Hamilton City Council is ready to get the diggers rolling from the Government's $1b housing funding, but Auckland Council is yet to stake a claim.
Hamilton has applied for $240m of the $1b fund to fast-track infrastructure for 2350 to 3100 homes in Peacocke and Rotokauri, described by Mayor Andrew King as a very convincing proposal with developers on board and diggers ready to roll.
The fund, set up by the Government in July last year, offered five councils low interest debt to fund such things as water and roading for new housing. The recipients are Auckland, Hamilton, Tauranga, Christchurch and Queenstown Lakes councils.
A spokeswoman for Mayor Phil Goff said the council was still in the drafting stage, but acknowledged concerns about possible constraints of taking on more debt.
Bids for a slice of the $1b pie close at the end of the month.
A monthly newsletter on council goings-on, Town Hall, published by local government consultancy McGredy Winder, says the Housing Infrastructure Fund poses a costly risk for ratepayers.
It quotes a Cabinet paper which says councils with high levels of debt could come close to or over their debt limits, resulting in credit rating downgrades and higher interest repayments.
Auckland Council's debt to revenue currently sits at 256 per cent, near the debt ceiling of 265 per cent.
Goff has warned that a credit downgrade would reduce investor confidence in Auckland Council, drive up the cost of borrowing and reduce council's ability to secure longer duration debt.
"The issues that these councils face is that, pushing up against lending ceilings, they have little or not borrowing headroom through which to fund the billions of dollars of infrastructure investment required to service growth.
"The resulting lack of investment is slowing the development of new dwellings," said Town Hall.
Hamilton Council chief executive Richard Briggs has called the fund a great initiative by the Government - "it's provided us an opportunity to really get things moving and ahead of the game".