The innovative funding that will enable the
construction of up to 9,000 new homes at Wainui just north of Auckland, is an
example of new models that need to be more widely used to fund critical
infrastructure, says the Employers and Manufacturers Association (EMA).Auckland Council, Crown Infrastructure Partners
and the private sector’s Fulton Hogan Land Development announced the new
Government Special Purpose Vehicle (SPV) partnership this morning. It includes
$91 million of Government funding for roading and wastewater infrastructure
needed before the 9000 homes can be built.
EMA chief executive Kim Campbell says,
"Partnerships like these are especially useful for ‘greenfields’ type developments
- building from scratch on vacant land - because the finance risk is shared.
"It also enables private investment in
these developments which is also partially repaid through a rates contribution.
The SPV funding will be repaid over time partly by Fulton Hogan Land
Development and partly by section owners as an ‘infrastructure payment’
collected with Council rates bills.
"People opt in to pay the extra rates
which are known upfront, to seed the development. The property owners are used
to paying higher rates and are prepared to continue to pay those rates, even
after the upfront contribution to infrastructure is repaid. This model is
unusual in New Zealand but in relatively common use overseas and enable faster
construction in new developments.
"Councils also benefit from the growth, as
they pick up the extra rates when the repayment period is over so they have an
incentive to encourage growth in their areas. They also have to borrow less to
fund critical infrastructure needed to support those new developments.
"This same model could be used in other
parts of Auckland or other fast-growth regions such as Tauranga and Queenstown
where development is required to cope with rapid population increases.
"While this funding model is new to New
Zealand, similar schemes are widely and successfully used overseas for example
in both the UK and the US," Mr Campbell says.
ENDS
For more information contact:
Mary MacKinven | Member Communications
Executive, EMA
Email: mary.mackinven@ema.co.nz,
Tel: +64 (0)9 367 0939, Mobile: +64 (0)21 636 089