial capacity, and their “approach to development, design and construction”.

Requests for actual proposals aren’t required until Stage Two, which will necessarily be after the election. That’s convenient because, like the Flinders St Station redevelopment competition, the process can be forgotten after the election without having required developers to expend large sums on research to make up for the inadequacies of the Expression of Interest document. (3)

Putting political opportunism aside, another way of looking at the project is to approach it in the same way Federation Square was conceived i.e. as a publicly-funded development providing largely civic uses. This perspective acknowledges a commercial solution is unlikely to work in the real world.

The Brumby Government’s proposal, which envisaged halls and a bridge across the Yarra, was costed at $680 million by Major Projects Victoria in 2013. Given the all-up cost of Federation Square was $467 million in 2002, that seems optimistic. (4)

The key issues, though, are whether or not it would deliver benefits (broadly defined) that exceed the costs and whether or not there are better uses for the money. That’s a big discussion I’ll leave to another time; for now, the point I’m making is that the Napthine Government’s proposed development of Federation Square East is a con.

Update 4/09/14 16:45

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  1. The railyards occupy 2.3 Ha of the 3.3 Ha site. The remaining 1 Ha includes the Federation Square car park.
  2. Federation Square was built in another era. Piling and crash barriers were done during the day; decking was done during both the day and night.
  3. The Expression of Interest document doesn’t require decking over the rail lines. It would be open to a canny proponent to propose redeveloping just the existing car park, with perhaps something like a pedestrian bridge across the rail tracks to provide a civic rationale. It would be a bit like another Gas & Fuel Corporation building, but on the southern side of the tracks.
  4. Federation Square cost around three times the original estimate, largely due to politically-imposed changes in the scope of the project; that’s a risk that would attach to the development of Federations Square East too if it were managed as a public sector project.
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