Auckland Mayor Phil Goff and Deputy Mayor Bill Cashmore have welcomed the Government’s announcement at the weekend of a new infrastructure investment vehicle.
“Funding provided through a Crown Company, Crown Infrastructure Partners (CIP), will enable Auckland to speed up the construction of thousands of new homes in our city,” Mr Goff said.
“Earlier this year we took to Government the concept of a Special Purpose Vehicle (SPV) to fund infrastructure in a way that recognises constraints on further Council borrowing.
“Under this vehicle we have lodged proposals with Government that would enable us to bring forward construction of around 23,300 new homes in South and North Auckland, much earlier than would otherwise be possible.
“The announcement of the SPV was made in Drury today (Sunday) because this area will be the likely first recipient of initial funding with 700 homes planned.
“The initial investment of $387 million in transport and water infrastructure in Drury south and west, Paerata and Pukekohe will enable the construction of 17,800 dwellings much earlier than would otherwise be the case.
“A further major development will be around Wainui in north Auckland with $201 million in infrastructure funding required for an additional 5500 dwellings.”
The new investment vehicle will provide capital from Government and the private sector which will not be debt on council’s books. It will be funded through development contributions and targeted rates within the new housing developments.
“Auckland is growing by 45,000 new residents a year and requires unprecedented levels of infrastructure growth to keep up with demand,” said Mr Goff.
“Increasing the supply of housing is a critical part of overcoming our housing shortage and slowing price rises caused by demand exceeding supply of housing.
The new Unitary Plan ensures there is adequate land, green and brownfield, to meet demand, but infrastructure servicing that land is necessary for homes actually to be built.
“SPVs are another tool in our toolbox to enable us to lift the scale and pace of new housing development,” the Mayor said.
Meanwhile Infrastructure New Zealand chief executive Stephen Selwood said the Government’s announcement provides a means to dramatically increase housing supply.
“Timely delivery of trunk infrastructure is a major constraint on developers’ ability to deliver housing across New Zealand,” Mr Selwood said.
“Under this model, Crown Infrastructure Partners will facilitate partnerships between the Government and local councils to enable private investment in roads and water treatment plants to unlock land for development.
“Traditionally councils have been unable to deliver infrastructure soon enough because of other demands on funding and political constraints on their ability to increase property rates and fund debt.”
Under this model, the debt will be covered by private investors.
“The $600 million seed fund announced today (on Sunday) will enable CIP to cover initial demand risk until the developments are in place and new ratepayers are able to pay for the infrastructure. As the Crown is repaid, it will then be able to recycle that capital into new developments.
“A key advantage of this approach is that the cost of the infrastructure is not included in the up-front cost of a home. This will reduce house prices, meaning smaller mortgages.
“Instead, home owners will pay for the infrastructure services over time through targeted rates on their properties.”