Welcome to the

UDZ TAX INCENTIVE CONFERENCE

Day 1 – 18 Aug 05

Gautrain Rapid Rail Link

Presentation at the Conference on Tax Incentives

in the Johannesburg UDZ

Jack van der Merwe (Pr. Eng)Project Leader: Gautrain

Chief Executive: Public Private Partnerships

Gauteng Provincial Government

Overview of Gautrain & its Impact on the Johannesburg

CBD• Strategic economic infrastructure initiatives• Objectives• Description of the project• Benefits of the project to Johannesburg

– During construction– During operation– Developments around the station– Accessibility of the CBD and UDZ

Strategic economic infrastructure initiatives

Strategic Economic Infrastructure Initiatives

• Various initiatives of the Department of Finance and Economic Affairs such as Blue IQ, Gautrain and the GPG Precinct, GEDA

• Development of the Gautrain Provincial Government to promote a smart province

• Projects in the Johannesburg UDZ:– Gautrain Rapid Rail Link and GPG Precinct (DFEA PPP

Unit)– Constitutional Hill (Blue IQ and JDA)– Newtown (Blue IQ and JDA)– City Deep Transport Logistics Hub

Proposed Provincial EconomicDevelopment Strategy

• Existing economic strengths :– Mining– Heavy Industry– Financial & Banking sector

• Proposed strategy:– Smart industries - Gauteng the “smart” Province – Move toward high value-added manufacturing – Enhancing the business services (Finance &

Banking) sector and business tourism

Objectives of the Gautrain Project

Development Goals

• Economic growth, development and job creation

• Must meet other goals of Government (SME promotion, Business tourism, BEE, etc.)

• To promote business tourism by means of the link between JIA and Sandton

Transportation Goals • Alleviate severe traffic congestion (traffic volumes in

corridor growing at 7% p.a. for more than a decade)• Show Government’s commitment to the promotion of

public transport (National Land Transport Transitional Act, Act 22 of 2000)

• Improve the image of public transport with this project and attract more car users to public transport

• To link to the Tshwane Ring Rail Project, linking Mamelodi, Atteridgeville and Soshanguve / Mabopane

• Part of holistic transport plan and network for Gauteng

2000 Northbound and Southbound Vehicle Volumes

2005 Northbound and Southbound Vehicle Volumes

Spatial Development and Urban Planning Goals

• To contribute towards urban restructuring, shortening travel distances and improving city sustainability

• Stimulate the renovation and upliftment of the Johannesburg and Tshwane CBDs

• Link the main economic nodes in Gauteng with JIA

Integration between railway and urban

environment

Overview of the Proposed System

Rosebank

SandtonMarlboro

Rhodesfield

JIA

Midrand

Centurion

Pretoria

Hatfield

Preferred Route

Anchor Stations

Stations

Airport

Park Station

Rosebank

Park Station

SandtonMarlboro

Midrand

Centurion

PretoriaHatfield

RhodesfieldJIA

High quality of modern

rail systems

Major construction works associated with rail

systems

SERVICE PEAK FREQUE

NCY

OFF- PEAK

FREQUENCY

JOURNEY

TIME

General passenger service Johannesburg Park to Hatfield Station

12 minute 20 minute 42 minute

General passenger service Sandton to Rhodesfield Station

21 minute 30 minute 15 minute

Airport Service between Sandton and JIA Station

21 minute 30 minute 15 minute

Rail Services Specified

PPP Projects

• Gautrain is a PPP Project where public sector resources are expanded by Private Sector finance for the building of infrastructure for:– Service delivery– Job creation– Fighting poverty– Multiplier effect in economy

PPP Components

• Technical content• Financial proposal• Legal mark-up• Socio-economic Development

Johannesburg Park Station

Johannesburg Park Station

Johannesburg Park Station Location

Station Definitions (1)

• Rail Functional Area– Railway functional elements, such as fare collection and

ticket sales for exclusive use of passengers• Station Precinct

– Development of stations to serve the Gautrain system, such as station building, parking and modal transfer facilities

• Impact Area– Area where land use is expected to change to capitalize on

opportunities created by the Gautrain, e.g. hotels to serve JIA air passengers

Station Definitions (2)

• Influence Area– Area where majority of patrons are located and where

land development may be diverted to increase patronage, e.g. residential densification

• Catchment Area– Area from where patrons are attracted and served by

feeder and distribution services• Impact Area and Influence Area create

opportunities for private sector to capitalize on benefits of the Gautrain

Functional Area of Johannesburg Park Station

• CBD (immediately south of station)• Transport related uses and services at the

station– SARCC, minibus taxi, buses, long distance

passenger rail, tour coaches• Newtown south-west of station• Mixed-use offices and residential uses in

Braamfontein, including Johannesburg Civic Centre

• Social and cultural uses surrounding the station

Transport Linkages at Johannesburg Park Station

• Municipal roads that serve pedestrians, cyclists, private vehicles and road-based public transport

• Minibus taxi services• Bus services• Tour coach operations• Commuter service provided by metro rail (SARCC)• Long distance rail passenger services

Feeder and Distribution Services

• 6 Routes– Auckland Park– Parktown / Bellevue– Wemmer Pan– Booysens– CBD Distribution west– CBD Distribution east

• 2000 Passengers Year 5– Urban Development Zone well-served by feeder

and distribution services

Train Service Capacity Requirement: Johannesburg Park

Station

• Year 5 : 3 200 peak hour passenger movements• Year 30: 5 600 peak hour passenger movements

DESTINATION

JOURNEY TIME

DISTANCE

COST

Rosebank 4.2 minutes 6 km R 7.44Sandton 8.0 minutes 10.2 km R 8.45Marlboro 12.5

minutes15.7 km R 9.77

Midrand 21.1 minutes

27.8 km R 12.67

Centurion 33.1 minutes

45.5 km R 16.92

Pretoria 41.1 minutes

56.6 km R 19.58

Hatfield 46.1 minutes

62.7 km R 21.05

Rhodesfield 25 minutes 30.0 km R 13.20JIA (Airport)

25 minutes 30.6 km R 72.60

Modelled Journey Time And FaresModelled Journey Time And Fares

PARKING REQUIREMEN

TS

YEAR 5 YEAR 15

Park-and- Ride 800 bays 1700 baysKiss-and-Ride 2 bays 2 baysShort Term Parking

5 bays 5 bays

Car Hire 15 bays 20 baysPublic Transport

3 bays 5 bays

Parking Requirements at Johannesburg

What will the Economic Impact be?

Vision for Johannesburg Park Station

• Functional area– Improve marketability of Johannesburg CBD

as cultural and commercial hub from African and International perspective

– Regeneration of CBD as place of work through high quality public transport access

– Promote tourism within CBD

Station Functional Area Guidelines

• Developed in consultation with Municipality as part of the Gautrain Rapid Rail Link planning process

• Catalyst to create compact city, limit urban sprawl and utilize urban land and infrastructure more effectively and efficiently

• Stations are key points of intervention

• Establish new urban form that embraces the Gautrain system

• Opportunities– Establish mixed land-use – generate trips throughout the

day

– Increase density

Current Land Uses in Impact Area

(1 km X 1km = 100 ha)STATUS QUO

AREA m²

PROPORTION

AVG HEIGHT

Residential 600 000

17% 8.5

Offices 1 590 000

47% 8.3

Retail 150 000

4% 1.1

Hotel / Conference

90 000

3% 8.6

Community 410 000

12% 3.6

Other 590 000

17% NA

TOTAL 3 430 000

100%

Densification and Land Use Model

FUTURE SCENARIO

AREA m²

PROPORTION

AVG HEIGHT

Residential 1 100 000

31% 8.5

Offices * 1 000 000

28% 9.3

Retail 160 000

5% 1.2

Hotel / Conference

150 000

4% 9

Industry 50 000

1% 1

Community 450 000

13% 4

Other 600 000

18% NA

TOTAL 3 510 000

100% NA

* * Reduction in office space projectedReduction in office space projected

CATALYST TO ESTABLISH NEW REAL PRIVATE SECTOR CATALYST TO ESTABLISH NEW REAL PRIVATE SECTOR INVESTMENTINVESTMENT

Increased business sales estimated at R 1.1 billionIncreased business sales estimated at R 1.1 billion

Real estate development opportunities for new & renovated Real estate development opportunities for new & renovated office residential and business spaceoffice residential and business space::* Transport * Transport * Retail Trade* Retail Trade* Accommodation* Accommodation* Financial Services* Financial Services* Business Serices* Business Serices

Economic Impact in Johannesburg CBD CAPEX

NEW METROPOLITAN-WIDE TRANSPORT FACILITY INCLUDING NEW METROPOLITAN-WIDE TRANSPORT FACILITY INCLUDING COMPREHENSIVE EXISTING FACILITIES WILL CREATE A COMPREHENSIVE EXISTING FACILITIES WILL CREATE A

DEMAND FOR NEW ECONOMIC ACTIVITYDEMAND FOR NEW ECONOMIC ACTIVITY

Translate into new and revitalized CBD office and retail space and Translate into new and revitalized CBD office and retail space and demand for accommodation demand for accommodation

Private and public sector response to new demand throughPrivate and public sector response to new demand through:: * Increased intensity in the flow of people* Increased intensity in the flow of people * Demand or accommodation close to stations* Demand or accommodation close to stations * Fast and reliable access directly to the CBD* Fast and reliable access directly to the CBD* Increased Disposable Income* Increased Disposable Income* Increased demand for retail trade, business & personal services * Increased demand for retail trade, business & personal services

Economic Impact in Johannesburg Greater CBD Influence Area

CBD Access to railway

SUPPORT ECONOMIC ACTIVITY AND SOCIAL SUPPORT ECONOMIC ACTIVITY AND SOCIAL SERVICES BASED ON IMPROVED TRAVEL SERVICES BASED ON IMPROVED TRAVEL

ACCESSIBILITYACCESSIBILITY

* Focal point for development within walking distance from station* Focal point for development within walking distance from station* Increase in property values close to stations* Increase in property values close to stations* Access to cultural, social and recreational facilities* Access to cultural, social and recreational facilities* Fast and reliable access to JIA airport* Fast and reliable access to JIA airport* More socially inclusive* More socially inclusive* Land use and transport integration* Land use and transport integration* Reduced need for CBD parking* Reduced need for CBD parking

Economic Impact in Johannesburg CBD

Some International Examples/Experiences

International Experience• Toronto: Property values around stations are

double the values in areas without station access• Washington: Stations became focal points of

commercial redevelopment and promoted substantial new development in surrounding areas

• Chicago: Rail projected to generate $8-10 billion. Pulls together regional economy and promotes intra-regional business growth

• Hong Kong: Extended rail system resulted in strong inner-city development and affordable housing

Development around Hong Kong

Stations

Socio-Economic Development

Socio-Economic Development (1)

• BBBEE– Equity– Ownership– Directorship– Training & development– Sub contracting– Procurement– Job creation

Socio-Economic Development (2)

• Promotion of SMME’s• Focus on women, youth and people with

disabilities• Local content• Local labour• Investment / focus on marginalised areas

Procurement Process

RFQ : 2 Pre-Qualified Bidders (May 2002)

• Bombela Consortium– Bombardier

Transportation– Bouygues Travaux

Publics– Murray & Roberts– RATP International– Loliwe Rail Contractors– Loliwe Rail Express– Standard Bank– RMB– ABSA

• Gauliwe Consortium– CAF– Dragados– Grinaker – LTA– Metro de Madrid– CANAC– Ufudo– Tirisano– Nedbank– Investec

Procurement Process (3)

• Announcement by Premier Shilowa of Bombela as the preferred bidder on 2 July 2005

Financial Closure• Negotiations with preferred bidder commenced

after the announcement on 2 July 2005• This process will take 6 months• The essence of this process is to finalise the

concession agreement• The tender phase will only come to a conclusion

at the signing of the concession agreement• Negotiations with lenders will also take place in

this phase

Schedule for Implementation

Timelines

RFQ-Process

Investors ConferenceAnnounce pre-qualified bidders

Announce Preferred &

Reserve Bidder

Construction Commence

Prepare RFP documents

Sep 2001

End April2002

21 Oct2002

29 Sep2003

30 Sep 2003

Mid2005

Late 2005

EIA - Process

FinancialClose

EIA Report & Draft EMP ROD

InfrastructureAct

requirements

Negotiate with Bidder(s)

RFPPhase II

RFPPhase I

29 Nov2002

Proclamation and Land acquisition

Final EMPROD Appeals

Detail Design

RFPPhase III(BAFO)

Apr 2004

2010 SoccerWorld Cup

Ready for 2010?

• Gautrain formed an integral part of South Africa’s bid document

• Gautrain was reported on extensively by FIFA in its evaluation and final recommendation

• Must form the backbone of the public transport system in Gauteng for the World Cup

• Both bidders indicated that they will complete the full system by Feb 2010 ( but it will be very tight)

Way Forward

WAY FORWARD

• Continued co-operation with Johannesburg regarding the development of station areas

• Implementation of project• Operation• Environmental Management Plan (EMP)• Participation of Private sector to effect urban

restructuring and economic development

Thank Youwww.gautrain.co.za

“Our wealth did not create our transport infrastructure; it is our transport

infrastructure which created our wealth.”

J F Kennedy