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Chapman Tripp advised on the deal, which includes an innovative funding model which will fund the construction of a new sludge minimisation facility (SMF) at Moa Point.
Wellington City Council will receive up to $400 million of 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, in order to fund the construction of a new sludge minimisation facility at Moa Point, Wellington.
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.
Importantly, the debt that is financed by the SPV will sit on the SPV’s balance sheet, rather than Wellington City Council’s. This will assist the Council to continue funding its operations and other significant projects while remaining within its debt constraints.
The Chapman Tripp team, consisting of Partner, Leigh Kissick, and Solicitor, Miles Sandston, advised Wellington City Council on all funding aspects of the transaction, including submission of a levy proposal to the Ministry of Housing and Urban Development and its contractual arrangements with the SPV and the Crown. Partner, Greg Wise, and Senior Associate, Rosa McPhee, advised Wellington City Council on its design and construction contracts for the sludge minimisation facility.
Leigh says,
This is the second transaction where we have advised a local council in respect of the funding of significant infrastructure assets through the Infrastructure Funding and Financing Act (IFF).
"IFF is an important tool for councils as it enables the assets to be funded off balance sheet, which is critical given the number of significant infrastructure assets that councils need to deliver and the current constraints with local government funding arrangements.”
“Under an IFF transaction, a local council has a number of roles. We advised the Council on each of these roles, including as proposer of the levy, as the party that constructs and delivers the SMF asset, as the recipient of the funding and as the administrator and collector of the levy. In addition, for the SMF asset, it was important that the construction and the delivery of the asset was aligned with the IFF funding principles. By having Greg and Rosa assist the Council with the construction contracts, we were able to provide Wellington City Council with this alignment.”
Greg says, “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.”
This is the second transaction under the IFF. Chapman Tripp advised Tauranga City Council on the first transaction, which unlocked up to $175 million of funding to part-fund up to 13 transport projects.
Andy Hagen at HKA also advised Wellington City Council. Crown Infrastructure Partners were advised by Bell Gully and consultant Hugh Kettle, Mafic Partners, KPMG and Deloitte, the financiers were advised by Buddle Findlay, while Simpson Grierson advised the Treasury.
