Reforms to Infrastructure Funding and Financing Act to Accelerate Growth Unveiled

The primary objective of the IFFA is to facilitate the timely delivery of infrastructure necessary for housing and urban development.

Parliamentary Under-Secretary for Infrastructure, Simon Court, has unveiled a series of reforms to the Infrastructure Funding and Financing Act (IFFA) aimed at making growth more responsive to demand. These changes are designed to improve the way infrastructure is financed, ensuring that new development is better supported without placing undue financial strain on local councils or ratepayers.

The primary objective of the IFFA is to facilitate the timely delivery of infrastructure necessary for housing and urban development. A central component of the Act is the establishment of a ‘special purpose vehicle’ (SPV) to finance required infrastructure. This mechanism allows for the repayment of costs through levies on benefiting properties, keeping the financial burden off council balance sheets and reducing reliance on ratepayer contributions.

The IFFA was initially inspired by a market-driven success story—Milldale, where a developer pioneered an innovative approach to infrastructure funding without being hampered by council financial limitations. However, the IFFA has not fully lived up to its potential in delivering the infrastructure required to meet demand due to existing limitations and bureaucratic inefficiencies.

Key Reforms to Improve the IFFA Framework

To address these challenges, the government has introduced a range of changes to enhance the effectiveness of the IFFA:

Expanding Access and Application

• Broadening Eligibility: Extending access to additional users, including water entities under the Local Water Done Well framework and Waka Kotahi NZ Transport Agency, to finance transport infrastructure where it supports development growth.
• Supporting Developer-Led Proposals: Requiring councils and levy authorities to endorse proposals that meet statutory requirements, reducing opportunities for obstruction.
• Flexible Payment Options: Allowing property owners to defer levy payments when affordability is an issue or until a specified event occurs.
• Retrospective Project Inclusion: Ensuring projects commissioned up to two years prior to the levy proposal submission can qualify for funding.
• Expanded Use for Development Levies: Removing the requirement for a direct link between IFFA levies and specific infrastructure projects, allowing their use for broader development levy payments.

Streamlining Levy Development and Approval Processes

• Simplified Documentation: Eliminating redundant reporting requirements to ensure necessary information is provided efficiently to decision-makers.
• Eliminating Unnecessary Steps: Removing ministerial affordability assessments when developers are the primary proponents or where all affected parties have agreed, reducing delays.

Increasing Certainty and Confidence

• Enhanced SPV Rights: Providing clarity on SPVs' ability to directly recover unpaid levies.
• Council Reimbursement: Ensuring councils can be reimbursed for administrative costs incurred in managing levies.
• Clarifying Māori Land Protections: Fixing ambiguities related to protections for general land formerly classified as Māori freehold land.
• Preventing Double Dipping: Establishing safeguards to ensure IFFA levies and development levies are not used to cover the same costs twice.

Driving a More Efficient and Responsive Infrastructure System

These reforms will make the IFFA a more accessible and effective tool for developers, infrastructure providers, and local authorities, ensuring that critical projects can proceed without unnecessary bureaucratic obstacles. By fostering a more balanced and flexible approach to demand-led growth, the government aims to create a sustainable, commercially viable framework for infrastructure financing.

Together with other infrastructure measures announced today and the broader Going for Housing Growth initiative, these reforms will contribute to a more dynamic and responsive urban development system that better meets New Zealand’s housing and infrastructure needs.