Tauranga is at the head of the queue when it comes to taking up the government's $1 billion housing offer, says Prime Minister John Key.
Speaking on Newshub's Paul Henry show, John Key says the money is intended for the five double-digit growth areas including Queenstown and Tauranga.
Tauranga has been identified as a high-growth area.
'It could be structured a few ways but the councils won't be paying interest on it,” says John Key.
'It's bridging finance. The council doesn't have to put it on their balance sheet because that's what they are worried about. They are not doing it up front, because they are bumping into their debt ceiling.”
The councils get the money back from the people buying the housing.
'In fact actually the home owner is paying for it, as they always would. It's just that we are allowing that to happen up front. So it's a clever sort of thing,” says John.
He agreed it wasn't technically lending from the government point of view and it's not technically borrowing from the councils' point of view.
Tauranga Mayor Stuart Crosby says Tauranga City Councillors don't know the details and they won't be in a position to assess the offer until they do.
'Until we know the details, see how the process fits with growth management with Western Bay and ourselves – because it's not just Tauranga City, we work with Western Bay as a high growth area - then we will assess it.
'If it ends up on our balance sheet extra debt then we'll have to really consider seriously whether it's an opportunity or not. But if it ends up on someone else's balance sheet, then it may well be an opportunity to bring more residential land forward.
'But there's no doubt we are ready to go, if it stacks up. To bring land forward we have a debt limit and we stick to it,” says Stuart.
'So if there can be funds available that don't land on our balance sheet, then we will seriously look at it.”
The affected local areas that could be accelerated in development are Papamoa East and Pyes Pa areas, says Stuart.
'I think Nick Smith told me the finance would be available mid next year, so there's time yet to do the planning, assess whether it's viable for us.
'But on that, I do congratulate the government for recognising that resources and funds are an issue.”
The high growth cities have been asking the government for some time to create an opportunity, and Stuart congratulates the government for creating an opportunity.
Traditionally infrastructure for housing developments; water, sewers and storm water systems are paid for by councils which borrow the money.
Tauranga City Council and others have debt limits, which puts the brakes on too many housing development at any one time in any one area.
'Historically, government used to assist in water and waste water, way, way back, but now it's only in land transport,” says Stuart.
'So if this fund is available again for water and waste water in particular, then we will seriously look at it.
'But at this stage there's no commitment from our council until we know how it works.”
Prime Minister John Key announced the plan in Christchurch on Sunday. He said the fund will provide interest free loans to councils in high demand housing areas to fund the new roads and other infrastructure to support new housing developments.
The Government will borrow the $1 billion required, and councils will have to repay the money within 10 years from rates and developers contributions.
Announcing the plan at the National Party's annual conference in Christchurch on Sunday, Key said the $1 billion fund would be available to local councils in high growth centres, currently Auckland, Christchurch, Queenstown and Tauranga.
2 comments
crazy council
Posted on 05-07-2016 15:00 | By rotovend
How about some high density inner city living instead of new council buildings. Public transport growth like ferries rather than more darn roads etc etc
Think about first home buyers .
Posted on 06-07-2016 07:20 | By BlueberryBee
What ever happens I really do hope first home buys benefit from this. The only people that seem to be benefiting are investors, property developers and other hangers on sticking there hand in the honey jar. And rotovend it correct our public transport is not up there. And nothing wrong with high density living. To much valuable land used to grow food is getting eaten up.
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