Tauranga civic precinct: Council seeks 30-year IFF loan for $151.5m - what it will cost ratepayers

Artist impressions of Tauranga City Council's civic precinct development, Te Manawataki o Te Papa.

Tauranga commissioners have approved plans to pursue a 30-year loan towards building the $306.3 million Te Manawataki o Te Papa civic precinct project, which would effectively fix how much ratepayers would contribute.

In a council meeting yesterday, commissioners voted, subject to consultation, to pursue using Infrastructure Funding and Financing Act (IFF) provisions for $151.5m towards the CBD project.

That amount had been signalled as the cap for ratepayer contributions towards the project, which would include a new library and community hub, civic whare (public meeting house), exhibition gallery and museum. Upgrades to Baycourt and Tauranga Art Gallery are also part of the plans.

The IFF allows councils to borrow money for construction from private markets through a Crown-owned entity, taking the debt off the council’s balance sheet.

The plan had previously been discussed in public-excluded sessions and was made public in Monday’s meeting.

Chief financial officer Paul Davidson said the annual levy for ratepayers was expected to be $107-$128 for a median residential property and $369-$440 for a median commercial property. Over 30 years, this would total $3210-$3840 and $11,070-$13,200, respectively.

The levy is proposed to begin in 2026.

Davidson said that, under an IFF model, the council would be paid $151.5m over the next four years. This would be reflected in the council’s assumed debt level in the draft 2024-34 Long-Term Plan.

Final authorisation of the levy was subject to Cabinet approval.

Commission chairwoman Anne Tolley said the IFF, and the set levies, provided “some certainly for people over the next 30 years”.

“If a generation is new every 20 years, that means one-and-a-half generations will be contributing quite significantly to help spread that lot of the cost.

“If people are happy with that … I think, given all the way through we’ve been upfront with the public that we would look for alternative methods of funding to try to get people to pay their fair share, I think this is a good way to do that. Hopefully, the public will think that too.”

Commissioner Stephen Selwood agreed.

Shadrach Rolleston, Tauranga City Council commissioner. Photo / Alex Cairns

“When we went to the community a week or so ago, there was quite a bit of concern about the costs and the amplification of those costs. I think that was due to the lack of certainty.”

Commissioner Shadrach Rolleston said the funding method would prevent potential future political interference “from an incoming council that might want to change something”.

“If someone comes in and wants to tutu with it, there’s significant risk around that,” Rolleston said.

The Government-appointed commission’s term is due to end in July next year, with an election to take place.

During the public forum part of a July 25 council meeting, former Tauranga councillor John Robson – one of those replaced by the commission – warned that moves to advance the project could be lost.

“If the right people, in my view, are elected in next year’s election a lot of this will be reversed. It doesn’t stand. Make no mistake,” he said at the time.

Robson was in the public gallery at yesterday’s meeting.

At the July meeting, a financial analysis of the Te Manawataki o Te Papa project suggested it could cost ratepayers $26m a year once completed. Commissioners also reconfirmed that ratepayers would pay no more than $151.5m towards the project – more than double the $70m originally approved in May 2022.

Tauranga City Council was the first in New Zealand to access the IFF legislation when it funded transport-related programmes late last year.

These included work on roads around the Port of Tauranga, 15th Ave and Turret Rd, and transport infrastructure to support new housing in Tauriko West. Repayments on this were expected to begin in 2024 with a first-year levy for a median-valued home costing $68 and a median commercial property $521.

Consultation on accessing the IFF for the civic precinct project will begin on Thursday and run until October 6, with hearings on October 16 followed by deliberations and decisions on November 6.

If approved, the process would begin in November with the IFF levy proposal submission beginning in January. Cabinet approvals were expected in April/May with contractual then financial closes in May.

The council planned for the rest of the construction costs to be covered by other sources such as government grants, the sale of non-core council assets and sponsorships.

Kiri Gillespie is an assistant news director and a senior journalist for the Bay of Plenty Times and Rotorua Daily Post, specialising in local politics and city issues. She was a finalist for the Voyager Media Awards Regional Journalist of the Year in 2021.

CLARIFICATION

The story has been updated to clarify consultation will now start on Thursday, not Tuesday, at the council’s request.