The Wellington City Council will receive $400m for a sludge minimisation facility
Under the deal, the Wellington City Council will receive up to $400m in funding from a special purpose vehicle (SPV) owned by Crown Infrastructure Partners and debt financed by Accident Compensation Corporation, China Construction Bank Corporation, New Zealand branch, ANZ Bank New Zealand Limited, Commonwealth Bank of Australia and Industrial and Commercial Bank of China Limited. The fund will be used to construct a sludge minimisation facility (SMF) at Moa Point.
Wellington ratepayers will be charged a levy authorised under the Infrastructure Funding and Financing (Wellington Sludge Minimisation Facility Levy) Order 2023, and this levy will be used to repay the SPV's debt and pay other costs related to the construction of the SMF.
Significantly, the debt that the SPV finances will sit on the SPV's balance sheet, assisting the council to continue funding its operations and other significant projects while remaining within its debt constraints. The project is one of the most complex the Wellington City Council will deliver over the next few years and is a critical component of a much broader waste minimisation strategy and the council's goal of being a net zero carbon capital by 2050.
Since its inception, this funding transaction has been the second one under the Infrastructure Funding and Financing Act (IFF). Under an IFF transaction, a local council has several roles. Chapman Tripp advised the Wellington City Council on each of these roles, including as proposer of the levy, as the party that constructs and delivers the SMF assets, as the recipient of the funding and as the administrator and collector of the levy.
The Chapman Tripp team is comprised of partner Leigh Kissick, solicitor Miles Sandston, partner Greg Wise, and senior associate Rosa McPhee.
"It has been extremely rewarding assisting Wellington City Council to create a construction contract structure that achieves a great balance of protections for the council, rate payers and levy payers but also offers flexibility to cater for the unique IFF funding model. The SMF is a significant infrastructure project for the region," Wise said.
Bell Gully advised Crown Infrastructure Partners on the transaction. Banking and finance partner Sarah Anderson-Butler led the Bell Gully legal team in Auckland concerning debt financing, Zac Kedgley-Foot in Wellington regarding the hedging, and consultant Hugh Kettle advised Crown Infrastructure Partners regarding the project and levy documentation.
Anderson-Butler said, "It's fantastic to be able to support Crown Infrastructure Partners on this landmark and first-of-its-kind transaction, including the development of the bifurcated funding structure, which represents a market development for future infrastructure transactions, particularly large-scale transactions requiring multiple capital sources."
Mafic Partners also advised Crown Infrastructure Partners as commercial advisers, KPMG acted as financial advisers and Deloitte as tax advisers on this transaction. The other advisory roles on the transaction were led by Buddle Findlay partners Daniel Collins and Peter Owles for the lenders and Simpson Grierson acting for the Crown.