By Marty Swaffield, New Zealand Team Lead – Planning, Arup; and Adrienne Miller, CEO, Urban Development Institute of New Zealand

How creating strategic growth corridors can support transport and intensified, mixed-use urban development in Aotearoa New Zealand.

Growth in Aotearoa New Zealand’s cities has tended to prioritise lower-density development, placing pressure on the ability to justify investment in housing and related transport infrastructure, and contributing to the infrastructure and housing crisis. However, a proactive and sustainable planning model that co-locates infrastructure with urban development has been successfully implemented, here and overseas, to satisfy demand and deliver the most value for money. This is known as creating strategic growth corridors.

Arup and the Urban Development Institute of New Zealand co-authored a white paper in December 2024 – titled ‘Strategic Growth Corridors: a mechanism for funding transport infrastructure’ – that highlighted the urgency of creating strategic growth corridors and allocating land for integrated high-quality transport systems that will support intensified, mixed‑use urban development. This planning would be supported by a value creation and capture model.

​New Zealand’s growth challenge

New Zealand’s housing, urban development and transport systems are under strain, as development and infrastructure delivery struggles to keep pace with a growing population. Alongside the explicit costs of building and servicing infrastructure, historical growth patterns have led to a range of social and environmental costs, which are greater than what could be expected from a coordinated and compact approach to land use and transport. These costs include increased congestion, higher greenhouse gas emissions and other pollutants, and reduced accessibility.

Across New Zealand, there is increased intensification of existing urban areas; however, high infill tends to be compromised by a lack of land aggregation, poor integration with strategic infrastructure investments and historical underinvestment in infrastructure.

Such growth patterns also make it hard to realise the gains from economies of scale, and public infrastructure entities cannot keep pace with needed capacity.

The Infrastructure Commission has made it clear that a business-as-usual approach to infrastructure is not feasible. New Zealand currently spends around 5.5 per cent of gross domestic product on public infrastructure, and if the country continues with the same growth and infrastructure delivery pattern to try to ‘build our way out’ of this issue, this cost will almost double over a 30‑year period.

Funding and financing

The current land transport funding system is increasingly straining to respond to the shifting trends in urban growth, with approximately 70 per cent of the National Land Transport Fund annually allocated to running costs. This underscores the need to consider alternative options for funding the longer-term investments in transport.

There are a number of challenges with the local development contribution model, the primary mechanism to fund infrastructure for growth. The model is unresponsive to unplanned or out-of-cycle growth, can lead to under-recovery of costs, lacks nuance between development sites, and is challenged in equally sharing benefits, costs, and risks across time, and between new and existing residents.

Strategic growth corridors

Strategic growth corridors allocate land for the integration of transport and mixed-use urban development, designed to meet the strategic goals of a city. Taking a corridor approach to urban growth and transport planning can promote more cohesive investment, policymaking and planning, spatially aligning the delivery of infrastructure with activities like employment, housing, and recreation. To achieve this, density is enabled in intentional, clustered patterns around transport infrastructure corridors.

Investment in a major transport infrastructure project is the key catalyst of a strategic growth corridor. When planned collaboratively, with necessary infrastructure provision to support increased land use changes and strategic urban development planning and investment, catalytic transport infrastructure investment can unlock the development and liveable potential of a place.

Effective growth corridor planning follows a clear strategic framework:

• developing and holding a strong vision for a strategic growth corridor
• requirements for urban development outcomes, including ensuring alignment around growth objectives (with timing alignment also to ensure that increased costs are captured in land value)
• regeneration locations align with investment in infrastructure capacity, including transparency on lead times for new capacity
• engagement with communities and stakeholders to support change
• managing the timing of delivery with available infrastructure provision and market conditions that support the broader urban objectives, and align with investment objectives
• clarity around the role of the public sector in supporting urban regeneration outcomes through the consolidation of tools, such as the Public Works Act.

Embedding value creation and capture through corridor planning

Changing the way we plan and charge for growth can help us transition towards a more mature approach to city building. A value creation and value capture model, in conjunction with strategic growth corridor planning, will direct growth in the right places while using the catalytic potential of transport investment to provide wide-ranging ‘value’ benefits to a city and its users.

Where timing is aligned, a value capture tool can be applied to redirect some of the uplift in value gained from more intensity and enhanced amenity back to the entity that made the original investment. A value creation/value capture model embedded through the life cycle of a strategic growth corridor optimises co-benefits through investment.

Embedding and creating value should be a key priority of strategic corridor planning because it is necessary for opening new funding and financing pathways. Central and local government can strategically steer value creation within a particular corridor through spatial planning and transport tools.

It is important to align the opportunity to capture a portion of the land value uplift resulting from the land use change or announcement of catalytic infrastructure. Poor timing can have downstream impacts on the consumer’s willingness to pay for the housing product.

Value capture

The value capture model is intrinsically linked to value creation. It looks at who benefits from infrastructure and other place-based investments, how value is created and then how to capture that value through a financial tool. A range of funding and financing tools can be used to capture created value. Both value creation and value capture can be embedded into the entire project life cycle to ensure that the benefits, and therefore ‘value’, are maximised throughout, and the right mechanisms are in place to capture that.

It is critical that the party that derives the value is levied at the time the zoning uplift happens (or the home owner is charged over time through, say, a targeted rate). If the uplift is not captured, it can start to be reflected and ‘baked into’ the price of the underlying land, resulting in beneficiaries of change being charged twice for the same value, which will not stack up commercially.

Key considerations

There are a number of important considerations for implementation:

• There is a need to establish a shared, outcomes-based vision and framework for integrated land use and transport planning at the national level, in which strategic growth corridors are considered a core method.
• Early protection of corridors is necessary to safeguard land against future uncertainty.
• Economic thinking should be well-embedded into spatial planning, at both the national and the local level. The Southern Auckland Economic Masterplan is one example of this.
• Strategic corridor planning can be integrated into existing work programmes, such as Regional Deals.
• Benefits, costs, and risks should be shared equally between the public sector and the private sector.

‘The Strategic Growth Corridors: a mechanism for funding transport infrastructure’ report, with case studies, can be found at www.arup.com/insights/strategic-growth-corridors/.