Tauranga City and Waikato District councils will tap the central government's housing infrastructure fund to help upgrade local water infrastructure, which Housing Minister Phil Twyford says will speed up residential property developments in those areas.

The $1 billion housing fund was set up under the previous administration as a means to speed up development by supporting infrastructure programmes in nine projects across Auckland, Hamilton, Waikato, Tauranga and Queenstown. Twyford today said Tauranga City Council will borrow $158 million to support capacity upgrades to the Te Maunga Wastewater Treatment Plant and a new Waiari water treatment plant, while Waikato District Council borrow $38 million to expand water supply, reservoirs and reticulation, and a new wastewater treatment plant, pipeline and treated water disposal. The 10-year interest-free loans are in the process of being finalised, he said.

The Tauranga infrastructure will support water and wastewater capacity for an extra 35,000 houses on either infill or greenfield development. while the Waikato funding will enable the development of 2,790 more houses.

Twyford said while Auckland's housing shortage had attracted a great deal of attention, issues also needed addressing in areas such as Tauranga and Te Kauwhata in North Waikato.

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"Tauranga City Council is keen to accelerate housing developments, and funding towards infrastructure to support such developments will go a long way to ease pressures on councils," he said in a statement. "There are signs that Auckland's housing issues are moving south. According to QV data, average house prices in the Waikato District have increased to $483,179 – up 8.8 per cent over the past year."

Infrastructure funding for residential property development has been a major issue for new builds, with councils cautious about taking on debt to pay for roads, water and drainage systems.

New Zealand's 'three waters' infrastructure was among areas identified as in need of investment by the International Monetary Fund in its recent review of the country's economy and something Local Government New Zealand has pointed to as needing central government assistance in upgrading. Local Government Minister Nanaia Mahuta is currently on a fact-finding mission in the UK and Ireland to see how those nations run their water systems and has said the local status quo is unsustainable and in need of a shake-up.

Last October, Standard & Poor's affirmed Tauranga City Council's A+ long-term credit rating, saying while it anticipated the local authority's debt will rise to meet increased capital spending, the rating was supported by "New Zealand's institutional settings, the council's experienced management team and budgetary flexibility, and our improved view of the council's liquidity".

At the time, the ratings agency was unsure what the election of the Labour-led government would do to the housing infrastructure fund, which it expected Tauranga would draw on between 2018 and 2021.

- BusinessDesk