Council to pursue innovative funding approach

File Image. SunLive.

Tauranga City Council could become one of the first New Zealand local authorities to utilise the Government’s Infrastructure Funding and Financing Act - IFF - to fund major infrastructure investments.
 
At Council's  2021-31 long-term plan amendment deliberations meeting, the Council’s commissioners adopted resolutions to proceed with IFF proposals to help fund the city’s Western Bay of Plenty Transport System Plan projects and enable the development of 2,000 homes in Tauriko West.

The IFF approach means a Crown-owned company borrows money for an approved project and then makes that money available to the Council to fund the investment concerned.

Repayments are made using levies on the properties benefiting from the project and the transaction stays off the Council balance sheet, leaving debt headroom which can then be used to fund other important community investment priorities.
 
Commission Chair Anne Tolley says inclusion of the IFF proposals in the long-term plan amendment doesn’t commit the council to using the new funding approach.

“We first have to establish that IFF funding makes economic sense and we won’t know that until Crown Infrastructure Partners has tested these projects with the private investment sector,” says Anne.

“If IFF generates better overall outcomes than our traditional funding sources, the Council will submit a proposal to government to take-up this innovative funding approach.”
 
IFF funding could provide $200 million for a suite of major city transport projects, such as Cameron Road Stage 2, which will continue the upgrading of the city’s main southern corridor from 17th Avenue to Barkes Corner and beyond.

Council says because the whole city would benefit from this type of investment, levies would apply to all properties, offset by reductions in the council’s transportation targeted rate.
 
A further $60 million could be raised to help fund Tauriko West infrastructure, with repayment costs levied on the new properties created within this growth area.
 
Commissioner Stephen Selwood says IFF would “bring more capital to the table” and could provide an innovative funding and financing solution.

“Private financing would mean that development contributions on the new properties in Tauriko West could be lower and homeowners could therefore benefit from lower capital and mortgage costs, but that would be offset by ongoing annual levy charges,” says Selwood.
 
“This has the potential to place us at the leading edge of doing something truly innovative to address the city’s chronic housing shortage, which would be a great fit with the Government’s urban development policy, but at the same time, a lack of funding certainty caused by misaligned transport funding legislation is constraining the progress we can make and that’s an ongoing frustration that only the Government can fix.”
 
Sharing the cost of growth
Planned increases in the citywide development contributions on new homes and commercial premises – which are designed to ensure that “growth pays for growth” – will be the subject of a further report to the Commission prior to adoption next month. The report will set-out changes to the proposed development contributions policy which address the submission points raised through community consultation.
 
Key policy change proposals include a 15 per cent increase in citywide contributions for residential developments, which would take the fee for a three-bedroom house from $28,557 to $32,754, taking effect from July 1 this year; lesser increases for local development charges in the Pyes Pa West and West Bethlehem catchments; and minor changes to the rules specifying when development contributions will be charged.
 
Development contributions are used to fund both new infrastructure and improvements to existing infrastructure and community facilities required to meet the needs of the city’s growing population.




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4 Comments

SORRY, but

Posted on 27-05-2022 23:05 | By The Caveman

Just another way to rack up RATEPAYER DEBIT !!

Tauriko West

Posted on 27-05-2022 12:17 | By Johnney

I thought this land was brought by the government for low cost housing. Why drag us ratepayers into financing the infrastructure. That’s their problem and cost.

GET THE ROADS BUILT FIRST

Posted on 26-05-2022 17:56 | By Get our roads

Oh my goodness, the amount of money these idiot commissioners are going to be spending will be in the billions soon, housing, CBD and still no decent roading infrastructure to get us to work, pick the kids up, do our shopping and get home, for God’s sake, it is more important to keep people moving before building houses and enhancing CBD that noone can get to, far out, how much longer does this idiotic thinking have to continue. As for priority one saying private investors will bring billions to Tauranga, they are dreaming, if you cannot keep your business and products moving on the roads people will not invest. Pathetic narrow vision for one group who think they will get rich and everyone will flock to the CBD, cant even get there mate, get the bloody roads built.

Money trees???

Posted on 26-05-2022 17:07 | By Let's get real

I’d love to know where they’re planted... There appears to be a great deal of effort being put into obfuscation. As I understand it the regional council will be charging ratepayers directly rather than indirectly through the rates payment. So potentially council rates will drop to be replaced with an alternative rate to regional (empty buses etc) leaving room for council to increase rates and appear to be responsive to the concerns of the ratepayers. In effect, the potential for enormous rates increases disguised in two separate rates demands.

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