The transaction is the first to be authorised under the Infrastructure Funding & Finance Act 2020
Simpson Grierson has supported the Treasury on the first deal to be authorised under the Te Tūāpapa Kura Kāinga – Ministry of Housing and Urban Development’s Infrastructure Funding & Finance Act 2020.
Lead partner Josh Cairns explained that the landmark transaction would “enable Tauranga City Council to deliver key transport infrastructure projects more quickly than if the Council had to obtain all the funding and financing itself, given balance sheet and funding constraints.”
“At a more global level, this is the first pathfinder transaction to proceed under the Act and has proven the viability of the model,” he added.
The deal involves a novel special purpose vehicle (SPV) funding and financing model that the firm said will “help deliver critical transport infrastructure projects for Tauranga City Council.” Simpson Grierson described the function of the model as follows:
- the SPV is authorised under the Infrastructure Funding & Financing (Western Bay of Plenty Transport System Plan Levy) Order 2022 to collect a 30 year infrastructure levy
- the levy is to be paid by ratepayers in Tauranga to fund project costs in the Western Bay of Plenty Transport System Plan (TSP)
- established by Crown Infrastructure Partners, the SPV is then able to obtain debt and equity finance to invest in the TSP projects on the strength of the levy
- the Crown provides a limited support package to the SPV to underwrite key risks
“We’ve been the advisers to The Treasury on the Infrastructure Funding & Finance model since its inception in 2018, so it’s really rewarding to now see it in action as it starts to deliver important infrastructure projects to support growth across Aotearoa,” Cairns explained. “Without the model, otherwise viable and much-needed projects – like those in the Western Bay of Plenty Transport System Plan – would be much more difficult for the council to achieve within its debt limits.”
Simpson Grierson said that the Infrastructure Funding & Finance Act 2020 was developed as an alternative funding and financing model for infrastructure needed by high growth councils “that they otherwise could not deliver due to funding and financing constraints, which have in many cases been magnified as a result of COVID-19.”
In working on the deal, Cairns was supported by special counsel Jonathan Salter and senior associates Mace Gorringe and Matt Hill. The team guided the Treasury on all aspects of Tauranga City Council’s funding and financing proposal and the resultant Infrastructure Funding & Financing (Western Bay of Plenty Transport System Plan Levy) Order 2022, as well as in negotiating a government support package for the funding and financing of the SPV.
Crown Infrastructure Partners received legal advice from Bell Gully, while the Tauranga City Council was assisted by Chapman Tripp. Buddle Findlay advised BNZ and Westpac.
