The suggestion of a vastly truncated three-kilometre line to Exhibition Park, with Gungahlin to follow, is made by the Capital Metro Agency in a draft version of its rapid business case, dated March and obtained by The Canberra Times.

The government has refused to confirm the contents of the document, but rejected the idea of staging the line to Gungahlin.

"The government has said very clearly that we are commited to delivering the project in the first stage from Gungahlin to the city,'' Environment and Sustainable Development Minister Simon Corbell said. ''That remains our position."

The rapid business case also reveals the possibility of an early extension to Russell and the Parliamentary Triangle, and Mr Corbell was not as quick to dismiss this suggestion.

"These are issues that will be looked at further in the final business case [a draft is due this week] but the route that is absolutely clear is the route from Gungahlin to the city," he said.

The Capital Metro Agency urges the government to bring forward a decision on redeveloping Exhibition Park and the racecourse, which it says offer the greatest potential for intensive development.

The draft rapid business case shows that far from simply being a tram line, the light rail project is about a transformation of the Northbourne corridor, which will suck development and demand from other parts of the city. The document recommends that the government place a higher priority on the corridor, and make decisions "that deliberately favour it over other precincts across the ACT".

It refers to the redevelopment of public housing on Northbourne Avenue as a done deal, saying: "The Government is planning to dispose of and redevelop the Northbourne Flats and the Northbourne Housing Precinct." The flats are home to 472 public housing tenants.

In its consideration of whether the line from the city to Gungahlin should be staged, it says the strongest case from the perspective of patronage per kilometre is the three-kilometre section from the city to Dickson, which could reach "passenger intensities" (passenger kilometres per kilometre of line) high enough to make the project a viable alternative to bus. The extra nine kilometres to Gungahlin would triple passenger kilometres but quadruple the line length, reducing passenger intensity.

But Mr Corbell said patronage to Gungahlin was very strong for peak times, with the 200-capacity trams expected to be full for travel to and from work. The challenge was to increase patronage outside those hours.

To do this, the Capital Metro Agency proposes carving up the corridor into nine development zones.

It calls for an accelerated decision on two zones. One is Dickson, with high-density student accommodation and park and ride facilities. It suggests "podium-style buildings" with retail and office space on lower levels, apartments above, car parking underneath, and a tram station. This might need greater building heights than now allowed at the northern end.

The other zone is Exhibition Park and the racecourse, where the report suggests a suburban business park, with "large campus-style uses", university and technology facilities, "hotel or serviced accommodation, private hospitals, place of worship (for example, Hillsong) and indoor recreational facilities".

Asked about Exhibition Park, Mr Corbell said while it was "certainly worth considering as an activity centre for a mixture of residential and commercial development", no decisions had been made. It might be possible to leave Exhibition Park where it was, "rationalising" the land and accommodating the extra development around it.

The rapid business case suggests increasing building height restrictions within 500 metres of the Northbourne corridor "to allow above ground podium-style car parking" – to minimise developer costs associated with below ground car parking. It suggests "innvoative land payment" deals to allow "delayed land settlement terms" to encourage larger developments. In another idea to encourage developers, it suggests "flexibility" in the lease variation charge, or "in-kind contributions".

The government has refused to confirm the possibility of a levy to fund the project, as revealed in The Canberra Times this month, but the document confirms a "district or direct levy" is on the table, as well as a host of other sources of funding, including rates, land taxes, fees on developers and the sale of "air rights" to develop area above rail stations.

Mr Corbell said the rapid business case was "just that, it's a quick ... initial analysis of options and possible directions", and would be superseded by the full business case.

"It's important to stress this document is a preliminary analysis only of the Capital Metro project,'' he said. ''It does not reflect any decisions that have been or may have been made by the government."