Infrastructure for a major suburban development on Auckland’s Hibiscus Coast will be the first to gain funding from a special purpose vehicle using long-term debt raised by the government’s Crown Infrastructure Partners and designed to lower the up-front cost of new housing for home buyers.
Some $48.9 million of the $91 million of roading and wastewater infrastructure for Fulton Hogan’s Milldale subdivision at Wainui, between Orewa and Silverdale, will be funded with long-term debt raised by CIP from the Accident Compensation Corp.
CIP began life as Crown Fibre Holdings, responsible for administering the previous government’s ultra-fast broadband roll-out. Its skills have been retained to assist with the current administration’s desire to accelerate other types of infrastructure using novel funding structures that can be held off-balance sheet by both the Crown and local governments.
Auckland Council is contributing $33.5 million to the SPV being formed for the project, while central government is contributing $4 million. Fulton Hogan is providing the remaining $4.6 million.
“The SPV funding will be repaid over time partly by Fulton Hogan and partly by section owners as an ‘infrastructure payment’ collected council rates,” Housing and Urban Development Minister Phil Twyford said in a statement. “This new model of infrastructure financing means that long-term debt can be raised through the SPV to enable the building of large-scale infrastructure, which is needed to step up the rate of houses being built and to assist councils that are nearing their debt limits.”
One of the impediments to building affordable housing has been the tendency for developers to charge home buyers up-front for the cost of roading, wastewater and other infrastructure for new subdivisions, adding to the pressures that have seen a bias in recent years towards only building new homes for wealthy buyers.
The Milldale development project will enable construction of some 4,000 dwellings and the infrastructure will be capable of supporting another 5,000 in surrounding areas.