10/08/2023·2 mins to read
Simpson Grierson advises Treasury on funding Wellington City’s new wastewater facility
We’re proud to have advised The Treasury on the second transaction to be authorised under the country’s new Infrastructure Funding & Finance Act 2020 (IFF Act).
The transaction uses an innovative special purpose vehicle (SPV) funding and financing model, which will help deliver a critical wastewater project for Wellington City Council.
The Act is designed to provide 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.
According to Simpson Grierson’s Banking & Finance Partner, Josh Cairns, the deal further cements the viability and utility of the IFF Act, which has now been used to support two critical infrastructure projects – the Western Bay of Plenty Transport System Plan in 2022 and now Wellington City’s new Sludge Minimisation Facility (SMF) at Moa Point.
“We’ve been the advisers to The Treasury on the Infrastructure Funding & Finance model since its inception in 2018, so it’s great to see it now consistently supporting important infrastructure projects across the country.
“It’s also particularly pleasing to see the model being used to support WCC’s goal to reduce carbon emissions,” says Josh.
How the SPV funding and finance model works:
- The SPV is authorised under the Infrastructure Funding & Financing (Wellington Sludge Minimisation Facility Levy) Order 2023 to collect a long-term infrastructure levy
- The levy is to be paid by ratepayers in Wellington City to fund project costs for the SMF
- Established by Crown Infrastructure Partners, the SPV is then able to obtain debt and equity finance to invest in the SMF project on the strength of the levy
- The SPV provides the debt and equity finance to Wellington City Council to pay for the SMF project, and uses the levy to repay the finance
- The Crown provides a limited support package to the SPV to underwrite key risks.
Josh says: “This transaction is significant because it will enable Wellington City Council to deliver a long-term sustainable and resilient approach to the treatment of Wellington’s wastewater. Less solid waste and a higher quality product will also mean fewer carbon emissions from the Southern landfill.”
Simpson Grierson advised The Treasury on all aspects of Wellington City Council’s funding and financing proposal and the resultant Infrastructure Funding & Financing (Wellington Sludge Minimisation Facility Levy) Order 2023. The firm also helped The Treasury negotiate a Government support package to support the SPV’s funding and financing.
Supporting Josh on the transaction were Simpson Grierson Special Counsel, Jonathan Salter and Senior Associates, Edward Norman and Matt Hill. Other parties involved in the deal include:
- Crown Infrastructure Partners, represented by Mafic, Bell Gully and Hugh Kettle (commercial barrister)
- Wellington City Council, represented by Chapman Tripp
- Financiers ANZ, CBA, ICBC, ACC and CCB, represented by Buddle Findlay.