Tauranga City Council commissioners have approved a proposal to consult the community on the possible use of Infrastructure Funding and Financing levies.

The levies are to part-fund infrastructure that will enable the development of 2000 homes in Tauriko West and contribute to the local share of the city's Transport System Plan projects.

This new funding approach was introduced by the Government in 2020, through the Infrastructure Funding and Financing Act.

It allows a Crown-owned company to borrow from third party lenders and provide funding to the council for approved infrastructure projects.

The Crown-owned company would then repay its borrowings by charging levies on the properties which benefit from the infrastructure projects.

Commission Chair Anne Tolley says IFF funding means the infrastructure projects involved can be financed and funded without increasing the Council's debt.

'That means TCC can use its financial capacity to deliver the other capital projects approved through our long-term plan.”

Anne says this new funding approach is particularly useful for fast-growth centres like Tauranga, where high existing debt levels could limit the ability to invest in future infrastructure projects.

'Now that a decision has been made to progress the IFF approach, we'll be seeking the community's views on these proposals through the forthcoming 2021-31 Long-term Plan Amendment consultation process.'

She notes that the proposed approach would provide certainty of funding for projects which will play a key role in addressing two of the city's major issues – inadequate housing supply and transport network congestion.

'This is a new approach to project funding and it does have some complexities, but its underlying principle is that those who benefit from a project will pay for it via a levy collected in the same way as their property rates.

'If a decision to proceed is made, it also signals to our partners that TCC is committed to making these projects happen.”

If adopted by the Council after considering community feedback, and approved by the Government, the proposed Transport System Plan (TSP) levy could contribute around $200 million towards planned road upgrading projects and apply to all eligible properties across the city, because everyone will benefit from the improvements delivered.

At commencement in 2025, the levy for a median value residential property is expected to be $75 - $85 a year, with a median value commercial property paying $570 - $630 a year. It's expected that a citywide TSP levy would be offset by a reduction in the transport targeted rate, which will be considered as part of the long-term plan amendment process.

The Tauriko West IFF project would be funded by a levy on each of the 2,000 new properties enabled by the infrastructure provided (primarily roads and water and wastewater networks).

This levy would largely replace the local development contributions which would otherwise apply when land is developed.

It's expected that the levy would be in the order of $2000 to $2500 a year, although that could be reduced by developer/landowner contributions to the infrastructure projects, with that investment then recovered when each property is sold.