Western United use ‘value capture’ model to drive building of Wyndham Stadium

A-League club Western United’s plans to develop its $150 million Wyndham Stadium on a greenfield site in Western Melbourne without state or federal government funding is being made possible through the use of the ‘value capture’ model.

Being built in the suburb of Tarneit, next to a planned railway station, the 15,000-seat venue, is key to the business plan for the recent A-League entrant. Key to this is Wyndham City Council - the fastest-growing area in Australia - gifting the 100-hectare site to Western United.

Explaining the concept of value capture, Karl Fitzgerald, Director of Research at Prosper Australia, advises that said it creates public value by allowing private developer to work with local government to make a profits, suggesting that the model could help boost Australia’s economic recovery from COVID-19.

Fitzgerald states “value capture is a closed-loops system of ensuring that the public receives a share of publicly funded infrastructure.

“In Australia, it’s largely the case that the public funds the infrastructure and private landholders who live nearby take the windfall. That has to change.”

Commenting on how value capture is helping build the new Western United stadium, Wyndham City Council Director of Deals, Investment and Major Projects, Kate Roffey, said the Council has essentially given the site to Western United.

Roffey notes “the ‘Field of Dreams’ we call it, because it takes a lot of vision to think that one day there’ll be a major sporting precinct out here.

“The biggest questions is, ‘is our Council paying for it?’

“And the answer is no, we’re not.

“We’re providing, at no cost, the piece of land, apart from about six and a half hectares for the stadium itself.

“Anything that the developer wants to develop on, they pay for… purchased at market rate, stays in the ownership of council and we use the profit to pay for the stadium.

“So you need a group of investors who were really interested in doing something good for the community, as opposed to saying ‘we could just buy the land, develop it ourselves and put the cash in our pockets.”

The model is common in Hong Kong and has helped finance the massive new Crossrail tunnel under London.

In 2016, independent advisory body Infrastructure Victoria floated the idea as a way for landholders who benefit from infrastructure - such as a new underground train line being dug under Melbourne's central business district - to contribute to the cost of projects.

With the proposal not adopted, Fitzgerald sees this as a missed opportunity, explaining “it's in the hundreds of thousands, often millions of dollars with what we call the 'golden pen tick'," he said, describing the soaring value of land when it is rezoned from industrial or farmland to residential, particularly for high-rise residential towers.

"When the government gives you that that pen tick to build upwards, up goes the land value and you're sitting on an absolute killer - you've made good, good money.

"A little bit is captured through land taxes, a little bit through council rates but really it's crumbs on the table compared to multi-million-dollar profits that are made through choices of, for example, which way a train line goes."

Image: Artist's concept of the completed Wyndham Stadium.