Govt infrastructure funding of $147m a ‘major step forward’ for Tauranga

Classic Group director Peter Cooney says it has been working for more than six years towards building homes on this land at Tauriko West. Photo / Carmen Hall

The announcement of nearly $150 million in Government funding to help deliver more than 3000 homes in Tauranga has been heralded as “a major step forward” and a “game-changer”.

Without it, the city would be “dead in the water”, says a leading developer who has been fighting to progress his Tauriko West development for more than six years.

Yesterday, the Government confirmed two Tauranga housing development projects would receive money through its $1 billion Infrastructure Acceleration Fund (IAF). In Tauriko West, $80m for infrastructure would help enable 2000 homes to be built, while $67.9m would support delivery of 1600 homes via intensification on the Te Papa Peninsula.

The money is expected to help fund major transport and wastewater upgrades in Tauriko West and critical transport and water supply upgrades in Te Papa, plus a full-length walking, cycling and public transport corridor for the peninsula.

Peter Cooney, director of Classic Group, which is developing the Tauriko West project, said it was great the Government was supporting housing development in Tauranga, because “without it, it wouldn’t happen”.

In his view: “Tauranga would be in the proverbial crap. We wouldn’t be able to progress anything. Nothing would be built going forward.

“Without it, Tauranga would be dead in the water.”

A view of Tauriko, pictured in 2021, looking over its business estate towards Mauao. Photo / George Novak

Cooney said the building sector had been “very concerned” about the lack of local housing infrastructure, particularly in light of the ever-increasing housing demand that had helped spur the “huge increases” in house prices in recent years.

“We’ve been lobbying for years and years over the lack of supply – purely because of a lack of infrastructure funding,” he said.

“There’s major infrastructure required in brownfields [already developed land] like Te Papa as well as greenfields [undeveloped land].

“It’s very fortunate that it has come. It’s unfortunate that it’s so late.”

Cooney described the Resource Management Act, Government water reforms, and National Policy Standards as “unfortunate and unnecessary” factors he believed contributed to the delay in more housing being built.

“There are a range of things holding us up, but this is a major step forward,” Cooney said.

“When it kicks in, it will solve the supply issue, but that’s a few years away.”

Cooney said he had been working on the zoning and progress of Classic’s development at Tauriko West – eventually expected to grow to about 4000 houses – for more than six years, and anticipated it would be another two years before earthworks could begin.

Tauriko Business Estate director Bryce Donne said the funding was great news for unlocking both residential and industrial land supply “and keeping the local and national economy moving”.

In 2021, Tauranga City Council commissioners wrote to the Government pleading for help to address the city’s housing shortage as its population grew.

Research released two months ago estimated the current shortage was up to 5300 homes, potentially growing to just under 9000 homes in 10 years, with flow-on effects for surrounding areas and house prices.

In statements yesterday, Tauranga City Council commission chairwoman Anne Tolley said yesterday the grant for Tauriko would help accelerate much-need housing development for the city.

“This is a game-changer for Tauranga and will mean many more families will have access to affordable homes as the planned developments proceed.”

Tolley said the Te Papa grant would “support the development of many more homes within the area’s existing footprint” and improve multi-modal transport connections.

Tolley said there was still work to be done “to realise the vision of the western corridor”. Funding confirmation, however, was “a major step forward”.

The funding was expected to help enable housing development in Tauriko West from 2027 and Te Papa Peninsula from 2023. It was also expected to be part of a larger infrastructure upgrade project across both areas, which was partially reliant on the council’s application to use the Government’s Infrastructure Funding and Financing Act being approved.

Council chief financial officer Paul Davidson said while the Government was putting $80m towards Tauriko, there was also an “agreed local share of cost” still being finalised. The Infrastructure Funding and Financing Act was “one consideration” for part of this local share, he said.

Other funding sources for Tauriko West included Waka Kotahi NZ Transport Agency.

For the intensification of Te Papa, he said a mix of funding sources was planned for Te Papa.

“As not all of these projects have been fully scoped, priced and timed (mostly relating to stormwater projects), the funding for all of these projects has not been finalised. However, there is a wide range of funding sources Council are looking to utilise.”

These included the rates, as well as the Infrastructure Funding and Financing Act, Infrastructure Acceleration Fund, Waka Kotahi subsidies, development contributions and direct contributions.

Tauranga City commission chairwoman Anne Tolley. Photo / George Novak

The Infrastructure Funding and Financing Act was introduced in 2020 to help high-growth councils such as Tauranga to invest in new, essential infrastructure — roads and water, wastewater, and stormwater — without affecting their debt levels.

A Special Purpose Vehicle, owned and operated by the Crown, borrows money that is repaid by charging levies on properties that benefit from the infrastructure.

If it was used to help fund development in Tauriko West, about 2000 homeowners would be expected to pay a proposed $2500 a year to help pay back the funding.

It is understood approval on this funding could be made as early as next week.

In yesterday’s Infrastructure Acceleration Fund announcement, Housing Minister Megan Woods said the $539.8m in funding was expected to help develop about 16,600 new homes to be built in 11 cities or regions over the next 10 to 15 years.

It would enable “connected, inner-city communities,” she said.

“This significant funding will help pave the way for new developments in towns and cities where more housing is needed,” Woods said.

“We are turning around the housing crisis we inherited by stripping back red tape to get more housing built, and investing in the long-neglected critical infrastructure needed to prepare land so it’s ready to build on.”

For Tauranga, Woods said the major transport and wastewater upgrades would unlock housing in the “priority growth area of Tauranga’s greenfield Tauriko West” and would increase connectivity to the city centre and nearby Tauriko Business Estate.

The funding for Te Papa Peninsula would contribute towards Stage Two of the Cameron Rd corridor upgrade, which included walking, cycling and public transport work. It would also encourage housing intensification by enabling more duplexes, townhouses, and apartments. However, local legislation Proposed Plan Change 33 needed to be adopted before intensification could happen in Tauranga.

A total of 13 proposals have been allocated funding from this round of the Infrastructure Acceleration Fund in Hamilton, Auckland, Tauranga, Christchurch, Kawakawa, Kaikohe, Westport, Upper Hutt, Waipukurau, Hokitika and Pahiatua.