Politics

Crown Fibre gets a re-tread

Finally, the long-touted special purpose vehicles to help councils fund infrastructure for housing have arrived.

As previewed by Newsroom Pro on February 17May 30 and July 12, the Government has used the Crown Fibre Holdings model to create these special purpose vehicles.

But Crown Fibre Holdings is more than the model. It is being morphed into the new Crown Infrastructure Partners entity itself to create the vehicles that will be used immediately for two major sets of projects in Auckland costing $588 million. The vehicles will receive revenues from targeted rates and volumetric charging for the use of the infrastructure by residents. Councils will have the option of buying back the assets "at some point in the future."

Finance Minister Steven Joyce, Prime Minister Bill English and Mayor Phil Goff donned their high viz gear yesterday to announce the creation of the repurposed entity and plans to kick off big new sets of infrastructure projects for 28,300 houses in Wainui to the north Auckland and around Drury and Pukekohe to the south.

Joyce said the Government would initially invest $600 million in Crown Infrastructure Partners, but expected private sector investors to eventually invest alongside the Government.

"We learnt from the ultra-fast broadband programme that if we de-risk some of the early stages of the investment, we can bring in private sector investors to take on much of the heavy lifting as the investments mature," Joyce said.

"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.

The key phrase there is 'over time.'

The Government will stump up the full $600 million for the first two sets of projects costing $588 million.

The bulk of the money will be spent in the south and be grouped around the massive Drury South development spearheaded by Stevensons Group, which appears to be the earliest winner of the acceleration of projects.

The Drury South project has 180ha of business and industrial development along with 700 houses adjacent to the Stevenson Drury quarry. It is one of the four areas identified in the South for the use of these special purpose vehicles, but Drury South is the first to be considered.

"Out of the four areas it is the most developed and is in near ready-to-go status, having already obtained planning permission, with the design and consenting expected to be complete in 2017," the Government said in the Q&A of its announcement.

"Should major civil works commence in October 2017 it is expected the project will be ready for the first occupants in 2019," it said.

The four areas in the south involve infrastructure investments costing $387 million, including $215 million for transport and $172 million for water. The transport portion includes rail stations at Paerata and Drury West costing $60 million.

The new entity was welcomed by the Employers and Manufacturers Association, Local Government New Zealandand the NZ Initiative, which highlighted its advocacy from 2013 for similar types of 'Municipal Urban District' (MUDs) vehicles.

Labour Housing spokesman Phil Twyford asked what had taken the Government so long, noting Labour had proposed the creation of infrastructure bonds funded through targeted rates in 2015.

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