A new development 30km north of downtown Auckland will have an "infrastructure payment" starting at $1000 a year when people buy a section.
A new development 30km north of downtown Auckland will have an "infrastructure payment" starting at $1000 a year when people buy a section.
The charge, which will run for 35 years, is part of a new funding model to bring forward transport and water infrastructure by several years that will lower the cost of housing.
The $1000 figure will increase by a low percentage year on year, and over 35 years is likely to double.
We can build more homes sooner and tackle the housing crisis quicker than would otherwise have been possible.
The infrastructure payment will be collected by Auckland Council for a special purpose vehicle that is funding $91 million of roading and wastewater infrastructure to support the building on 9000 homes at Wainui on the city's northern outskirts.
It is not a targeted rate, but amounts to about 40 per cent of the average household rates bill of $2506.
Details of the new funding model were announced today by Transport and Urban Development Minister Phil Twyford and Auckland Mayor Phil Goff at Milldale, where earthworks are underway.
The Government Special Purpose Vehicle (SPV) has been created in partnership with Auckland Council, Crown Infrastructure Partners and Fulton Hogan Land Development.
Milldale north of Auckland. Photo / Greg Bowker
Twyford said instead of the $91m cost of infrastructure being added onto the price tag of new homes, it will be paid back over 35 years.
The model also allows private investment in new infrastructure with the debt sitting on a balance sheet that is neither the Council's or the Government's, the minister said.
In July last year, Prime Minister Bill English unveiled the new financing model at Drury in South Auckland for people to buy cheaper homes in exchange for paying higher rates and water bills.
The scheme works by the Government and private investors paying the upfront cost of new transport and water infrastructure, which is recouped by charging new residents higher rates and water bills over a 20 to 30-year period.
The National Government announced a new investment vehicle, Crown Infrastructure Partners (CIP), to attract private sector investment and run the scheme.
It was to have Government seed funding of $600 million to bring forward construction of 23,300 new homes in the north and south of the city.
It was set up to bring forward big new housing developments, which cash-strapped councils like Auckland cannot afford because it is right up against its debt ceiling.
At the time, Twyford said Labour welcomed the CIP financing model and was keen to continue its work to create a pipeline of finance for developers.
"The Milldale project is an example of the innovative new approaches to financing infrastructure that the Government is developing through the Urban Growth Agenda. This funding model can be used in other high-growth areas affected by the housing crisis to help more houses to be built more quickly," Twyford said today.
"One of the major roadblocks to our towns and cities growing is the lack of ready access to finance for the infrastructure that allows for new urban growth, for green or brownfields developments," he said.
Goff said without the scheme the Milldale development at Wainui would not be taking place and could be 10 years away.
He said the cost of the money from the model does have to be paid for and people will know before they purchase a house the obligations they are entering into.
"Using Crown Infrastructure Partners to fund that infrastructure enables us to build roads, water and wastewater services without overburdening Council with debt and exceeding our debt to revenue ratio.
"We can build more homes sooner and tackle the housing crisis quicker than would otherwise have been possible," Goff said.
Housing Minister Phil Twyford and Auckland Mayor Phil Goff turn the sod at Milldale north of Auckland. Photo / Greg Bowker
Fulton Hogan Land Development has started work on the Milldale development at Wainui, which will have nearly 4000 homes and businesses. The first houses are due to be built by the end of next year.
The infrastructure can support another 5000 dwellings in the surrounding areas, with $33.5m funding for this coming from Auckland Council.
Crown Infrastructure Partners has secured long-term fixed-rate debt from Accident Compensation Corporation. The SPV will be funding $48.9 million towards the infrastructure, with the Crown contributing less than $4 million.
The SPV funding will be repaid over time partly by Fulton Hogan Land Development and partly by section owners as an 'infrastructure payment' collected with Council rates bills.
Former National Party leader and Reserve Bank Governor Don Brash, who was at today's announcement, said it was the right model and the type of project needed to build more houses and lower the price of housing.
"Certainly we need intensification but we also need greenfield developments like this," said Brash, who has been critical of National and Labour Party housing policies.
