North Island’s golden triangle big winner of government’s $1b housing fund

Hamilton, Auckland and Tauranga’s councils have all received a sizable shot in the arm from the government’s Housing Infrastructure Fund though Auckland got $300 million instead of the $1 billion it is understood to have asked for.

Prime Minister Bill English, along with Building and Construction Minister Nick Smith and Finance Minister Steven Joyce today unveiled which councils will receive a portion of the $1 billion fund.

The debt-constrained Auckland Council was awarded the most money, receiving $300 million to build infrastructure for 10,500 houses.

Auckland Mayor Phil Goff says the new funding will help unlock new housing development in Auckland’s north-west via investment in transport, wastewater and stormwater projects earmarked by Auckland Council as priority, fast-track initiatives.

Mr Goff says Auckland’s bid focused on a small number of highly development ready areas where funding would accelerate priority projects and unlock housing growth quickly.

But he acknowledges the new infrastructure investment falls well short of meeting the billions of dollars of extra investment needed to keep pace with the city's unprecedented growth and address the city's housing shortages.

He says in coming weeks there will be a further important announcement from Government on new funding options for Auckland that take into account the balance sheet constraints the city faces.

"The HIF package will help significantly, but with ongoing growth and the pressing need for matching infrastructure, we will need to continue to work together to increase and bring forward investment to tackle Auckland’s housing shortage and growing congestion,” Mr Goff says.

What the others got
Hamilton will be lent $272 million for infrastructure for 8100 houses and Tauranga will get $230 million for infrastructure for 35,000 houses.

Other successful regions are Queenstown and Waikato, which will respectively receive $50 million for infrastructure for 3200 homes and $37 million for infrastructure for 2600.

“The funding will be used to provide network roading and water infrastructure for 60,000 houses across nine projects in these five fast-growing urban areas,” Mr Joyce says.

He says the funding of this infrastructure is bringing forward the ability to build these homes in some cases up to eight years earlier than otherwise.

The $1 billion fund was announced by then Prime Minister John Key in July last year, who said it would accelerate the supply of new housing where it’s needed the most.

The contestable fund, for use mainly by Auckland Council, offers interest-free loans to councils in high-growth areas. The programme uncovered a lack of ready-to-build projects and an unwillingness by the Auckland local body to take on substantial new debt because it is already close to limits that could affect the city's AA credit rating. Last month, Minister for Building and Housing Nick Smith said the government was looking into 'special purpose vehicles' – separate debt entities – as an alternative approach for councils facing up to their debt limits.

The fund is to be used to bring forward new roads and water infrastructure needed for new housing, where financing has been a constraint.

Under the scheme, the government will invest up front to ensure infrastructure is installed. But councils will have to repay the investment or buy back the assets once houses have been built and development contributions paid.

Mr Joyce says the infrastructure to be funded includes a new bridge over the Waikato River, a state highway interchange, arterial roads, water and waste treatments plants, pump stations and reticulation and collection networks, and storm water drainage.

“The next step is for the councils to complete with the government the detailed funding agreements, which we expect to be concluded in the next few months.”

He says the first earthworks will be under way this coming summer, the first homes consented early in 2018 and homes completed by late 2018.

Fierce competition
Competition for the fund has been fierce.

Last month, at Parliament’s social services select committee, Mr Smith said the government had received $1.5 billion worth of bids for the $1 billion.

Prime Minister Bill English has previously said Auckland Council had applied for the entire $1 billion fund.

More details
The new funds will provide 10,700 more houses across two major new subdivisions in the Waikato, Mr Joyce says.

“These investments will unlock two major subdivisions in one of New Zealand’s fastest-growing regions.

“It will provide network roading and water infrastructure for the 8100 section Peacockes Development on the southern border of Hamilton and a 2600 section subdivision in Te Kauwhata in Northern Waikato.”

Meanwhile, the proposal from the Hamilton City Council includes a new bridge over the Waikato River, as well as an interchange at Cobham Drive and connection to State Highway 3.

“This initiative is a massive boost to the supply and affordability of housing in Hamilton. The first homes are projected to be completed by the end of 2018, at least 1000 by 2022, and a further 7100 progressively as demand requires,” Dr Smith says.

In other areas, Auckland will get infrastructure for a greenfield development (north-west) at Whenuapai and Redhills.

In Tauranga, there will be a greenfield development at Te Tumu (eastern end of Papamoa) as well as a capacity upgrade to the Te Maunga Wastewater Treatment Plant and a new (Waiari) water treatment plant (at Te Puke).

In Queenstown, there are two new greenfield sites (Quail Rise South and Ladies Mile) on the Frankton Flats and an extension of the Kingston township.