Hamilton City Council candidates' plans for $1b fund

Development areas, especially greenfield subdivisions, could really get going after the government's $1b infrastructure fund was announced.

Waikato real estate prices are rising because there are so few sections available, councillors in the region agree. That shortage could be overcome by the Government's $1 billion infrastructure fund.

Hamilton City Councillor Andrew King is among those urging city leaders to go for it.  "This money would cover us for the six to eight years that it takes for the farm to be turned into a titled subdivision," he said.  "Where we've dropped the ball is we haven't got it to the farm gate."

Fellow councillor and mayoral candidate Rob Pascoe agreed, saying council can't be the sole funder of infrastructure, nor could it wear the cost of holding infrastructure until developers are ready to build.

But Waikato Regional Council chairwoman Paula Southgate, who is running for the mayor's seat in Hamilton, urged caution.

She wants to see the policy in detail.

"There is no such thing as a free lunch," Southgate said. "We would have to look at what opportunities there are in it and what considerations to be managed might be going forward."

King said council had stopped spending in greenfields areas and the fund would provide a buffer to get sections on the market again.

"Six years ago, we cut back on infrastructure spending and because we are throwing a whole lot of money at infrastructure now, it is going to take six to eight years to flow through," King said.

On Sunday, Prime Minister John Key announced the interest-free loan for councils to build vital infrastructure and get houses built.  Under the proposal, the fund would own the infrastructure until property rates and development charges can pay off the debt, which must happen within 10 years of the loan.

It mirrored a February email exchange King had on a council submission on the National Policy Statement on Urban Development, where he suggested a central government pool of funding, to be paid back by development levies.

"It was a surprise," King said.

Financing infrastructure through traditional means would drive up the city's debt-to-income ratios and that would make debt unserviceable, he said. The fund allows council to grab an interest-free loan.

"From a council perspective, we want to work with the developers to get the infrastructure at a time when the developers are ready rather then fund it and get the city to pay for it and wait until the developers are ready," Pascoe said.

Development areas like Peacockes and Rototuna will be the likely beneficiaries of the fund.

Small pockets of land around the city, relatively close to existing services are easier and cheaper around the city but infill housing – about 54 per cent of new consents – won't be able to tap into the fund.

Auckland will likely get the lion's share of the fund with the rest shared with the rest of the country's high growth areas.

"If it's not too restrictive, I can see that being quite useful if it allows us to work with developers in terms of being able to open up some more growth cells in the city," Pascoe said.

But Hamilton City Council needs to take the opportunity and not let it go to waste, said Hamilton East MP David Bennett. It's too good to let slip.

"We need Hamilton to take up that opportunity and not let it go," Bennett said.

"I'd hate for it to sit there and for Hamilton to not apply for it."

Outgoing Hamilton City Mayor Julie Hardaker said it's about time the government came to the party.

"We're really pleased the government has finally picked up on this issue.

"We absolutely welcome the fund. We've been asking for this for a long time."

Hamilton is ahead of the supply and demand equation, she said, but there are a number of things - red tape, lack of a skilled workforce, construction costs - that are holding work back.

"We have three years' supply based on our populations projections and how many building consents we know we've got to issue."
She said council will "definitely" put up its hand for funding and if the fund allows, some long-held development opportunities could finally see the light of day.

"I'm thinking this could be an opportunity to open up Peacockes and we can make an application for that."

From Stuff.co.nz