The Government is to repurpose Crown Fibre Holdings (CFH), the company set up to build the ultra-fast broadband network, and use it to invest up to $660m to fund the building of roads, water and sewerage infrastructure in large scale housing developments in partnership with local councils and private investors.
Finance minister, Steven Joyce, said CFH would be rebranded Crown Infrastructure Partners (CIP), which will set up special purpose companies to build and own new trunk infrastructure for housing developments in return for dedicated long term revenue streams from councils through targeted rates and volumetric charging for use of the infrastructure by new residents.
The Government said that, with stage one of the UFB now 75 percent completed CFH’s work would start to wind down, freeing up capacity to undertake its new role. “In addition, repurposing an entity like CFH is significantly cheaper and more efficient than establishing a new entity,” it said.
Joyce said the Government had learnt from the ultra-fast broadband programme that de-risking some of the early stages of the investment could bring in private sector investors to take on much of the heavy lifting as the investments mature.
“We would expect the Crown’s investment in each project to be matched with at least one-to-one with private sector investment over time,” he said.
“This new model is another way in which we are helping councils in our fastest growing cities to open up more land supply so more Kiwis can achieve the goal of home ownership.”
Local government minister, Anne Tolley, said the funding scheme would be made available to cash-strapped councils that are struggling to fund new long-term infrastructure from their own balance sheets.
“Councils will have the option of buying back the infrastructure at some point in the future, but won’t have to commit to doing so,” she said. “This is all about introducing outside capital to build this infrastructure, so current ratepayers don’t get burdened with all the costs of growth.”
The Government says the criteria for projects to received CIP funding are yet to be determined but at a high level projects must show an ability to generate sufficient revenue to cover their own costs over time, including the cost of capital in most cases.
They must also include an exit pathway to allow the Crown to recoup its capital within a reasonable time period and should include a mechanism through which external providers of capital can invest in infrastructure.”
Two of the earliest projects to be assessed by CIP for investment will be the Auckland North and Auckland South; projects previously submitted by Auckland Council as requiring investment outside the council’s own balance sheet.
These could provide an additional 5,500 homes in Wainui to the north of Auckland, and 17,800 homes across Pukekohe, Paerata and Drury to the south of the city.