Source: New Zealand Government
Parliamentary Under-Secretary for Infrastructure Simon Court has today announced decisions to reform the Infrastructure Funding and Financing Act (IFFA) to help growth pay for growth in a way that is more responsive to demand.
“The IFFA’s primary focus is to facilitate the delivery of infrastructure for housing in a responsive way. Providing for this ‘demand-led’ growth is a key part of Minister Bishop’s ‘Going for Housing Growth’ programme.
“The IFFA involves the establishment of a ‘special purpose vehicle’ to finance the infrastructure needed to enable development, which is repaid by levying the properties which benefit – all off councils’ balance sheets. This reduces reliance on ratepayers to cross-subsidise growth infrastructure, facilitating growth that is more commercially viable.
“It was born out of a market innovation success story, where a developer established a pathway to build the infrastructure needed for the Milldale development without having to contend with council infrastructure funding and debt constraints.
“Yet, while it was intended to codify this approach to replicate this success, the IFFA has fallen short of delivering additional infrastructure needed to respond to growth.
“We’re aware of limitations and unnecessary, bureaucratic hurdles that add cost and inhibit its potential to deliver, which is why we’ve committed to a range of changes.”
Key changes include:
Expanding uptake and use cases
Extending access to a variety of users including water entities under Local Water Done Well and NZTA as part of a funding stack for transport infrastructure investment where it increases development capacity.
Supporting developer-led proposals including by requiring levy and infrastructure authorities like councils to provide the necessary endorsements where statutory requirements are met, limiting avenues for councils to obstruct approval.
Enabling levy deferrals so where affordability is an issue there are options for property owners to defer payment to a later date or until a specified triggering event.
Clarifying project eligibility to explicitly include projects commissioned up to two years prior to the levy proposal submission.
Enabling use for development levies by removing the requirement that there be a direct link between an IFFA levy and an infrastructure project where the IFFA is to be used to finance payment of development levies.
Streamlining levy development and approval
Rationalising information and endorsement requirements by removing duplicative and largely redundant requirements and ensuring levy documentation delivers the right information, in the right format, to the right people, to get the right decisions.
Removing unnecessary steps, including removing the ministerial affordability assessment where a developer has either been the proponent, or where all affected parties have agreed.
Other changes to increase certainty and confidence
Providing SPVs certainty by clarifying their ability to directly commence recovery action for unpaid levies.
Ensuring that councils can request to be reimbursed for costs which are incurred in administering levies, as a condition for providing the necessary endorsements.
Clarifying protected Māori land provisions to fix an ambiguity around protection as it relates to general land which was formerly Māori freehold land.
Preventing double dipping by ensuring IFFA levies and development levies cannot be used to pay the same cost twice.
“These changes will deliver a more usable pathway that can be accessed by developers and others to deliver infrastructure that may not have been planned for by councils.
“Together with the other infrastructure levers announced today, and the wider programme of change through Going for Housing Growth, these changes will contribute to a more balanced system that accommodates flexible, demand-led growth.”