Josh Cairns (Partner), Jonathan Salter (Special Counsel), Mace Gorringe (Senior Associate) and Matt Hill (Senior Associate) are proud to have advised The Treasury on the first ever transaction to be authorised under the country’s new Infrastructure Funding & Finance Act 2020.

The inaugural deal to proceed under the Act uses an innovative special purpose vehicle (SPV) funding and financing model, which will help deliver critical transport infrastructure projects for Tauranga 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, which have in many cases been magnified as a result of Covid-19.

Our team also advised 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. The firm also helped The Treasury negotiate a Government support package to support the SPV’s funding and financing.

Josh Cairns says the trailblazing deal represents a significant milestone following several years of work to design and implement the model.

“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.

“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,” says Mr Cairns.

How the SPV funding and finance model works:

• 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 SPV provides the debt and equity finance to Tauranga City Council to pay for the TSP projects, and uses the 30 year levy to repay the finance

• The Crown provides a limited support package to the SPV to underwrite key risks.

Mr Cairns continued: “This transaction is significant because it will 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,” says Mr Cairns.