Lithgow City Council Agenda 1 November...

Wallerawang Industrial Park

PREPARED FOR

Lithgow Council

February 2010

Hill PDA ABN 52 003 963 755 3rd Floor 234 George Street Sydney GPO Box 2748 Sydney NSW 2001 t. +61 2 9252 8777 f. +61 2 9252 6077 e. [email protected] w. www.hillpda.com

Ref: V09116 Page 2

This study has been funded by Lithgow City Council and the NSW Department of Industry and Investment (formerly Department of State and Regional Development).

Ref: V09116 Final Page 3 Hill PDA

QUALITY ASSURANCE

QUALITY CONTROL This document is for discussion purposes only unless signed and dated by a Principal of Hill PDA. REVIEWED BY

Dated 23 February 2010 Adrian Hack

REPORT DETAILS:

Job Ref No: V09116 Version: Final Date Printed: 16/12/2009 1:42:00 PM File Name: Wallerawang Industrial Park Market Feasibility FINAL 161209.doc



CONTENTS

1. EXECUTIVE SUMMARY .................................................................................................... 8

2. INTRODUCTION............................................................................................................. 16 2.1 Brief and Background.....................................................................................................16 2.2 Methodology ...................................................................................................................17 2.3 Background Documentation ...........................................................................................17

3. SITE DESCRIPTION ....................................................................................................... 18 3.1 Regional Context ............................................................................................................18 3.2 Local Context..................................................................................................................19 3.3 Site Characteristics.........................................................................................................20 3.4 Infrastructure (Services) .................................................................................................21

4. PLANNING & POLICY CONSIDERATIONS ......................................................................... 24 4.1 State Statutory Provisions ..............................................................................................24 4.2 State Planning Reform ...................................................................................................24 4.3 Lithgow City Local Environmental Plan (1994) ..............................................................25 4.4 Other Council Plans and Polices....................................................................................27

5. DEMOGRAPHIC & EMPLOYMENT PROFILE....................................................................... 32 5.1 Population Growth ..........................................................................................................32 5.2 Jobs in Lithgow by Industry ............................................................................................33 5.3 Persons with Workplace in Lithgow ...............................................................................34 5.4 Where Residents in Lithgow Work .................................................................................36 5.5 Implications for Lithgow LGA and Wallerawang ............................................................37

6. TRENDS IN INDUSTRY ................................................................................................... 39 6.1 Distribution Centres and Transport Infrastructure..........................................................40 6.2 Intermodal Transport Hubs.............................................................................................40 6.3 Eco-Industrial Estates.....................................................................................................41 6.4 Technology and Research .............................................................................................42 6.5 Implications for Lithgow LGA and Wallerawang ............................................................42

7. DEMAND FOR INDUSTRIAL LAND IN LITHGOW ................................................................. 45 7.1 Job Forecasts .................................................................................................................45 7.2 Demand for Industrial Zoned Land.................................................................................46 7.3 Implications for Wallerawang .........................................................................................47

8. EXISTING INDUSTRIAL PRECINCTS IN LITHGOW ............................................................... 48 8.2 Chifley Road, Lithgow.....................................................................................................49 8.3 Mort Street, Lithgow .......................................................................................................50 8.4 Inch Street/Bells Road, Lithgow .....................................................................................52 8.5 Donald Street, Lithgow ...................................................................................................54 8.6 ADI Site, Lithgow ............................................................................................................56 8.7 Pinta Street, Wallerawang..............................................................................................58 8.8 Cement Works, Portland ................................................................................................59 8.9 Marrangaroo ...................................................................................................................60



8.10 Implications for Wallerawang .........................................................................................62

9. LITHGOW INDUSTRIAL MARKET ANALYSIS...................................................................... 64 9.1 NSW Industrial Market Outlook......................................................................................64 9.2 Lithgow Industrial Land Values ......................................................................................64 9.3 Implications for Wallerawang .........................................................................................65

10. CONCEPT PLAN OPTIONS ............................................................................................. 66 10.1 Option 1 ..........................................................................................................................66 10.2 Option 2A........................................................................................................................67 10.3 Option 2B........................................................................................................................68 10.4 Option 3 ..........................................................................................................................69 10.5 Option 4 ..........................................................................................................................70 10.6 Option 5 ..........................................................................................................................72 10.7 Option 6 ..........................................................................................................................73

11. FEASIBILITY ASSESSMENT ............................................................................................ 74 11.1 Financial Modelling Methodology...................................................................................74 11.2 Project Timeframe ..........................................................................................................74 11.3 Construction Costs and Professional Fees....................................................................74 11.4 Finance and Miscellaneous Costs .................................................................................75 11.5 Profit and Risk ................................................................................................................75 11.6 Revenue – End Sales Values.........................................................................................76 11.7 Financial Return..............................................................................................................76 11.8 Relocation of Council Depots .........................................................................................78

12. KEY FINDINGS AND RECOMMENDATIONS ....................................................................... 80 12.1 SWOT Analysis of Lithgow LGA Industrial Land ...........................................................80 12.2 Opportunities for Wallerawang.......................................................................................81 12.3 Branding and Economic Development...........................................................................85

LIST OF FIGURES

Figure 1 - Map: Regional Context............................................................................................................. 18

Figure 2 - Map: Approximate Site Location............................................................................................... 19

Figure 3 - Photo: Topography of the Subject Site ..................................................................................... 21

Figure 4 - Photo: Access from Castlereagh Highway................................................................................ 21

Figure 5 - Subject Site and Servicing ....................................................................................................... 23

Figure 6 - Aerial Map: Lithgow Industrial Precincts................................................................................... 48

Figure 7 - Aerial Map: Wallerawang and Marrangaroo Precincts .............................................................. 48

Figure 8 - Aerial Map: Wallerawang and Portland Precincts ..................................................................... 49

Figure 9 - Photo: Mort Street, Lithgow...................................................................................................... 50

Figure 10 - Aerial Map: Chifley Road Precinct.......................................................................................... 50

Figure 11 - Photo: Mort Street, Lithgow.................................................................................................... 51



Figure 12 - Photo: Mort Street, Lithgow.................................................................................................... 51

Figure 13 - Aerial Map: Mort Street Precinct ............................................................................................ 52

Figure 14 - Photo: Inch Street/Bells Road, Lithgow .................................................................................. 53

Figure 15 - Aerial Map: Inch Street/Bells Street Precinct .......................................................................... 53

Figure 16 - Photo: Donald Street, Lithgow................................................................................................ 54

Figure 17 - Photo: Donald Street, Lithgow................................................................................................ 55

Figure 18 - Aerial Map: Donald Street Precinct ........................................................................................ 55

Figure 19 - Photo: ADI Site, Lithgow ........................................................................................................ 56

Figure 20 - Photo: ADI Site, Lithgow ........................................................................................................ 56

Figure 21 - Aerial Map: ADI Precinct ........................................................................................................ 57

Figure 22 - Photo: Pinta Street, Wallerawang........................................................................................... 58

Figure 23 - Aerial Map: Pinta Street Precinct ........................................................................................... 59

Figure 24 - Photo: Cement Works, Portland ............................................................................................. 59

Figure 25 - Aerial Map: Cement Works Precinct....................................................................................... 60

Figure 26 - Aerial Map: Marrangaroo Precinct .......................................................................................... 61

Figure 27 - Concept Plan: Wallerawang Industrial Park Option 1 ............................................................. 67

Figure 28 - Concept Plan: Wallerawang Industrial Park Option 2A ........................................................... 68

Figure 29 - Concept Plan: Wallerawang Industrial Park Option 2B ........................................................... 69






LIST OF TABLES

Table 1 - Comparison of Industrial Precincts ............................................................................................ 10

Table 2 - Industrial Activity in Lithgow Land Use Zones............................................................................ 26

Table 3 - Lithgow LGA Forecast Population Growth (2007-2027) ............................................................. 32

Table 4 - Central West Forecast Population Growth (2007-2027)............................................................. 33

Table 5 - Jobs in Lithgow LGA and the Central West Region (2006) ........................................................ 34

Table 6 - Persons with Workplace in Lithgow Local Government Area (2006) .......................................... 34

Table 7 - Jobs in Lithgow by Origin of Workers by Industry Type as % of Total Industry Types (2006)..... 35

Table 8 - Persons with Usual Residence in Lithgow by Area of Workplace (2006) ................................... 36

Table 9 - Persons with Usual Residence in Lithgow by Area of Workplace and Industry (2006) ............... 36

Table 10 - Forecasts of Lithgow Working Residents by Industry (2006-2021) .......................................... 45

Table 11 - Forecast of Jobs in Lithgow at 2021 ........................................................................................ 46

Table 12 - Demand for Industrial Floorspace in Lithgow to 2021 .............................................................. 46



Table 13 - Comparison of Industrial Precincts .......................................................................................... 62

Table 14 - Industrial Land Sales Evidence ............................................................................................... 64

Table 15 - Wallerawang Industrial Park Lot Details Option 1 .................................................................... 66

Table 16 - Wallerawang Industrial Park Lot Details Option 2A.................................................................. 67

Table 17 - Wallerawang Industrial Park Lot Details Option 2B.................................................................. 68





Table 22 - Financial Summary of Option 2 (2 Year Market Absorption) ($) ............................................... 77

Table 23 - Financial Summary of Options (5 Year Market Absorption) ($) ................................................ 78


ABBREVIATIONS

ABS Australian Bureau of Statistics

DCF Discounted Cash Flow GFA Gross Floor Area

FSR Floor Space Ratio

IRR Internal Rate of Return

JTW Journey to Work

LGA Local Government Area RLV Residual Land Value

TDC Transport Data Centre

GLOSSARY OF TERMS

Development Profit: is total revenue less total cost including interest paid and received Net Present Value: is the project's cash flow stream discounted to present value

Internal Rate of Return: is the discount rate where the NPV above equals Zero

Residual Land Value (based on NPV): is the purchase price for the land to achieve a zero NPV



1. EXECUTIVE SUMMARY Lithgow City Council (Council), Delta Electricity and the NSW Department of Industry & Investment are working together to investigate the feasibility of developing 10ha in Wallerawang for industrial purposes as a means of addressing a perceived lack of industrial land available within Lithgow Local Government Area (LGA).

Hill PDA was engaged by Council to prepare a feasibility study to determine whether it would be economically viable for the land at Wallerawang to be developed for industrial purposes with the possible inclusion of Council Depots. As part of the brief, concept plans for development and subdivision of the subject site were prepared by Jackson Teece. Six options were prepared each with a total of 8-10 hectares of saleable land divided into lots ranging from 0.5ha to 1ha.

Site Context

The subject site comprises predominantly open grassland with a service road accessing the site from Castlereagh Highway. The subject site forms two allotments being Lot 3 and 4 DP 1018958 having a combined area of 40.19ha which appears to be generally level.

The site is adjacent to the Delta Electricity’s existing power plant, and forms part of the 100ha Lithgow Minerals Processing Park. The Lithgow Minerals Industry Park, strategically provides new opportunities for vertical integration and value adding to the region's mineral wealth and associated industries.

The subject site in Wallerawang is identified as being zoned Rural (General) 1(a).The Rural General 1(a) zone permits with consent all forms of industrial development. It is understood the LEP is flexible and is not supported by development control provisions. As a result, this flexibility has led to dispersed industrial development across the LGA giving rise to various industrial precincts with severe land use conflicts. These constraints have subsequently reduced investor interest in the area.

Demographic and Employment Implications

The following characteristics of residents and workers in Lithgow LGA that will influence demand for employment land include:

There are fewer young people living in the LGA.

Lithgow has a population which is aging at a relatively faster rate than the NSW average.

Marginal population growth to 2017 is forecast for Lithgow, after which the population is forecast to decline.

The largest employer in Lithgow LGA is mining, followed by retail trade, accommodation and food services, public administration and safety, health care and social assistance.

The majority of workers in Lithgow (84.9% or 5,820 persons) live and work within the LGA.

15.1% of total workers live outside the LGA and travel into Lithgow for work, with the majority travelling from the Blue Mountains.



24.5% of the resident workforce leaves Lithgow LGA to work, mostly to the Blue Mountains followed by Bathurst.

Those who travel to the Blue Mountains mainly work in health care, accommodation and food services, retail trade and public administration and safety. Most of those working residents who travel to Bathurst work in manufacturing, agriculture, and education and training.

Only a very small proportion of working residents travel to Sydney and Penrith.

The majority of working residents in Lithgow LGA work in mining, manufacturing, retail trade, accommodation and food services, public administration and safety, health care and social assistance.

Those working residents that leave Lithgow LGA to work mainly work in manufacturing, construction, wholesale trade, transport, postal and warehousing, information media and telecommunications, professional, scientific and technical services, administrative and support services, education and training, arts and recreation services (based on more than 25% of working residents leaving the LGA by industry type).

The above indicates that if Wallerawang can attract businesses in manufacturing, construction, wholesale trade, transport and distribution, education and health care, Lithgow is likely to recapture those residents that currently leave the LGA to work. This would not only increase Lithgow’s resident worker containment rate, but would increase the attractiveness of Lithgow for further investment and employment.

Demand for Employment Land in Lithgow

Based on Australian Bureau of Statistics (ABS) population and workforce projections Lithgow will require an additional 5.8 hectares of industrial zoned land between 2006 and 2021, equivalent to average growth of 0.5ha per annum. There is a potential weakness in this methodology however because this result does not consider existing supply of industrial floorspace or industrial zoned land in the LGA. Furthermore it does not consider supply lead demand and the potential to attract base industries over and above these forecasts.

Demand for industrial floorspace was based on those population forecasts from the ABS. A 1% per annum increase in the population would result in demand for an additional 15ha of industrial floorspace between 2006 and 2021, equivalent to additional demand of around 1 hectare per annum. A 2% increase in population per annum results in additional demand for 25ha or 1.7ha per annum.

Demand for floorspace associated with construction is forecast to increase whilst demand for manufacturing, utilities, wholesale, transport, postal and warehousing floorspace is anticipated to decline. However, it is important to note that there is always the possibility of Lithgow attracting new base industries or more capital intensive heavy industries which require significant amounts of land even if they do not employ large numbers of employees. In some cases, a decline in jobs in manufacturing may be due to automation rather than an actual decline in demand for land.



Industrial Precincts and Industrial Market in Lithgow LGA

There are 8 industrial precincts in Lithgow LGA that are comparable to the subject site. Those precincts located within the Lithgow urban area include Chifley Road, Mort Street, Inch Street, Donald Street and the Australian Defence Industries (now Thalis) precinct. Other precincts outside of the Lithgow urban area include the Pinta Street precinct in Wallerawang, the Cement Works precinct in Portland and the Marrangaroo precinct.

The constraints and opportunities of the above precincts are summarised in the table below:

Table 1 - Comparison of Industrial Precincts

Constraints Chifley Road

Inch Street/

Bells Road

Mort Street

Donald Street ADI Pinta

Street Cement

Works Marran-

garoo Subject

Site

Flooding/drainage X X X X Protection zones X X Known Contamination X X X Heritage X X X Land use conflicts X X X X X X X Traffic/ accessibility X X X X X X Service X X X Fragmentation of ownership X

Opportunities Chifley Road

Inch Street/

Bells Road

Mort Street


Street Cement

Works Marran-

garoo Subject

Site

Minimal Upfront Land Costs X Adaptive reuse opportunities X X X Underutilised sites X X X X X X X Vacant land available X X X X X Agglomeration X X X X X X Potential Residential Amenity X X

Whilst there are numerous industrial precincts in Lithgow LGA, many with sites ripe for redevelopment or with vacant land available, site inspections and further analysis has revealed that most of them are heavily constrained. The main reasons for constrained land in Lithgow industrial precincts include:

Land use conflicts with adjacent residential development;

Access to the site via local residential roads may prevent certain vehicles from accessing the site and hence certain industries from locating there;

Lack of visibility and passing trade due to the precinct’s poor location in the middle of residential suburbs;

The relative distance from the site to major roads;

Land which is effected by site encumbrances (e.g. flood, contamination, heritage);

Very long term market prospects due to the need for remediation, heritage listing etc.



In some cases, precincts have higher and better uses over and above industrial land uses, due to their strategic location or prevailing land use conflicts. As a result, some precincts may lend themselves to other uses over and above general or light industrial activities. Examples include Mort Street (civic, cultural, or bulky goods land uses) and Inch Street/Bells Road (residential).

Whilst some precincts do have considerable opportunities for redevelopment, adaptive reuse, and agglomeration, in many cases the timing of this land being available is uncertain or long term due to other constraints such as heritage restrictions and contamination.

As a result there is a lack of ready, available, serviced and vacant industrial sites. Whilst smaller local service infill sites are available across the precincts, Lithgow lacks a precinct with significant vacant land holdings appropriate for larger industrial land users (e.g. large manufactures, larger industrial park type users).

The subject site in Wallerawang has far less constraints to redevelopment than its comparables. The Wallerawang site has better access opportunities, is located on a highway, has less timing constraints and can provide flexible lot sizes as a direct response on market demand. Furthermore, as the site is currently vacant, there is not a large opportunity cost tied to the land in its current form.

The Global Financial Crisis (GFC) has significantly weakened the industrial market in NSW. Land values had been impacted by both the state of the global economy and the difficulties developers were experiencing in obtaining finance to complete proposed projects. Estimates indicate that industrial land values have fallen by an average 16.1% in Sydney over the six months to March 2009. There are too few sales in Lithgow to draw comparisons but sales in Bathurst and the Blue Mountains suggest that the experiences have been similar. Discussions with local real estate agents, property officers at Bathurst City Council (involved in the sale and marketing of council owned industrial property) and analysis of comparable sales, indicated that the sale of serviced industrial land has been extremely slow over the last 18 months. Hill PDA believes that the potential realisation of the subject land in the current market, once serviced would be in the order of $35/sqm.

Development Options

Six design options were prepared for the subdivision and land development of the proposed industrial estate. The design options were based on the following assumptions: 10ha to 12ha site with saleable area of 8ha to 10ha; industrial allotments ranging from 5,000sqm to 1ha; and access from Castlereagh Highway. The options varied in layout and size and configuration of allotments.

The first four options had various limitations with design and feasibility including:

Excessive roadway resulting in a high cost design;

Some battle-axe blocks which are not supported by Council due to potential traffic and land use conflicts, reduced public address to the streets, reduced security and reduced exposure for the industrial sites; and

Multiple entry and exit points from the Highway which are unlikely to be supported by the Roads & Traffic Authority (RTA).



This left Options 5 and 6 being:

Option 5 - a single cul-de-sac road from the highway with industrial lots fronting both sides.

Option 6 - a single entry road to a T intersection in the middle of the site. Development is set back from the south western boundary resulting in more lots with visual exposure to the highway.

Assumed Development Costs

Likely infrastructure and development costs include:

$200,000 allowance for intersection with the Highway. This is to allow for the cost of slow down turning lanes. Note that signalisation is not required.

Allowances for sewer main at 2.5km by $300/m ($750,000) plus $470,000 for augmentation of pumping station No. 1; plus $530,000 for pumping station on site including works on ground (total $1,750,000);

$250,000 allowance for water quality and detention.

Internal road (2 lanes wide with parking either side) at $1,400/m including kerb and drainage.

Water reticulation at $200 per linear metre of road.

Landscaping at $100 per linear metre of road.

Power to the site at $500,000.

Power internal and street lighting at $300 per linear metre of road.

One substation at $120,000.

Telecommunications at $90 per linear metre of road.

Professional fees of around 15% of construction costs to cover development and project management, engineering design and certification, subdivision, application fees and lot registration.

10% project contingency on the above infrastructure, development, design and professional costs.

No allowance has been made for land costs, monetary contributions to government authorities or gas on site.

Feasibility Assessment

Hill PDA adopted the discounted cash flow (DCF) approach as the methodology of assessment, using Hill PDA’s Estate Master Development Feasibility Model. The DCF approach discounts the forecast cash flow to a present value using an appropriate discount rate that reflects the required rate of return on investment given the level of project risk.

The financial models also calculate future value or profit based on funding assumptions. For the purpose of this analysis development is assumed to be fully debt funded with 7.5% interest capitalised.

All six options fail to achieve a positive level of profit. Option 5 is the best performing option with a loss of $2.1m assuming a 2 year selling period and a loss of $3.1m assuming a 5 year selling period. Option 6 is the



second best performing option with a loss of $2.2m assuming a 2 year selling period and $3.4m assuming a 5 year selling period.

Notwithstanding the better financial performance from Option 5, Option 6 is the preferred option due to:

Its better design with more lots having visual exposure to the highway; and

A setback from the adjoining parcel of land to the southwest.

Consolidating the Council depots into a single depot on the subject site in Wallerawang has a number of advantages including consolidation of operations and improved accessibility for service vehicles. Disadvantages include greater locational separation between the main depot in Lithgow from the Council administration building and from CBD retail and commercial services. There is likely to be some savings in land cost of around $125,000 but the rehabilitation of the existing depots, relocation and rebuild costs are likely to well exceed this saving. There are considerable uncertainties with this option which would require a detailed feasibility study including contamination and physical condition report.

A new relocated Council depot provides some advantage in marketing because the presence of businesses attract other businesses. Other businesses that are operating in constrained conditions near Lithgow (eg Henry’s on Mort Street) could be enticed to the new estate.

Strategy for Wallerawang

It is recommended that Council gives support to the concept for a 10ha industrial estate on the subject site generally in accordance with the preferred plan (Option 6). Whilst the feasibility testing suggests that development is not viable some improvements in market value expected during the rezoning process may tip the balance in favour of development.

However, the relocation of Council’s depots to the site is not supported within the next 5 years largely because the revenue from sale of the existing depots will not outweigh:

The costs of rebuilding and relocating the depots; and

The revenue obtained from sale of the land in Wallerawang.

Recommended Design Option

Whilst Option 5 is slightly more cost-effective, Option 6 is the preferred design. Option 6 includes a single entry road to a T intersection with development set back from the south western boundary resulting in more lots with visual exposure to the highway. Advantages with Option 6 include:

No battle-axe blocks.

Single entry to the site.

Maximum saleable land (9.7ha).

Most efficient (cost effective) subdivision next to Option 5.

Provides buffer or setback from the adjoining property to the southwest



Project costs of Option 6 (including infrastructure, development and design but excluding land, finance and interest) are around $2.24m higher than net sale proceeds.

Target Land Uses

Target industries for the subject site at Wallerawang include, but are not limited to, the following:

Distribution centre given the possibility of supply large sites (or amalgamation of lots) and given the land’s central location in the Mid-west region, and suitable access from the Highway;

Manufacturing;

Building materials and construction and outdoor supplies mainly to service the region;

Coal based service industries; and

Possibly local service industries (although not highly probable given the distance from Lithgow).

Notwithstanding the above preferred land uses, Council should be proactive in encouraging any employment land uses that are compatible with the remaining land associated to the Minerals Park land.

Recommended Zoning Categories

The site is currently zoned Rural General 1(a) under Lithgow Local Environmental Plan 1994 (LEP) permitting with consent all forms of industrial development.

Industrial zones for the subject site in Wallerawang should be consistent with the LEP Template and rezoned to the IN1 General Industrial Zone. The objectives of this zone being:

To provide a wide range of industrial and warehouse land uses;

To encourage employment opportunities; and

To minimise any adverse effect of industry on other land uses.

Permitted uses with consent being: depots; freight transport facilities; heavy industries, light industries (defined in the Local Environmental Plan); warehouse or distribution centres.

Council’s Role and Next Steps

Lithgow City Council will need to manage the development either with in-house staff or through an external development manager. The cost of an external project manager is typically around 2.5% to 3% of total project cost for a project of this size (say between $70,000 and $100,000). This has been allowed for in the estimate of professional fees in the DCF models.

Next steps for Council include:

Give consideration to removing the need for gas to service the land as this is an added cost burden;

Undertake a Phase 1 Contamination Report to eliminate any risk of contamination.



Make representations to the Roads and Traffic Authority (RTA) at the Development Application (D.A.) or pre-D.A. stage regarding access from the Highway;

Make representations to Sydney Catchment Authority at the D.A. stage regarding the Authority’s requirements for water quality and detention; and

Cost estimate the major works including, intersection treatment, drainage and sewer as these items will affect feasibility.



2. INTRODUCTION 2.1 Brief and Background Lithgow City Council (Council), Delta Electricity and the NSW Department of Industry & Investment (formally, NSW Department of State & Regional Development) are working together to investigate the feasibility of developing 10ha in Wallerawang for industrial purposes as a means of addressing a perceived lack of industrial land available within Lithgow LGA.

It’s understood Council currently has two works depots within the LGA located within Lithgow and Wallerawang town centres. As a result, Council is interested in exploring the potential for the proposed industrial development to include the amalgamation of Council’s depots onto a single site thereby providing an anchor or start up development for the industrial park.

The need to investigate the potential of the subject site for further development came about as a result of the following:

In 1987 Council commissioned a report to identify possible sites in the Lithgow LGA that may be suitable for a large industrial project.

In 1995 the NSW Department of Mineral Resources identified a 100ha site at Wallerawang adjacent to the Wallerawang Power Station as a potential site for use as an electrometallurgical industrial park which later became known as the Lithgow Minerals Processing Park. This land was dedicated to mineral processing requiring significant usage of electrical power.

In 2000 the Department of Urban Affairs & Planning approved development of a Silicon Plant for the 100ha site, however in 2001 the project stalled.

Between 2002 and 2004 efforts were made to identify whether some of this land or other Crown land would be suitable and available for other industrial development to increase the attractiveness for the site. No other Crown land was identified and consequently, there were calls for the part of the site to be identified as available for non-heavy industrial land uses.

In May 2008 it was agreed by the NSW Department of State & Regional Development in conjunction with the Lithgow Minerals Park Project Committee that 10ha of the 100ha site could be used for other agreed industrial purposes which would not compromise development of the remaining 90ha. It was felt that the 10ha lot would provide sufficient flexibility for other smaller scale and alternative developments in the immediate future.

As a result, Hill PDA was engaged by Council to prepare a feasibility study to determine whether it would be economically viable for the land at Wallerawang to be developed for industrial purposes with the possible inclusion of Council Depots. Council engaged Hill PDA to identify the market demand for industrial land within the region and the suitability of the proposed site for development.



As part of the brief, a concept plan for the subject site was developed. For this, Hill PDA engaged the services of Jackson Teece as sub-consultants to provide the urban design aspects of this study.

2.2 Methodology In order to meet the objectives of the project brief, Hill PDA undertook the following key tasks:

Identified patterns of supply and demand for industrial land.

Conducted an appraisal of the current market position of the site as potential employment development land.

Considered surrounding and comparable developments within the catchment of the study area.

Identified suitable locations for the proposed ten hectares of industrial land within Delta’s boundaries.

Identified and examined the various development options associated with the parcel of land.

Considered the consolidation of Council’s various depots on to the site.

Feasibility modelling of the draft Concept Plan.

Commented on disposal options and the likely returns and risks of each redevelopment option.

Preliminary identification of the issues and opportunities associated with consolidating Council’s various depots into one area on this site.

Identified and examine the various ownership and development options associated with the parcel of land and provide guidance regarding the preferred role for Council.

2.3 Background Documentation The following documents were reviewed as part of this study:

Lithgow Local Environmental Plan (LEP) 1994

Lithgow Social Plan (2008)

Lithgow City Council State of Environment Report (2007/2008)

Lithgow City Council Management Plan (2009/10 – 2011/12)

Lithgow Strategic Plan (2007)

Lithgow Jobs Summit Report, Western Research Institute (2008)



3. SITE DESCRIPTION 3.1 Regional Context The Central West Region includes Lithgow, Bathurst, Cowra, Forbes, Orange and Parkes. The major highways connecting major towns in the Central West and NSW are the Mid-Western, Newell and Great Western Highways.

The rail network in the Central West features two intermodal rail terminals located in Parkes and Blayney.

Figure 1 - Map: Regional Context

Source: Central West Regional Development Board

Major competitive advantages of the Region are:

It has extensive freight and commuter road and rail infrastructure;

It is rich in natural resources including coal, gold, copper, timber and water supplies;

It is close to the major population and market centres of Sydney, Newcastle, Wollongong and Canberra;

It is one of the most diverse regional economies; and

It has strong education and service sectors.



Together the Region contributes to a manufacturing industry worth around $1.42bn annually and is home to an expanding mining sector including coal, gold and copper1. The Lithgow Minerals Processing Park, strategically located next to the Wallerawang power station, provides new opportunities for vertical integration and value adding to the region's mineral wealth and associated industries.

3.2 Local Context Lithgow LGA is a relatively large geographical area located about 140km west of the Sydney CBD, on the western edge of the Blue Mountains, and within the eastern part of the Central West Region.

Lithgow is the major urban centre of the LGA with two townships Portland and Wallerawang, and numerous villages, hamlets and rural localities of varying proximity to Lithgow. While still a major coal mining area the surrounding mountains and countyside offer extensive tourism opportunities. There were 19,756 people living in the Lithgow LGA at the 2006 Census.

The subject site comprises predominantly open grassland with a service road accessing the site from Castlereagh Highway in Wallerawang. The site is located around 2.8km north-east of the Wallerawang town centre and 14km north-west of Lithgow. The site is adjacent to the Delta Electricity’s existing power plant, and forms part of the 100ha Lithgow Minerals Processing Park.

Figure 2 - Map: Approximate Site Location

Source: Department of State & Regional Development

1 Source: Business NSW



Surrounding land uses comprise of a variety of rural uses with the Delta Electricity Wallerawang Power Station to the north which can provide access to existing services such as electricity, gas, water and telecommunications and industrial lands to the north/west, residential to the east and industrial/commercial uses to the south.

The site is well located to transport infrastructure being approximately two hours away by road to Sydney, two and a half hours by road to Wollongong and three hours by road to Newcastle. Also the main NSW east/west rail corridor passes through the site providing direct access to Sydney, Port Botany and ready access to a number of the State’s major mineral deposits at Orange, Parkes, Cobar and Broken Hill.

3.3 Site Characteristics Land Use and Zoning

The site is currently zoned Rural General 1(a) under Lithgow LEP (1994). The objectives of this zone are:

a) Protecting, enhancing and conserving: rural land, soil, forests, valuable deposits of minerals/coal/extractive materials, trees and other vegetation in environmentally sensitive areas, water resources for use in the public interest, and items of heritage significance;

b) Preventing the unjustified development of prime crop and pasture land for purposes other than agriculture;

c) Facilitating farm adjustments;

d) Minimising the cost to the community of fragmented and isolated development of rural land, and providing, extending and maintaining public amenities and services;

e) Providing land for other non-agricultural purposes, in accordance with the need for that development; and

f) Providing for the separation of conflicting land uses.

The Rural General 1(a) zone permits with consent all forms of industrial development.

Topography and Access

The subject site comprises predominantly open grassland with a service road accessing the site from Castlereagh Highway. The subject site forms two allotments being Lot 3 and 4 DP 1018958 having a combined area of 40.19ha which appears to be generally level. Our inspection did not reveal any obvious site or drainage issues. The site is located within the Sydney Drinking Water Catchment in proximity to Category 1 Stream – Coxs River. As such any development upon the site must result in a neutral or beneficial effect upon water quality.

All the schematic drawings undertaken by Jackson Teece allow for water retention.



Figure 3 - Photo: Topography of the Subject Site

Figure 4 - Photo: Access from Castlereagh Highway

Looking North along Castlereagh Highway

Looking South along Castlereagh Highway

3.4 Infrastructure (Services) Water Supply

It is understood that town water from Wallerawang is available to the site and runs along the Castlereagh Highway as part of Council’s Water Supply Network to Springvale Lane.

Oberon Dam supplies the Fish River Water Supply (FRWS). There is concern with the ongoing capacity of this supply to meet current and future needs due to a number of inter-related factors:

The level of Oberon Dam, as at September 2009, was at 12.78% capacity and has fallen further since. The area has been in drought for a considerable period and climate change may continue to impact heavily upon the dam.

The catchment for the Oberon Dam is only 50km² and as such is more prone to drought.

The FRWS services the Oberon urban area including the timber processing plant, parts of Lithgow LGA, Delta Electricity and feeds into the Sydney Catchment. The diversity of users impacts on the viability of the supply.



As part of the current Drought Management Strategy, Lithgow Council is exploring the possibility of providing water to all towns and villages within its LGA from the Farmers Creek Dam supplemented by flows from the Clarence Water Transfer System.

Under this scenario water to the subject site would be sourced from the Farmers Creek Dam Supply. This system will not provide for peak demands without the support of water restrictions.

Council engineers advise that there are 2 options for providing water services to the proposed Industrial Park being:

Option 1 - connecting to Council Reticulation on Castlereagh Highway. Council currently services residents of Springvale Road with potable water from the Lidsdale Reservoir. The reservoir has sufficient capacity to accommodate the development of the site. The limiting factor for the supply of water to the site is within the reticulation network and from discussion with Council staff there is existing pressure problems on the pipeline along Springvale Road.

Option 2 - connecting to Fish River Water Supply. The FRWS pipeline that feeds to Wallerawang runs close to the rear or western boundary of the proposed site. This pipeline should have the capacity to service the site but further discussions would be required with FRWS to ensure that connection to the line is possible and hydraulic capacity is sufficient.

Sewer

Council engineers considered several options to sewer the site. The most cost effective option is to pump discharge from the site into the gravity sewer area in Blaxland Street, which gravity feeds to Pump Station (P/S) No 1. This requires transferring the sewer across Delta Electricity land and across Lake Wallace – some 2.5km. There is an existing pipeline bridge, (further investigation is required to find the owner of the bridge) and occupation agreements would be required.

Under all options augmentation of P/S No 1 is required at an estimated capital cost of $468,900.

Wallerawang Sewer Treatment Plant (STP) requires augmentation but the upgrading will be carried out regardless of whether or not development on the subject site proceeds.



Figure 5 - Subject Site and Servicing

Source: Lithgow City Council

Electricity Supply

Electricity is available to the site from the existing network which runs along the Castlereagh Highway, Costs include $300/m for reticulation including street lighting and $120,000 for a sub-station.

Gas Supply

The site can be serviced from the existing network with a pipeline located approximately 2km south of the site. Cost is approximately $150/m. Gas is not an essential service. Very few industries require it as an essential service although many industries desire it because it provides a cheaper energy alternative. For the purpose of the feasibility testing this cost has been removed.

Telecommunications

Broadband internet and telecommunications infrastructure is located near the site and the extension of this to any proposed development is a relatively simple matter. Additional ducting for telecommunications is $90/m.

Environmental Factors

Hill PDA has no knowledge of any contamination of the land which may have resulted through the use of the land. The likelihood of contamination from the current use along with previous and surrounding uses is remote. No previous land uses related to this site are listed in Schedule 1 SEPP No. 55 - Remediation of Land, however, a Phase 1 Contamination Report is recommended which would reduce risk associated to the development and sale of the site.



4. PLANNING & POLICY CONSIDERATIONS This section provides an overview of the planning context in which employment land activity in Lithgow LGA is managed. It includes the following provisions as applicable to employment land use and development:

State statutory provisions;

State planning reforms (including the State’s LEP Template); and

Local statutory provisions (including LEP’s and Development Control Plans).

4.1 State Statutory Provisions For the present study, a brief outline is presented below of the key state planning policies which are relevant to the planning and development of employment activity in Lithgow LGA.

SEPP (Infrastructure) 2007

SEPP (Mining, Petroleum Production and Extractive Industries) 2007

SEPP (Major Development) 2005

SEPP No. 55 - Remediation of Land

SEPP No. 33 - Hazardous and Offensive Development

SEPP No. 22 - Shops and Commercial Premises

4.2 State Planning Reform As a result of amalgamations and boundary changes, Lithgow LGA is currently covered by two LEPs including Lithgow City LEP (1994), Rylstone LEP(1996). Lithgow City LEP(1994) currently applies to the subject site.

The NSW Department of Planning is currently seeking to promote improved integration of the various statutory planning and reporting processes undertaken by councils required under the Local Government Act and the Environmental Planning & Assessment Act. As a result Lithgow City Council has commenced the process of preparing a comprehensive Principal LEP for the LGA to accord with the Standard Instrument..

Consistent with its new more strategic approach, Council has also recently developed a updated Social Plan (2008), a new Cultural Plan (2008-2013), and is in the process of developing a Land Use Strategy, an Economic Development Strategy and an Aging Strategy. These projects are also reflected in Council’s Strategic and Management Plans.

Recent changes to planning legislation also require that only one Development Control Plan (DCP) apply to a site. To comply with this requirement, a DCP may cover the whole local government area, a precinct or a site. Site specific DCPs would operate to exclude the application of all other DCP’s to the site. As a result, Lithgow will comply with this requirement inline with its new comprehensive LEP.



4.3 Lithgow City Local Environmental Plan (1994) This section examines the existing Lithgow City Council’s LEP (1994) that applies to the various employment lands in Lithgow LGA as well as those controls as currently apply to the subject site.

The LEP adopts the definitions of the 1980 Model Provision in respect of industrial land uses. The Model Provisions define Industries as

a) “any manufacturing process within the meaning of the Factories, Shops and Industries Act 1962 , or

b) the breaking up or dismantling of any goods or any article for trade or sale or gain or as ancillary to any business,

but does not include an extractive industry.”

The Model Provisions further define Light Industries as

“an industry, not being an offensive or hazardous industry, in which the processes carried on, the transportation involved or the machinery or materials used do not interfere with the amenity of the neighbourhood by reason of noise, vibration, smell, fumes, smoke, vapour, steam, soot, ash, dust, waste water, waste products, grit, oil, or otherwise”.

The definitions are flexible. This flexibility has led to dispersed industrial development across the LGA giving rise to various industrial precincts with severe land use conflicts. These constraints have subsequently reduced investor interest in the area.

Rural General 1(a) Zone

The subject site in Wallerawang is identified as being zoned Rural (General) 1(a) with the objective of:

a) Protecting, enhancing and conserving: rural land, soil, forests, valuable deposits of minerals/coal/extractive materials, trees and other vegetation in environmentally sensitive areas, water resources for use in the public interest, and items of heritage significance;

b) Preventing the unjustified development of prime crop and pasture land for purposes other than agriculture;

c) Facilitating farm adjustments;

d) Minimising the cost to the community of fragmented and isolated development of rural land, and providing, extending and maintaining public amenities and services;

e) Providing land for other non-agricultural purposes, in accordance with the need for that development; and

f) Providing for the separation of conflicting land uses.

Development permitted without development consent includes development for the purpose of agriculture (other than intensive livestock keeping establishments or ancillary dwellings); bushfire hazard reduction; forestry (other than ancillary dwellings); home-based child care.



Prohibited development includes development for the purposes of boarding houses; bulky goods salesrooms or showrooms; commercial premises; home occupation (sex services); motor showrooms; residential units; restricted premises; sex services premises; shops (other than general stores).

The Rural General 1(a) zone permits with consent all forms of industrial development.

Clause 11 of the LEP also applies to this zone, indicating other general considerations for development in rural zones. Specifically, before determining a development application, Council must take into consideration the effect that the proposal development would have on the present use of the land, potential rural uses, and potential extractive resources of that land.

Industrial Activity Permitted in Zones

There are various other land use zones which permit industrial activity. These are indicated in the matrix below.

Table 2 - Industrial Activity in Lithgow Land Use Zones Zone Permitted Industrial Activity with

Consent Prohibited Industrial Activity

Zone No 1(a) Rural (General) All None Zone No 1(c) Rural (Small holdings)

Home industries and light industries. General industrial, extractive or hazardous industry.

Zone No 1(d) Rural (Future urban)

General Industrial, home industries and light industries.

Extractive or hazardous industry.

Zone No 1(e) Outer Rural All None Zone No 1(f) Rural (Forestry) Extractive industries General industrial, light industrial, extractive

or hazardous industry. Zone No 2(a) Residential Home industries and light industries. General industrial, extractive or hazardous

industry. Zone No 2(v) Village General industrial, home industries and light

industries. Extractive, offensive or hazardous industry.

Zone No 3 Business Home industries and light industries. General industrial, offensive or hazardous industry.

Zone No 4 Industrial Extractive industry, general industrial, home industries and light industries.

Offensive or hazardous industry.

Zone No 6 Open space None None Zone No 8 National Parks/Nature Reserves

None None

Source: Lithgow City LEP (1994)

Home and Light Industries

Home and light industries are permitted with consent in most zones including Zone No 1(a) Rural (General), Zone No 1(c) Rural (Small holdings), Zone No 1(d) Rural (Future urban), Zone No 1(e) Outer Rural, Zone No 2(a) Residential, Zone No 2(v) Village, Zone No 3 Business, and Zone No 4 Industrial.

General Industrial

General industrial uses are permitted in Zone 4 Industrial with the objective of:

a) Designating sufficient land for industrial uses;



b) Allowing a wide variety of industrial activities which by the nature of their operation may require a large portion of the activities to be comprised of commercial, office or shop purposes in conjunction with industry providing for a wide variety of light industrial uses which are generally compatible with nearby residential neighbourhoods; and

c) Allowing appropriate bulky goods retailing.

General industrial is also permitted with consent in Zone No 1(a) Rural (General), Zone No 1(d) Rural (Future urban), Zone No 1(e) Outer Rural, and Zone No 2(v) Village.

Extractive, Offensive and Hazardous Industry

Extractive, offensive and hazardous industry is permitted with consent in Zone No 1(a) Rural (General) and Zone No 1(e) Outer Rural. Extractive industries are also permitted with consent in Zone 1(f) Rural (Forestry) and Zone 4 Industrial. Extractive, offensive and hazardous industries are prohibited in all other zones.

4.4 Other Council Plans and Polices Lithgow City Council State of Environment Report (2007/2008)

The State of the Environment Report 2007/08 is a supplementary report which aims to identify any new environmental impacts since the 2006/07 State of the Environment Report and updates trends in environmental indicators that are important to each environmental sector. The Report addresses the environmental sectors of Land, Air, Water, Biodiversity, Waste, Noise and Heritage.

Of relevance to the current study in Wallerawang is the state of Land - There have been no significant developments or changes to employment within the 2007/2008 reporting period to indicate a significant change in population. Pressures to land include:

The overall sustainability of growth opportunities in the medium to longer terms.

The Department of Planning requires the Lithgow Local Government Area to complete a new principle Local Environmental Plan in accordance with the Standard Instrument (Local Environmental Plans 2006) and an endorsed Land Use Strategy.

The following actions were planned for 2008/09:

Preparation of a Land Use Issues Paper and Land Use Strategy

Preparation of a Draft Economic Development Strategy

Preparation of Development Contributions Plans and Development Servicing Plans

Commencement of the preparation of a Comprehensive Development Control Plan/s.

Commencement of the preparation of Community Lands Plans of Management.

All of these are underway in various stages of completion.



Lithgow City Council Management Plan (2009/10 – 2011/12)

Council plays an important role in the community by undertaking activities, initiatives and works on behalf of residents. To inform the community of these planned works, each year Council prepares a three year management plan. The Plan provides details of how Council will fund these activities, initiatives and works and how Council will measure its performance. This Management Plan continues to be based on the visions, strategies and activities which the community assisted Council to develop in its Strategic and Social Plans and in a range of other plans that Council is continuing to develop.

The overarching vision is: “A centre of Regional excellence that:

Encourages community growth and development; and

Contributes to the efficient and effective management of the environment, community and economy for present and future generations.”

The following vision statements of relevance for this study in Wallerawang are:

Community - We retain, respect and strengthen both our overall sense of community, and the unique linked communities of groups, rural areas, villages and towns that make up the Lithgow LGA.

Employment – Developing and embracing diverse job opportunities for all ages and abilities.

Environment – Balancing, protecting and enhancing our diverse environmental elements, both natural and built, for the enjoyment and support of both current and future generations.

Growth - Providing for sustainable and planned growth, while enhancing the existing rural and village identity.

Some of the new initiatives set out in the Management Plan of relevance to this study include:

Prepare a revised Social Plan.

Prepare a Retail and Business Strategy.

Undertake the preparation of Land Use Strategy informed by Local Profile and Issues Paper.

Undertake the preparation of Local Environmental Plan to accord with the Standard Instrument (Local Environmental Plans) Order 2006 informed by an endorsed Land Use Strategy.

Undertake the preparation of a Comprehensive Development Control Plan to support the comprehensive LEP.

Prepare a development contributions system using one or more methods available under Section 94 of the Environmental Planning and Assessment Act, 1979.

The completion of an economic development strategy that will include retail, business and tourism development.

Regularly meet with the Lithgow Business Association, Futures Lithgow and other groups as required.

The development of marketing and branding strategies that will contribute to Council’s ability to communicate with the community and support business and tourism growth.



Provide an advisory service to business and industry regarding the LGA.

Commence construction of Wallerawang Sewerage Treatment Plant augmentation to improve the quality of effluent being discharged into the Sydney Drinking Water and Hawkesbury Nepean Catchments.

Lithgow Strategic Plan (2007)

The Lithgow Strategic Plan (2007) is the first long term plan to be developed by Lithgow City Council in collaboration and consultation with the community and government. It introduces a new framework of strategic planning in the Lithgow LGA which is driven by the community's vision and issues.

The objective of the Plan is to provide the strategic framework for the future development of the Lithgow Local Government Area and to encourage environmental, economic and social sustainability.

Vision statements, identification of key issues, and strategic objectives were developed for the following aspects of the LGA:

Community Health

Transport Environment

Employment Arts and Culture

Heritage Youth

Education Growth

Particular aspects of the Strategic Plan of significance to this study in Wallerawang are those issues and strategies related to Employment and Growth.

Employment

The vision for employment in Lithgow LGA is: developing and embracing diverse job opportunities for all ages and abilities. Those key employment issues identified from community and government consultation include:

Protecting resources and maximising opportunities for sustainable growth of existing industries.

Diversifying the economic base of the LGA to provide increased opportunities for employment.

Overcoming a lack of employment generation land by planning, providing for and locating development on land capable and suitable for its purpose.

Developing the tourism potential of the LGA.

The absence of an economic development strategy.

Minimising land use conflict through well planned development.

Strengthening the Lithgow Central Business District as the primary centre and reinvigorating Portland and Wallerawang Central Business Districts as secondary centres.

Attracting clean green industries to the LGA.

Protecting agricultural land from conflicting and competing land uses, particularly residential land use.



To handle the above issues, the following strategies were identified:

Employment through economic development - To create employment opportunities through economic development in the LGA. Strategies included planning for a diversified economy which supports local employment and encouraging local employment opportunities for the community.

Economic assets - To enhance employment opportunities through the protection of the LGA’s economic assets. The economic base of the LGA has long been characterised by mining and manufacturing, however, this is changing. Nevertheless, the economic assets need to be protected and these include mineral resources, forestry, agriculture,

Employment generation land - To identify land in the LGA suitable for employment generation by ensuring supply of employment generation lands.

Retail - To promote retail opportunities in the Central Business Districts of Lithgow, Wallerawang and Portland.

Tourism - To build a sound and diversified tourism sector based on the natural and cultural assets of the LGA.

Growth

The vision for growth in Lithgow LGA is: providing for sustainable and planned growth, while enhancing the existing rural and village identity. Those key growth issues identified from community and government consultation include:

The overall sustainability of growth opportunities in the medium to longer terms.

The changing needs of the community and demographic characteristics.

The impact of population growth on the amenity and character of our towns, villages and rural areas.

The housing needs of our community.

The effective and efficient allocation of infrastructure, services and facilities to accommodate growth.

The cost of growth on the wider community with no net community benefit.

The impact of an expanding development footprint of the LGA and development pressures.

The potential for growth to increase land use conflict.

The need for new urban areas capable of supporting a range of urban uses.

To handle the above issues, the following strategies were identified:

Population growth and settlement - To set a growth rate for the LGA with the community. During Stage 2 consultation for the Strategic Plan in 2006, community input was sought on setting a growth rate for the LGA. The 1%-2% growth rate indicated to be planned for the LGA, is a desire of those who participated in the consultations. They do not take into account any unexpected activities or change in values which may lead to an increase in population.



Location of growth - To nominate areas for growth with the community, by planning growth in the towns and villages, followed by rural residential areas.

Criteria for urban land - To establish criteria for assessment of urban lands by facilitating the sustainable planning of residential, commercial and employment generation land based on environmental, social and economic considerations.

Residential land for growth - To identify adequate residential land to support future growth.

Infrastructure for growth - To provide growth areas with appropriate utilities and infrastructure. The provision and/or upgrade of infrastructure such as water, sewer and stormwater are important considerations when determining the rate, level and location of growth within the LGA.

Who pays for growth - There are a number of options available to fund development related infrastructure and Council is currently preparing and/or reviewing its developer contributions policies and plans. The strategy is to provide infrastructure for growth.



5. DEMOGRAPHIC & EMPLOYMENT PROFILE 5.1 Population Growth The total population of Lithgow LGA as per the 2006 ABS Census was 19,756 people. Council’s Social Plan (2008) indicated that the LGA continues to have a low rate of population growth. Population growth was very modest between 2001 and 2006. Whilst Lithgow LGA recorded a population increase of 1.1% over the period, Wallerawang and Cullen Bullen both recorded population decreases of -1.5% and -3.9% respectively. Lithgow Urban Area recorded a 2.4% increase and Portland a 3.6% increase.

Forecast population growth can be deduced from the ABS which was commissioned in 2008 by the NSW Department of Health & Ageing to develop population projections for every local government area in Australia. The forecasts are based on assumptions of fertility (birth rates), mortality (death rates) and migration as based on historical patterns and trends specific to each area.

The table below shows the change in forecast population from 2007 to 2027 for Lithgow LGA. The results indicate Lithgow’s population is anticipated to increase slightly to 2017, after which the population is expected to progressively decline.

Lithgow is forecast to experience compound annual population growth of around -0.06% per annum. However, these forecasts should be considered with caution as they do not consider the potential change to the population brought about by a change in base industry which in turn impacts on employment opportunities.

Table 3 - Lithgow LGA Forecast Population Growth (2007-2027)2 Year Forecast Population Growth in Persons 2007 20,660 - 2012 20,799 139 2017 20,832 33 2022 20,705 -127 2027 20,412 -293

Source: ABS 2008.

It should also be noted that Council’s Strategic Plan (2007) set a target growth rate of 1% to 2% for the LGA based on community and stakeholder consultation. However, this target does not take into account any unexpected activities or change in values which may lead to an increase in population.

Factors that influence and challenge population growth in Lithgow LGA include:

The median age in the LGA increased from 34 years in 1996 to 37 years in 2001 and again to 40 years in 2006. By comparison, in 2006 the median age of the Central West was 38 years and NSW 37 years.

2 Note: the base Estimated Resident Population (ERP) is preliminary for 2007, based on final 2006 Census-year ERP; later years are projected.



Lithgow LGA had a slightly older than average population which is ageing at a relatively fast rate compared with NSW.

There were proportionately fewer young people aged 20 to 39 years living in the LGA compared with NSW.

There were significant declines in the number of children and young people between 1996 and 2006 in the LGA in line with the decline in the number of child bearing aged adults.

Changes in base industries (e.g. opening of a new mine) will impact on population growth. A new base industry locating in Lithgow has the ability to be an employment attractor for the existing population whilst encouraging new residents to move to Lithgow for work.

Lithgow is not the only regional centre in the Central West Region to experience negative growth forecasts. Except for major regional centres like Bathurst and Orange, Cowra, Parkes and Forbes are also forecasting negative growth rates over the same period.

Table 4 - Central West Forecast Population Growth (2007-2027)3

LGA Persons 2007

Persons 2027

Growth in Persons

Compound Annual Growth

Rate Lithgow 20,660 20,412 -248 -0.06% Bathurst 37,731 42,383 4,652 0.58% Blayney 6,958 8,422 1,464 0.96% Orange 37,433 39,403 1,970 0.26% Cowra 12,910 12,173 -737 -0.29% Parkes 14,885 14,641 -244 -0.08% Forbes 9,705 8,753 -952 -0.51%

Source: ABS 2008.

5.2 Jobs in Lithgow by Industry Journey to work data, as compiled by the NSW Ministry of Transport’s Transport Data Centre (TDC), from ABS Census data, uses employment counts for specific locations, to analyse the likes of commercial centres, daytime population, profile of resident workforce, industry trends and method of travel to work.

TDC journey to work data may produce slightly different counts to those obtained directly from ABS for the same geographic level due to:

ABS confidentialising process (randomisation of small cells);

Further validation and adjustment of the data by TDC; and

Imputed of unknown destination counts across zones within a statistical local area to eliminate locality 'dump' codes.

3 Note: the base Estimated Resident Population (ERP) is preliminary for 2007, based on final 2006 Census-year ERP; later years are projected.



Journey to work data also indicates where particular job types are located. Jobs provided in a particular location can be analysed against the profession of residents which may indicate why residents leave a LGA to work. The table below shows for example that the biggest employers in Lithgow LGA are mining, retail trade, accommodation and food services, public administration and safety, and health care and social assistance. Combined these industries employ 51.5% or 3,529 workers. The largest employer in Lithgow is the mining industry, employing 833 persons or 12.2% of workers in Lithgow. Mining is followed closely by retail trade employing 797 persons or 11.6% of jobs in Lithgow LGA.

These are also trends experienced across the broader Central West Region where retail trade, health care and manufacturing are the greatest employers. The Region also has a high representation of jobs in agriculture, forestry and fishing, with Lithgow only providing a small proportion of these.

Table 5 - Jobs in Lithgow LGA and the Central West Region (2006) Lithgow LGA Central West SD Industry Type No. Jobs % No. Jobs %

Agriculture, Forestry and Fishing 191 3% 7,931 12% Mining 833 12% 2,362 4% Manufacturing 514 8% 6,791 10% Electricity, Gas, Water, Waste Services 396 6% 1,131 2% Construction 311 5% 3,185 5% Wholesale Trade 114 2% 1,890 3% Retail Trade 797 12% 7,933 12% Accommodation and Food Services 587 9% 4,577 7% Transport, Postal and Warehousing 328 5% 2,826 4% Information Media, Telecommunications 50 1% 764 1% Financial and Insurance Services 145 2% 1,191 2% Rental, Hiring, Real Estate Services 84 1% 785 1% Professional, Scientific, Technical 195 3% 2,152 3% Administrative and Support Services 194 3% 1,195 2% Public Administration and Safety 634 9% 4,964 7% Education and Training 478 7% 6,127 9% Health Care and Social Assistance 677 10% 7,660 11% Arts and Recreation Services 55 1% 512 1% Other Services 220 3% 2,507 4% Inadequately described 49 1% 518 1% Total employed persons aged 15 years plus 6,852 100% 67,001 100%

Source: ABS 2006 Census

5.3 Persons with Workplace in Lithgow Journey to work data also indicates where people travel from to work in Lithgow. The following table indicates the majority of workers in Lithgow (84.9% or 5,820 persons) live and work within the LGA, with 90.8% of workers living within the Central West Region.

6.1% of Lithgow’s workers travel from the Blue Mountains with only a very small proportion travelling from the remainder of Sydney SD and Penrith. In total, 1,032 workers or 15.1% of total workers live outside the LGA and travel into Lithgow for work.



Table 6 - Persons with Workplace in Lithgow Local Government Area (2006) Area of Usual Residence No. people who work

in Lithgow % of Lithgow

Workers Lithgow 5,820 84.9% Bathurst 319 4.7% Mid-Western Regional 31 0.5% Oberon 34 0.5% Remainder of Central West Statistical Division 20 0.3% Total Central West Statistical Division 6,224 90.8% Blue Mountains (C) 419 6.1% Remainder of Sydney Statistical Division 147 2.1% Total Sydney Statistical Division 566 8.3% Other Statistical Local Areas 62 0.9% Total 6,852 100.0%

Source: ABS 2006 Census and JTW Data 2006 from NSW Transport Data Centre.

The following table shows jobs in Lithgow LGA by origin of workers by industry type.

Table 7 - Jobs in Lithgow by Origin of Workers by Industry Type as % of Total Industry Types (2006)

Industry Type Total Central

West Statistical Division

Total Sydney Statistical

Division

Total Other Statistical Local

Areas Total

Agriculture, Forestry and Fishing 2.8% 2.3% 4.8% 2.8% Mining 12.0% 12.9% 22.6% 12.2% Manufacturing 7.5% 8.7% 0.0% 7.5% Electricity, Gas, Water and Waste Services 6.1% 3.0% 0.0% 5.8% Construction 4.5% 5.3% 4.8% 4.6% Wholesale Trade 1.7% 1.1% 4.8% 1.7% Retail Trade 12.0% 7.4% 6.5% 11.6% Accommodation and Food Services 9.1% 3.7% 4.8% 8.6% Transport, Postal and Warehousing 4.9% 4.8% 4.8% 4.9% Information Media and Telecommunications 0.8% 0.5% 0.0% 0.7% Financial and Insurance Services 2.1% 1.9% 0.0% 2.1% Rental, Hiring and Real Estate Services 1.2% 1.4% 4.8% 1.2% Professional, Scientific Technical Services 2.7% 3.5% 8.1% 2.8% Administrative and Support Services 2.8% 2.7% 0.0% 2.8% Public Administration and Safety 8.8% 13.6% 14.5% 9.3% Education and Training 6.4% 12.7% 9.7% 7.0% Health Care and Social Assistance 9.7% 11.7% 4.8% 9.9% Arts and Recreation Services 0.8% 0.5% 0.0% 0.8% Other Services 3.4% 1.2% 4.8% 3.2% Inadequately described 0.6% 0.5% 0.0% 0.6% Not stated 0.1% 0.5% 0.0% 0.1% Total 100.0% 100.0% 100.0% 100.0%


The results above indicate:

The majority of workers who travel from within the Central West Statistical Division to Lithgow LGA work in retail trade, mining, manufacturing, health care, accommodation and food services.

Large proportions of workers in public administration, safety, education, training and health care travel from the Sydney region to work in Lithgow LGA.



Those workers who travel from further a field (outside the Central West and Sydney regions) do so to work mainly in mining, public administration and safety.

5.4 Where Residents in Lithgow Work Journey to work data also indicates where Lithgow’s resident workforce travels to for work. The table below indicates the majority of Lithgow’s resident workforce (75.5% or 5,824 persons) live and work within the LGA, with 82% of the resident workforce finding work within the Central West Region.

In total, 1,893 working residents or 24.5% of the resident workforce leave Lithgow LGA to work. Of those that work outside the LGA, 5.8% of Lithgow’s resident workforce travel to the Blue Mountains for work and 3.6% travel to Bathurst. Only a very small proportion of working residents travel to Sydney and Penrith.

Table 8 - Persons with Usual Residence in Lithgow by Area of Workplace (2006) Area of Workplace Number of

Working Residents % of Resident

Workforce Lithgow 5,824 75.5% Bathurst 275 3.6% Mid-Western Region 69 0.9% Oberon 104 1.3% Remainder of Central West Statistical Division 32 0.4% Total Central West Statistical Division 6,304 - Blue Mountains 441 5.7% Penrith 36 0.5% Sydney (inner) 29 0.4% Remainder of Sydney Statistical Division 213 2.8% Total Sydney Statistical Division 719 - Other Statistical Local Areas 91 1.2% NSW Undefined 75 1.0% No fixed address 232 3.0% Not stated 296 3.8% Total Other 694 - Total 7,717 100.0%


The following table shows where and in which industries Lithgow residents work.

Table 9 - Persons with Usual Residence in Lithgow by Area of Workplace and Industry (2006)

Industry Lithgow Bathurst Mid-

West’n Region

Oberon Remain Central

West SD

Blue Mnts

Remain Sydney

SD

Total Other Areas

Total

Agriculture, Forestry, Fishing 168 6 26 17 3 8 3 31 262 Mining 689 3 8 - - 3 4 64 771 Manufacturing 448 50 5 44 - 7 27 48 629 Electricity, Gas, Water, Waste 339 6 6 - - 13 7 18 389 Construction 259 20 - 9 3 25 15 145 476 Wholesale Trade 102 9 3 - - 7 9 17 147 Retail Trade 721 24 3 3 9 56 21 26 863 Accommodation, Food Services 551 6 3 9 - 62 13 29 673 Transport, Postal, Warehousing 285 16 3 4 - 25 29 41 403 Information Media, Telecomm. 43 - - - - 3 10 3 59 Financial, Insurance Services 130 6 - - - 3 5 - 144 Rental, Hiring and Real Estate 65 12 - - - - 4 4 85



Industry Lithgow Bathurst Mid-

West’n Region

Oberon Remain Central

West SD

Blue Mnts

Remain Sydney

SD

Total Other Areas

Total

Professional, Scientific, Technical 155 9 - - - 14 20 20 218 Administrative, Support Services 170 12 3 3 - 7 12 37 244 Public Administration, Safety 481 28 - 6 11 46 40 27 639 Education and Training 341 35 6 6 3 27 33 13 464 Health Care, Social Assistance 578 27 - - 3 97 20 39 764 Arts and Recreation Services 46 3 - - - 9 3 12 73 Other Services 207 3 3 3 - 22 3 19 260 Inadequately described 39 - - - - 7 - 25 71 Not stated 7 - - - - - - 76 83 Total 5,824 275 69 104 32 441 278 694 7,717


The preceding table indicates that Lithgow residents mainly leave the LGA to work in manufacturing, construction, wholesale trade, transport/ postal/warehousing, administrative and support services, and professional, scientific and technical industries. These are also industries not overly represented in Lithgow (in respect to jobs in Lithgow).

Of those residents that leave Lithgow LGA for work, the majority travel to Bathurst and the Blue Mountains. Most of those working residents who travel to Bathurst, work in manufacturing, education and training. Those who travel to the Blue Mountains mainly work in health care, accommodation, food services, retail trade and public administration and safety.

5.5 Implications for Lithgow LGA and Wallerawang The following characteristics of residents and workers in Lithgow LGA will influence demand for employment land include

There are fewer young people living in the LGA.

Lithgow has a population which is aging at a relatively faster rate than the NSW average.

Marginal population growth to 2017 is forecast for Lithgow, after which the population is forecast to decline.

The largest employer in Lithgow LGA is mining, followed by retail trade, accommodation and food services, public administration and safety, health care and social assistance.

The majority of workers in Lithgow (84.9% or 5,820 persons) live and work within the LGA.

15.1% of total workers live outside the LGA and travel into Lithgow for work, with the majority travelling from the Blue Mountains.

24.5% of the resident workforce leaves Lithgow LGA to work, mostly to the Blue Mountains followed by Bathurst.

Those who travel to the Blue Mountains mainly work in health care, accommodation and food services, retail trade and public administration and safety. Most of those working residents who travel to Bathurst work in manufacturing, education and training, public administration/ safety, health care/ social assistance and retail.



Only a very small proportion of working residents travel to Sydney and Penrith.

The majority of working residents in Lithgow LGA work in mining, manufacturing, retail trade, accommodation and food services, public administration and safety, health care and social assistance.

Those working residents that leave Lithgow LGA to work mainly work in manufacturing, construction, wholesale trade, transport, postal and warehousing, information media and telecommunications, professional, scientific and technical services, administrative and support services, education and training, arts and recreation services (based on more than 25% of working residents leaving the LGA by industry type).

The above indicates that if Wallerawang can attract businesses in manufacturing, construction, transport and distribution then Lithgow is likely to recapture those residents that currently leave the LGA to work. This would not only increase Lithgow’s resident worker containment rate, but would increase the attractiveness of Lithgow for further investment and employment through industrial agglomeration.



6. TRENDS IN INDUSTRY The demand for industrial floorspace is being influenced by trends such as the globalisation of trade and the wider use of information technology. The global economy today consists of sophisticated linkages between businesses, which are designed to enable the efficient sharing of information and the delivery of goods now through a global supply chain. This supply chain, once thought of as the flow of goods through production to the end user, can now be seen as an alignment of firms that design, develop, market and produce goods and services, and deliver them to the customer when needed.

An example of this change can be seen in the motor industry. Once concentrated in cities, the industry has evolved into process where design, manufacture, and assembly occur in many different locations worldwide. Owing to the ability to utilise markets around the world, costs savings may be achieved by transferring manufacturing of goods to cheaper locations such as China and Indonesia. All this has heightened time based competition and flexibility, with consequential implications for the functional characteristics and spatial disposition of industrial activity.

In response to the changing format of industrial activities and the growth of inner metropolitan land values, there has been a spatial redistribution of more traditional forms of industrial activity. Those activities with lower rent sensitivities have relocated to less expensive land often on the urban periphery. Others have simply stopped operations in Sydney or altogether. This trend is recognised as the “suburbanisation” of industry whereby cheaper land opportunities have attracted industry out of urban areas.

The term used to describe the growing efficiencies of industry, with particular respect to manufacturing is “deindustrialisation”. This effect has resulted in a reduction in the number of industrial jobs for the same input through greater equipment and procedural efficiencies. This is evident in the trends emerging in parts of the Illawarra and Greater Western areas that have born industrial growth, and decreasing local manufacturing jobs.

As a result of the above trends, over the past two decades, the development of industrial land and floorspace in NSW has generally occurred at a rate slower than employment growth. This however, has varied considerably between specific sectors of activity. In manufacturing and wholesale trade, employment growth has, with only a few exceptions, either declined or remained stagnant. Contrasting this pattern has been the performance of transport and storage, which has shown strong growth.

Industrial floorspace used primarily for storage is predicted to be in secular decline, whereas space built for the transfer of goods may increase (industries affected include wholesaling, utilities, transport and storage). This “high throughput distribution” space is essentially designed to facilitate the rapid movement of goods through the supply chain. In essence, businesses with low inventory turnover are gravitating to inexpensive land and low cost buildings.

In contrast, businesses that have high inventory turnover, high value products, and typically provide value added functions (including product customisation, packaging, and customs) are more prepared to pay a premium for excellent access to a large customer base and proximity in time and space to roads, ports and airports.



Whilst Lithgow and the subject site will attract industrial and mining service industries in the first instance there are emerging industries which could impact demand for future employment land. These include:

Distribution Centres Technology and research

Intermodal Transport Hubs Eco-Industrial Estates

6.1 Distribution Centres and Transport Infrastructure In all likelihood, and as current evidence suggests, demand for new employment lands within close proximity of Sydney and major rail and road infrastructure will be focussed on the development of high throughput distribution facilities and what has been termed “bulk fulfilment distribution centres”, where large quantities of goods are broken down for distribution to consumers of small business markets. Locations for these facilities are being increasingly sought in hub/gateway areas in close proximity to major transportation infrastructure.

In Sydney this pattern can be seen with the realisation of opportunities generated by the development of new transport infrastructure. In areas located on periphery of the Sydney metropolitan region (areas such as Arndell Park) comparatively inexpensive land serviced by new infrastructure (e.g. the Western Sydney Orbital and the M4 motorway) have become attractive alternatives to traditional industrial areas for transport and logistics related activity. The M5 Industry Park at Moorebank, which offers a high level of access to the M5 Motorway, Hume Highway and several other major arterial roads, exemplifies this trend. In this industrial park, the logistics group, Toll Ipec, occupy a large building comprising some 21,500sqm.

Whilst this trend is less evident outside the metropolitan there are a growing number of industries that seek proximity to major transport nodes and there are regional cities that offer these facilities with examples being Wollongong, Albury and Wagga Wagga. These regional cities have airports, railways and major high-speed highways between the capital cities that have made them attractive destinations. Albury and Wagga Wagga in particular are positioned centrally in the triangle between Sydney, Melbourne and Adelaide.

6.2 Intermodal Transport Hubs An intermodal terminal can be defined as a location for the transfer of freight from one transport mode to another, (for example between road and rail). The coordination of resources to achieve intermodal efficiency is a challenging task that involves government and industry commitment.

Priority actions for the State Government include developing faster, more accessible transport links, and improving the connections between ports, industrial and agricultural centres. Intermodal terminals contribute directly to the outcome of developing a seamless freight and logistics system that enhances global competitiveness by reducing transport costs while meeting business requirements. In turn, this system contributes to other goals such as:

Maintaining prosperous and sustainable communities;

Increased regional development;

Better access to services and markets;



More efficient use of transport infrastructure; and

Reduced road congestion and environmental impact of transport through reduced truck use.

Examples of successful and proposed intermodal terminals include:

FCL Terminal, Blayney

Macarthur Intermodal Shipping Terminal, Minto

Road Sea Rail Terminal, Leightonfield Yard

Sydney Rail Port Facility, Menangle

Patrick Freight Terminal, Ingleburn

Enfield Intermodal Logistics Centre;

Intermodal Terminal Facility in Moorebank

6.3 Eco-Industrial Estates Unlike traditional industrial estates where there is usually little attempt to encourage interaction between land uses, eco-industrial estates are built around networks of associated supplier and distribution chains that have a functional dependence on local material and energy flows. In traditional industrial areas, industries are much freer to switch suppliers and material from non-virgin to virgin sources. In this situation, waste is absorbed into the cost of the final product.

Industrial ecologies allow the co-location of industrial activities that enable waste or energy surplus to be used or reprocessed by industries in the same location. The ecological orientation of the development encompasses the interactions of the industrial park with the natural environment, internal relationships within the estate, and the connotation of a more environmentally beneficial structure.

Eco-industrial estates can also become places where specialised industries cluster. Eco-industrial estates encompass two fundamental objectives: firstly, enhanced individual economic competitiveness; and secondly, reduced collective environmental impacts. Both of these goals are achieved through greater efficiency, sharing of services and if possible by-product exchanges.

Steel River is developing a successful industrial ecology environment in Newcastle and is a prime example of an eco-industrial development. The original land owner was BHP, who remediated the land between 1997 and 2000. The Steel River development has been planned to promote principles of industrial ecology. The site is zoned 4(c) Steel River Zone (Eco Industrial Zone), with an aim to facilitate employment generating industrial, research service or storage activities. The zone also allows commercial, retail or other development where it is ancillary to the primary employment objective.

A notable feature of this project is the unique Strategic Impact Assessment Study defining environmental entitlements, design guidelines and social objectives for the estate. Steel River is covered by an environmental envelope, which defines allowable levels for air, water, traffic, noise, waste management and emissions. The environmental standards have already been apportioned to the sub-divided sites so that the sum of all



businesses located on Steel River will comply with the environmental envelope. The whole estate has a pre-approved environmental envelope for air, water, traffic and noise emissions, even if a proposed development is designated development. Individual lots receive a proportional entitlement so that the sum of all these entitlements complies with the total estate environmental envelope.

6.4 Technology and Research Technology and research industries provide a diversification in base industries and prove compatible with industrial zonings. Successful clustering can occur via research and development functions. There may be some scope for research facilities with affiliations with universities particularly in the areas of business and agricultural sciences. The Sydney examples of the Macquarie Technology Park and the Norwest Business Park are relevant.

As with the Central West, an increasing proportion of the workforce is employed in tertiary service industries. Growth in tertiary industries will most likely be linked to population flows from Sydney. Higher levels of education and the lifestyle benefit of living in a rural environment, mean this is a real possibility.

6.5 Implications for Lithgow LGA and Wallerawang A jobs summit was held in Lithgow in July 2008. The purpose of the Summit, facilitated by the Western Research Institute, was to answer three key questions:

Where are we now and where are we going?

Where do we want to be?

How will we get there?

The Summit identified that Lithgow needed greater industry diversification into economic, social and environmental sectors that will lead to job growth and sustainability. The Summit also identified various issues and ideas which could be further considered by Council in its planned Economic Development Strategy.

The Summit identified various ideas and categorised these into 7 themes. The two themes seen as priorities were events and the hub concept. The main challenges with these ideas were identified as a lack of funding and a lack of champions to drive those ideas. The summit recommended that the next steps included Council further investigate options for establishing a hub and facilitate the events idea.

The Western Research Institute analysed the hub idea further and identified the following opportunities:

Energy Hub/Technology Park;

Renewable Energy – reuse existing infrastructure;

Build on existing industries;

ICT based creative industries;

Business park creation;



Music education node;

Cultural precinct (Hoskins building);

Cinema/Culture Centre (Bracey’s building); and

Creative incubator.

The hub concept is based on the idea of agglomeration of like industries which fosters support, growth, employment and identifies that cluster as specialists in a particular field. However as clustering becomes more popular as an economic development strategy for regional areas, there is the challenge of attracting industries to one area over and above another.

This would also apply to many of the land use trends identified earlier within this chapter (e.g. eco-industrial estates, transport hubs, technology and research etc). Those regional areas with the following attributes will be more attractive for clustering and attracting new base industries:

Good road, rail or air access;

Local available employment;

Close to major markets;

Available vacant and serviced land;

Variety of vacant sized sites available, inclusive of very large sites which allows greater flexibility;

Council support to promote, brand and link businesses with the cluster;

Industry recognition of the benefits of relocating or establishing in the local area; and

A cluster that can be linked to major local base industries (e.g. Macquarie University and their adjacent cluster of research and development industries) will be easier to develop establishing a new base industry from nothing.

Industrial land for clustering or agglomeration will depend on the type of industries and their land requirements. For example creative industries or creative incubators do not necessarily require a great land mass and can often be accommodated in multi-level buildings, small industrial warehouse units (with ancillary office) or in heritage buildings that can be adaptively reused.

This is as compared to business parks or high technology/research parks which generally comprise the following key characteristics:

They are predominantly office parks with a component of warehousing, and in some cases a component of research and development and high-technology users;

Enable purpose designed buildings and plenty of on-site car parking;

Enable large corporations to custom build their operations, providing them with their own stand alone identity, which cannot be achieved in other locations;

They have lower floorspace ratios, typically 1:1 or lower compared to 2:1, or higher in established commercial centres, allowing for more cost-effective building construction; and



They have flexible floor plates and cheaper ground rent, which allows warehousing and office space to be integrated.



7. DEMAND FOR INDUSTRIAL LAND IN LITHGOW 7.1 Job Forecasts The ABS population projections in Section 5.1 of this report were used as the basis for calculating workforce projections for Lithgow LGA. This is done by applying the projected labour force participation and unemployment rates to the projected population. The resulting projections of the workforce (at five-yearly intervals, corresponding to Census years) are used as control totals for subsequent forecasts of employment at lower geographical levels.

As a result, forecast jobs in Lithgow LGA are shown in the following table.

Table 10 - Forecasts of Lithgow Working Residents by Industry (2006-2021) Industry Type 2006 2011 2016 2021 Agriculture, forestry & fishing 267 265 258 246 Mining 787 628 450 261 Manufacturing 642 591 525 450 Electricity, gas, water & waste services 397 364 321 274 Construction 486 533 570 600 Wholesale trade 150 136 117 97 Retail trade 881 994 1,094 1,176 Accommodation & food services 687 742 784 815 Transport, postal & warehousing 411 364 307 245 Information media & telecommunications 60 55 50 43 Financial & insurance services 147 148 146 143 Rental, hiring & real estate services 87 92 96 98 Professional, scientific & technical services 222 248 270 287 Administrative & support services 249 292 332 367 Public administration & safety 652 726 789 840 Education & training 473 519 555 583 Health care & social assistance 780 915 1,039 1,148 Arts & recreation services 74 90 103 116 Other services 265 300 329 354 Total 7,717 8,000 8,137 8,141

Source: Hill PDA based on ABS 2008 forecasts of population growth.

Note however that this is population lead forecast rather than a industry lead forecast. Development of base industries can stimulate population growth.

As acknowledged in Section 5.1 of this report, Council’s Strategic Plan (2007) set a target growth rate of 1% to 2% for Lithgow LGA based on community and stakeholder consultation. Significantly above the ABS forecasts, these targets are a desire only and do not take into account any unexpected activities or change in values which may lead to an increase in population. Comparing the ABS growth rates to Council’s targets the following table indicates job growth in Lithgow LGA for 2021 using 2006 as the base year.



Table 11 - Forecast of Jobs in Lithgow at 2021 Jobs in 2021

Industry Type Jobs in 2006* ABS Growth 1% Growth pa 2% Growth pa Agriculture, forestry & fishing 267 246 282 323 Mining 787 261 299 343 Manufacturing 642 450 514 590 Electricity, gas, water & waste services 397 274 313 359 Construction 486 600 687 789 Wholesale trade 150 97 111 127 Retail trade 881 1,176 1,346 1,546 Accommodation & food services 687 815 932 1,070 Transport, postal & warehousing 411 245 280 322 Information media & telecommunications 60 43 49 56 Financial & insurance services 147 143 163 187 Rental, hiring & real estate services 87 98 113 129 Professional, scientific & technical services 222 287 329 378 Administrative & support services 249 367 420 482 Public administration & safety 652 840 962 1,104 Education & training 473 583 668 767 Health care & social assistance 780 1,148 1,315 1,509 Arts & recreation services 74 116 132 151 Other services 265 354 405 465 Total 7,717 8,141 9,320 10,699

* Source: ABS Census 2006

The ABS, the more conservative forecast of growth, anticipates job growth of 424 jobs between 2006 and 2021. By comparison using Council’s target of 1% and 2%, job growth of 1,600 and almost 3,000 jobs are forecast over the same period.

7.2 Demand for Industrial Zoned Land The increase in jobs translates to an increase in demand for zoned and serviced land. Hill PDA calculated this by assigning floorspace and an assumed 0.5:1 floor space ratio (FSR) requirement to each additional industrial type job and apportioning the jobs to industrial zones only. The calculations are shown below.

Table 12 - Demand for Industrial Floorspace in Lithgow to 2021 Industrial Land Demand (sqm)***

Industry Type

Proportion of Jobs in Industrial

Zones*

2006 GFA per Job

(sqm)

2021 GFA per Job (sqm)** 2006 2011 2016 2021

Agriculture, forestry & fishing Mining Manufacturing 100% 80 104 102,689 103,953 100,726 93,504 Electricity, gas, water, waste 100% 80 104 63,507 63,990 61,686 56,905 Construction 100% 80 104 77,711 93,758 109,524 124,775 Wholesale trade 100% 100 130 29,999 29,849 28,122 25,197 Retail trade 20% 80 104 28,178 34,990 41,998 48,904 Accommodation, food services 20% 80 104 21,975 26,102 30,108 33,886 Transport, postal, warehousing 100% 220 286 180,931 176,322 162,004 140,100 Information media, telecomm. 50% 80 104 4,816 4,864 4,809 4,491



Industrial Land Demand (sqm)***

Industry Type

Proportion of Jobs in Industrial

Zones*

2006 GFA per Job

(sqm)

2021 GFA per Job (sqm)** 2006 2011 2016 2021

Financial & insurance services 0 Rental, hiring & real estate services 20% 80 104 2,775 3,242 3,701 4,080 Professional, scientific, technical 20% 80 104 7,118 8,727 10,358 11,948 Administrative & support services 20% 80 104 7,967 10,280 12,762 15,272 Public administration & safety 20% 80 104 20,864 25,549 30,299 34,950 Education & training - - - - - - - Health care & social assistance - - - - - - - Arts & recreation services - - - - - - - Other services 40% 80 104 16,979 21,087 25,250 29,419 Total 565,509 602,713 621,347 623,432

* Sources: Hill PDA estimate based on previous and various studies ** Allows for declining worker occupancy rates due to increasing automation in line with historic trend *** Land demand equals number of jobs multiplied by the proportion rate, multiplied by GFA rate, divided by an average FSR of 0.5:1. FSR may be lower than permissible levels but generally reflects what is cost-effectively achievable for a single storey building with required setbacks and on-site car parking.

The table above suggests that Lithgow will require an additional 5.8 hectares of industrial zoned land between 2006 and 2021, equivalent to average growth of 0.5ha per annum. This result however does not consider existing supply of industrial floorspace or industrial zoned land in the LGA. The requirement to zone additional land will depend on the supply of appropriately zoned and vacant land across the LGA. Note also that this method does not allow for industry led population growth which from time to time occurs in regional areas. For example, the opening of a new base industry or mine can have significant stimulus to the local area.

Demand for industrial floorspace was based on those population forecasts from the ABS. A 1% per annum increase in the population would result in demand for an additional 15ha of industrial floorspace between 2006 and 2021, equivalent to additional demand of around 1 hectare per annum. A 2% increase in population per annum results in additional demand for 25ha or 1.7ha per annum.

7.3 Implications for Wallerawang The results indicate those industries that are expected to see growth or decline in demand for industrial floorspace. For example, demand for floorspace associated with construction is forecast to increase whilst demand for manufacturing, utilities, wholesale, transport, postal and warehousing floorspace is anticipated to decline.

However, it is important to note that there is always the possibility of Lithgow attracting new base industries or more capitally intensive heavy industries which require significant amounts of land even if they do not employ large numbers of employees. In some cases, a decline in jobs in manufacturing may be due to automation rather than an actual decline in demand for land.

Note that likely industries in Wallerawang are likely to have lower employment rates per hectare than the industrial sites in Lithgow township.



8. EXISTING INDUSTRIAL PRECINCTS IN LITHGOW There are 8 industrial precincts in Lithgow LGA that are comparable to the subject site. Those precincts located within the Lithgow urban area include Chifley Road, Mort Street, Inch Street, Donald Street and the ADI precinct as indicated in the map below.

Figure 6 - Aerial Map: Lithgow Industrial Precincts

ADI

MORT ST.

DONALD ST.

CHIFLEY RD.

N

INCH ST. / BELLS RD.

Other precincts outside of the Lithgow urban area include the Pinta Street precinct in Wallerawang, the Cement Works precinct in Portland and the Marrangaroo precinct. The map below shows the relationship between the subject site, the Pinta Street precinct in Wallerawang and the Marrangaroo precinct.

Figure 7 - Aerial Map: Wallerawang and Marrangaroo Precincts



The map below further shows the relationship between the Pinta Street precinct in Wallerawang and the Cement Works precinct in Portland.

Figure 8 - Aerial Map: Wallerawang and Portland Precincts

8.2 Chifley Road, Lithgow The 12.29ha precinct is located on the eastern fringe of the Lithgow urban area and is serviced by Chifley Road. This precinct is constrained by the two lane Chifley Road, not offering ideal access for large heavy vehicles. Additionally, westward vehicle access is via the Lithgow town centre through the busy Lithgow and Main Street intersection.

There are residential uses adjoining this precinct to the east and west. Existing uses in the precinct are mixed, predominantly with light industrial, bulky goods and car dealerships. Existing users include Tradelink, TNT, Welch’s Highway Smash Repairs, Tiles, Merve Moore Bedding and Furniture, R & K Gas Supplies, Lithgow Cable Services, Lithgow Paint & Panel, Mitsubishi, Lithgow Tyre Service, Ford, KIA.

Whilst the precinct is quite built out, vacant land exists further to the east along Chiefly Road. It is also understood that a vacant site bounded by Chifley Road and O’Connor Street is for sale. Various sites to the south previously used for quarrying are also underutilised.



Figure 9 - Photo: Mort Street, Lithgow

Whilst various parts of the precinct are suitable for redevelopment or additional industrial land uses the precinct will still suffer from being located adjacent to a two lane arterial road with no scope for widening. Residential land use conflicts also prevail.

Figure 10 - Aerial Map: Chifley Road Precinct

Source: MapInfo, Lithgow City Council and Hill PDA

8.3 Mort Street, Lithgow The 5.64ha precinct is located on the eastern fringe of Lithgow town centre, less than 400m east of Lithgow train station and covers all land zoned Industrial 4 under Lithgow LEP (1994) on either side of Mort Street.




Service access is from a two-lane carriageway on Mort Street and westward access is less desirably provided through Lithgow town centre. That industrial to the south of Mort Street is accessed via a service road. Rear access adjacent to the railway line is also provided via Gas Works Lane.

The precinct includes the Lithgow City Council works depot amongst other light industrial users including Lithgow Bearings, Henry Plant & Equipment Hire, Hicks Automotive & Exhaust Centre, Marway Auto Electrics, BP Service Station, and TLE Electrical & Data Supplies.

Whilst the relocation of Council’s depot and private heavy vehicle depot out of the precinct would release the area for future redevelopment, contamination is an issue for much of the site given part of the precinct comprises a former gas works site and Council works depots which included underground oil and petrol storage tanks.


The precinct is located in close proximity to heritage items, with the precinct bound by the Union Theatre and Lithgow’s Cultural Precinct to the west. The railway line bounds the precinct to the north with residential development to the east, south-east and south. The surrounding residential development and proximity of heritage items may constrain redevelopment and could result in land use conflicts should the site redevelop into new modern industrial land uses.



Whilst residential may not be an option for the precinct given its contamination constraints, the precinct is well positioned on the fringe of the town centre providing good opportunities for redevelopment into higher order bulky goods and business support services.

It should also be noted that it is often rare to find such a large underutilised site within such close proximity to a town centre. As a result, the Mort Street precinct may provide opportunities for higher order land uses such as additional civic and cultural precinct functions or commercial support/fringe retail should there be pent up demand for those uses. This would have the added benefit of reducing land use conflicts with surrounding residential and town centre land uses, and allow for the extension of the town centre in the future.

Although the precinct is more heavily constrained than the subject site in Wallerawang due to contamination and land use conflicts, the site is more suitable to bulky goods than Wallerawang due to its superior visibility, better passing trade, and proximity to Lithgow town centre existing retail and services.

Figure 13 - Aerial Map: Mort Street Precinct


8.4 Inch Street/Bells Road, Lithgow The 4.73ha Inch Street/Bells Road precinct is 2.1km north-east of Lithgow town centre and 4.4km from the Great Western Highway. The precinct is bound by residential to the west and north-east, and the railway line to the south. Primary access is therefore through residential streets from Lithgow town centre.



Figure 14 - Photo: Inch Street/Bells Road, Lithgow

There are few industrial businesses located in this precinct; however it does include Lithgow Auto Wreckers & Repairs, Cemex Lithgow, AELAG Refrigeration and various other vacant and disused industrial buildings.

As of September 2009, 6 industrial units were currently for sale at 157 Bells Road asking $595,000 (or $78/sqm). The 7,543sqm site to the south of Bells Road and north of the rail line is being advertised with redevelopment potential.

Figure 15 - Aerial Map: Inch Street/Bells Street Precinct


Although some vacant and underutilised land is still available in this precinct, the land is somewhat constrained from being redeveloped for modern new industrial uses due to:




Access to the site via local roads may prevent certain vehicles from accessing the site and hence certain industries from locating there;

Two overhead bridges (3.8m clearance) in Inch Street limit the size of vehicles travelling to and servicing the area;

Many sites suffer from poor presentation to the street;

Lack of visibility and passing trade due to the precincts poor location to main roads; and

The relative distance from the site to major roads.

As a result, residential may be a higher and better use of this land especially given the location of the surrounding residential areas of Oakey Park and Morts Estate.

The subject site in Wallerawang has far less constraints to redevelopment, with better access, a superior location, and minimal land use conflict opportunities.

8.5 Donald Street, Lithgow The 13.66ha Donald Street precinct is a well developed and established industrial cluster inclusive of a mix of building, home renovation and automotive service industries. The precinct is accessed via Lithgow town centre, is adjacent to the Greyhound racing track, and to a certain extent is surrounded by residential development. The site is also within close proximity to heritage items such as Blast Furnace Park.

Figure 16 - Photo: Donald Street, Lithgow

Existing users in the precinct include Cooks Metal, Style Smash Repairs, Garden @ Lithgow, Hanson Concrete Plant, Toll Priority, Lithgow Valley Engineering, Industrial Printing Co, Multitech Ceramics, Bill Evans Auto Repairs, AusGlaze, Lithgow Custom Kitchens, LSS Couriers, and Geoff Wilson Mechanical Repairs.

The precinct includes a mix of new and older style industrial units and buildings. Whilst the precinct is largely built out, some sites are underutilised or have aged considerably and may be ripe for redevelopment. Whilst it is clear some buildings in other precincts have been refurbished, the Donald Street precinct appears to have some relatively new industrial buildings (both standalone warehouse buildings and industrial units). This may indicate the relative attractiveness of this precinct for industrial land uses or industrial clustering, over and above other precincts.



It is understood that the precinct is partly affected by the 1% flood level due to the proximity of some sites to the nearby creek. This also means some sites are partly zoned Open Space 6 under Lithgow LEP (1994).

Figure 17 - Photo: Donald Street, Lithgow

Compared to the subject site in Wallerawang the limitations of this precinct for further industrial redevelopment are:

Land use conflicts with surrounding residential development;

Partially flood affected;

Poor access and visibility as not near main roads; and

Lack of available vacant land for additional industrial development and investment.

Figure 18 - Aerial Map: Donald Street Precinct




8.6 ADI Site, Lithgow Located approximately 2km south east of Lithgow town centre, the 19.9ha precinct comprises the former Australian Defence Industries site. Although part of the site has been decommissioned, there is still some limited defence manufacturing maintained on the site. Existing users in the precinct include Lithgow Small Arms Museum, TimberFix, Children’s Furniture, and Thales Australia.

Figure 19 - Photo: ADI Site, Lithgow

The precinct is bounded by established residential areas to the north, east and west, and parkland to the south. Access is provided via residential streets from either Main Street or the Great Western Highway. The site is around 1.1km from Great Western Highway.

Figure 20 - Photo: ADI Site, Lithgow

Parts of the precinct are affected by contamination issues, specifically the ADI Lithgow Small Armaments site which has been issued a Contamination Notice under the Contaminated Lands Act (1977). Redevelopment of the precinct is also constrained by the presence of heritage items.

A Development Control Plan is in place to encourage light industrial redevelopment, however its understood land released for sale has encountered a lukewarm response and a slow take-up.



Lot 203 Methven Street in the precinct is currently for sale for $389,000 ($66/sqm). The 5,858sqm site consists of a 1,800sqm sealed car park and two 120sqm sheds. The site is being advertised with redevelopment potential for a strategic transport facility, a production facility or a commercial outlet facility subject to Council approval.

Whilst the site is located closer to the Great Western Highway than other industrial precincts in the Lithgow urban area it remains as heavily constrained as other sites by way of:

Contamination issues;

Access issues via local roads;

Land use conflicts;

Heritage restrictions; and

Timing constraints brought about by the need for remediation, heritage listing etc.

Regardless of adaptive reuse prospects, it may be some time before the market recognises these opportunities. Vacant, ready and available land for modern industrial redevelopment is limited in this precinct.

Figure 21 - Aerial Map: ADI Precinct




8.7 Pinta Street, Wallerawang Situated around 500m north-east of the Wallerawang train station and around 3.3km north-west of the subject site, the 44.21ha Pinta Street precinct is on the fringe of the Wallerawang retail centre. The site is adjacent to Pipers Flat Creek. There are existing residential uses to the south of the precinct, with a church and motel located opposite.

The site is accessed via a service road (Pinta Street) off Main Street. Good vehicular access to Main Street is via Castlereagh Highway to the north east or Barton Avenue and Castlereagh Highway to the south. However, being low lying, part of the precinct is affected by drainage issues and flood inundation. As a result some of the land is not immediately developable which is a major constraint to the ongoing industrial development of the precinct.

The area was historically designated as an industrial subdivision by Council in the early 1980’s, although the local zoning in the Local Environmental Plan 1994 is Village 2(v) and Rural General 1(a). Both zones permit industrial activity with consent. The Village 2(v) zone prohibits extractive, offensive and hazardous industry, whilst the Rural General 1(a) zone permits all industrial activity with consent.

Light industrial and local service industries exist in the precinct including Kings General Mining Engineering, Bedwells Feed, Hunter Mining Methods, Coats Hire, and Masta Mix Concrete. It is understood that since its creation, the area has experienced slow take-up.

Figure 22 - Photo: Pinta Street, Wallerawang

The Coates Hire site on Pinta Street (12,309sqm site area and 324sqm building area) was for sale earlier this year, however discussions with Colliers indicated the site did not sell. At this stage, there are no immediate plans to readvertise the property for sale. It is understood the property was offered with a long term leaseback.



Figure 23 - Aerial Map: Pinta Street Precinct


8.8 Cement Works, Portland The Cement Works is located adjacent to Portland town centre, around 25km north-west of Lithgow town centre. The site is the home of the first Australian cement production facilities and as a result there are substantial heritage values attributed to the site. The precinct is currently zoned ‘Village 2(v)’ under Lithgow City LEP (1994).

Figure 24 - Photo: Cement Works, Portland

The site has been closed for some time and is the subject of a rehabilitation plan following closure with parts of the site proposed for heritage listing.



Although the site is very large, currently vacant and with adaptive reuse opportunities, the land is somewhat constrained from being redeveloped for modern new industrial land uses due to:

The heritage values attributed to the site;

The time taken to establish heritage listing and undertake a rehabilitation plan;

Possible land use conflicts with adjacent residential development to some parts of the site;

Access to the site via poor conditioned local roads may prevent certain vehicles from accessing the site and hence certain industries from locating there; and

The relative distance from the site to major roads (i.e. 13km from Great Western Highway).

The subject site in Wallerawang, whilst smaller than the Cement Works site, has far less constraints to redevelopment. The Wallerawang site has better access opportunities, is located on a highway, and has less timing constraints to redevelopment.

Figure 25 - Aerial Map: Cement Works Precinct


8.9 Marrangaroo The 294.73ha Marrangaroo Precinct is located approximately 4km south-west of the subject site in Wallerawang. There is good access from the south via Great Western Highway and north via Castlereagh Highway. There are existing manufacturing uses established within the precinct.

Whilst the area is subject to good visibility from the Great Western Highway, the land to the west of the highway is restricted by the rail corridor. An overhead bridge potentially provides required access however this may be cost prohibitive.



In 2005 the Marrangaroo Study Area (of which this precinct is a part) was mooted as a subdivision for light industrial development and bulky goods retail. The Marrangaroo Land Use Study and Structure Plan (2006) were consequently prepared by Council in response. The Structure Plan indicates proposed uses for the site include:

Highway/Business Services;

Employment Generation;

Large Lot Residential (with three different densities);

Urban (comprising open space, neighbourhood centres and housing variety); and

Private Open Space/commercial recreation.

It is acknowledged that there is potential for future residential development on the eastern side of the highway. However, the precinct is highly fragmented, in multiple ownership, and if not well planned could result in ‘ribbon development’.

Like the subject site in Wallerawang, land in the Marrangaroo precinct is zoned Rural General 1(a) under Lithgow LEP (1994). This zone permits with consent all forms of industrial development. Given the flexibility of this zone, ad hoc development and poor planning outcomes could result (also a risk for the subject site).

Given the proximity of the Marrangaroo precinct to the subject site in Wallerawang, in many ways these sites will directly compete given their comparable zonings and access attributes. However, there is uncertainty as to when land in the Marrangaroo precinct will come on line, due to high land costs associated with securing the site from multiple landowners, which favours development on the subject site.

Figure 26 - Aerial Map: Marrangaroo Precinct



8.10 Implications for Wallerawang The constraints and opportunities of the above precincts are summarised in the table below:

Table 13 - Comparison of Industrial Precincts

Constraints Chifley Road

Inch Street/

Bells Road

Mort Street


Street Cement

Works Marran-

garoo Subject

Site

Flooding/drainage X X X X Protection zones X X Known Contamination X X X Heritage X X X Land use conflicts X X X X X X X Traffic/ accessibility X X X X X X Service X X X Fragmentation of ownership X

Opportunities Chifley Road

Inch Street/

Bells Road

Mort Street


Street Cement

Works Marran-

garoo Subject

Site

Minimal Upfront Land Costs X Adaptive reuse opportunities X X X Underutilised sites X X X X X X X Vacant land available X X X X X Agglomeration X X X X X X Potential Residential Amenity X X

Whilst there are numerous industrial precincts in Lithgow LGA, many with sites ripe for redevelopment or with vacant land available, site inspections and further analysis has revealed that most of them are heavily constrained. The main reasons for constrained land in Lithgow industrial precincts include:


Access to the site via local residential roads may prevent certain vehicles from accessing the site and hence certain industries from locating there;

Lack of visibility and passing trade due to the precincts poor location in the middle of residential suburbs;

The relative distance from the site to major roads;

Land which is effected by site encumbrances (e.g. flood, contamination, heritage);

Very long term market prospects due to the need for remediation, heritage listing etc.

In some cases, precincts have higher and better uses over and above industrial land uses, due to their strategic location or prevailing land use conflicts. As a result, some precincts may lend themselves to other uses over and above general or light industrial activities. Examples include Mort Street (civic, cultural, or bulky goods land uses), Inch Street/Bells Road (residential), Chifley Road (bulky goods).



Whilst some precincts do have considerable opportunities for redevelopment, adaptive reuse, and agglomeration, in many cases the timing of this land being available is uncertain or long term due to other constraints such as heritage restrictions and contamination.

As a result there is a lack of ready, available, serviced and vacant industrial sites. Whilst smaller local service infill sites are available across the precincts, Lithgow lacks a precinct with significant vacant land holdings appropriate for larger industrial land users (e.g. large manufactures, larger industrial park type users).

The subject site in Wallerawang has far less constraints to redevelopment than its comparables. The Wallerawang site has better access opportunities, is located on a highway, has less timing constraints and can provide flexible lot sizes as a direct response on market demand. Furthermore, as the site is currently vacant, there is not a large opportunity cost tied to the land in its current form.

Whilst the subject site is likely to compete with Marrangaroo, high fragmentation of ownership will limit the potential of Marrangaroo to redevelop in the short term. For these reasons, the site at Wallerawang provides an opportunity to provide to the market a product type not already offered in the LGA.



9. LITHGOW INDUSTRIAL MARKET ANALYSIS 9.1 NSW Industrial Market Outlook The global financial crisis continues to thwart activity in NSW industrial property markets. Sydney’s industrial markets suffered from falling demand resulting in declining capital values and rents, increasing incentives and overall softening of market conditions.

This has had a knock on effect to outer areas such as Lithgow which saw more dramatic declines in conditions. Land values in certain areas experienced a severe decline over the past 12 months and there is an expectation that there may be a further 5% to 10% downward correction before reaching the bottom of the market over the next 6 months.

With the continuing low interest rate environment, yields are not expected to revise much more over the next six months. Private investors and developers are anticipated to carry on taking advantage of the opportunity to purchase industrial assets at higher yields and reduced prices.

With stagnant or nil rental growth affecting capital values over the course of 2009 and 2010 and compounded by the difficulty in securing credit, development activity and the supply of new stock is likely to be scarce at least over the next 12 months.

Although interest rates have fallen rapidly over the last 12 months, lending for industrial development projects are likely to remain difficult to obtain. Developers or landowners with sufficient equity capital may build on a speculative basis to capture occupiers who have not adequately planned their accommodation or those who may not be comfortable pre-committing.

9.2 Lithgow Industrial Land Values Discussions with local real estate agents and property officers at Bathurst City Council (involved in the sale and marketing of council owned industrial property) indicated that the sale of serviced industrial land has been extremely slow over the last 18 months.

In determining values for individual vacant serviced industrial lots Hill PDA have analysed a number of single vacant serviced industrial land sales in Lithgow and surrounding regional towns. The results are summarized below.

Table 14 - Industrial Land Sales Evidence Address Suburb Area (sqm) Sale date Sale price $/sqm $/ha Comments Lot 4 Pinta St Wallerawang 14,980 19/12/2008 $1,551,000 $104 $1,035,381 improved 80 Chifley Rd Vale of Clwydd 9,226 11/07/2008 $780,000 $85 $845,070 improved 22 Michigan Rd Kelso 10,030 2/01/2008 $592,242 $59 $590,471 vacant 18 Quamby Pl Blayney 36,500 3/07/2008 $570,000 $16 $156,164 improved 9A Delaware Cr Robin Hill 19,390 29/4/2008 $285,000 $15 $146,983 vacant Curtis St Oberon 17,250 13/5/2008 $210,000 $12 $121,739 vacant 1 Pinegrove Av Wallerawang 37,200 7/02/2008 $244,000 $7 $65,591 vacant



Address Suburb Area (sqm) Sale date Sale price $/sqm $/ha Comments 85 Wislon Dr Oberon 35,000 31/3/2008 $165,000 $5 $47,143 vacant rural Castlereigh Hwy Lidsdale 47,100 9/03/2008 $136,730 $3 $29,030 vacant 240A Limekins Rd Kelso 212,800 2/07/2008 $300,000 $1 $14,098 vacant rural Great Western Hwy Mount Lambie 405,700 3/03/2008 $375,000 $1 $9,243 vacant

Source: Hill PDA Research 2009

The sales evidence reflects a range of land values dependent on land size, location topography, aspect and location. In undertaking our assessment, Hill PDA has had regard to the inherent characteristics of the subject property, in particular:

The overall size and scale of the site;

Location;

Surrounding development;

Underlying demand for industrial development sites;

Underlying socio-economic issues of the immediate area; and

The prevailing market conditions.

The following industrial properties are also currently on the market:

6 industrial units are currently for sale at 157 Bells Road Lithgow. Asking price is $595,000 (or $78/sqm). The 7,543sqm site to the south of Bells Road and north of the rail line is being advertised with redevelopment potential.

Lot 203 Methven Street Lithgow, part of the ADI site, is currently for sale asking $389,000 ($66/sqm). The 5,858sqm site consists of a 1,800sqm sealed car park and two 120sqm sheds. The site is being advertised with redevelopment potential for a strategic transport facility, a production facility or a commercial outlet facility subject to Council approval.

The Coates Hire site on Pinta Road in Wallerawang (12,309sqm site area and 324sqm building area) was for sale earlier this year, however discussions with Colliers indicated the site did not sell. At this stage, there are no immediate plans to readvertise the property for sale. It is understood the property was offered with a long term leaseback.

9.3 Implications for Wallerawang Based upon the sales evidence and discussions with local selling agents, Hill PDA believes that the potential realisation of the subject land in the current market, once serviced would be in the order of $30/sqm to $35/sqm. This is slightly below current asking prices for Bathurst Council owned industrial land in Kelso.



10. CONCEPT PLAN OPTIONS Jackson Teece as sub-consultants to Hill PDA, were required to develop a concept plan for the subject site. Jackson Teece prepared 6 subdivision options based on the following assumptions: 10ha to 12ha site with saleable area of 8ha to 10ha; industrial allotments ranging from 5,000sqm to 1ha; and access from Castlereagh Highway.

Hill PDA had discussions with Council, RTA and the Sydney Catchment Authority in order to ascertain the requirements for onsite water quality and retention, road access from the Highway and water and sewer services.

Assumptions made in the development of the site include:

Construction of a 2.5km sewer main from the subject site to the existing sewer system.

Water supply available from the Highway which can be reticulated into the site.

Power can be delivered.

Stormwater would be controlled and retained onsite in accordance with Sydney Catchment Authority’s requirements.

Access from the Highway can be gained.

10.1 Option 1 Option 1 provides for the development to the south of Cemetery Road. The land to the south is gentle undulating allowing for smaller style sub divisions. A super lot could be created to the north (40,000sqm) although subdivision of this lot into smaller lots is possible. A 40m vegetated buffer is also included along Castlereagh Highway with a 4% detention basin at the rear of the subdivision.

Table 15 - Wallerawang Industrial Park Lot Details Option 1 Characteristic Size Lot Size 5,000sqm 4 lots Lot Size 10,000sqm 2 lots Super lot 1 x 40,000sqm Main Road (east-west) Width x Length (m) 20 x 410 Access Road (north-south) Width x Length (m) 20 x 500 Service Road (north-south) Width x Length (m) Nil

Advantages of this Option

Single entry exit point from Highway.

Disadvantages of this Option

Battle-axe blocks not supported by Council due to potential traffic and land use conflicts, reduced public address to the streets, reduced security and reduced exposure for the industrial sites.



North-south roads are inefficient in terms of marginal benefit / cost.

Figure 27 - Concept Plan: Wallerawang Industrial Park Option 1

Source: Jackson Teece CD01 REV: 01 16 July 2009

10.2 Option 2A Option 2A provides for the development of the proposed site to the south and north of Cemetery Road. Option 2A provides for the development to the south of Cemetery Road inclusive of a mixture of 5,000sqm and 10,000sqm battleaxe blocks. A 40m vegetated buffer is also included along Castlereagh Highway with a 4% detention basin at the rear of the subdivision. A service road off Castlereagh Highway is also provided.

Table 16 - Wallerawang Industrial Park Lot Details Option 2A Characteristic Size Lot Size 5,000sqm 8 lots Lot Size 10,000sqm 4 lots Super lot Nil Main Road (east-west) Width x Length (m) 20 x 410 Access Road (north-south) Width x Length (m) 20 x 250 Service Road (north-south) Width x Length (m) 10 x 590


Multiple entry and exit points to Highway unlikely to be supported by RTA.




Figure 28 - Concept Plan: Wallerawang Industrial Park Option 2A


10.3 Option 2B Option 2B provides similar development of the proposed site as Option 2A but without a turning circle at the intersection with the Cemetery Road and the service road off the Castlereagh Highway

Table 17 - Wallerawang Industrial Park Lot Details Option 2B Characteristic Size Lot Size 5,000sqm 8 lots Lot Size 10,000sqm 4 lots Super lot Nil Main Road (east-west) Width x Length (m) 20 x 410 Access Road (north-south) Width x Length (m) 20 x 250 Service Road (north-south) Width x Length (m) 10 x 600


Multiple entry and exit points to Highway unlikely to be supported by RTA.




Figure 29 - Concept Plan: Wallerawang Industrial Park Option 2B


10.4 Option 3 Option 3 utilises all land to the south of Cemetery Road, with a service road running from the Castlereagh Highway through to Cemetery Road. A 40m vegetated buffer is also included along Castlereagh Highway with a 4% detention basin at the rear of the subdivision.

Table 18 - Wallerawang Industrial Park Lot Details Option 3 Characteristic Size Lot Size 5,000sqm 8 lots Lot Size 10,000sqm 2 lots Super lot 1 x 13,000sqm and 1 x 20,000sqm Main Road (east-west) Width x Length (m) 20 x 410 Access Road (north-south) Width x Length (m) 20 x 600 Service Road (north-south) Width x Length (m) Nil





Development contained to the southern end of the site.


Road design not as efficient as Option 5.



10.5 Option 4 Option 4 provides for development to the north of Cemetery Road. A 40m vegetated buffer is also included along Castlereagh Highway with a 4% detention basin at the rear of the subdivision.

Table 19 - Wallerawang Industrial Park Lot Details Option 4 Characteristic Size Lot Size 5,000sqm 8 lots Lot Size 10,000sqm 4 lots Super lot Nil Main Road (east-west) Width x Length (m) 20 x 410 Access Road (north-south) Width x Length (m) 20 x 430 Service Road (north-south) Width x Length (m) Nil






Road design not as efficient as Option 5.






10.6 Option 5 Option 5 is the most cost effective option being a single cul-de-sac road from the highway with industrial lots fronting both sides. A 40m vegetated buffer is also included along Castlereagh Highway with a 4% detention basin at the rear of the subdivision.

Table 20 - Wallerawang Industrial Park Lot Details Option 5 Characteristic Size Lot Size 900sqm to 1,000sqm 11 lots Super lot Nil Main Road (east-west) Width x Length (m) 20 x 410 Access Road (north-south) Width x Length (m) Nil Service Road (north-south) Width x Length (m) Nil




More saleable land than Options 1 to 4 (9.4ha).

Most Efficient (cost effective) subdivision.





10.7 Option 6 Option 6 is similar to Option 5 but allows for a buffer or set back from the south-western boundary.







Provides buffer or setback from the adjoining property to the southwest.


Source: Jackson Teece, November 2009



11. FEASIBILITY ASSESSMENT 11.1 Financial Modelling Methodology Hill PDA adopted the discounted cash flow (DCF) approach as the methodology of assessment, using Hill PDA’s Estate Master Development Feasibility Model. The DCF approach simply discounts the forecast cash flow to a present value using an appropriate discount rate that reflects the required rate of return on investment given the level of project risk. The model also calculates borrowings, capitalised interest and future profit. Two residual land values are determined being firstly the maximum amount that a developer can afford to pay for the development site whilst achieving a required profit/risk margin and the maximum amount that the developer can afford to achieve the required internal rate of return (or zero net present value).

In formulating our advice, Hill PDA has relied on information provided by Jackson Teece, including site areas, and lot yields. Construction and other cost estimates where not available have been sourced from similar recent cost estimates from quantity surveyors and engineers as well as industry published cost guides including Rawlinsons Cost Handbook 2009.

The feasibility is based on the various options prepared by Jackson Teece.

11.2 Project Timeframe The Residual Model assumes a 2 month settlement period, six months of construction commencing four months after settlement and sales revenue spreading evenly over 2 years immediately after construction.

Based on the market evidence given in Section 9 and the demand analysis in Section 7 of this report, a 2 year absorption in the market placed is considered optimistic. Accordingly, further sensitivity testing was carried out by extending the selling period to 5 years following construction.

11.3 Construction Costs and Professional Fees Construction costs have been sourced from cost estimates for similar land development feasibilities as well as from Rawlinson’s Construction Handbook (2009). Assumptions are as follows

$200,000 allowance for intersection with the Highway. This is to allow for the cost of slow down turning lanes. Note that signalisation is not required;

Allowances for sewer main at 2.5km by $300/m ($750,000) plus $470,000 for augmentation of pumping station No. 1; plus $530,000 for pumping station on site including works on ground (total $1,750,000);

Sewer main at 2.5km by $300/m plus $470,000 allowance for augmentation of pumping station No. 1;

$250,000 allowance for water quality and detention;



No gas assumed on site;

2 lane service road at $1,100/m including kerb and drainage;

Internal road (2 lanes wide with parking either side) at $1,400/m including kerb and drainage ;

Water reticulation at $200/m;

Landscaping at $100/m of road;

Power to the site at $500,000;

Power internal and street lighting at $300/m of road;

One substation at $120,000;

Telecommunications at $90/m of road;

Professional fees of around 15% of construction costs to cover development and project management, engineering design and certification, subdivision, application fees and lot registration. Around half of this cost is spent prior to works on site whilst the balance is spread pro-rata with construction; and

10% project contingency on the above costs.

Please note that the cost estimates are preliminary and do not include any detailed estimates prepared by a quantity surveyor or engineer.

Also no allowances have been made for developer contributions nor land costs.

11.4 Finance and Miscellaneous Costs Other cost assumptions include:

Capitalised interest at 7.5% with full debt funding; and

Land holding costs of $10,000 per annum to cover land tax and Council rates.

No allowance has been made for upfront finance establishment fees or line fees.

11.5 Profit and Risk A target profit margin of 15% on costs was adopted to reflect the level of risk associated with this project. We note that in many regional areas industrial or employment zones have been created at cost with no profit margins by Councils. This is to ensure an adequate and affordable supply of developed industrial zoned land for new and expanding enterprises.

Sensitivity testing on the residual land values was also carried out based on a zero profit margin.

A discount rate (or target internal rate of return) of 15% was selected.



11.6 Revenue – End Sales Values Gross revenue is assumed at $35/sqm net of GST. This would normally be considered a conservative estimate but in the current climate is more realistic. Note that land in Kelso, Bathurst is currently marketed with an asking price of $49/sqm. However discussions with Council indicate that negotiated prices have been between $40/sqm and $45/sqm. The site at Kelso is a little superior having frontage to the Great Western Highway just 2km east of Bathurst town centre.

Additional sales assumptions include:

GST being one eleventh of the gross sale price; and

Selling costs and sales commissions have been assumed at 2.5% of sales.

Note that the assumed end sale values are high level and have been adopted based on historical data and current market conditions. Values change over time and it is recommended that prior to commencement of the project and sales that market research be updated.

No allowances have been made in the modelling for escalations in both costs and revenues. The target internal rate of return (IRR) and profit margin have been adjusted to reflect this method.

11.7 Financial Return The table below provides a summary of the financial returns from each of the options. The table assumes that all the sites are sold and it excludes Council taking up any of the sites for its own purposes. The table further assumes gas is not provided for and a zero land acquisition cost at the commencement of the project.



Table 22 - Financial Summary of Option 2 (2 Year Market Absorption) ($)

REVENUETotal Sales Revenue Less Selling CostsLess GST paid

TOTAL REVENUE (after GST paid) COSTS

Land Purchase CostConstruction Costs

Service Road (10m wide) incl. drainage - 713,900 713,900 - - - Internal Roads (20m wide) incl. drainage 1,401,400 1,016,400 - 1,555,400 1,293,600 631,400 800,800 Water Reticulation 200,200 275,000 129,800 222,200 184,800 90,200 90,200 Power and Lighting 300,300 412,500 194,700 333,300 277,200 135,300 135,300 Landscaping 100,100 137,500 64,900 111,100 92,400 45,100 45,100 Substation 132,000 132,000 132,000 132,000 132,000 132,000 132,000 Telecommunications 90,090 123,750 58,410 99,990 83,160 40,590 40,590

TOTAL CONSTRUCTIONEstate Major Works

Entrance / Highway Intersection 220,000 220,000 220,000 220,000 220,000 220,000 220,000 Sewer Main & Pumping Stations 1,925,000 1,925,000 1,925,000 1,925,000 1,925,000 1,925,000 1,925,000 Water Quality and Detention 275,000 275,000 275,000 275,000 275,000 275,000 275,000 Power to the Site 550,000 550,000 550,000 550,000 550,000 550,000 550,000

TOTAL ESTATE MAJOR WORKSProfessional FeesStatutory FeesMarketing and AdvertisingMiscellaneous CostsProject Contingency (Project Reserve)Land Holding CostsInterest ExpenseTOTAL COSTS (before GST reclaimed)Less GST reclaimed

TOTAL COSTS (after GST reclaimed)

PERFORMANCE INDICATORSGross Development Profit 1

Development Margin (Profit/Risk Margin) 3

Target Development MarginResidual Land Value (Target Margin) 4

Discount Rate (Target IRR)Net Present Value 6

Project Internal Rate of Return (IRR) 9

Residual Land Value (NPV) 10

Maximum Debt Exposure

Footnotes (based on current Preferences):1. Development Profit: is total revenue less total cost including interest paid and received3. Development Margin: is profit divided by total development costs (net of selling and leasing costs).4. Residual Land Value: is the maximum purchase price for the land whilst achieving the target development margin.5. Breakeven date for Cumulative Cash Flow: is the last date when total debt and equity is repaid (ie when profit is realised).6. Net Present Value: is the project's cash flow stream discounted to present value.

It includes financing costs but excludes interest and corp tax.9. Internal Rate of Return: is the discount rate where the NPV above equals Zero.

10. Residual Land Value (based on NPV): is the purchase price for the land to achieve a zero NPV.

(26.05%) (1,966,547)

4,977,312

15.00%(1,921,722)

6,071,522 (498,942)

5,572,580

(2,228,929) (39.96%) 15.00%

(2,237,233)

19,708 634,505

2,970,000

50,643 -

3,343,651

-

1,243,990

691,447 -

461,229

(339,500)

3,734,500 (51,349)

OPTION 6.

(25.53%) (1,864,367)

(1,821,870)

606,844

15.00%

(39.37%) 15.00%

(2,123,674)

5,826,694 (479,056)

5,347,638

(2,107,399)

-

1,074,590

663,739 -

442,735 19,708

(329,000)

2,970,000

49,077

3,240,239

-

(43.32%) (3,294,619)

(58.95%) 15.00%

(3,642,920)

OPTION 5.

15.00%(3,219,521)

(591,838) 6,723,716

(3,966,066)

3,619,000 (49,761)

41,768 -

7,315,553

549,016 19,708

847,690

(280,000) 2,757,650

-

2,063,160

824,211 -

2,970,000

(40.20%)

3,080,000 (42,350)

(3,369,472)

OPTION 4.

(3,292,668)

896,184

15.00%

(55.63%) 15.00%

(3,739,803)

7,868,811 (638,351)

7,230,460

(4,024,692)

-

592,002 19,708

2,970,000

48,555 -

(325,500) 3,205,768

-

2,453,990

888,371

(49,232)

(36.28%) (2,469,813)

OPTION 3.

3,580,500

15.00%(2,413,516)

6,177,494 (502,922)

5,674,572

(2,916,922) (51.37%) 15.00%

(2,756,513)

19,708 687,699

2,970,000

41,768 -

2,757,650

-

1,293,710

698,886 -

465,723

(280,000)

N.A.(4,096,314)

3,080,000 (42,350)

15.00%(4,002,942)

8,421,724 (678,261)

7,743,463

(4,985,813) (64.36%) 15.00%

(4,506,573)

19,708 1,003,199

2,970,000

41,768 -

2,757,650

-

2,811,050

946,024 -

629,975

(280,000)

5,032,078

OPTION 2A.

(42,350)

4,777,779 6,397,150 5,935,506 6,813,620

(3,388,097) (44.55%)

(3,467,127)

6,124,457

(60.25%) 15.00%

(3,828,830)

15.00%

19,708

(4,185,494)

2,970,000

41,768 -

7,553,578 881,152

(610,434) 6,943,144

2,757,650

-

2,224,090

850,422 -

566,437

(280,000)

3,080,000 3,080,000 (42,350)

OPTION 2B.OPTION 1.

All the above options fail to achieve a positive level of profit. The best performing Option being Option 5 still makes a loss of $2.1m at the project end (last sale date). Option 6 achieves a loss of $2.2m. A 4% per annum escalation on end sale values improves Option 6 with a loss of $1.7m.

There are a number of risks associated with development. In particular market risk. In order to assess the sensitivity of the performance indicators to market risk we modelled the options based on a 5 year take-up (1.8ha to 2.0ha per annum). As expected the returns were worsened due to considerably higher levels of capitalised interest.



Table 23 - Financial Summary of Options (5 Year Market Absorption) ($)

REVENUETotal Sales Revenue Less Selling CostsLess GST paid

TOTAL REVENUE (after GST paid) COSTS

Land Purchase CostConstruction Costs

Service Road (10m wide) incl. drainage - 713,900 713,900 - - - Internal Roads (20m wide) incl. drainage 1,401,400 1,016,400 - 1,555,400 1,293,600 631,400 800,800 Water Reticulation 200,200 275,000 129,800 222,200 184,800 90,200 90,200 Power and Lighting 300,300 412,500 194,700 333,300 277,200 135,300 135,300 Landscaping 100,100 137,500 64,900 111,100 92,400 45,100 45,100 Substation 132,000 132,000 132,000 132,000 132,000 132,000 132,000 Telecommunications 90,090 123,750 58,410 99,990 83,160 40,590 40,590

TOTAL CONSTRUCTIONEstate Major Works

Entrance / Highway Intersection 220,000 220,000 220,000 220,000 220,000 220,000 220,000 Sewer Main & Pumping Stations 1,925,000 1,925,000 1,925,000 1,925,000 1,925,000 1,925,000 1,925,000 Water Quality and Detention 275,000 275,000 275,000 275,000 275,000 275,000 275,000 Power to the Site 550,000 550,000 550,000 550,000 550,000 550,000 550,000

TOTAL ESTATE MAJOR WORKSProfessional FeesStatutory FeesMarketing and AdvertisingMiscellaneous CostsProject Contingency (Project Reserve)Land Holding CostsInterest ExpenseTOTAL COSTS (before GST reclaimed)Less GST reclaimed

TOTAL COSTS (after GST reclaimed)

PERFORMANCE INDICATORSGross Development Profit 1

Development Margin (Profit/Risk Margin) 3

Target Development MarginResidual Land Value (Target Margin) 4

Discount Rate (Target IRR)Net Present Value 6

Project Internal Rate of Return (IRR) 9

Residual Land Value (NPV) 10

Maximum Debt Exposure

Footnotes (based on current Preferences):1. Development Profit: is total revenue less total cost including interest paid and received3. Development Margin: is profit divided by total development costs (net of selling and leasing costs).4. Residual Land Value: is the maximum purchase price for the land whilst achieving the target development margin.5. Breakeven date for Cumulative Cash Flow: is the last date when total debt and equity is repaid (ie when profit is realised).6. Net Present Value: is the project's cash flow stream discounted to present value.

It includes financing costs but excludes interest and corp tax.7. Net Present Value of each stage at commencement of the consolidated cash flow using the Holding Discount Rate.9. Internal Rate of Return: is the discount rate where the NPV above equals Zero.

10. Residual Land Value (based on NPV): is the purchase price for the land to achieve a zero NPV.

OPTION 1.

(42,350)

OPTION 2B.

3,080,000 3,080,000

(280,000)

2,224,090

851,536 -

566,437

2,757,650

-

36,208

(5,635,741)

2,970,000

41,768 -

9,005,426 2,315,387

(612,035) 8,393,391

15.00%

(67.11%) 15.00%

(4,042,122)

(23.11%) (3,855,716)

6,125,483

(3,767,828)

(42,350)

4,778,804 6,398,176 5,936,532 6,815,991 5,033,103

OPTION 2A.

(280,000)

2,811,050

947,137 -

629,975

2,757,650

-

36,208 2,638,671

2,970,000

41,768 -

(70.62%) 15.00%

(4,719,768)

10,074,810 (679,863)

9,394,947

(6,637,297)

(4,382,673) 15.00%

(25.54%) (4,484,903)

3,080,000 (42,350)

(280,000)

1,293,710

700,000 -

465,723

2,757,650

-

36,208 1,802,956

2,970,000

41,768 -

(59.45%) 15.00%

(2,968,452)

7,310,365 (504,524)

6,805,841

(4,048,191)

(2,793,248) 15.00%

(18.31%) (2,858,403)

OPTION 3.

3,580,500 (49,232)

(325,500) 3,205,768

-

2,453,990

889,485 -

592,002 36,208

2,970,000

48,555 -

9,341,646 (639,952)

8,701,694

(5,495,925)

2,351,405

15.00%

(63.13%) 15.00%

(3,984,582)

(3,819,455)

OPTION 4.

(3,732,394)

3,080,000 (42,350)

(20.53%)

2,063,160

825,324 -

2,970,000

(280,000) 2,757,650

-

41,768 -

8,712,228

549,016 36,208

2,226,751

3,619,000 (49,761)

15.00%(3,599,252)

(593,439) 8,118,789

(5,361,139)

OPTION 5.

(22.38%) (3,683,209)

(66.00%) 15.00%

(3,856,301)

3,240,239

-

(329,000)

2,970,000

49,077 -

1,074,590

664,853 -

442,735 36,208

6,822,158 (480,657)

6,341,501

(3,101,262)

1,584,694

15.00%

(48.87%) 15.00%

(2,370,408)

(2,319,072)

(2,266,211) (12.50%)

OPTION 6.

3,542,000 (48,703)

(322,000)

1,243,990

692,367 -

460,968

3,171,298

-

36,208 1,691,935

2,970,000

48,033 -

(52.23%) 15.00%

(2,614,861)

7,143,501 (500,024)

6,643,477

(3,472,179)

(2,486,160) 15.00%

(2,544,151)

4,977,276

(14.26%)

As expected all options perform worse under this scenario. Due to the discounting factor and the exacerbation of capitalised interest profit and NPV are considerable worse. The best financial option (Option 5) still results in an outstanding debt position of more than three million dollars at the completion of the project (last sale date).

11.8 Relocation of Council Depots Council has two depots currently operating – 146 Mort Street which is 1,745sqm in size and the other at 26 Main Street, Wallerawang which is 2,949sqm.

Consolidating the depots into a single depot on the subject site in Wallerawang has a number of benefits including consolidation of operations and improved accessibility for service vehicles. Dis-benefits include



greater locational separation from Council administration building and from CBD retail and commercial services.

The Council depot on the subject site may assist in catalysing business investment in the estate and improve land sales take-up.

The Mort Street site is very close to Lithgow Town Centre which increases its marketability. Therefore there may be some benefits or savings in land cost given that the Mort Street site would achieve a higher land value than the subject land in Wallerawang.

The Mort Street site’s proximity to the CBD makes it suitable for higher value land uses such as residential or commercial. However there is risk of contamination and the cost of remediation may well exceed any betterment from rezoning of the land. Based on comparable sales evidence we estimate the potential realisation of the Mort Street site to be in the order of $100/sqm or $175,000 (refer to Section 9). The sale of both depots may provide revenue of around $300,000.

The sale of a half hectare site at Wallerawang would be $175,000 (5,000sqm by $35/sqm net of GST). Hence the sale of both existing depots will provide some $125,000 more than the revenue that could have been realised from the sale of a half hectare parcel on the subject land at Wallerawang.

However the cost of demolition and rehabilitation of the existing depot sites and the rebuilding and relocation of the depots is likely to well exceed the $125,000 savings in land cost. Furthermore the benefits to the Wallerawang industrial estate are unlikely to exceed the costs in rebuilding and relocation of the depots.

If Council wishes to proceed with this option we recommend that a more detailed feasibility report be instigated including contamination and physical condition surveys.

Relocating the Council depots to Wallerawang will reduce total revenue from the sale of land at Wallerawang. The net revenue from the sale of Option 6 ($3.34m) will be reduced by $175,000 to $3.17m if Council takes up 0.5ha of land at Wallerawang for consolidation of Council’s depots.



12. KEY FINDINGS AND RECOMMENDATIONS 12.1 SWOT Analysis of Lithgow LGA Industrial Land Strengths of Industrial Land in Lithgow LGA

Strengths of Lithgow LGA for further industrial development include:

Lithgow is located at a major transport hub with main road access to Oberon, Bathurst and Mudgee, with easy access to Sydney via the Great Western Highway, Bell's Line of Road and Main Western Railway.

Main Western Railway line through Lithgow and Wallerawang, Wallerawang-Gwabegar Branch line to Mudgee.

Electricity supply is readily available in the LGA.

The natural gas transmission pipeline intersects the LGA.

Supplies of potable and industrial quality water are available in the district.

Lithgow is committed to fostering lifelong learning in the community.

Similar to the Blue Mountains, Lithgow possess well developed social infrastructure, including educational institutions, hospitals, well developed industrial estates (e.g. Lawson), electric inter-urban train service to Sydney and extensive tourist infrastructure.

Two major thermal power stations operate nearby.

Major firms and industries operated within the LGA including: Ferrero Australia South-east Asia; Thales; FreightCorp locomotive depot; spring water bottling and distribution; pyrotechnics manufacturing.

8 coal mines in and surrounding the LGA.

Some of the larger existing industrial precincts remain in single ownership allowing for coordinated and planned redevelopment on a large scale (e.g. Cement Works, ADI site, Mort Street).

Threats and Weaknesses to Industrial Land in Lithgow LGA

Threats and weaknesses of Lithgow LGA for further industrial development include:

Low forecast population growth.

Aging population and workforce.

Lack of suitably located and zoned land to cater for industrial growth.

Many precincts are constrained due to relatively small average lot sizes, poor access, and conflicting surrounding land uses.



Such small sized lots do not have a good capacity to accommodate a broad range of employment generating uses, limited to only providing small scale service industry.

Additional constraints include: slope and topography, groundwater, drainage and flooding, land ownership and tenure, trunk infrastructure location and capacity, utilities and services provision, vehicular and rail access, major road network capacity, agricultural land suitability/capability, cultural heritage and archaeology, market preferences, location of labour supplies, or character of the location.

Heavily constrained land in existing industrial precincts.

Lack of existing zoned and marketable land available in the short term.

High fragmentation of ownership will limit the potential of some sites in the short term (e.g. Marrangaroo).

Opportunities for Industrial Land in Lithgow LGA

New industrial locations need to ensure direct access to major infrastructure such as roads, rail and air and not through existing residential areas.

Increasing the supply of industrial land to the market will keep a check on land price rises.

The continual upgrading of infrastructure to Lithgow improves accessibility and transport links between Lithgow and its existing markets, including Sydney. This improves the attractiveness of Lithgow to industry for accessibility reasons.

Given Lithgow’s amenity and lifestyle attributes, tourism, live/work balance, home based businesses, cottage industries and creative industries are supported. Mixed use zones should be encouraged in and around the Lithgow urban centre to allow these types of businesses, which permits active ground floor uses and residential above.

Whilst land at Lithgow will be in competition with Regional supply, economic development initiatives can be put in place now to attract new and emerging industries like eco-industrial estates, distribution facilities, research and development facilities, and incubator hubs.

High standards of environmental quality for industrial development should be maintained which enhance the streetscape and amenity of industrial areas.

Some existing precincts do have considerable opportunities for redevelopment, adaptive reuse, and agglomeration, however in many cases the timing of this land being available is uncertain or long term due to other constraints such as heritage and contamination.

Existing industrial land may need government assistance to maintain and enhance the existing buffer zones. Careful consideration needs to be given as to what uses are appropriate in these buffer zones to ensure conflicts of future use do not arise.

12.2 Opportunities for Wallerawang Based on the analysis within this report, the following advantages and opportunities exist for potential industrial and employment lands at the subject site in Wallerawang:



The topography and vast supply of land at and surrounding the subject site allows for the provision of adequate buffering between land uses, minimising the type of land use conflicts currently being experienced in industrial precincts in the Lithgow urban area (i.e. Inch Street/Bells Road, Donald Street, ADI site).

The site provides enough land not only to relocate some industrial uses out of the Lithgow urban area, but to cater for future employment land demand as a result of market demand.

The industrial land uses which may relocate out of Lithgow town centre include services to the mining and industrial sectors.

The Wallerawang site has better access opportunities, is located on a highway, and has less timing constraints than existing precincts.

The site can provide flexible lot sizes dependent on market demand.

The site is currently vacant, there is not a large opportunity cost tied to the land in its current form.

The site provides an opportunity to provide to the market a product type not already offered in the LGA and when compared to other precincts, is relatively less constrained.

A range of lot sizes should be provided at the subject site to accommodate a variety of industry types and encourage the clustering of industrial land users, including for example building materials and construction, manufacturing, wholesaling, trade related business and services to the mining and industrial sectors.

There is a lack of ready, available, serviced and vacant industrial sites. Whilst smaller local service infill sites are available across the precincts, Lithgow lacks a precinct with large land holdings appropriate for larger industrial land users (e.g. large manufactures, larger industrial park type users).

Journey to work data indicates there is an under representation of jobs in manufacturing, construction, wholesale trade, transport/postal/warehousing, administrative and support services, and professional, scientific and technical industries indicating those industries which should be targeted for relocation in the LGA and to the subject site.

There is always the possibility of Wallerawang attracting a new base industry or more capitally intensive heavy industry which requires significant amounts of land even if they do not employ large amounts of employees.

12.3 Strategy for Wallerawang It is recommended that Council gives support to the concept for a 10ha industrial estate on the subject site generally in accordance with the preferred plan (Option 6).

The relocation of Council’s depots to the site however is not supported in the short term largely because the costs in rebuilding and relocating the depots will outweigh the minor savings in land costs and the marginal benefits to the Wallerawang estate.

Furthermore development is currently not viable. The high costs of extending services to the site is rendering development unviable.



Recommended Design Option

Option 6 is the second most cost effective option being a single cul-de-sac road from the highway with industrial lots fronting both sides. A 20m vegetated buffer is also included along Castlereagh Highway with a 4% detention basin at the rear of the subdivision. Whilst Option 5 is a little more cost-effective, Option 6 is considered superior in design because of its setback from the adjoining land to the southwest and because it results in more lots having visual exposure to the highway.










Provides buffer or setback from the adjoining property to the southwest

Whilst Option 5 is a little more cost effective it includes developing the site right to the south western boundary and it does not take advantage of highway exposure.

Target Land Uses

Target industries for the subject site at Wallerawang include, but are not limited to, the following:

Distribution centre given the possibility of supply large sites and given the land’s central location in the Mid-west region, and suitable access from the Highway;

Manufacturing;

Building materials and construction and outdoor supplies mainly to service the region; and

Service industries for the mining and industrial sectors.

Notwithstanding the above preferred land uses, Council should be proactive in encouraging any employment land uses that are compatible with the remaining land associated to the Minerals Park land.

Recommended Zoning Categories

The site is currently zoned Rural General 1(a) under Lithgow LEP (1994) permitting with consent all forms of industrial development.

Industrial zones for the subject site in Wallerawang should be consistent with the LEP Template and rezoned to the IN1 General Industrial Zone. The objectives of this zone being:

To provide a wide range of industrial and warehouse land uses;

To encourage employment opportunities; and

To minimise any adverse effect of industry on other land uses.

Permitted uses with consent being: Depots; Freight transport facilities; Heavy industries, Light industries; Warehouse or distribution centres

Council’s Role and Next Steps

Lithgow City Council will need to manage the development either with in-house staff or through an external development manager. Council will need to ensure flexibility in any contract as the process of de-risking the project may render it unviable.

Next steps for Council includes:

Give consideration to removing the need for gas to service the land as this is an added cost burden;

Undertake a Phase 1 Contamination Report to eliminate any risk of contamination.

Make representations to RTA at the D.A. or pre-D.A. stage regarding access from the Highway;



Make representations to Delta and the Minerals Park Committee to get an agreement for the development of the land.

Make representations to Sydney Catchment Authority at the D.A. stage regarding the Authority’s requirements for water quality and detention; and

Cost estimate the major works including, intersection treatment, drainage and sewer as these items will affect feasibility.

12.3 Branding and Economic Development Lithgow LGA needs to consider economic development strategies and branding to attract new investment, new industry and associated spending. There is need for cooperation with industry to capitalise on the LGA’s strengths, provide opportunities for information sharing, and promote coordination of suppliers and service industries.

This initiative will provide smaller operators in particular with the opportunity for asset sharing schemes, joint purchasing agreements and LGA wide promotion. Therefore using a consistent brand and image to promote Lithgow LGA should be considered.

In particular promoting ‘Wallerawang Industrial Park’ or ‘Wallerawang Employment Zone’ as ready zoned vacant and flexible (subdivision on a case by case basis) industrial land should be encouraged. Branding and economic development strategies will be of significance especially if the local industrial market is lagging in Lithgow.

Branding is increasingly important in assisting regions in marketing their products, capture valuable tourism expenditure, and build supply chains to access international markets. The concept of geographic branding is not new. The brand is about the LGA, what uniqueness it has and what specialties it has. This brand will be used in all promotion of the LGA for business investment, staff attraction and tourism.

It is noted that Council is in the process of undertaking an Economic Development Strategy that will include retail, business and tourism development.



DISCLAIMER

This report is for the confidential use only of the party to whom it is addressed (the client) for the specific purposes to which it refers. We disclaim any responsibility to any third party acting upon or using the whole or part of its contents or reference thereto that may be published in any document, statement or circular or in any communication with third parties without prior written approval of the form and content in which it will appear.

This report and its attached appendices are based on estimates, assumptions and information sourced and referenced by Hill PDA and its sub consultants. We present these estimates and assumptions as a basis for the reader’s interpretation and analysis. With respect to forecasts we do not present them as results that will actually be achieved. We rely upon the interpretation of the reader to judge for themselves the likelihood of whether these projections can be achieved or not.

As is customary, in a report of this nature, while all possible care has been taken by the authors to prepare the attached financial models from the best information available at the time of writing, no responsibility can be undertaken for errors or inaccuracies that may have occurred both with the programming or the financial projections and their assumptions.

This report does not constitute a valuation of any property or interest in property. In preparing this report we have relied upon information concerning the subject property and/or proposed development provided by the client and we have not independently verified this information excepted where noted in this report.

Lithgow City Council Agenda 1 November...

Documents

Transcript of Lithgow City Council Agenda 1 November...